Is the order coming? Global clothing inventory continues to decline, and downstream foreign trade samples are increasing!

Exploring the Basic Recovery of Yiwu's Foreign Trade Cold and Warm to 2019 Levels

As the world's largest wholesale market for small commodities, the International Trade City under the Small Commodity City (600415. SH) is a core part of Yiwu's foreign trade industry, with a total of 5 districts and a gathering of approximately 75000 small and medium-sized merchants.

On the afternoon of the 14th, the reporter visited and felt the popularity of the commercial city on site. The large screen above the entrance scrolled and played "Yiwu China Small Commodity Index". According to the analysis of the Small Commodity Index website, the price index slightly declined in the second week of December, and offline transactions were hot, driving up the on exchange trading price index and export trading price index. The popularity of military coats has brought about a sales boom, driving the production of related clothing accessories and accessories. In addition, products such as skincare and beauty products, hygiene and cleaning daily necessities, etc. have also been selling well on the market.

Shuttling through the first district of the International Trade City, the reporter saw merchants briskly walking between stores, negotiating business, and many merchants in the stores were busy receiving customers and taking inventory of goods.

The reporter randomly visited 8 merchants and learned that their performance has increased year-on-year this year. "We have been working in the commercial city for decades, and this year is definitely better than last year, mainly relying on orders from old customers," said one home decoration shop owner. Another shop owner who specializes in exporting lighting fixtures revealed that this year's performance is expected to increase by 30% -40% year-on-year, and demand in various overseas markets has rebounded. However, when it comes to whether the performance has recovered to the level of 2019, many merchants have hinted that "there is still a way to go". " . As for the expected market situation for next year, merchants are cautious in their words and often reply with "unclear", "difficult to explain", and "hope it will get better and better".

It is reported that the 8 interviewed merchants are all traditional foreign trade merchants, mainly responsible for coordinating with overseas merchants to complete orders. The subsequent production and logistics warehousing are all handled by factories and foreign trade companies. In addition, they will also rely on the small commodity city to build the Chinagoods platform to expand online business, which is also the mainstream foreign trade model of the commercial city.

The performance of commercial cities located upstream of merchants is more impressive. Chen Zhixing, Deputy General Manager of Mall Group, said in an interview, "From January to November this year, the sampled transaction volume of the entire market exceeded 200 billion yuan, with a daily average passenger flow of over 200000 people and a daily average foreign trade flow of over 3100 people, basically recovering to the level of 2019."

According to him, among the main markets, Yiwu has closer trade relations with countries along the "the Belt and Road" and other RCEP countries. From January to November this year, Yiwu's imports and exports to countries along the "the Belt and Road" totaled 292.47 billion yuan, up 22% year on year. The "the Belt and Road" trade is also warming up in the transport sector. Fan Xiaohong, the relevant person in charge of East China International Intermodal Port, told reporters that the number of scheduled trains to be sent next year is expected to continue to grow. In order to meet the growing demand, plans are being made to increase China Europe scheduled trains to Central Asia.

Downstream textile foreign trade sample production increases, domestic textile and clothing exports welcome positive news

Recently, there are signs of an increase in foreign trade orders in the textile market in the Jiangsu and Zhejiang regions. A textile trader said, "Recently, I received an order for 100000 meters, which was sent to Vietnam for garment production. The orders in November were much better than the previous 10 months. There were really no orders before, and there were also small orders for thousands of meters. Since November, the order volume has been in the tens of thousands of meters, and there has been a significant increase in the number of orders. There have already been several orders, and employees have been working overtime for over a month."

As the end of the year approaches, there are signs of a rebound in foreign trade orders, indicating that this decline may change in the first half of next year. Industry insiders generally believe that there is also an opportunity for Chinese clothing exports next year. On the one hand, the continuous efforts of the Chinese government in policy benefits, the implementation of numerous new trade regulations, and the entry into force of some trade agreements will jointly promote the stabilization of China's clothing exports. In addition, since the beginning of this year, China's clothing exports to emerging markets have grown rapidly, promoting a more diversified clothing export market structure, which will have a positive driving effect on future clothing exports. On the other hand, after a year long small-scale order model, overseas customers gradually digest their clothing inventory, and overseas restocking demand will rebound, which will bring new export orders to clothing enterprises. The orders received so far are all new models for next year and are gradually being developed.

In addition, the annual Spring Festival holiday will be celebrated in the future, and overseas enterprises will also prepare their goods in advance to avoid being unable to place orders during the Spring Festival period and delaying the production progress of ready to wear clothing. According to the latest news on printing and dyeing, the salary offered by the Vietnamese factory during recruitment reached 7 million to 10 million Vietnamese dong, equivalent to approximately 2100-3000 yuan, which is much higher than the level in 2021. This salary level is actually constantly increasing globally, and Vietnam no longer has the advantage of low costs. Therefore, European and American customers have been transferring their orders back to China. And we have also found that some markets such as the European Union have put forward green and environmentally friendly requirements for imported textiles, with strict requirements for product quality and raw material sources. Other countries simply cannot meet this requirement, only domestic products can pass through customs. Therefore, China still has a competitive advantage.

The continuous decline in global clothing inventory is expected to drive a rebound in fabric exports

The import and export volume was 55.98 billion US dollars, a year-on-year decrease of 10.4% In the first 10 months of this year, the import and export volume of Chinese fabrics decreased year-on-year. Industry insiders predict that global clothing inventories will continue to decline in the fourth quarter, and buyers will continue to increase their flexible replenishment orders.

Data shows that from January to October 2023, the import and export volume of fabrics in China was 55.98 billion US dollars, a year-on-year decrease of 10.4%. Among them, the export value was 53.68 billion US dollars, a year-on-year decrease of 10.1%; The import value was 2.3 billion US dollars, a year-on-year decrease of 16.6%. "China's fabric trade is mainly focused on exports, accounting for nearly 90%. Printing and Dyeing News learned that in recent years, with the continuous enhancement of China's independent research and development capabilities for fabrics, some high-end fabrics that were previously monopolized by Europe, America, and Japan have achieved independent production, and China's fabric imports have shown a downward trend year by year." The relevant person in charge of the Fabric Branch of the China Textile Import and Export Chamber of Commerce said.

From the perspective of export markets, in the first 10 months of this year, except for Brazil, the top ten markets for Chinese fabric exports showed a downward trend in all other countries. Asia is the main market for China's fabric exports. Due to the decline in international market demand, the momentum of China's fabric exports to major markets such as Southeast Asia and South Asia has weakened since the beginning of this year. According to the query data of printing and dyeing news, from January to October 2023, China's cumulative export of fabrics to Asian countries was 35.33 billion US dollars, a year-on-year decrease of 10.2%, accounting for 65.8% of the total fabric exports. Vietnam is the largest single market for Chinese fabric exports, with a fabric export value of 8.4 billion US dollars in the first 10 months, a year-on-year decrease of 11.6%. The decline in fabric exports from China to Bangladesh continues to expand, with exports reaching 4.6 billion US dollars, a year-on-year decrease of 20.6%.

From the perspective of major products, the export value of cotton and chemical fiber woven fabrics has shown a downward trend. Data shows that from January to October 2023, the export value of China's two major categories of chemical fiber woven fabrics and cotton fabrics was 23.26 billion US dollars and 8.16 billion US dollars, respectively, a year-on-year decrease of 5.5% and 19.8%; The export value of silk woven fabrics was 310 million US dollars, a year-on-year decrease of 20.4%; The export value of wool animal wool machine fabrics was 250 million US dollars, a year-on-year decrease of 11.2%.

At present, fabric enterprises are gradually bringing the mature vertical integration model of the domestic industry chain to overseas, while promoting related textile enterprises in other upstream links of the industry chain to "go overseas" for supporting production capacity layout. During the process of going abroad, the dependence of the industrial chain on Chinese textile raw materials will still be maintained at a high level. Faced with fierce international market competition, the above-mentioned person in charge believes that Chinese fabric enterprises need to have an efficient industrial chain, leading R&D capabilities, high-quality products, stable and fast delivery times, as well as continuous investment in ESG, in order to have the opportunity to become deep partners of brand merchants or suppliers of high-quality raw materials.