How will the epidemic affect Jiangsu textile and garment enterprises? Detailed explanation of countermeasures and suggestions
At present, the Party Central Committee and the State Council attach great importance to the impact of the epidemic on freight and material supply, and are trying to properly solve the freight logistics problem. This is not only a very important part of winning the epidemic prevention and control war, but also the implementation of the “CPC Central Committee” The State Council’s Opinions on Accelerating the Construction of a National Unified Market”.
Jiangsu is a major textile and garment province. In order to fully understand the impact of the recent COVID-19 epidemic on the textile and garment industry in Jiangsu Province, provide suggestions and decision-making basis for government departments to support the development of the industry, and promote the steady development of the industry’s economy, the Jiangsu Garment Association recently Organize enterprises to conduct a questionnaire survey on “The Impact of the Epidemic on Jiangsu Textile and Garment Enterprises”.
This survey targets textile and garment enterprises in the province. The Jiangsu Provincial Garment Association conducted a survey online on April 14, 2022. The enterprises responded positively. As of April 22, 199 valid questionnaires were received, including : There are 52 key textile companies, 143 clothing and apparel companies, and 4 textile and clothing equipment companies.
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The impact of the epidemic on Jiangsu textile and garment enterprises
The impact of the recent epidemic on enterprise production and operations
The survey shows that 25.13% of enterprises’ production and operations “dropped by more than 50%”, 18.09% “dropped by 30~50%”, 32.66% “dropped by 20~30%”, and “dropped by less than 20%” Accounting for 22.61%, “no significant impact” accounted for 1.51%. The impact of this epidemic on the production and operation of enterprises is huge and deserves attention and attention.
The main difficulties currently faced by enterprises due to the epidemic
The survey shows that among all options, the top three are: “High production and operation costs” (73.37%), “Reduced market orders” (66.83%), and “Unable to produce and operate normally” (65.33%) , the selection proportion exceeds half. Others are: “It is difficult to collect accounts receivable”, “Enterprises need to pay liquidated damages because they are unable to perform transaction contracts on time”, “Financing is more difficult”, etc. Specifically:
(1) The cost of production and operation is high and the burden on enterprises is heavy
Mainly reflected in: the epidemic has caused transportation and logistics to be blocked, raw and auxiliary materials, equipment and materials cannot come in, and products cannot go out. Freight rates have increased by as much as 20% to 30% or more, and the price of raw and auxiliary materials has also increased significantly; Labor costs are rising year by year, and rigid expenses such as social security are huge; rent costs are high, and many stores are not operating satisfactorily or even closed; and corporate epidemic prevention costs are increasing.
(2) Market orders decrease
Overseas markets: Due to obstacles in logistics and transportation, sample clothes and samples delivered to customers cannot be delivered in time, and customers cannot confirm in time, which directly affects the placement of large orders. Noodles and auxiliary materials could not come in, causing orders to be interrupted. Goods cannot be delivered, and products are backlogged in warehouses. Customers are very worried about order delivery, and subsequent orders have also been affected. Therefore, a large number of foreign customers have stopped placing orders and are waiting to see. Many orders will be transferred to Southeast Asia and other regions.
Domestic market: Due to the epidemic lockdown, orders cannot be fulfilled on time, foreign customers cannot visit the company normally, business personnel cannot carry out normal sales activities, and customer losses are serious. In terms of retail, due to irregular lockdowns, shopping malls and stores are unable to operate normally, traffic in various business districts has plummeted, customers are afraid to invest easily, and store decoration has been hampered. Affected by the epidemic, customers go shopping less often, wages have dropped, consumer demand has declined, and the domestic sales market has been sluggish. Online sales cannot be shipped on time due to logistics reasons, etc., resulting in a large number of return orders.
(3) Unable to produce and operate normally
During the outbreak, due to the lockdown and control, employees were unable to come to work normally, logistics was not smooth, and there were problems with the transportation of raw and auxiliary materials, finished products, etc., and the production and operation of enterprises were basically at a standstill or semi-standstill.
The impact of the epidemic on corporate operating funds
The outbreak of this epidemic has three main impacts on the operating funds of enterprises, mainly in terms of working capital, financing and debt:
84.92% of companies said that their operating income has decreased and their working capital is tight. Due to abnormal production and operation of most enterprises, order delivery is delayed, order volume is reduced, online and offline sales are hindered, and there is a great risk of capital withdrawal;
20.6% of companies are unable to repay loans and other debts in time, increasing financial pressure;
12.56% of enterprises have reduced short-term financing capabilities;
10.05% of corporate financing needs decreased;
6.53% of enterprises face the risk of being withdrawn or having their loans cut off.
Estimated impact of the epidemic on the company’s annual operating income
Estimated impact of the epidemic on corporate employment throughout the year
Through domestic e-commerce platforms and live broadcast platforms
Sales status
According to the survey, most clothing companies conduct sales through platforms such as Tmall, JD.com, Vipshop, Pinduoduo, WeChat Mall, and Douyin. Among them, short videos and live broadcasts have the advantage of spreading information quickly and having high public acceptance. The advantage is that the product styles and effects are fully displayed through live broadcast. Compared with the flat pictures on the online platform, the live broadcast is more intuitive, more interactive, and the effect is better. And some pure foreign trade export companies, textile semi-finished products and accessoriesProduct manufacturing companies are not suitable for online sales.
At present, the main problems reported by online sales companies are: (1) The operating costs of e-commerce platforms are high; (2) Price involution is serious; (3) Due to strict logistics control during the epidemic, orders cannot be fulfilled on time, and orders are returned. serious.
Prediction of the next development trend of enterprises and industries
According to the survey:
52% of the companies said that the current corporate development mainly focuses on “seeking stability” and “persistence”, stabilizing customers and employees, and exploring dual markets for export and domestic sales.
37.5% of the companies said that they are currently facing many difficulties and the situation is not optimistic. Affected by the epidemic, rising costs, declining market demand and other factors, production and operation are difficult and losses are serious. Foreign alternative production resources are recovering, overseas brands are increasingly concerned about China’s supply chain, orders are being transferred overseas at an accelerated pace, and corporate confidence is low.
10.5% of companies said that the difficulties are temporary and are full of confidence in the future. It is believed that “the market will recover after the epidemic stabilizes”, “China’s textile and apparel industry has stable production capacity, complete supply chain, skilled employees, and good industry development prospects”, “Adhere to high Qualitydevelopment, insisting on one’s own expertise and characteristics, and making high-end and high-quality personalized products, the market will definitely be good.”
In response to the impact of the epidemic, what companies hope the government will do
Assistance measures
The survey shows that among all options, the top five are: “ensure smooth logistics”, “strengthen precise epidemic prevention and control and reduce the impact on normal production and operation activities of enterprises”, and “phased reduction and exemption of social security fees” , “Providing job stabilization subsidies”, “reducing or providing subsidies for rent, water and electricity bills, etc.”
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Suggestions on countermeasures to deal with the epidemic
Make every effort to ensure smooth logistics
Ensuring smooth logistics is also an important part of fighting the “tough battle” of epidemic prevention and control. Sufficient and timely supply of materials is not only the “lifeline” for stabilizing people’s livelihood and enterprise development, but also is related to epidemic prevention and control and economic development. In order to “grasp the overall situation with both hands”, the government has introduced relevant policies and strives to ensure that the industrial chain and supply chain “do not drop out”.
Strengthen effective and precise prevention and control of the epidemic
In order to reduce the impact on normal production and operation activities of enterprises, it is recommended that relevant epidemic prevention departments provide door-to-door nucleic acid testing services for units subject to inspection and quarantine to ensure the normal operation of enterprises, and encourage the resumption of normal exchanges in low-risk areas.
Further implement tax and fee reduction policies
In view of the practical difficulties faced by enterprises, it is hoped that the government and relevant departments can provide measures such as phased social security exemptions and reductions for labor-intensive textile and garment enterprises, and introduce tax reductions in a timely manner Fee reduction plans, such as deferring tax declaration or making appropriate reductions and exemptions, can reduce the burden and pressure on enterprises due to the impact of the epidemic and help enterprises tide over difficulties. Otherwise, many enterprises will disappear. At the same time, policies that benefit enterprises and people must also take into account regulations. Enterprises that are above the standards and regulations are the “ballast stone” for economic stability.
Increase financial support for companies in difficulty
Regarding the current severe situation of enterprises resuming work, production, and exports, the biggest difficulty for some enterprises is the difficulty in capital turnover after the production cycle is lengthened, the lack of working capital, and the need for bank credit support. It is hoped that financial support policies to fight the epidemic can be better implemented, especially for companies that have orders and markets and are experiencing temporary difficulties.
Provide job stabilization subsidies for enterprises and vocational skills training subsidies for employees, etc.
The textile and garment industry is a traditional labor-intensive enterprise, which absorbs a large number of social employment people and plays a positive role in social stability. It is hoped that government departments can formulate regulations on this Special policies that are conducive to the development of the industry will help enterprises accelerate their development and expand the visibility and market share of Jiangsu textile and apparel products.
Improve the industry’s flexible manufacturing and intelligent manufacturing levels
Enterprises should further increase the application of digital technology, network technology, and automation technology in the industry, improve the level of flexible manufacturing and intelligent manufacturing in the industry, and promote the industry to move up to the middle and high end of the international value chain. In addition, clothing companies must collaborate with supply chain supporting companies to jointly improve product development capabilities, inject development momentum into clothing companies with a flexible, fast, and efficient supply system, enhance their ability to resist risks, accelerate online and offline integrated development, and enhance domestic and foreign markets. Exploit and develop capabilities, and accelerate the construction of a collaborative innovation system for the joint development of digitalization and networking.
Strengthen innovation and enhance product competitiveness
Enterprises should strive to improve the adaptability of brands and products to the market and enhance product competition from various aspects such as technological innovation, product innovation, design innovation, management innovation, service innovation, etc. At the same time, efforts should be made to strengthen the construction of corporate brand culture, promote and lead the development of the textile and apparel industry, and at the same time accelerate the cultivation of new growth points in the fields of innovation leadership, cultural creativity, shared economy, modern supply chain, human capital and other fields, and improve the level of industry integration innovation , build an industrial chain value creation community and promote the high-quality development of Jiangsu’s garment industry chain.
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