Price advantage gradually lost, Foshan Textile Canton Fair encountered challenges

On the morning of the 3rd, at the Canton Fair booth of Jingyuan Garment Co., Ltd. in Shunde District, Foshan City, Lin Xiaowen, the general manager of the company, was receiving an American buyer and lined up a dozen pairs of jeans that he had chosen, one by one. It took more than half an hour to introduce the details. But Lin Xiaowen was still unsure whether the order could be negotiated: “The customer thinks our unit price is too high.”

The third phase of the 119th Canton Fair is underway in Guangzhou. Yesterday, reporters visited textile companies participating in the exhibition in Foshan and learned that the rising textile industry in Southeast Asian countries is becoming the main competitor of Foshan and even Chinese textile companies. In the foreign trade situation where the price advantage is gradually disappearing, Foshan’s textile industry is facing difficult challenges.

The wage level in Southeast Asia is less than 20% of the local level

“The unit price of clothing in Guangdong is high, and now our orders are basically taken away by textile companies in Southeast Asian countries such as Cambodia and Vietnam.” As the company’s orders continued to decline, Lin Xiaowen visited Bangladesh last year and learned more about it. The situation he encountered filled him with a sense of crisis: the monthly salary of ordinary local workers is US$50, the salary of skilled technicians is US$100-120, and the salary of skilled workers in Foshan is generally around 5,000 yuan (approximately US$770). The labor cost is several times worse.

“The difference in wages is several times, and the price of each item is four to five times different. Today’s Bangladesh is similar to the situation in China in the 1990s, and is in the honeymoon period of demographic dividend.” Lin Xiaowen frowned, He told reporters that the company has long been a OEM for brands under the famous American denim brand LEE, which is also their big customer. But since last year, several such large customers have terminated cooperation with them. “The main issue is price.” Lin Xiaowen said helplessly that the company’s exports in the first quarter fell by 30% year-on-year.

Due to high labor costs and uncompetitive product prices, more and more Foshan companies have begun to examine the feasibility of setting up factories in Southeast Asia. Lin Xiaowen also personally visited Bangladesh, Cambodia and other places. Among them, the local government of Cambodia gave him preferential conditions for tax exemption for three years. But what troubles Lin Xiaowen is that with the loss of major customers, there is not enough order quantity to support even if he goes to open a factory overseas, so the plan to open a factory has to be temporarily shelved.

The overseas sales of Foshan Shengqi Garment Co., Ltd. were also severely impacted by the textile industry in Southeast Asia. The company’s export volume in the first quarter fell by nearly 40% year-on-year. “We sell a T-shirt for 6 or 7 yuan, but the one produced in Southeast Asia only costs 2 yuan. We can’t compete with the price. We can only compete with quality and focus on European customers as our main target customers.” The person in charge of the company’s booth said that this year they brought The products that come are made with great efforts in product quality.

Drive product sales with independent design

“In recent years, the domestic demographic dividend has gradually disappeared, which has had a great impact on the garment industry.

If the textile industry wants to continue to develop, it must find its own advantages. “In the view of Deng Wenli, head of Foshan Shunde District Xiehe Garment Co., Ltd., the textile industry in Southeast Asian countries has had a huge impact on enterprises, and enterprises must make strategic adjustments based on the advantages they have accumulated in the past.

At present, Xiehe Clothing is gradually shifting from OEM to ODM. Deng Wenli said that in the past, foreign customers would provide samples for them to copy and produce, but now it is gradually becoming the case that enterprises provide samples to buyers. At this Canton Fair, Xiehe Clothing brought 12 independently designed denim varieties to the exhibition. Yesterday, a buyer from South Africa looked at their booth and selected 9 varieties of products on the spot for them to send samples. If an agreement can be reached, Xiehe Clothing will receive orders for 40,000 pieces worth nearly 2 million yuan.

“This shows that our independent research and development is very accurate. These new products use environmentally friendly washing technology and more comfortable environmentally friendly fabrics. I didn’t expect them to be so popular.” Deng Wenli said that the company began to increase design as early as 2010 The investment intensity was high, but at that time I felt that the results were not very effective. In the past two years, they have found that their self-designed products are increasingly popular. At present, the company has established a dedicated design team to always pay attention to the fashion trends of domestic and foreign clothing. In the first quarter, corporate sales increased by 13% year-on-year.

In addition to strengthening product design, companies have also begun to focus on the domestic market and walk on two legs. Deng Wenli said that the company began to expand into the domestic market last year and entered e-commerce platforms such as Tmall with its own brand, but it is still in its infancy. Zhang Lixia, a foreign trade merchandiser at Foshan Shengqi Garment Co., Ltd., also said that her company plans to increase domestic sales this year and build its own brand through online platforms.

AAA

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