Apparel / Textiles & Accessories

In the first half of this year, my country's clothing exports showed a rapid growth trend. According to China Customs statistics, in the first half of the year, my country’s clothing (including clothing accessories, the same below) exported US$74.11 billion, a year-on-year increase of 40.9% and an increase of 13.1% over the same period in 2019. Since the second quarter, the growth of apparel exports has slowed down month by month.

01. Interpretation: my country's apparel export situation in the first half of the year

#Knitted garments export growth rate is much higher than that of woven garments

In the first half of the year, my country's knitted garment exports increased by 59%, which was significantly higher than the 17.7% growth rate of woven garments. The main reason for the small increase in exports of woven garments was that the export growth of chemical fiber woven garments was only 9.4%, which was much lower than the average growth rate. Since medical protective clothing is classified as chemical fiber woven garments, the export base of protective clothing was relatively large last year. In the first half of this year, exports fell sharply year-on-year, resulting in a slow growth in the overall export of woven garments.

In addition, the export of higher-priced wool and silk woven garments declined, and the increase in wool leather garments was only 4%. This shows that the purchasing power of high-priced garments in foreign consumer markets is still weak.

#Anti-epidemic supplies export growth has gradually slowed down

In the first half of the year, the export of medical protective clothing was US$2.1 billion, a sharp drop of 64.7% year-on-year and an increase of 136% over the same period in 2019. The export value of protective clothing in June fell by as much as 90.6%, almost back to the value of exports before the epidemic. The export of medical gloves still maintained rapid growth. The cumulative export value in the first half of the year was US$6.28 billion, a year-on-year increase of 241.8% and a year-on-year increase of 590%. The export growth rate of medical gloves showed a trend of slowing down month by month, and the growth rate in June was only 18.8%.

With the decline in foreign demand for anti-epidemic products, coupled with the high export prices last year and a large base, the growth of the export of anti-epidemic products in the first half of this year slowed down, and its role in stimulating clothing exports weakened. The anti-epidemic products included in clothing exports are mainly medical protective clothing and medical gloves. In the first half of the year, the total export of medical protective clothing and gloves was 8.38 billion US dollars, accounting for 11.3% of the total export of clothing. In 2020, the export of medical protective clothing and gloves accounted for 18.7%. It is expected that the proportion of protective clothing and gloves in clothing exports will further shrink in the second half of the year.

If the factor of anti-epidemic materials is excluded, my country's conventional clothing exports in the first half of the year were US$65.73 billion, an increase of 46.7% year-on-year, and an increase of only 3.2% year-on-year.

#The United States and the "One Belt One Road" market lead, far exceeding the level before the epidemic

Compared with the same period last year, in the first half of the year, China's apparel exports to major global markets other than Hong Kong, China and Brazil increased at a relatively high rate. Exports to the United States were US$17.49 billion, a sharp increase of 65.2%, the highest level in the same period in history; Exports to countries along the Belt and Road were US$17.08 billion, an increase of 43.9%; exports to the EU were US$13.91 billion, a year-on-year increase of 30.4%; exports to Japan were US$6.94 billion, an increase of 14.2%; exports to ASEAN, the Middle East, Africa and Latin American countries increased by 43% respectively %, 39.3%, 41.6% and 44%.

Compared with the same period in 2019, in the first half of the year, exports of clothing to the United States, the European Union, and ASEAN increased by 15.4%, 11.5%, and 40.7% respectively; exports to South Korea, Canada, Australia and other countries all increased by close to or more than 30%; exports to Japan were basically the same . Exports to Hong Kong, Russia, and Brazil have not yet recovered to their pre-epidemic scale, falling by 49.1%, 17.6%, and 31.3%, respectively.

#Leisure sports products maintain strong growth, fashion products return

From the perspective of clothing categories, consumers' lifestyle and social life are returning, but the new crown epidemic is also having a fundamental impact on people's clothing habits. In the first half of the year, the export of T-shirts, sweaters, pants and other major commodities increased by more than 40%, underwear, pajamas, casual suits, etc. increased by more than 60%, and tops, dresses and other products with strong fashion relevance also increased by more than 50% . In contrast, the growth rate of commuter-related product shirts was slightly slower, with an increase of 27.2%. The export of suits and neckties decreased by 8.5% and 25% year-on-year respectively.

#Guangdong grows strongly, Hebei, Shandong, Fujian, etc. are growing rapidly

In the first half of the year, Guangdong surpassed Zhejiang to rank first among export provinces and cities, with total clothing exports reaching 15.05 billion U.S. dollars, an increase of 73.2% year-on-year, contributing 30% of the country’s export growth; Zhejiang and Jiangsu exported 13.26 billion U.S. dollars and 10.4 billion U.S. dollars, respectively. , Increased by 25.1% and 22.9%, respectively, lower than the national average growth rate; Shandong and Fujian exported 7.88 billion U.S. dollars and 7.53 billion U.S. dollars, respectively, an increase of 52.6% and 54.9%, which exceeded the national average growth rate; Hebei, Xinjiang, Jiangxi, etc. The export growth rate of the western region exceeded 80%.

Compared with the same period in 2019, garment exports in Guangdong, Shandong and Fujian increased by 17.4%, 41.2% and 22.6% respectively. Zhejiang is basically flat, while Jiangsu has fallen by 5%, and has not yet returned to the export scale of the same period in 2019.

02. Outlook: Facing multiple complex factors in the second half of the year

In the first half of this year, with the recovery of international market demand, coupled with the return of orders caused by epidemics in other supplier countries and the turmoil of the situation, my country's clothing exports have shown a good recovery trend. Looking forward to the second half of the year, as the US$2 trillion cash subsidy effect fades, the three major obstacles of the superimposed exchange rate, freight and raw material prices, there is still uncertainty about the growth trend of my country's clothing exports in the second half of the year.

#US retail market is strong

From the perspective of sales in the US market, in the first five months, sales of clothing and apparel stores increased by more than 70% year-on-year, and increased by 5% compared with the same period in 2019. The sales of general stores (including department stores and large supermarkets, etc.) in the first five months increased by 11% year-on-year and 13.5% year-on-year, showing a good growth momentum. In the first five months, online retail sales in the U.S. grew by approximately 22% year-on-year and 42% year-on-year, showing rapid growth.

#EU market recovery is weak

The recovery of the EU retail market is lower than that of the US market. From January to April this year, the EU textile, apparel and footwear retail sales increased month by month. Due to the impact of the epidemic in the same period last year, the base is low, and it is difficult to show the current recovery of the retail market. In Europe, the number of new cases rose by 10% in the last week of June. The new crown Delta variant virus is spreading rapidly in Europe. The WHO warned that Europe may welcome a wave of outbreak risks. The EU retail market is expected to continue to be sluggish.

#Japanese market is still sluggish

The Japanese government implemented the third epidemic emergency from April to June this year. Large commercial facilities were closed, and passenger flow and purchasing power slowed down, which had a negative impact on clothing retail in the first half of the year. In July, many places in Japan entered the fourth state of emergency, which will undoubtedly increase the risk of economic downturn.

In the first five months, the cumulative retail sales of textiles and apparel in Japan remained basically the same year-on-year, still maintaining the sluggish state when the epidemic broke out last year. Compared with 2019, the cumulative retail sales from January to May fell by as much as 25%, showing no obvious signs of recovery.

#The tightening of the epidemic situation in surrounding supplier countries has caused some orders to return

Recently, the epidemic broke out in many Southeast Asian countries again, and many factories in Vietnam, Cambodia and other countries were forced to suspend operations or downsize, causing some orders to return to the country.

In the first five months of this year, China’s share of U.S. apparel imports increased by 5.1 percentage points year-on-year, while Vietnam, Bangladesh, and Indonesia decreased by 2.6, 1.5, and 1.7 percentage points, respectively. China's share of EU apparel imports increased by 2% year-on-year, while Bangladesh decreased by 3%.

#The growth rate of clothing exports will slow down in the second half of the year

The growth rate of apparel exports in the second half of the year is expected to be significantly lower than that of the first half.

First, the export base was relatively large in the second half of last year;

Second, the US fiscal stimulus policy is gradually weakening, and its effect on consumption is limited, and the recovery of markets such as the European Union and Japan is weak;

Third, the main international market procurement trend is to gradually reduce the proportion of procurement in China and increase procurement from neighboring countries. For example, in 2020, Inditex reduced the number of Chinese suppliers for the first time, a year-on-year decrease of 13.6%, and paid more attention to nearby procurement and production, and the number of Turkish suppliers increased by 6.4%. In the first four months of this year, Turkey and Morocco's market share in the EU increased by 1.2 and 0.4 percentage points, respectively. Central American countries such as Honduras also grew steadily in the United States. It should be noted that the current return of orders is only temporary, and how long they can stay depends mainly on the degree of resumption of work and production in neighboring countries.

Fourth, foreign demand for anti-epidemic products has gradually declined, and prices have also gradually fallen, which will have less and less stimulating effects on clothing exports.

03. The "Fourteenth Five-Year Plan for the Textile Industry" was officially released

The China National Textile and Apparel Council recently officially released the "Fourteenth Five-Year Plan for the Textile Industry". The outline clarifies the positioning of industries in the entire national economy during the "14th Five-Year Plan" period, namely: pillar industries for national economic and social development, basic industries for solving people's livelihood and beautifying life, and advantageous industries for international cooperation and integrated development; 2035 is proposed. The long-term goal of the industry in 2016 is that when my country basically realizes a modern socialist country in 2035, my country's textile industry will become the main driver of the world's textile technology, an important leader in global fashion, and a powerful promoter of sustainable development.

With this as a guide, the outline gives the key directions for the development of the industry for a period of time in the future, that is, strengthening the strategic support capacity for technological innovation; building a high-quality textile manufacturing system; smoothing the industrial cycle with domestic demand as the strategic base; improving the level and level of international development ; Promote industry fashion development and brand building; promote social responsibility construction and sustainable development; optimize domestic layout to enhance development coordination; build a safe development system for the textile industry.

In addition, the outline puts forward industry development goals, 8 key tasks and 5 key projects for the development of the "14th Five-Year Plan" period. The "Fourteenth Five-Year" Development Outline of the textile industry has pointed out the development direction for the development of the industry, clarified the development focus, guided the industry to accelerate the transformation and upgrading, and achieved high-quality development of the entire industry chain, which is of great significance.

04, risk warning

#Vietnam textile and apparel industry faces the risks of delivery delays and loss of orders

According to a report from Vietnam’s “Investment News” on August 4, the chairman of the Vietnam Textile and Apparel Association, Wu Dejiang, said that the Vietnamese textile and garment industry is facing severe challenges due to the severe impact of the new crown epidemic. In the southern region where the epidemic is most severe, a large number of textile and apparel companies have ceased production. Many companies have implemented the "three-in-place" (on-site production, on-site dining, and on-site accommodation) model for a period of time, but they cannot stick to it. The reason is that the cost of maintaining production is too high, the production efficiency is low, and workers have to arrange food and lodging. , The pressure was so great that many factories were forced to stop production. Some companies' 19 factories were forced to suspend production completely due to their inability to implement the "three locales".

Wu Dejiang said that textile and apparel companies in the southern region generally face delivery pressure. Clothing production belongs to the fashion industry. If delivery cannot be made on time, clothing design will lose its fashion value. At present, the demand from major clothing importing countries such as the United States and Europe is picking up rapidly. Orders have increased by 16-17% year-on-year, and some varieties have increased by 30%. However, Vietnamese companies cannot deliver goods on time and face default penalties and the risk of dishonesty. Lost orders. Vietnam accounts for 30-40% of global exports of brands such as Nike and Adidas, and is currently facing the risk of losing share.

According to the Ministry of Industry and Trade of Vietnam, a large number of enterprises in southern Vietnam have suspended work and production, which has caused a slowdown in industrial production in relevant provinces and cities. In July, the industrial production index of Ho Chi Minh City fell 19.4% year-on-year, Long An province fell 14.6%, and Ca Mau province fell 13.7%. While enterprises in the south are facing severe difficulties, the epidemic in the northern region has eased. Enterprises in Beijiang and Beining are resuming production, but the highest rate of worker return is only 80%. Since the fourth wave of the epidemic broke out, many workers have returned to their hometowns to avoid the epidemic, and it is unlikely that they will return to the factory in the future. The Vietnam Textile and Apparel Association believes that even if the epidemic is brought under control and the provinces and cities are reopened in the future, the return rate of workers is expected to be only 60-65%. When the supply chain is broken and Vietnam is no longer a stable market, customers will transfer orders to other countries, which will seriously affect the medium and long-term development of the textile and apparel industry.

#India and East Asia are severely affected by the epidemic, and the textile industry has been hit hard

Affected by the blockade measures during the epidemic, the exports of the Indian apparel industry have shrunk severely. In 2020, the exports of the Indian apparel industry will decrease by 24%. In the new round of the epidemic, related Indian companies have lost a large number of garment export contracts due to the inability of workers to arrive at their posts. In the clothing cities of Delhi and Bangalore, the labor absenteeism rate in the clothing industry is as high as 50%. Industry insiders said that normally this time of year is the peak time for placing orders, but buyers from all walks of life are now more cautious. At present, the entire Indian textile industry is in a state of rapid decline.

It is not only India that is affected by the epidemic, but other Asian countries are also showing signs of heating up. Asian countries such as Pakistan, Cambodia, and Vietnam are also suffering from the impact of the new crown epidemic.

#2021 The second quarter of 2021 reported losses are concentrated in traditional textile export markets such as the United States, Hong Kong, Bangladesh, etc.

In the second quarter of 2021, under China Credit Insurance's short-term export credit insurance, the amount of textiles insured increased by 16% year-on-year, and the risk indicators all dropped significantly. The loss is still concentrated in traditional textile export markets such as the United States, Hong Kong, and Bangladesh.

In the second quarter, there were four large-amount compensation cases in the textile industry, three of which were late-stage compensation for large-amount reporting cases under the epidemic in 2020, and two related to terminal retail that went bankrupt under the impact of the epidemic, and reported to those with poor financial foundation and credit quality. Intermediate wholesalers conduct related. The other is suspected to involve buyer fraud. From July to November 2020, the US buyer concentrated on inquiries from more than ten insureds in 7 provinces, and immediately disbanded the company after defrauding the goods. The case had obvious buyer fraud characteristics.

In terms of risk, textile machinery underwriting scale is limited, which is greatly affected by individual factors, leading to higher underwriting risks; garments and textile products downstream of the industrial chain are affected by Sino-US trade frictions, European and American retailers’ bankruptcies, and new crown epidemics. The impact of terminal market fluctuations such as tides has a high level of risk; while the overall risk level in the middle and upper reaches of the industrial chain is controllable. On the whole, the risk indicators of all links in the industrial chain have dropped significantly year-on-year.

Recently, some export companies in Jiangsu, Zhejiang and Shanghai have reported that clothing (including cotton clothing and clothing that does not contain cotton) and home textile products exported to the United States have been detained by the U.S. Customs and Border Protection, requesting evidence to prove the export The product has nothing to do with Xinjiang cotton, and the export company has not been released after providing the corresponding evidence, resulting in the long-term detention of the goods in the port. In response to such situations, it is recommended that companies exporting to the US market communicate with the buyer in advance and make a plan to avoid unnecessary losses.