Packaging / Advertising & Office

If you want to ask what is the biggest challenge facing the packaging industry today? It is estimated that the vast majority of the answers may be the increase in the price of raw materials. But editor Bao believes that the biggest challenge is the order cliff, and it is the order cliff caused by high inventory in the terminal market.

Let's take a look at a few sets of data:

"Since last year, the inventory of foreign clothing has remained high, which has caused the company's overseas orders to have not been very good." said Ouyang Hong, general manager of Suzhou Jingzhi Textile Technology Co., Ltd., "we mainly do foreign trade business in Europe and the United States. Now The company sent emails to overseas customers, and they basically did not reply, and there were very few orders."

As the world's worst-performing consumer category in 2020, the clothing industry is currently overstocked with a large amount of inventory. McKinsey statistics claim that this figure is as high as 140 to 160 billion euros, which is close to 200 billion US dollars at most. The consulting firm Euromonitor International said that the global apparel market will shrink by about 17% in 2020 and a further 11% contraction in 2021, which means that a quarter of the market will be evaporated in two years.

In the electrical appliance industry, the inventory backlog is also serious. From Gree's 2021H1 financial report, its balance sheet shows that when the revenue scale is similar to the same period in 2018 and 2019, the company's inventory is much higher than in previous years.

Data source: iFind for flush, drawing: poetry and starry sky

How to deal with such a high inventory in the end, Bao Xiaobian is not difficult to infer, many products can only be burned. In fact, burning inventory is not uncommon abroad.

H&M, a world-renowned fashion brand born in Sweden, stagnated sales growth in 2018, and its operating profit fell 62%, the lowest in 10 years. Inventory exceeds 4 billion U.S. dollars, which already accounts for 30% of H&M's sales. The clothes of more than 20 billion RMB cannot be sold. In the face of high inventory pressure, but to maintain the brand style, H&M chooses to burn 12 tons of inventory every year...

H&M has also burned its overstocked commodities weighing more than 15 tons to provide electricity to a small town in Sweden.

The BBC also reported in 2018 that the luxury brand Burberry burned more than 28 million pounds worth of inventory in just one year, with a total value of about 250 million yuan, which is equivalent to more than 20,000 Burberry classic British trench coats. , It burned away like this. In fact, this is not all! In the past six years, Burberry has burned the value of its inventory of goods more than 90 million pounds, or about 800 million yuan!

It is an indisputable fact that the epidemic has led to a decline in global demand, and the decline in residents' income and the start of new infrastructure construction will cause the domestic consumer industry to bear a much greater impact than abroad.

Unfortunately, under the interference of various factors, China's production capacity cannot be stopped at all. The upstream raw materials claim that the demand is strong and the prices will increase. In order to increase the market share, the downstream industries will expand blindly regardless of social efficiency. As a result, a good market has returned to the vicious circle of "disordered, disorganized, and disorganized in the 1980s".

I believe many people in the packaging industry know how serious the high inventory in the terminal industry is.