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    How does China's garment manufacturing hit the first shot of industrial transformation?

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    [Abstract]:
    In2016,theCentralEconomicWorkConferenceproposedtodoagoodjobincapacity,inventory,deleveraging,costreduction,andshort-boardtasks.Themeetinglisted“de-capacity”asthetopofthefivemajortasksofstructuralrefor

    In 2016, the Central Economic Work Conference proposed to do a good job in capacity, inventory, deleveraging, cost reduction, and short-board tasks. The meeting listed “de-capacity” as the top of the five major tasks of structural reform in 2016, and clarified the idea of ​​“multiple mergers and acquisitions, less bankruptcy and liquidation”. For the apparel manufacturing industry in 2016, as the first year of the “Thirteenth Five-Year Plan”, how to take the first step in industrial innovation will play a vital role in this fierce market competition.

    China's apparel industry has significant competitive pressure at home and abroad

    China's textile and garment exports continued to decline. Faced with competition from countries such as Vietnam and Cambodia, the advantage of cheap labor is no longer the domestic economy has entered a new normal. Industry competition has intensified, a large number of factories have closed down, some excellent workers are unemployed, and orders are outflowing. The garment industry is a labor-intensive industry. China's population is aging, and the labor force is declining year by year. As a result, labor costs and resource price pressures are significantly higher than most garment producing countries. Enterprises need to bear the dual pressures of insufficient demand and rising costs.

    According to China Customs statistics, the total export value of China's textile and apparel (including textile yarns, fabrics and products, and clothing and accessories) in 2015 was US$283.85 billion, a decrease of approximately 4.9% from the previous year. The implementation of the TPP agreement also has a certain adverse impact on the export of China's textile and garment industry.

    In order to cope with the rising cost pressure and the differences in tax policies between importing countries, more production enterprises choose to set up production bases abroad. The development of domestic garment industry has turned to fine management and technological innovation. The competitive pressure of the industry has risen markedly, and the apparel industry needs to be transformed.

    The garment manufacturing industry is an important civilian production industry and an industry integrating modern technology and fashion culture. Faced with the current multiple challenges, whether it is a production-oriented enterprise or a circulation-oriented enterprise, China's garment manufacturing industry generally faces problems such as rising costs, increasing market competition and shortage of funds. During the “Twelfth Five-Year Plan” period, the garment manufacturing industry experienced a complicated and difficult period. In the early days of this five-year period, the industry continued to maintain a high speed under the inertia of the “Eleventh Five-Year Plan”. However, since 2012, the domestic market consumption growth has been weak, many clothing brands have experienced the market winter, high inventory has caused the store to tide, and sales performance has fallen sharply. During the period of 2015, the textile industry collapsed the most. The unemployment population in this upstream and downstream industry chain is huge. It is expected that there will be a large-scale 1,000-person factory collapse this year. Some experts said that even if China's garment enterprises do not manufacture or produce in the next decade, the existing stocks are enough to meet the needs of the people of the country.

    For a long time, the clothing industry has been chaotic. Clothing is a non-standard product, and the industry has failed to establish a unified management standard. The price war, the failure to sign production contracts, the difficulty of settlement, the boss running, the delivery of goods, etc. are aggravated. The whole industry lacks order and falls into a vicious circle of bad money expelling good money.

    The traditional large factory has a long production cycle. In order to ensure sufficient orders and maintain the stability of the workers, the factory owner will require 3 months or even half a year to place an order, and the order is for 1,000 pieces. In the case of comparable manpower, time and material costs, the average cost of a small order to a single piece of clothing is slightly higher, so the overall profit is lower than the large order. In addition, the source of small orders is unstable. In general, most factories are not willing to accept small orders.

    For brand owners, premature orders cannot accurately grasp the popularity of the season, and sales are not good enough to become inventories, and serious cases lead to difficulties in the flow of funds. Large factories do not accept small orders, and small factories are unstable. If the factory can produce goods in small batches and quickly, the seller can realize the order-on-demand, quickly turn the order to create explosives, reduce inventory pressure and even zero inventory.

    Domestic production capacity and evolution trend

    We can divide domestic production capacity into four categories according to their scale:

    The first category: the super-large factory represented by Shenzhou International.

    These large factories only serve top brands, and their production capacity is also occupied by international brands such as Adidas and Nike. At a time when the domestic demographic dividend has gradually weakened and the textile industry has become more competitive, Shenzhou International has made great progress and has drawn a beautiful “smile curve”: the market value is about 52.742 billion Hong Kong dollars, and the annual sales as of December 31, 2015. It was approximately HK$14,905,918,184, an increase of 13.5% over 2014. The gross profit margin for 2015 was 30.5%, an increase of 1.5 percentage points over the same period last year. Gross profit amount as of December 31, 2015, reached HK$4,539,134,425, an increase of 19.3% over 2014. Net profit as of December 31, 2015, reached 2,777,131,116 Hong Kong dollars, net profit margin of 18.79%, an increase of about 13.9% over 2014.

    The second category: large-scale factories, the number of people is more than 5,000 people.

    Such factories have closed down from 2013 to 2015; the textile giant Zhuangji Group declared bankruptcy from the output value of 3 billion to May 2015; in August 2015, the East China textile predator Baolijia Group declared bankruptcy and the boss owed debts; In the same period, Jinan Guomian No.1 Factory, a once-in-a-lifetime 100-year-old textile factory, also declared bankruptcy; Zhejiang Hongjian Group Co., Ltd., which was once a top 500 private enterprise in China and whose total assets exceeded 2 billion, officially ceased production, and more than 1,000 employees went to the streets to discuss Was in arrears for three months. A large number of clothing owners owe wages to run, and a large number of orders flow to countries with low labor costs such as Southeast Asia. Uniqlo, MUJI, Qingshan Commercial, Lifeng, Tokyo STYLE, and Honeys are all accelerating the transfer of orders to Southeast Asia.

    The third category: medium to large factories of 500 to 5,000 people.

    In April 2015, with more than 2,000 employees, Li Ning and Xtep’s core supplier, Yalun’s clothing, suffered a broken capital chain due to the expansion of the market, and the boss did not know where to go. In May 2015, Shaoxing Printing and Dyeing Co., Ltd., a top 500 private enterprise in China and with a total asset of 1 billion yuan, was bankrupted and had more than 2,000 employees. The Dongguan Houhong garment factory owner, who used to have more than 10,000 employees, ran on the road. The employees went to the streets to ask for two months' salary and economic compensation. The local government dispatched 1500 police to maintain order. The Shaoxing, Shantou, Changle and Dongguan gathered in the textile industry. In other places, small and medium-sized textile and garment enterprises that have failed in bankruptcy are countless.

    After the introduction of the new labor law in 2008, China’s labor costs more than doubled in just five years. Since the textile and garment industry is a typical labor-intensive enterprise, the increase in labor costs has brought unimaginable pressure on business operations. China's spinning industry is backward in equipment and high in operating costs. At present, the low-end market share of less than 50 has been eaten by countries such as Southeast Asia, India and Bangladesh. More than 100 high-end products are dominated by Japan, Germany and Italy. Before and after the attack, the textile and garment industry has long since collapsed.

    The fourth category: small factories, workshops, unemployed workers, etc.

    Due to the collapse of the above-mentioned factories, the scope of such people has been expanding. The idle unemployed workers entered the stage of re-employment and re-employment. Some excellent skilled workers with the ability to take orders began to take orders from the workshops themselves. Such a workshop lacks an effective management system and fabric procurement control, and the quality is difficult to grasp. Most of the small factories are less than 30 people. The facilities are simple and the business and management are all managed by the boss. Once the workers have sick and leave, the overall construction period will be delayed. There is no human and financial investment, no advanced technical equipment, and the process. Roughness, such as color fastness detection, pilling test, such fine control is basically missing. The production process is all done by hand. Once a newcomer is encountered, the quality is difficult to guarantee. Therefore, the productivity of such workshops is extremely unstable and survival has become a problem.

    It can be seen from this that the polarization of the garment industry is serious, and the industrial pattern of stronger and weaker is becoming more and more obvious. The collapse of unlisted medium- and large-scale factories has made orders for top leading enterprises more abundant; on the other hand, the existence of a large number of small factories, workshops, and idle textile workers has yet to be reorganized, upgraded and standardized production, which is a society. The development of the platform provides conditions.

    The evolution of "supplier-supply chain-supply network"

    Most of the factories in the past were closed and isolated. They all met the supply and demand relationship between enterprises. The supply and demand relationship here only stayed in the supply and demand relationship of physical products, monotonous and imperfect, rigid and inflexible. The small-scale production workshop formed by the development of small-scale peasants has gradually developed into a large-scale factory. Its thinking mode tends to be traditional, and in the closed environment of information, repeated operations are always carried out. However, domestic production capacity and demand were relatively balanced during this period, and the competitive pressure between factories was slow, which has not yet created an opportunity for reform and innovation.

    At present, the competition in the global market is becoming more and more fierce, and enterprises are facing the rapidly changing market demand and the pressure to shorten the delivery time, improve the quality, reduce the cost and improve the service. It turns out that scattered companies have realized that to survive in a highly competitive market, they must complement the advantages of other companies to achieve a cooperative alliance, and in a cross-enterprise integrated management model, Enterprises can be unified and coordinated in order to better adapt to environmental changes. In this form, the flow of material, information, and capital occurs in the supply and demand network centered on the target enterprise, thus forming the prototype of the supply chain. At this time, the relationship between supply and demand is not only the supply and demand relationship of physical products between enterprises, but also the relationship between the supply and demand of services, and the supply and demand relationship between R&D and production of products within enterprises or within enterprises. As far as the garment industry is concerned, in the entire production process, such as procurement, cutting, sewing, logistics, etc., through the subdivision, the cooperation relationship of various links in the clothing supply chain has been formed, although the production efficiency has been improved to some extent, There are also limitations, such as regional failure to break, cooperation is limited to relatives and friends or neighbors, the choice of new partners and the cost of running-in, time cost and integrity issues to be resolved.

    In the foreseeable future, the communication channel between supply and demand between enterprises and enterprises will be formed in a network-like manner. Through Internet technology, data for connecting and precipitating national production capacity: factory distribution, good at category, and technical level can be digitized and programmed. Through these data, we can grasp the status of the national factory in real time and accurately match the order. Organize regional production capacity and efficient collaboration through Internet products to increase production efficiency and reduce cost waste. Taking advantage of the Internet, breaking the limits of time and space, making the supply of clothing convenient and efficient, and gradually reducing losses, this is the concept of supply network.

    The value of flexible supply networks is highlighted

    The core competitiveness of Chinese apparel enterprises is precisely the optimal allocation of resources and the optimal integration of the industrial chain. Due to the asymmetric distribution of clothing raw materials, textile technology, production base, talent structure, capital operation, and clothing information, resources are not optimally allocated. It is imperative to optimize the industrial chain.

    Changing the status quo of the industry is not a one-off event. It needs to be reformed from the grassroots production capacity, breaking, reorganizing and upgrading it into a platform-based operation. For example, the domestic Sinbad clothing flexible supply chain platform, its core model is to organize production capacity into a network layout, provide flexible production services, through the use of idle capacity and optimization of production processes, can reach orders as small as 100 to tens of thousands, The average production cycle is 7.4 days.

    Through the upgrading of traditional garment factories, the concept of socialized production was introduced, the labor cost and corporate loan pressure were eliminated, and the return rate of manpower and investment was also improved. In the production, the demand of the clothing market was met, and the brand store was made. It can be used in the shortest possible time to create a batch of domestic “ZARA” enterprises.

    Recently, in order to promote information exchange between suppliers and brands, promote upstream and downstream enterprises to explore new cooperation models, and establish a rapid response industry chain collaborative innovation system, China Garment Association decided to build a "China clothing industry resource platform." In order to bring together the resources of high-quality manufacturers in the industry, the China Garment Association is now carrying out information collection for Chinese garment manufacturers.