Composite Fabric,bonded fabric,Lamination Fabric Lamination Fabric News Abandon “low-price ordering” and rely on innovation to find entry points for transformation

Abandon “low-price ordering” and rely on innovation to find entry points for transformation



Experts point out that China’s supplier base is huge and not united. In the price game with international buyers, they are easily defeated individually and are always in a weak position. To this end, Chinese co…

Experts point out that China’s supplier base is huge and not united. In the price game with international buyers, they are easily defeated individually and are always in a weak position. To this end, Chinese companies should unite and improve their competitiveness and take the say in price into their own hands.
“Every order at any price is filled by someone!” Recently, Lin Lili, who specializes in exporting foreign trade clothing to Japan, complained, reflecting the current survival situation of foreign trade clothing companies.
With labor costs rising, factories relocating to Southeast Asia, and European and American buyers constantly lowering procurement costs in China, it is no longer news that some Chinese textile foreign trade companies have no business to do. What follows is a wave of “bankruptcies” and “shutdowns,” making it imperative to upgrade the industrial structure. However, the upgrade process is not easy, which has also led some companies to risk their lives with low-profit orders. From the perspective of the industry, this is something more terrifying than the “wave of bankruptcies.”
“In order to maintain customers and ensure order volume, some manufacturers do not hesitate to take orders in a ‘guaranteed’ manner, and many export companies have fallen into a price red ocean. This has plunged the entire industry into a vicious cycle and lost its vitality.” An analyst said with concern explain.
Buying orders based on price is a common practice
It is reported that the habit of export enterprises to “match orders based on price” is also attributed to the initial ordering model of European and American merchants. “Foreign buyers are very smart. For example, my Japanese customers will cooperate with a single factory when placing orders. If the cooperation goes well, they will continue to increase the size of the order. As a manufacturing company, in order to retain such a large customer , companies will continue to expand production capacity to meet their production needs. But the problem is that once domestic production companies expand their scale to a certain extent and become highly dependent on large orders, purchasers will often ask for price cuts.” Lin Lily said that at this time, if prices are not lowered, the company will face the risk of losing major customers, and its expanded production capacity will become a liability for the company. “Foreign customers are well aware of this, so they often ask for price reductions after cooperating for a period of time. We are the passive party.”
Obviously, if the company cannot find new customers in a short period of time, it can only continue cooperation with old customers on the basis of low-price orders. “To put it simply, if the orders given by foreign companies are not fulfilled, the production capacity can only be idle. Therefore, companies must either accept low-price orders or shelve part of the production capacity.” Lin Lili said helplessly.
Normally, international buyers look for suitable suppliers based on cost and quality planning. As China’s demographic dividend has gradually disappeared in recent years and international sales have been sluggish, international buyers have become increasingly strict on cost control. Some Chinese manufacturers receive price reduction indicators every year. Once such a request is accepted, the damage to the company will be huge.
A survey by the international consulting firm McKinsey showed that through an analysis of the S&P 1,000 large companies in the United States, each percentage point reduction in price resulted in a decrease in profit margins of between 7.1% and 8.1%. Therefore, unless a company’s cost structure has a significant advantage over its competitors, cutting prices is not a good idea.
Experts point out that China’s supplier base is huge and not united. In the price game with international buyers, they are easily defeated one by one and are always in a weak position. To this end, China’s exporters should unite and take a longer-term view. The most important point is to improve the competitiveness of the company itself and take the say in price into its own hands, so as not to weaken the overall interests of the industry.
The key is innovation
Of course, in order to have a say in price, the transformation and upgrading of enterprises is the key. Only by improving their own technology and changing the form of rough machining workshops can processing companies find a way to survive.
According to industry insiders, whether it is traditional or emerging markets, although some orders are now transferred to Southeast Asia, international buyers’ dependence on the Chinese market has not changed. In the price war game, Chinese export companies can fully exploit their own advantages and obtain more benefits by improving product research and development capabilities.
“If China only hovers in the world’s ‘clothing manufacturing field’ and ‘clothing consuming country’ position, and cannot create a national clothing brand that rides the world, then the revival of China’s clothing industry can only become a good vision.” Member of the National Committee of the Chinese People’s Political Consultative Conference, Jin Jianhua, general manager of Shanghai Peromon Suit Company, said that the key to building a brand is innovation.
Jin Jianhua said that since the reform and opening up more than 30 years ago, China’s textile and garment enterprises have experienced a process of starting from scratch and from existing to many, and some enterprises have also created a number of successful brands. However, overall, China is only a major clothing manufacturing country in the entire international market, and is still in a catching-up and subordinate position in international competition.
Jin Jianhua believes that in addition to rising costs caused by the slowdown in global economic development, the deep-seated problems facing China’s garment industry include insufficient innovation.
“Design is the core value of clothing.” Jin Jianhua said that in China’s clothing industry, most companies are still stuck in the traditional model, and design is still in the backward stage of paper lofting.It takes a lot of time and trial production costs are high, resulting in a long new product development cycle. In developed countries in the apparel industry, this cycle lasts an average of two weeks, with the fastest reaching 4 days in the United States, and an average of 10 weeks in China. The gap is very obvious.
“The important prerequisite for creating a brand requires a group of designers with strong brand awareness and advanced concepts, as well as enthusiasm and creativity. They can integrate their individual styles into products to make them culturally identifiable and win over consumers.” Jin Jianhua said, There are not many people in China who can truly be called fashion designers, and designers with unique personalities and the ability to grasp the cultural psychology of consumers at home and abroad need to be cultivated.
Looking for entry points for transformation
In fact, transformation is also a consensus in the industry, and some clothing companies have achieved certain results in this regard. Statistics show that as of October 7, 48 listed companies in the textile and apparel industry have released performance forecasts for the third quarter of 2015. Among them, 11 listed companies have forecast increases; 14 listed companies have slightly increased; 4 listed companies have continued to Profitable; 4 listed companies turned losses. The performance improvement of some companies is due to the successful business transformation.
In addition to business transformation, the transformation of marketing methods is also a new way out for garment foreign trade companies.
Analysts pointed out that the clothing industry should speed up the comprehensive promotion of the “Internet +” entire industry chain. The comprehensive promotion of the entire industry chain here not only refers to the links of research and development, design, production and processing, communication and sales, but also includes the construction of new infrastructure, new production factors, and a new division of labor system. In particular, changes in the organizational systems of industrial enterprises include the cloudification of organizational structures, the opening of organizational boundaries, and the miniaturization of organizational scale. All in all, clothing companies must determine the entry point for implementing “Internet +” based on their own characteristics.
Lin Lili revealed that she is now thinking about an online customization platform. Previously, her factory had received orders from many top-tier brands, and she had a lot of experience in materials and processes. She planned to learn some of the brand’s online customization methods to create a shoe where the customers could choose the fabrics, heels and other details. Finally, a customized platform is realized. “Through the launch of WeChat and website platforms, integrating customization with our offline factories is my hope for the future development of the company.”

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