It’s the middle of the year again. Compared with previous years, this year’s foreign trade situation is extremely severe. Quiet changes in the consumption patterns of major economies and fluctuations in the exchange rates of several major currencies are the main factors affecting export data, affecting the nerves of textile foreign trade companies. Starting from this issue, the International Trade Edition will take stock of the industry’s import and export situation in the first half of the year from three different perspectives: “observing the general trend”, “reading policies” and “asking companies”.
Although since the end of last year, economists and experts have repeatedly emphasized that China’s economy, including exports, will enter a new normal of low growth and stable growth, after the national textile and apparel import and export trade data for the first quarter were released, people Still feeling unexpected, even a little panicked.
In the first month of this year, my country’s textile and apparel exports fell sharply by 10.8% year-on-year, exceeding the national foreign trade average decline of 3.3%. Subsequently, the data in February sharply improved, but from a month-on-month perspective, export trade still fell by 15%. In March, the textile and apparel export trade volume was US$12.56 billion, the lowest value in the same period in the past five years, a year-on-year decrease of 32.6%. Experts reassure that one or two months of data cannot explain anything, especially around the Spring Festival in January and March, unstable situations occur from time to time, and such fluctuations cannot represent the norm. People ushered in the data for April and May with a skeptical attitude. Regrettably, like the current stock market, my country’s textile and apparel exports are still on a downward trajectory.
If analyzed carefully, such changes are reasonable. As a major exporter of textiles and apparel in the world, China’s trade volume must continue to fluctuate with changes in the world economy. Looking at the world, the world structure is evolving. The deterioration of relations between Russia, the United States and Europe has broken the balance of large economies; the debt crisis in Greece once dragged down the pace of the entire European economic recovery; and the continuous growth of costs and rapid economic development, So that China can no longer play the role of a single world processing factory, but assume greater responsibilities.
Under this situation, Chinese businessmen went from constantly asking why and what to do to finally recognizing and getting used to the fact that only falling but not rising is the norm, and actively looking for ways to make up for losses. Their mentality has undergone tremendous changes with the fluctuations in export trade. Variety. Subsequently, news came out that the decline in export trade in May was narrower than before, and people seemed to have regained some hope for the situation in the second half of the year.
Export data: one red and five green
In January, textile and clothing exports fell sharply by 10.8% year-on-year, exceeding the national average decline of 3.3% in foreign trade. Among them, textile exports were US$9.72 billion, down 7.8%, and clothing exports were US$15.82 billion, down 12.5%. The decline in clothing exports exceeded that of textiles. In February, the textile and apparel trade volume was US$23.11 billion, an increase of 82.4%, of which exports were US$21.68 billion, an increase of 99.3%. From January to February, the cumulative trade volume of textiles and clothing was US$50.82 billion, an increase of 17%, of which exports were US$47.22 billion, an increase of 19.3%. In February, textile and apparel exports surged, nearly doubling in rate, in sharp contrast to the weak start in January. In March, the textile and apparel trade volume was US$15.01 billion, a year-on-year decrease of 28.3%, of which exports were US$12.56 billion, a decrease of 32.6%. From January to March, the cumulative trade volume of textiles and apparel was US$65.82 billion, an increase of 2.3%, of which exports were US$59.78 billion, an increase of 2.8%, which was far behind the expectations at the beginning of the year. Exports in March were the lowest in the same period in the past five years. At the same time, the proportion of textile and clothing exports in the country’s total export value of goods trade fell below 10% for the first time that month, to 8.7%. In April, the textile and apparel trade volume was US$22.13 billion, down 15.2% year-on-year, of which exports were US$19.88 billion, down 16.3%. From January to April, the cumulative trade volume of textiles and clothing was US$87.95 billion, down 2.8%, of which exports were US$79.66 billion, down 2.7%. The decline in April was smaller than that in March, but still reached double digits, resulting in a negative growth of 2.7% in cumulative exports in the first four months. In addition, both imports and exports fell in the same month for the first time in the year. In May, my country’s textile and apparel trade volume was US$25.44 billion, a year-on-year decrease of 6.4%, of which exports were US$23.39 billion, a year-on-year decrease of 6.3%. The decline continued to narrow to less than 10% compared with April. From January to May, my country’s cumulative trade volume of textiles and apparel was US$113.39 billion, a year-on-year decrease of 3.6%, of which exports were US$103.05 billion, a decrease of 3.6%. The slowdown in export trade decline in May was largely due to the improvement of the U.S. market.
The world economy has changed a lot
United States
Judging from the situation in the first half of the year, the U.S. consumer market presents a “dumbbell-shaped” characteristic. Industry insiders are generally optimistic about its luxury goods market and low-end consumer fields, but have reservations about the mid-range market. Credit Suisse statistics show that the United States will remain the richest country in the world, and the country’s total wealth will exceed $114 trillion by 2019. The country’s strong luxury consumption power has attracted the attention of the global luxury goods industry. Norsa, CEO of Italian luxury brand Ferragamo, said that since 2014, the United States has been at the top of the brand’s investment plan. Similarly, Louis Vuitton Group also stated that its sales highlight in the past two years has been in the United States. Its sales in the United States in the first quarter of this year increased by 8% compared with the same period last year.
On the other hand, many brands in the United States have gone bankrupt due to various operating pressures. For example, Jones New York, a long-established women’s clothing brand in the United States, announced the closure of 127 retail stores, and WetSeal, a teenage women’s clothing and accessories brand, announced that it will close 127 retail stores.filed for bankruptcy. In addition, Macy’s, the most popular store among the American middle class, announced the establishment of a discount store, Macy’s Backstage, at the beginning of this year. The group said that providing consumers with lower-priced and more reasonable products is the best reform direction for the U.S. department store industry. In fact, Macy’s is not the only American retailer to adjust its business. Its competitors, Nordstrom and Saks Inc., have all launched discount stores. TheNPDGroup Inc., an American research organization, stated that from February 2014 to February 2015, the sales performance of low-price retailers in the US market increased by 2.5%, with sales of US$23.2 billion.
Europe
In the first half of this year, the European market did not improve significantly compared with last year. It continued to be weak and the overall economic recovery was slow, which directly led to a decrease in orders from European importers. At the same time, factors such as the sluggish European economy and high unemployment rate have led to a lack of confidence in the market within the industry.
Taking the United Kingdom as an example, according to statistics from PricewaterhouseCoopers, the number of stores closed on British high streets last year was 5,839, and the number of newly opened stores was 4,852. Among them, there were very few newly opened clothing brand retail stores. Due to the poor sales performance of most stores, the speed of store opening is not as fast as the speed of closure, making the British high street look particularly deserted.
Although reports indicate that consumer confidence in the country has recovered, the increase in the number of net store sales reflects a slight recovery in the economy and a slight recovery in consumer confidence, which has not had any effect on easing the depressed retail situation. However, it is worth noting that as consumers prefer low-price consumption, the strength of British online shopping continues to grow.
The performance of other countries is not better than that of the UK. According to data released by the Central Statistics Office of the Netherlands, another European country, the turnover of clothing and textile stores in the country fell by 2.2% and 8.8% respectively in the first quarter of this year.
Africa
This year, AGOA’s African Growth and Opportunity Act has once again made Africa the focus of the textile and apparel industry. In mid-April, several U.S. trade-related bills, such as AGOA (African Growth and Opportunity Act), were sent to the House of Representatives and the Senate for review. This news shocked many U.S. clothing, shoe and hat retailers, as well as African export companies. , because the textile and apparel industry has benefited the most from AGOA, and the advancement of these trade agendas has finally given them hope.
Subsequently, the U.S. House of Representatives passed the extension of the African Growth and Opportunity Act (AGOA) by a vote of 397 to 32. The bill will be extended for 10 years until 2025, and will also retroactively extend the “Generalized Preferential Tariff System (GSP)” and the “Haitian Trade Preference Program.”
A survey of the apparel industry conducted by consulting firm McKinsey showed that the world’s largest apparel retailers have expressed great interest in sourcing from sub-Saharan Africa. According to the survey, 40% of buyers believe that sub-Saharan Africa will play an increasingly important role in the apparel industry in the next five years, while this figure was only 24% in 2013.
Not only European and American buyers, but also the Chinese textile industry are paying attention to this hot land. At the beginning of this year, the famous economist Lin Yifu pointed out that the most suitable location for the relocation of labor-intensive industries should be Africa. In April, a Chinese textile delegation visited Ethiopia for inspection. At that time, some entrepreneurs expressed that they were considering moving their industries here.
Exchange rates fluctuate constantly
Euro
Exchange rate fluctuations are an important factor affecting import and export trade in the first half of the year. In late January, the euro-renminbi exchange rate fell below the 7.0 mark. Afterwards, although it rebounded slightly, it has been hovering around 7.0. As of press time, 1 euro was worth 6.8698 yuan. In fact, the euro has continued to depreciate since May last year, with a decline of nearly 20% so far. This has led to continued pressure on my country’s textile and apparel exports to Europe.
Ruble
Since the end of last year, the Russian economy has continued to weaken. As of April, the sharp depreciation of the ruble exchange rate has triggered a series of chain reactions, especially having a great impact on my country’s clothing export trade. Since China and Russia mainly settle transactions in US dollars during the trade process, under the sharp depreciation of the ruble, even if Chinese suppliers or sellers do not increase the US dollar price, Russian buyers or buyers still need to spend more rubles to purchase the same item. . In the first half of the year, both large garment companies and individual traders exporting to Russia were full of worries about the trade prospects. Taking the fur industry as an example, the order volume has dropped sharply. From April to May this year, the number of Russian businessmen coming to Beijing Yabao Road for purchasing dropped by at least 2/3.
However, in April, the ruble grew strongly, and the dollar-ruble exchange rate fell below 51 rubles to the dollar for the first time since December 2014. Just as everyone is speculating that the most difficult period for the Russian economy has passed? After May, the ruble exchange rate fell again. As of press time, 1 US dollar was exchanged for 57.3950 rubles.
Japanese Yen
On May 27, the exchange rate of 100 yen against the yuan fell below 5 for the first time. On June 2, the central parity rate of 100 yen was equivalent to approximately 4.9196 yuan, setting a historical low since August 31, 1994.
Not only against the RMB, the Japanese yen is also depreciating against other currencies around the world. On June 2, the exchange rate of the US dollar against the Japanese yen exceeded 125, and the exchange rate of the Japanese yen against the US dollar hit a new low since 2002. However, unlike the above-mentioned countries, the Japanese government is willing to let the yen depreciate in the hope of combating deflation and driving export growth to stimulate economic development. According to media reports, Japanese industry insiders said that the depreciation of the yen will prompt more companies to move their production bases back to Japan, and the increase in localized production will help promote domestic local economic development.
Indeed, in the field of textiles and apparel, the depreciation of the yen has had a considerable impact on the export trade of countries such as China and South Korea. In addition, due to the depreciation of the yen, South Korea’s tourism industry suffered a severe blow, which had a considerable impact on the country’s overall economy in the first half of the year.
��Coping with deflation and driving export growth to drive economic development. According to media reports, Japanese industry insiders said that the depreciation of the yen will prompt more companies to move their production bases back to Japan, and the increase in localized production will help promote domestic local economic development.
Indeed, in the field of textiles and apparel, the depreciation of the yen has had a considerable impact on the export trade of countries such as China and South Korea. In addition, due to the depreciation of the yen, South Korea’s tourism industry suffered a severe blow, which had a considerable impact on the country’s overall economy in the first half of the year.