Exports of Textiles and Garments to the EU Decline in the Second Quarter or the Turning Point

Affected by the current EU economic uncertainty, the growth momentum of more than 10% of China's textile and clothing exports to the EU may turn around in the second quarter.

“Since last year, the export situation to the EU has not been very satisfactory. At the beginning of this year, the European Union’s purchasers tended to bounce back slightly in order to replenish their inventory. However, end-use consumption has still not improved substantially. In the recent period, exports to Europe have once again turned down and outnumbered the financial crisis. Before the year-on-year decline of 40%, and in the just-concluded Canton Fair, almost no EU orders, which can be expected to export in Europe in the next few months will be very bleak." Deputy General Manager Zhou Xiaonan Ramadan Co., Ltd. yesterday accepted The First Financial Daily said in an interview.

Zhou Xiaonan mentioned that exports to the European Union have always been settled in U.S. dollars, so they are not worried about the impact of the depreciation of the euro. However, the depreciation of the euro will affect the purchase orders of the buyers. With the EU market spending still weak, the EU orders will be significantly reduced. .

According to Zhong Haosen, assistant to general manager of Guangdong Textiles Import & Export Co., Ltd., orders in the United States, Canada, and Asia are gradually picking up. Only orders from EU buyers are beginning to decline again, and orders have become small and fragmented. The rising cost of production in China has made it more difficult to deal.

“For example, in European specialty stores, the basic price of some jeans has been sold for 19.9 euros for a long period of time. However, under the current economic downturn, it is impossible to increase prices. With the depreciation of the euro, buyers’ purchasing costs are continuously increasing and profit margins are becoming smaller. Therefore, European customers who have always been relatively generous in price have also started to lower their prices. However, raw materials and labor costs continue to rise, and Chinese manufacturers have little room for profit. Plus, there is no large amount of European orders for customers in the United States, and it is difficult for manufacturers to rely on scale to reduce them. Cost," said Zhong Haosen.

With the slow recovery of the global economy, in the first quarter of this year, the demand of major exporting countries and regions in China's garment industry in Europe, the United States, Japan, and South Korea also rebounded significantly. From January to March of this year, China’s textile and apparel exports totaled 37.903 billion U.S. dollars, an increase of 15.4 percent year-on-year, of which exports to the EU, the largest export market, reached 8.107 billion U.S. dollars, and U.S. exports to the second largest export market reached 5.619 billion U.S. dollars, increasing respectively. It was 16.82% and 21.83%, which together accounted for 36.21% of China's total textile exports. However, it is generally reflected in the industry that as the EU economy fluctuates, China’s exports of textile and apparel to Europe may turn down again in the second or third quarter.

Wang Qiang, president of First Textile Net and a senior analyst in the textile industry, said in an interview with the reporter of the First Financial Daily yesterday that the export base for the EU in the first quarter of last year was relatively low, so there was a good year-on-year growth in the first quarter of this year. China's textile and garment exports to Europe are the most important countries in Germany, France, and other countries. The economy is relatively stable, and the small economies such as Greece, which suffered economic crisis, accounted for a very small share of China's textile and apparel exports. Looking at the situation, China's textile and clothing exports to the EU are relatively normal, but the future may not be optimistic.

Wang Qianjin pointed out that on the one hand, the market is concerned about the spread of the Greek debt crisis, and on the other hand, the impact of the depreciation of the euro during the trade cycle will have a certain lag. It may start from the second or third quarter of this year, the export to the EU will slow down or even once again Negative growth. From the Canton Fair of China's foreign trade barometer, we can see that there are signs of weakness in EU procurement.

At the 107th Canton Fair, which had just concluded on the 5th of this month, 203,996 overseas buyers from 212 countries and regions attended the meeting, an increase of 8.4% over the autumn fair last year. However, EU buyers declined by 15.2% compared with last year's Autumn Fair, Japan decreased by 4.6%, and US buyers increased by 3.8%. Emerging market buyers have obviously increased. The number of purchasers from Asia, the Americas, Africa, and Oceania has kept growing.

With the weakening of the European Union economy and the depreciation of the Euro, some Chinese companies are ready to purchase clothing and shoes from Europe. According to Ma Xuezheng, the managing director of TPG, it is not necessarily the best time to dip the money overseas. It still depends on whether Chinese companies are ready to go out and integrate, or whether they have certain risks.