Cotton industry from the perspective of the entire industry chain

Textile covers the entire industrial chain of F2F (fiber to fashion). When thinking about the future changes in the cotton industry chain, if it is separated from the perspective of the downstream companies and ignores the sound from the downstream, then the conclusions drawn will be biased.

In order to facilitate the upstream and downstream exchanges in the cotton textile industry chain, an open, cooperative, win-win, and resource-sharing platform for marketers in the cotton textile industry was established. The textile company set up by the China Cotton Information Network was formally established in Shanghai on October 22. At the Sharon Conference held at the Textiles Corporation, guests from textiles, cotton textiles, clothing industry and SGS and other textile quality inspection authorities analyzed the operation of China's textile industry, the data analysis of the national public inspection and the tracking of new cotton quality surveys, and textile companies. The exchange of raw materials procurement strategy and cost control, how to use new media to do marketing, the new profit model of the imported yarn market, the downstream industry operation situation and the purchase intention, the quality requirements for cotton textile product export and the response plan were exchanged. The direct dialogue breaks the gap between upstream and downstream companies, allowing participants to understand the future development trend of cotton and various fiber materials from the perspective of the overall industry chain. Here, we extract the essentials from the guest speeches in order to readers.

Zhejiang Sunma Garments Co., Ltd. Production Director Jiang Xia Cotton price fluctuations have little effect on garment companies. As a clothing brand business, we are most concerned about the customer's feelings about the product. We recently conducted a market research survey. The results of the survey showed that consumers now put clothing comfort first, and the surprising thing is that the two options of price and fashion rank in the penultimate and penultimate positions. This result has very important guiding significance for us in adjusting the product structure.

If consumers choose comfort as their first choice, brand clothing companies will certainly consider this factor when choosing product fabrics. As we all know, cotton products are more comfortable than chemical fiber products. Therefore, our products have increased cotton content since last year. From the perspective of sales, the best seller is the basic model. The original denim fabric will be made of polyester-cotton fabrics, and the ratio may be 70% polyester 30% cotton, but now basically no more than 10% polyester, and more comfort will decline. Last year we purchased more than 2 million meters of chiffon fabrics, but this year it may be only about 450,000 meters. According to the feedback from some fabric manufacturers, orders for cotton products will be greatly improved in the past year or two.

In recent years, the change in cotton policy has been one of the serious problems that I have realized is that the accident rate of cotton fabrics is much higher. Fabric suppliers stated that there is no way to ensure that the quality of the yarns supplied by raw material suppliers is stable in each batch, which will lead to fluctuations in the quality of fabrics. This is what brands are most reluctant to see. There are many suppliers who recommend buying cotton from abroad to spin the yarn because quality will be more stable and prices may have advantages, but some may be more expensive. For brand owners, the price difference is acceptable, and we are more willing to pursue quality stability.

According to purchasing experience, I did a basic survey on the price of a conventional fabric in the last five to six years and found that the increase in yarn price from 2010 to 2013 was relatively large, but the fabric quotation only went up by 12%. Moreover, the increase in prices is not necessarily caused by the increase in the price of yarn, because the price of dyestuffs has risen in the past two years, and labor costs have also risen. This may have a greater impact on fabric suppliers. The direct impact on clothing costs may be less than 6%. If the cost of a shirt was about 50 yuan, it would now rise at most 2 to 3 yuan. From here, we can see that the fluctuation of cotton price has little effect on the cost of garment factories. The fluctuation of raw material prices is not particularly stressful to us, but we are under pressure that the quality of cotton cannot be controlled. The color fastness of fabrics made as such may be affected, and strength may also be affected.

For branded apparel manufacturers, quality and delivery time are more important than cost, and supply stability is the most important.

Liu Yiming, supply manager of Jiangxi Jinyuan Textile Co., Ltd., used market opportunities to purchase the most cost-effective cotton purchases, not necessarily to buy the cheapest thing, but to maximize and optimize the use of funds. The most ideal way for companies to purchase raw materials is of course to perform procurement actions before or after the starting point of a wave of the market. The inventory cycle of intermediate companies is the fluctuation cycle of this wave.

However, there is an important question here. Is the variety of raw materials used by the company single or diversified? If it is a company with a single raw material variety, it is necessary to grasp the accuracy of the single-category market cycle and whether the liquidity of the enterprise covers the entire market cycle of the commodity. If it cannot be covered, the use of funds is a test. Based on the same judgment based on market conditions, different operating techniques and rhythms will eventually bring different raw material costs to the company.

If it is a company that diversifies its raw material varieties, it needs to consider more issues because the market cycle for different types of raw materials has different widths, and the range of price cycles for the different types of products is not the same. Then, in the case that the proportion of each species in the raw material structure of its own enterprise is different, it is necessary to analyze the difference in the length of time and the price difference of each product's market cycle. The most reasonable allocation of funds for the use of funds in the variety. Companies need to take a different rhythm to find buying points and build up inventory, so that the use of funds can be maximized and optimized. There is also the need for companies to be good at using traders and some pledges to improve the coverage of their own businesses on the market, which can also make the company's money management more flexible.

There is something weird about buying cotton with cotton companies nowadays, that is, resource information often mismatches. There are many varieties of cotton in the current cotton market, with their own quality, price, market positioning, and use value. The quality of these factors is relatively solid, and several other factors are dynamic and have been changing. There are spreads between so many cotton varieties. What's interesting is that this spread is not completely determined by the price/performance ratio of the species, because each breed faces its own supply surface and fundamentals at different times. It is Changed. Therefore, the price mismatch between different cottons often appears in the market, and it is often difficult to understand the price of some varieties of cotton. At this time, looking for the most cost-effective cotton purchase is an opportunity given by the market. Of course, all this must be based on the company’s own production needs. In fact, in order to cater for the factory's own production, it is a common practice to use different cotton varieties under different market conditions in different seasons. However, nowadays, most Chinese textile companies purchase cotton according to the inertia of cotton distribution. Purchase-oriented. If the company's procurement and production can work in harmony, it can achieve low-cost procurement of raw materials and use the most cost-effective cotton to produce finished products that meet corporate standards. In fact, in so many cotton varieties, the transaction costs of some varieties are not the same, and this cost is very flexible. This tests whether the company’s procurement staff has a thorough understanding of the system model of each cotton variety transaction.

Many people on the market today are concerned about whether the drop in cotton prices this year will shrink the use of chemical fiber and increase the use of cotton. In fact, chemical fiber raw materials used directly by textile companies are polyester staple fiber and viscose. These two varieties also entered the Big Bear market with the country's cotton purchase and storage policies. The Chinese Khmer prices did not bring corresponding benefits to these two varieties. Therefore, we must consider whether the textile companies will switch to more cotton and less chemical fiber raw materials because of the decline in cotton prices. They should not consider the spread of varieties, or should not be considered completely from the perspective of spread, but should use these from textile companies. The benefits of different raw materials are better than the ones that are considered, which is to say which breed is the most profitable. It should be noted that China is now importing cotton yarn, but it is exporting synthetic fiber yarn. Therefore, the more likely impact of this year's decline in China's cotton price is the reduction in the number of imported yarns, which will not necessarily have an intuitive impact on the use of chemical fiber.

China Cotton Information Network Cotton Information Department Li Nan New cotton quality is also good in the Mainland. As of October 20, the public inspection of lint this year was only 178,790 tons. Compared with the data of the same period of last year, it can be seen that the speed of public inspection this year is slow, only It was 1/8 of the same period last year.

The national public inspection quality of lint cotton in 2013/2014, from the national point of view, the color grade: white cotton grade two or three accounted for about 66%, light polluted cotton grade two accounted for nearly 14%; length: the proportion of 28 mm About 48%, 29mm and 27mm respectively accounted for 21% and 25%; in terms of micronaire value: B2 file accounts for about 44%, A file about 30%, C2 file accounts for about 20%; breaking strength ratio: More than 87% of the proportion of the average, while the poor accounted for 12%. There is little change in the uniformity of the length and the quality of the work. Overall, in the region, the color of the cotton in the Yellow River Basin, Northwest China, and Xinjiang is relatively good, while in the Yangtze River Basin, due to the high rainfall, the majority of the polluted cotton is lighter. Because of the “drought in the north and south of the Yangtze River”, the temperature in the Yangtze River valley has generally been higher than 40°C for a long time. As a result, some cotton fibers have grown too thick during the growth process, resulting in high micronaire values ​​and short lengths in some regions. one of the reasons.

For textile companies, the length, micronaire value, and color grade of lint are the main reference for purchasing cotton. This year's new flower quality compared with the same period of last year, from the national point of view, the color level: mainly white cotton grade 2 to 3, the proportion of light spotted cotton decreased, light cotton stained cotton grade 3 and light yellow dyed cotton Looked up; length: the length is relatively longer than the same period, 29 mm increased proportion, 28 mm slightly lower, 27 mm has a greater decline; micronaire value: B2 accounted for a small drop, C2 rose. In general, dry weather, rain, and low temperatures in the weather, as well as insufficient fertility in production and timely harvesting and processing, can lead to abnormal fiber development. At present, the lint cotton for public inspection this year is mainly based on early cotton, and with the large number of new cotton listed in the later period, the overall quality will be improved.

The purchase price of seed cotton has been falling all the way this year. Recently, due to the release of the Xinjiang region, the tight funding situation of the company temporarily eased and the purchase price was increased. This led to a rebound in prices, mostly from RMB 6/kg to RMB 7/kg. In the Mainland, the purchase price of seed cotton stopped falling and stabilized, but the cotton farmers were reluctant to sell, and processing plant acquisition was relatively difficult. From the point of view of lint prices, the market has lost its “wind vane” since the end of its throwing storage, and prices have been falling all the way to find directions. Recently, due to the need of some textile companies to make up the bank and the impact on the quality of the recent decline in Xinjiang weather, the price of lint has emerged. Rebound, but the bearish atmosphere in the market remains strong.

At present, the reserve cotton purchased by the textile companies in the early stage will be exhausted and there will be a certain amount of demand for stocks. Xinjiang's cotton auction has already begun. For enterprises, according to the results of the public inspection data, the number of resources available for selection should be quite a few. Coupled with quotas in hand, it should be able to solve the problem of buying cotton, the key is the enterprise. It is necessary to have a good grasp of the direction of its own business, with cotton on demand. This year, the state restricted the distribution of imported cotton quotas, and textile companies had to turn their attention back to domestic cotton. Xinjiang cotton is the first choice, but at the same time, it should not lose confidence in the cotton in the interior. The quality of new cotton produced by the processing plants in some areas in Shandong and Hebei is also good. You can refer to the quality of the public inspection to purchase, but the quality of the actual purchase should prevail.

Ma Pujing, vice president of textiles at JKN International Group in Hong Kong, faced the challenge of the textile industry in Southeast Asia. First, look at the status quo of the textile industry in Southeast Asia. There are 10 million spindles in Pakistan and Pakistani cotton is rarely exported because cotton is used in large quantities in the local area. The local spinning factory mainly purchases local cotton, and some of them have special requirements for quality, such as US cotton or Australian cotton. And these products are mainly exported.

India currently has around 42 million spindles. As India gradually replaces China in certain products, its number of spindles is continuously expanding, while high-end products, including some high-spending cotton yarn products, are gradually exported. China is the largest buyer. At present, the price of 32 ring-spun cotton yarns in India is 2.76 USD/kg, which is very cheap.

Bangladesh has about 9 million spindles, and it is mainly used textile equipment imported from China, the United States, India, and other countries, mainly home textile products. In the United States, clothing in Bangladesh is very competitive. Nowadays, many fabrics are produced in China. Clothing is produced in Bangladesh because it has a sufficient workforce.

Most of the spinning mills in Vietnam are built with foreign investment, mainly from China.

Indonesia currently has more than 12 million spindles, but it has grown rapidly in recent years. Indonesia is an ASEAN country, and ASEAN countries have zero tariffs for cotton yarn entering China. Indonesia does not need quotas for importing cotton, so Indonesia is a hot spot for investment in the cotton spinning industry. Although the United States does not belong to Southeast Asia, it now sells well in China. Its advantages lie in: first, abundant raw material resources; second, the low cost of electricity in the United States, which is 1/3 of the cost of electricity in China; and third, the degree of automation of equipment is high. Although there are high costs in employing personnel in the United States, there are very few people. Therefore, the overall cost of labor is not high. In addition, cotton yarns have lower freight rates than cotton. Therefore, the impact of U.S. cotton yarn on the Chinese market is very large, especially 32 air-spun yarns. At present, raw materials used in China's air spinning are generally relatively low-grade, and raw materials used in US spinning are better.

One of the current strategic choices for Chinese companies is transfer—transfer of factories to other regions with lower labor costs, good investment conditions, or other countries. The establishment of spinning production bases to raw material production areas reduces the transportation costs of raw materials. This is the reason for spinning in the United States. The local government’s incentive to encourage investment is also a driving force. Domestic Xinjiang is a very good choice, and it is also a good choice to ship cotton to Pakistan. From the point of view of investment, entering Pakistan's cotton textile industry is a good option for the development of China's textile industry, whether it is engineering equipment, trading habits, or the friendly and potential markets of both countries. From Pakistan to China, all kinds of transportation tools are very convenient.

It is advisable for companies to seek advice from experienced consultants when investing abroad. At the same time, we must understand the process of local financial markets and the entire investment operation. Of course, we must also understand the political system and local restrictions on foreign direct investment (FDI). Some countries require that local employees account for more than the proportion of workers. In addition, workers in some countries do not like to work overtime, so although unit wages are relatively low, but the production efficiency is very low, and the status of their product output is not good, so these factors must be considered.