garment manufacture_garment Factory_Making garment Trading Easier Garment Manufacture News The inventory clearance cycle of China’s clothing industry is coming to an end

The inventory clearance cycle of China’s clothing industry is coming to an end



In the context of the decline in domestic economic growth, the textile and apparel industry has fallen into a trough. Recently, some clothing brands have frequently exposed the new…

In the context of the decline in domestic economic growth, the textile and apparel industry has fallen into a trough.

Recently, some clothing brands have frequently exposed the news of withdrawing stores. There is even news that the clothing industry has “enough inventory to sell for three years.” The current situation of high inventory in the clothing industry has become the focus of the capital market. In this regard, Rong Zilong, a researcher at Yimao Commodity Information Research Center, said that the destocking cycle of China’s clothing industry is nearing its end, but the overall situation is still not optimistic.

In 2012, the A-share textile and apparel sector fell by more than 25% as a whole throughout the year. Except for printing and dyeing, silk and other sub-sectors, all other sub-sectors fell sharply. Rong Zilong believes that the performance of the textile and apparel industry in the stock market is not unrelated to the industry. The total losses of China’s apparel industry in 2012 increased significantly compared with the previous two years, and the absolute value and relative growth rate of losses were worse than in 2008.

According to the third quarter reports of listed companies in 2012, the inventory of China’s clothing industry reached 257 billion yuan. Some market participants calculated based on this that it would take three years to digest such a huge amount of inventory if it were all sold domestically.

In this regard, Rong Zilong believes that this statement is inappropriate. Based on the domestic sales of clothing in 2011 of 1.4 trillion yuan, it only takes 2.2 months to digest the above inventory. In addition, some clothing companies are involved in investments in other fields, and when calculating inventory, it is not reasonable to combine clothing inventory with other product inventories. Taking Youngor as an example, Youngor’s clothing business accounts for 31.98%. In the first three quarters of 2012, its inventory reached 24 billion yuan, and the clothing in inventory only accounted for 1.7 billion yuan.

“Overall, China’s apparel industry inventory increased significantly in 2012 compared with the previous two years, but judging from recent surveys, the apparel industry’s destocking cycle is nearing its end.” Rong Zilong said that since the end of 2012, domestic companies including Li Ning have Clothing companies have begun to accelerate destocking and achieved certain results, and “accounts receivable should improve.”

“However, the export situation is still not optimistic.” Rong Zilong believes that the clothing export situation is still difficult to improve in the first half of 2013. “The Canton Fair is a good indicator. The number of attendees and transaction data at last year’s Autumn Fair both declined, indicating that the situation in the first half of this year will not be very good, while the situation in the second half of the year will depend on the situation of this year’s Spring Fair.”

Data show that in 2012, the year-on-year growth rate of domestic clothing exports to major markets declined to varying degrees, with the EU declining by 12.08% year-on-year.

“However, in the long term, urbanization will promote the release and transfer of clothing demand.” Rong Zilong is optimistic about the opportunities that urbanization brings to the clothing industry. Data show that the proportion of clothing production in the central and western regions is increasing year by year, with a share of 17.4% in 2012. In 2012, the output growth rate in the western region was 18.29%, while that in the eastern region was only 2.75%. In 2011, the output in the eastern region dropped by 13.81%.

Information source: Securities Times

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