According to reports from cotton textile mills in Henan, Hebei, Shandong and other places, from late September to mid-October, driven by the “high opening and high rising” of the 2016/17 seed cotton purchase price, lint sales price and the phased recovery of cotton yarn demand, open-end spinning The quotations of ring-spun and combed yarns have increased by 300-500 yuan/ton as a whole. However, because the increase rate still lags significantly behind the cotton price, the pressure on the spinning mills has not significantly weakened with the increase in yarn prices. “Not even a chance to breathe” is the view of most small and medium-sized cotton textile mills.
Judging from the survey, since October, the operating situation of mainland textile companies has become more differentiated. The few textile mills that stocked cotton reserves at low prices in August and September are mostly operating at full capacity (some large cotton-consuming companies began to purchase small quantities in 2016/17). High-quality, high-grade hand-picked cotton is used as cotton), and the profit situation of spinning enterprises using reserve cotton as raw material is relatively optimistic. From October 11 to 13, the transaction price of non-“Double 28, Double 29” reserve cotton in the mainland market was 14,500-14,800 Yuan/ton (directly affected by the Zhengzhou front-month contract).
Other textile companies with little surplus grain are transitioning through the purchase trade of cotton reserves, cotton from ports, 2016/17 real estate cotton, and a small amount of Xinjiang cotton moved to the mainland, because the price difference between new cotton and old cotton reaches 1,000-2,000 yuan/ tons, so the proportion of textile companies that have reduced or stopped production has increased. The operating rates of small and medium-sized spinning mills and weaving mills in Xinye, Henan, Changzhou, Jiangsu, Changyi, Shandong and other places are only 25-35%.
As yarn profits continue to be squeezed, many yarn mills have no choice but to embark on the old route: price war. A while ago, I came into contact with a cotton yarn middleman and made a deal with him. He said that in order to be a big customer this year, he only made 30-50 yuan in gross profit per ton, which was barely enough for the transportation fee. He knew that there were several competitors. As long as he raised the price a little, his competitors would immediately cut in, so he could only Such low gross profit.
I asked him how much goods he could ship in a month, and he said that with only 500 tons of customers, the couple and a follower were already very busy. I said, then you only have a gross profit of 20,000 per month. After paying the transportation fee, shop rent, labor, water and electricity, and not counting the labor of you and your wife, you are already losing money. He said, yes, but if you don’t do it, your competitors will step in immediately.
I am very familiar with this big customer and have been dealing with him for a long time. He has a very good reputation and a very large volume. He is a banner in the textile industry in South China. But I am very strange, very strange. The purpose of my business dealings with this big customer is to make money, not just to do business. If there is a slight problem, it will be compensation.
To be honest, a husband-and-wife cotton yarn middleman can earn 500 tons per month, which is fine, but the gross profit of 20,000 yuan per month is very small. This colleague is obviously diligent, but he regards low-price competition as a business method as the purpose of business. I’m very surprised why so many bosses would think of going down this road that is obviously a dead end.
Each of our units is just a drop in the ocean compared to the size of China’s textile industry. Not to mention small units, even large units such as Huafang Weiqiao, even if they fall, it will only be a small splash at most, and it will never make a big wave, and it will definitely not affect the market. Your supplier has collapsed for any reason. There are still a lot of suppliers in the market. In the same way, if you use low-price competition to defeat a certain opponent, a large number of opponents will still appear. It is simply Wildfire cannot burn out, even if there is no wind, it will grow!
Huafang Weiqiao, these very large textile mills, used to use low prices to compete with other textile companies in the market. That was because they monopolized most of the country’s government subsidies and used these government subsidies to compete with other textile companies. , so Huafang Weiqiao can sell it at a very low price, so low that other textile mills can’t afford it. But now that their government subsidies are less, they can no longer produce the low-priced cotton yarns they used to have. At the same time, because of the vicious competition with domestic textile companies using government subsidies at that time, a lot of root causes have been left behind. Now they just Although the subsidy is less, it is still much more than many textile mills on the market, but they can no longer bear it and their scale has shrunk significantly.
The purpose of business is definitely to make a profit, and low-price competition is just one of the means of business. Loss-making low-price competition is a very high-end means. Only companies with strong financial strength and short-term purpose is to occupy and expand a stable market. It can be used only if the occupancy rate is satisfied.
The spinning industry like ours is simply not suitable for using such extreme and advanced methods. No matter what method you use to occupy a part of the market in the short term, as long as your quality, price, and service do not meet customer requirements in the next stage, customers will immediately find other suppliers in the Chinese textile industry, which is as big as the sea. The customer share obtained from this loss-making transaction will be wiped out in a very short period of time.
