Recently, the office of the United States Trade Representative (USTR) has announced 3 new notice on the elimination of tariff goods to China, and more than 400 items are exempt from customs duties, including some textiles.
However, Ren Xinchen, deputy general manager of the Donghua International (Group) Co., Ltd. (hereinafter referred to as "Oriental International"), told reporters that it was understood that only a small amount of fabrics in the exemption list was exempted from customs duties.
Chen Zheng, general manager of Shanghai New Union textile import and Export Co., Ltd. (hereinafter referred to as "new union spinning") is very direct: "the list of tariffs added recently announced by the United States gradually covers our products exported to the United States. The issue of tariff exemption and tax rate announced by the United States is of little significance to us. Even if some products have not been listed, customers are afraid to place orders.
Chen said that the total import and export volume and exports of Xinlian textile industry increased slightly in the first half of this year, because some orders rushed out before tariffs were imposed, while the decline in exports to the United States was offset by the growth in Africa and the United States, so the overall increase. However, in the second half of the year, exports are expected to decline as a whole due to the continued decline in exports to the United States, "with considerable pressure".
He believes that in the first half of this year, when the United States imposed tariffs on China's output fabrics, the export volume of new textile fabrics had declined. Once the garment products are really taxed, the export business with less profit will surely decline dramatically.
Dongfang International is China's largest textile and Garment Group and textile and garment export enterprises. Data show that this year 1~7 months, the group achieved (customs) import and export 31 billion 160 million yuan, down 1.8% compared to the same period. Among them, exports of RMB 22.08 billion, an increase of 4.4% compared with the same period last year, and imports of RMB 9.08 billion, a decrease of 14.1% compared with the same period last year.
Specifically for exports to the United States, from January to July this year, the Group exported 5.71 billion yuan to the United States, accounting for 25.8% of the total export volume of the Group. In the same period last year, the Group exported 6.2 billion yuan to the United States, accounting for 29.3% of the total export volume of the Group. Among them, the cumulative export of goods with a list of $250 billion was 1.39 billion RMB (24.3% of the group's exports to the United States), down 13.7% from the same period last year; the cumulative export of goods with a list of $300 billion was 4.29 billion RMB (65.2% of the group's exports to the United States), down 0.8% from the same period last year.
To Chen's satisfaction, the profit of American export business is not high, while that of non-American region is higher. The latter shows a growth trend, so the decline of American export will not have a great impact on the company's overall profit. But trade frictions have a huge impact on the confidence of global customers.
Ren Xinchen said that US buyers are very worried about orders placed in China under the expectation of further increase in tariffs. "Not only American customers, buyers from Europe, Japan and Australia also ask us to transfer the existing orders processed in China to Southeast Asia or to make transfer plans." The company's exports to the United States are expected to decline by 40% in 2019.
Three Ways to Deal with Current Challenges
Although the pressure is increasing, enterprises also have countermeasures.
Ren Xinchen said that in response to the challenges of Sino US trade friction, the company mainly used three measures: first, the company should speed up the industrial layout in Southeast Asia and speed up the transfer of orders in Bangladesh; secondly, pay attention to exchange rate risk, track the exchange rate trend, trade settlement as far as possible, use RMB settlement, and order to lock in exchange rate settlement; finally, dig deep domestic demand and accelerate domestic fast fashion products. Brand demand development, jeans products as the grasp, combined with overseas processing advantages, expand the export of production capacity and the proportion of ready-made clothing imports.
Similarly, Chen also summarized the company's strategy to deal with current trade frictions into three strategies. The first is to develop markets outside the United States, which are already growing. But Chen Zheng said this is not easy because "the economy of the United States is declining, and the overall economy of the world will not be very good. The cake of Europe, Japan and Australia is limited. Even though our transformation is well done and value-added services such as design are relatively high, we can only grab more cakes on the premise that the total amount of cakes is that big.
The second move is also to speed up the layout in Southeast Asia and other places, to make the entire supply chain into global supply, and to cultivate the company's ability to manufacture and supply in the areas such as China, Africa and Africa. "To be more open to ourselves, only by globalization can we truly resist foreign trade risks." Chen Zheng said.
The third strategy is to transform into domestic sales and imports, so as to make business more diversified.
With the eastward wind of the first China International Import Fair (hereinafter referred to as the "Expo"), the import transformation of Orient International has accelerated significantly. From the introduction of global high-quality consumer goods to the "go out", the "red shop" has been opened along the "one belt and one road". Orient International is trying to mobilize global resources to get out of the new path.
Similarly, the transformation from export to import has been preliminarily realized. The company used to serve domestic factories and overseas buyers, and sold to foreigners in China. Now Chen Zheng leads the team to cut into the domestic and import markets, helping foreign SMEs to sell high-quality local food and daily necessities to China.
Gracina Life Fashion Life Hall, located at 1341 Yuyuan Road, is the perennial exhibition and trading platform for imported goods of Oriental International Group. Here, consumers can buy a variety of "blog goods" and use global resources to allocate fashion life.
"In the first half of the year, the import volume of the new cotton spinning industry is gradually rising, and in the second half it will continue to be optimistic, because the second Expo is coming again." Chen said the shift to imports would reduce export pressures.
Of course, importing requires professionalism. In order to transform an export company into an import company, it is necessary to understand the changes of customers, build a supply chain of import business and an import team, and transform "export resources into import capabilities".
In addition to the new textile and Hua Hua Shen, the Oriental International affiliated company, Luotai Tai holdings, has invested more than $22 million to invest in the construction of the digital factory. It also invested $10 million to build a production base of 1 million 500 thousand bags per year. In Vietnam, the secret underwear brand production base was passed in August this year.
In addition, the Oriental International affiliated company, Hui Lian manufacturing, is also building a sweater production base by leased factory buildings. The decoration works have been completed and the capacity of 3 million 500 thousand units per year can be achieved. The group will invest 330 million yuan in the construction of foreign trade processing and production base, and it can also achieve 12 million / year capacity.
Like Oriental International, Zhenhua Heavy Industries is also vigorously deploying overseas markets. In the area covered by the "one belt and one way" initiative, Zhenhua heavy industries has established 25 overseas institutions in Europe, America, Asia, Africa and Africa, and has set up a European procurement center and a North American logistics procurement center to set up a global spare parts warehouse in Singapore and Singapore.
