China’s garment trimmings industry is bracing for an even more challenging trade environment as the global economic downturn continues to affect exports adversely.
Overseas shipments for the first five months of the year reached $1 billion, down 25 percent from the previous corresponding period. This came after growth in 2008 slowed to a meager 6 percent. In stark contrast, 2007 export sales were up a healthy 33 percent.
Given the current economic difficulties, the majority of suppliers are not expecting to recover in the months ahead. In fact, more than half of the companies surveyed for this report are projecting negative growth.
Falling revenue is exacerbated by intense price competition, which is forcing many suppliers to cut quotes between 5 and 15 percent.
To maintain sufficient cash flow despite dwindling sales and drastically reduced product prices, manufacturers have had to rethink their business strategies, including order parameters.
The following are some of the key developments we see in China’s garment trimmings industry:
• Many factories will continue laying off inefficient or less-skilled workers or reducing their monthly salaries as means of cutting costs.
• Companies will be increasingly selective of the buyers they will be transacting with and the orders to accept. Many of them will assess client stability carefully before finalizing contracts. Others are even rejecting production runs that are worth less than $75,000. Such prudence is adopted to minimize revenue loss.
• Export prices are likely to fluctuate in the months ahead. Makers are closely monitoring trends in material costs and the yuan-dollar exchange rate. While the primary purpose is strategic procurement, quotes will also be adjusted accordingly.
The above is extracted from the Executive Summary of China Sourcing Report: Garment Trimmings
To learn more about this report, visit: http://www.chinasourcingreports.com/csr/baby-travel-care-products
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