Textile exports may face sustained cold winters? How should foreign traders respond?
Textile and clothing are an important component of China's foreign trade exports. According to customs data, the total amount of textile exports in China reached 323.57 billion US dollars in 2022, accounting for nearly 10% of the country's total goods exports. However, due to the impact of the global economy, textile exports are currently facing a severe test. Data shows that from January to May 2023, China's cumulative textile and clothing exports reached 118.03 billion US dollars, a year-on-year decrease of 5.26%.
Textile exports continue to experience a cold winter
Türkiye is one of the world's largest textile exporters, but its textile industry exports also suffered a sharp decline in 2023, with the capacity utilization rate declining by at least 30%. The decline in Türkiye's textile export sales is mainly due to the sharp decline in import demand of the EU and the UK.
Due to the current economic recession faced by the United States and the European Union, their import demand has significantly declined, directly leading to a decrease of about 15% in the total world trade in ready to wear and textiles. It is obvious that a chain reaction will affect countries mainly engaged in textile exports.
China has also been greatly affected, as the top four markets for textile exports are the United States, ASEAN, the European Union, and Japan, with Europe and America among them. Meanwhile, due to the possibility that the economic situation will not recover or rise in the short term, the cold winter of textile exports is likely to continue.
In addition, in addition to the decline in demand, the rise of the textile industry in Southeast Asia is also one of the important factors affecting China's textile product exports. Southeast Asia has low labor costs, so they also have a price advantage, which has greatly affected some low-priced textile export enterprises in China. So how should foreign traders respond?
How should foreign traders respond?
1. Expanding new markets: Although textile imports from Europe and America are showing a downward trend, this does not mean that the global market is shrinking. Therefore, foreign traders can also explore new demands by exploring new markets, but it should be noted that before choosing a market, the first thing foreign traders need to do is to conduct in-depth research on that market.
You can use tracking data to determine whether a target market is worth entering by querying the changes in the number of buyers and suppliers in that market. If the number of suppliers in this market shows a significant growth trend, it is highly likely that the market is thriving, but at the same time, it also means that its competition will become increasingly fierce.
After gaining a general understanding of the market situation, foreign traders need to combine their actual situation to make a comprehensive judgment on whether to enter or not.
2. Industrial upgrading and avoiding low price competition: In terms of labor costs, Southeast Asia has a significant advantage. However, due to factors such as labor quality and supply chain, the textile industry in Southeast Asia is still concentrated in the simple and primary stage, and there is relatively less exploration of complex and functional textiles and clothing. Therefore, for sellers of textile products, upgrading the industry and avoiding blindly falling into low price competition is very important.
3. Optimizing the supply chain: After a long period of development, China's supply chain has become relatively mature. Therefore, the supply chain will be a major advantage for China's foreign trade exports, but whether it can be utilized or not depends on the foreign traders themselves. Optimizing the supply chain and accelerating iteration may help foreign traders break through the encirclement.
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