The South China garment wholesale market has awakened in the throes: digitalization, intelligence, and scenario-based are helping the industry to carry it through...

(Image source: One Map Network)

Economic Observation Network reporter Shen Shuhong After a one-month delay, the garment industry chain resumed work and production in March.

Located in Nanshan, Shenzhen, the Nanyou Garment Wholesale Market has also "awakened". Here is the famous South China's high-end foreign trade clothing wholesale market, with a total construction area of about 200,000 square meters, the country exports to Southeast Asian countries and regions nearly 8% of the clothing from here, most of the Taobao shop sellers in Shenzhen are often mixed here, or take goods, or seek good design solutions. This value is created by more than 5,000 garment wholesalers and tens of thousands of migrant workers gathered here.

Pan Chen is one of them. She and her husband run 3 shops here, specializing in fashionable women's clothing. 15 km away, there is also their small garment factory. In the month of delaying the resumption of work, her loss exceeded 500,000 yuan. In previous years, from the end of January to February, the most important sales season of the year, the sales of clothing in her store accounted for 10%-15% of the annual revenue.

Because of the epidemic, the loss of several shop owners around Pan Chen is also about 150,000-200,000 yuan. Due to high rents and sporadic orders, there are also some shop owners and garment factories facing the situation of "opening or bankruptcy", which has led to their withdrawal of the intention to quit the rent and rejoin the ranks of migrant workers.

But at the same time, more "survival" operations are taking place. They may reduce their presence and use online channels to digest existing inventory; or they can lighten their cost structures and arm themselves with technology to reduce new product launches; or they can strengthen marketing and layout in terms of community, live broadcast and short video; or plan to relocate factories to lower cost places.

"Big spending, low input"

At 10:30 a.m., pan Chen scanned the code and passed the temperature check, went to his three stores to inspect, and found that the traffic here was at least half lower than that of the previous year. The clerk told her that she had received very few orders in the past few days of resuming work. The short videos released on Douyin and the several live broadcasts tried on Taobao have not yet achieved much.

After some thought, Pan Chen made two phone calls to the property and her husband who was in the garment factory. On the property side, Pan Chen's demand is to reduce the rent, at least not to increase the rent, but the property gave a negative answer. At the end of the garment factory, Pan Chen let her husband suspend the routine overtime of the employees in the factory, and some of the new products planned to be launched years ago were also slowed down.

"Open source throttling, I'm struggling with these four words every day." Pan Chen said that large expenditures and low inputs are the common situation faced by her and the merchants here.

Of all the expenses, high rents are a part that has to be mentioned. Here, the rent of a small shop is as high as 50,000 or 60,000 yuan per month, and the location is better and the space is more expensive. What is more serious is that since the resumption of work, merchants in the clothing wholesale markets such as Shenzhen's East Gate and South Oil have also encountered the problem of rent increases.

In Pan Chen's view, under the epidemic, shopping malls, landlords, and merchants are all victims, but the degree of damage is different. "It's clear that merchants are currently less able to afford it."

Before the demand was stimulated, various expenditures followed, and the competition in the apparel industry chain was life and death. Although everyone is struggling to support, it is clear that some people cannot hold on. "In another building here, my friend is not ready to do it because of the overall unstable operation last year, coupled with the losses caused by the epidemic now, and the 'rent' notice has been hung up." Pan Chen said frankly.

Li Juan is also engaged in "production + trade" in the Nanyou Garment Wholesale Market and intends to start working as an international station this year. But her current problem is that on the one hand, some key positions of employees are stranded in Hubei, production capacity is shrinking, and related clothing plate making procedures cannot be carried out; on the other hand, foreign customers basically do not accept the products they provide, so the plan to expand overseas is postponed.

At the same time, according to the industrial chain law of the first half year of research and development, it should be a critical period for various clothing manufacturers to sell summer clothing and develop autumn and winter clothing in 2020. As the core link of undertaking clothing brands and manufacturing factories in the clothing industry chain, once the stagnation triggers the first domino, the loss will become long and difficult to stop.

"Most of the summer clothing on display in Wholesale City now, we have missed spring sales, product inventory is piled up in warehouses, and cash repatriation has become a problem." In addition, because of the delay in starting work, the autumn order will inevitably be postponed, and our production cycle will be shortened. ”

The chain of loss does not stop at retail and wholesale. At the manufacturing end, the orders that have been delivered can still be completed with the gradual resumption of work of the factory, but the doubts about the ability to perform future orders make the textile and garment export business face the risk of order outflow.

"I learned that some medium-sized garment factories in Shenzhen that do export business have less liquidity than large factories, but the loss of plant, equipment, and wages is very large, and they also have to face the reality of weakening consumption power when they start construction, and they are the most sad." Li Juan said.

At the same time, in the case of the manufacturing link is difficult to subjectively drive the recovery, if you can not grasp the autumn and winter orders, a large number of foreign trade orders will flow to Turkey, as well as some countries in Eastern Europe, Southeast Asia, and if the autumn and winter orders account for 60% of the total orders of the year are lost, it will affect the livelihood of a large number of practitioners, and will continue to affect China's entire garment industry.

The situation of the Nanyou Garment Wholesale Market is only a drop in the ocean of the heavy blow caused by the epidemic that has spread around the world. In February, China's manufacturing purchasing managers' index (PMI) plunged 14.3 percentage points from the previous month to 35.7 percent, the lowest since statistics were made, according to the National Bureau of Statistics.

This figure was previously a new low of 38.8% in November 2008. As a result, a brokerage analyst in East China pointed out that the impact of the epidemic on China's economy even exceeded the global financial crisis in 2008.

Another analysis report from the United Nations Conference on Trade and Development, "The Impact of the Coronavirus (COVID-19) on Global Trade", shows that the coronavirus epidemic is expected to cause a loss of $50 billion to global value chain exports, of which the textile and apparel industry will lose more than $1.5 billion. This also means that in this epidemic, the textile and garment industry has lost more than 10 billion yuan.

The online and offline sales of relevant listed companies in this field have also been greatly affected. Taking online channels as an example, in February, the sales of Bosideng, Snow In Flight, Goodbaby, Anel, Fu Anna, Li Ning, and Xtep in Tmall stores fell by 58%, 22%, 7%, 50%, 9%, 14%, and 18% respectively year-on-year, and only a small number of listed companies such as Mercury Home Textiles increased their sales on Tmall year-on-year.

In addition, the aforementioned report said that outside of China, because Italy, France and Spain and other EU member states and Chinese textile and garment suppliers have maintained close cooperation in yarn, fabrics, zippers, buttons and other accessories, their losses in the epidemic are expected to reach 538 million US dollars, followed by Vietnam and Turkey, where manufacturing is concentrated, and the textile and apparel industry in the United States is also expected to lose 80 million US dollars.

Break the game and save yourself

Losses have become a foregone conclusion, and continuing to be "paralyzed" by the epidemic or decisively changing the way of thinking to survive is no longer a matter of choice, but a choice to decide survival.

"Self-help" has become the common choice of most participants in this industrial chain. Nowadays, many people choose to reduce the façade and use online channels to digest existing inventory; or to reduce the cost structure, reduce the launch of new products, and strengthen marketing, especially in terms of community, live broadcast and short video layout; or plan to relocate factories to the mainland.

Gao Xiang, who has operated two women's clothing stores for more than 5 years, is also observing recent market trends. Although there are already two or three peers around who have had average operating performance in previous years, they want to find other ways out. But his idea is to try to support until May, and if the order still can't come up, he will sell the shop on the fourth floor that is not in a good position, and the one on the first floor will continue to work hard to rush the performance.

Gao Xiang said frankly that the loss of nearly 200,000 yuan this month is still within the range he can bear. Although there is still a lot of inventory backlog, at the suggestion of his daughter, who is already in college, he began to re-plan the online channel marketing that was only used as a "face project" during the Spring Festival and did not spend much effort.

After the start of construction, he came to WeChat groups, live broadcasts, and short videos. In the small space of more than ten square meters, Gao Xiang's clerks not only connect the merchants in the north and south of the sky, but also attract individual customers on the other end of the screen.

As an online "novice", Gao Xiang is obviously not professional enough. So far, less than a tenth of his store's backlog has been cleared, but the good omen of "selling" has satisfied him.

"If it weren't for this outbreak, I, a traditional clothing practitioner, might never have taken the initiative to learn these new skills." Next, I'm going to try to ask influencers to stream live for us, and if it works well, I'll keep doing it. In addition, I will continue to look for more suitable upstream partners. ”

The reason gao xiang was looking for a partner was that its suppliers had not fully resumed work. This situation is not uncommon in the Nanyou and even South China garment wholesale markets. Data from the Guangdong Garment and Apparel Industry Association shows that as of March 4, only 68.5% of enterprises have gradually resumed work, accounting for 37.8% of the number of workers under normal production conditions, in addition, 31.5% of enterprises have not resumed work due to avoiding the risk of the epidemic, government restrictions on starting work, waiting for approval to resume work, and fewer orders for recruitment, and about 10% of enterprises are expected to fully resume work in April.

In his opinion, the real test is not the "relatively static" February-March, but the fast-forward April-May of playing. "So I won't lose easily, at least I have to go through the real test period after the epidemic."

Compared with Gao Xiang, Pan Chen's community, live broadcast and short video marketing effects are not very significant. Her idea is to start with a lightweight cost architecture. On the one hand, moderately reduce the launch of new products and control cash flow. "Now the employees are gradually returning to work, but there is a certain difference in the efficiency of everyone, so I am ready to do a good job of management, reduce unnecessary costs, and improve the working status of employees."

In previous years, due to the need to keep up with international clothing trends in time, Pan Chen would take time to visit major fashion stores in Japan or South Korea every quarter. But in the first half of this year, she canceled the above trip, supplemented by magazines, websites and other channels to learn the latest information. "Even so, our designs will only become more demanding, and we will try to form our own design style."

A small number of garment factories have also chosen to relocate their locations to lower costs. "We used to have a cooperative manufacturer in Bao'an, Shenzhen, and we planned to move to Huizhou at the end of the month, because the rent and labor there are cheaper." Li Juan said that in her WeChat group, some friends have revealed the idea of "if you can't survive, you can simply go back to your hometown in Sichuan to open a factory".

In fact, emergencies will become an obstacle for some people, and it may also become an opportunity for some people. Not all garment industry chain practitioners are in a state of "struggle", and some businesses and enterprises have gained new life as a result.

Cao Xiang's independent designer brand, because as early as the beginning of 2018, it completely laid out the community, live broadcast, short video, and now there are many things that can be done. In the Taobao store, in addition to the resident live broadcast to increase conversion, it also uses the small V broadcaster to live broadcast to the Taobao Alliance on platforms such as Douyin, Kuaishou, and Xiaohongshu, and the conversion rate is quite considerable. At present, nearly 80% of the goods in the store come from online.

"Our Taobao store has more than 200,000 fans, and there are nearly 30 WeChat groups that have been fully staffed. Although the epidemic has affected online and offline channels to a certain extent, although some community e-commerce has collapsed, but due to the unique product style and more online repeat customers, the impact of the epidemic is very small, it can be said that it has been smoothly passed, and the cash flow is enough to support more than half a year. ”

Cao Xiang said frankly that their next goal is to further strengthen the layout of content channels such as live broadcasting and graphics, and strive to exceed 300,000 fans in Taobao stores as soon as possible.

The owner of another shop that operates leather goods told reporters that in previous years, the demand for their products was not high during this period, so the store was not greatly affected by the epidemic, and the inventory could also last until the end of this month. "In the absence of a fully resumed work in the industry, inventory has become a kind of guarantee, allowing me to have more energy to optimize the cost structure and seek more suitable suppliers."

In addition, the platform of the industry chain focusing on "online communication" has also ushered in development opportunities. A few days ago, STYLE 3D, a subsidiary of Lingdi Digital, announced that it has completed a round of financing of 100 million yuan, led by Gaorong Capital, and followed by Shunwei Capital, Yuanjing Capital, BV Baidu Venture Capital, and Ginkgo Valley Capital.

The main reason why the above brands have gained favor is that the catalysis of the epidemic has made the core product design thinking of "online communication" a strong demand in the apparel industry chain. The platform can achieve complete online communication from design and development to production and delivery for small and medium-sized garment enterprises, and shorten the delivery time from three months to about fifteen days.

When the traditional manufacturing industry will remain labor-intensive for a long time and it is difficult to evolve rapidly, the efficient digitization of the front end of clothing design is particularly important. The spread of the epidemic this time has stimulated the demand for digitalization in the garment industry in advance.

Digitalization, intelligence, and scenario-based are competing for lost time for this industry. Although the participants in the industrial chain have their own ways of playing, what can really win in this "life and death game" depends on who evolves faster, wins more time, and who can finally complete the complete subversion of the concept, realize the thorough innovation and expansion of sales channels, and the rapid turnover and rapid realization of the supply chain.

"If the change is a little slower and a little behind, it is possible to 'carry' it." Li Juan said.

(At the request of the interviewees, Pan Chen and Li Juan are pseudonyms)