China's apparel industry is the best way to face the "resource control" innovation channel

The average hours a cotton price index rose proclaim industry, low-cost era is over, raw material prices break the old rules, to try to stabilize on a higher level of new value.

At the same time, the basic elements that affect the survival and development of the industry seem to be increasing prices.

"Human" has become the most valuable resource, and the cost of human resources such as salary, benefits and training has risen. It is both cost and investment. “Land” prices have been rising, and the government has successively introduced policies to curb housing prices, failing to rewrite the realities of commercial real estate as a scarce resource, especially in the second- and third-tier cities with huge growth potential. Even the "money" is increasing prices. With high inflation expectations, corporate employees' daily and daily administrative costs have risen. Higher interest rates and higher bank reserve ratios have come one after another, making investment costs and commoditization costs soaring.

However, the most inconspicuous price increase, and the most gutsy, is the terminal commodity.

The increase in cotton prices has caused upstream companies and capital operators to splurge, but it has caused the sweat in the downstream. In the past, the apparel industry paid little attention to the price of cotton. When the increase in cotton prices was very small, it was entirely possible to absorb price fluctuations through price transmission, cost control, sales increase, and price adjustment in the upstream. With the increase in cotton prices, the ability of the garment industry to absorb costs through other channels will also decline.

Especially in 2010, the increase in cotton prices unexpectedly created an irreparable gap in the apparel industry's profits. The supply and demand relationship between upstream and downstream has almost reversed. Upstream industry profits, profit margins, and sales revenue growth have greatly exceeded the apparel industry, while the apparel industry is stuck in a dilemma that high prices cannot timely obtain high-quality raw materials. In the past, it was the upstream industry that made profits to stabilize the prices of surface materials. Now it is the apparel industry that has made profits only for stable supply.

Conversely, orders that are flying like snowflakes can't find people who can make orders. Recruiting has become the number one problem for companies. After experiencing the low inventory period from 2008 to 2009, the number of orders has grown explosively. For a time, “lists cannot be issued”, “double prices have to be dropped”, and “where there is a processing plant”, the cries of help are coming one after another. , and even at least continue for one year.

Because the bearer of the price is the consumer, the price increase of clothing can be said to be a good time. Not increasing prices may not even be able to cross the difficult times. However, the market has just passed through the financial crisis and has not fully recovered its strength. It is more rational and mature than before, and its price sensitivity has been greatly improved. From the brand perspective, long-term continuous market positioning, price positioning, style positioning, etc. should not be easily changed. In the final analysis, brand price increases must not only be accepted by the market, but also in pace with the mid- and long-term development plan of the brand.

The level of cost control in the apparel industry has to be improved, not to mention the indigestion of cotton prices. Although the brand exhausted its price in disguise, it was eventually discovered by vulnerable orders. Fortunately, the country promptly suppressed cotton prices, so that the overall price of clothing is not far outrageous, which also allows temporary relief clothing companies have the opportunity to think about, whether the innovation channel can become the best way to take profit in the future.

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