The problems in the textile industry are actually typical of the "low profit but high sales" model predicament. The industry has several fatal flaws:
Firstly, the entry threshold is too low. Anyone can set up a textile factory. As a result, everyone is desperately lowering prices to compete for orders, but in the end, no one can make a profit. It's like in a vegetable market where you have to bargain over the price of a cabbage that costs one dollar per pound.
Secondly, the position of the industry in the value chain is too passive. Big brands take away the profitable parts such as design and marketing, leaving the textile factories with only the most arduous and labor-intensive processing steps. Last time I read a report saying that for a $100 piece of clothing, the subcontractor might only receive $10 for processing.
And even worse, this industry is particularly vulnerable to external influences. Cotton prices are like a roller coaster, rising today and falling tomorrow; the wages of workers in Southeast Asia are half of ours; and environmental requirements are getting higher and higher. All these factors combined are like walking on a tightrope.
Why do we feel that "it's always difficult"?
When the economy is good: The benefits brought by increased demand are quickly offset or even exceeded by rising costs (raw materials, labor, energy) and more intense competition (everyone wants to expand production).
During economic downturns: Shrinking demand directly impacts the order volume. Price wars intensify. However, fixed costs and some rigid costs (such as environmental protection expenditures) are difficult to decrease proportionally. The risk of losses increases sharply.
Core issue: The industry has long been in a state of low added value, high competition, and high sensitivity to costs, lacking effective barriers to protect itself from the impact of economic fluctuations. The quality of the economy merely changes the specific manifestations of the predicament (whether it is mainly characterized by cost compression or demand contraction), but the essence of "difficulty in making profits" has not changed.
What is the way out?
Although the situation is difficult overall, not all enterprises have no way out. Successful textile enterprises usually break through through the following methods:
Extending towards both ends of the "smile curve":
Upstream: Invest in research and development to create high value-added, functional, and differentiated fabrics or fibers.
Downstream: Establish a brand identity, gain control of distribution channels, enhance design and marketing capabilities, and directly reach consumers.
Focus on targeted market segments and differentiation:
Deeply focus on specific fields (such as high-performance sportswear, medical textiles, sustainable and environmentally friendly materials, high-end customization, etc.), and establish technical barriers and brand recognition.
Technology Upgrades and Intelligent Manufacturing:
By means of automation, digitization and intelligence, we aim to enhance production efficiency, reduce reliance on human labor, improve quality and increase the ability for rapid response.
Globalization strategy:
Based on comparative advantages, different production stages should be allocated to different regions (such as R&D and design at the headquarters, high-end manufacturing in the home country, and labor-intensive processes in low-cost countries), thereby optimizing the supply chain.
Lean Management and Supply Chain Optimization:
Internal optimization, strict cost control, reduction of waste, and improvement of operational efficiency; optimization of supply chain management, enhanced response speed and flexibility.
In summary, the "constancy dilemma" in the textile industry stems from its structural characteristics such as low entry barriers, intense competition, thin profits, and high sensitivity to costs. These are compounded by the continuous pressures of global competition, rigid cost increases, technological iterations, and changes in consumption patterns.