Survival Test For Foreign Trade Enterprises Under The Epidemic Situation: Upgrading The Industrial Chain Capability And Waiting For The Situation To Improve

Under the epidemic situation, it is time to change the law. Many foreign trade enterprises think so.

From the beginning of the Spring Festival, the new crown pneumonia epidemic caused foreign trade enterprises to play a "full audience": in the first half, Chinese enterprises were unable to resume production, worried that overseas orders could not be delivered on time, and overseas orders could not be found in the second half.

Overlay risks such as inadequate overseas construction, shortage of international transport capacity, significant changes in supply chain aging and cost, and greatly increased customer default risk. "The Spring Festival has been so hot that it has no chance to breathe at all." A global purchasing director of a foreign elevator enterprise in Shanghai said.

A number of foreign trade enterprises told reporters that sales expected to decline by 20%~50% this year. At present, we are adjusting our development thinking and thinking about the plan to overcome the crisis. Reduce expectations, embrace heating, and practice hard work. Strive for enterprises not to bleed, not to be hurt, not to lose vitality, to keep an eye on the market and find opportunities.

The most serious challenge: orders decline, goods can not go out.

"This is probably the most severe test I have ever faced since I was doing foreign trade." Deville, deputy general manager of Shanghai International Trading Co., Ltd. (hereinafter referred to as "Deville"), said Li Qiangsheng.

Deville is a trading company established in 2014 by Henan wing Tong Aluminum Industry Co., Ltd. in Shanghai, which mainly exported aluminum and aluminum, and exported about 60000000 US dollars last year.

In February, Deville ushered in the small peak of orders. Because of the impact of the Spring Festival holiday in China, the inventory of foreign customers is almost the same, so there is a wave of replenishment peak. But in March, the company wanted to deliver the goods, but it was exacerbated by the epidemic situation abroad, and the goods could not go out.

Deville's current situation is: 20% of the order customers request extended shipment, 30% of the order customers request to postpone production. As for the return of the bill, Li Qiangsheng said, yes, but very few. The reason is that the price of aluminum has fallen sharply after the order is placed. "During this time, about 1 tons of aluminum ingot fell by 2000 yuan, so customers would rather abandon, lose ten thousand or twenty thousand dollars in advance, or pay less."

The change in orders has increased Deville's cash flow pressure. Li Qiangsheng said: "in February, we received a quantity of 6000 tons, with a market value of nearly 80 million yuan, 20% suspended shipment plus 30% postponed production, which means 40 million cash flow is affected."

By March, Deville had fewer orders and the volume of business fell by 30%~40% compared with the same period last year. As the epidemic continues, Li Qiangsheng expects further expansion. "We expect to drop 20%~30% by the end of this year."

Not only non-ferrous metals, including clothing, daily necessities, cars and other industries, said that the impact is greater, the annual sales expected to decline by 20%~50%.

Shanghai New Union textile import and Export Co., Ltd. (hereinafter referred to as "new union spinning") has an annual import and export volume of US $1 billion 300 million, of which export is the main and trade volume is US $1 billion. It is also a supplier of fast fashion brands such as H&M and ZARA.

"Fortunately, no order was cancelled in the first stage (February), and no client claimed our claim." Chen Zheng, general manager of the new spinning and weaving department, said that because of good customer relationship and short term customers could not find an alternative, the order for February was postponed. In order to minimize the impact of the delay, new spinning also converted sea freight into air freight.

Chen Zheng said that this stage is worried that the supply chain can not be repaired, customers leave. Fortunately, China's epidemic was controlled in time. "It was thought that the impact was limited, and there was no injury to the bones. In 4 and May, the original rhythm could be restored."

But the change took place. In early March, with the spread of the epidemic, foreign customers suddenly said they were afraid to take the goods, because the clothes were just on shelves, and the stores were closed. The previously delayed clothing can only be put in the warehouse and sold again next year.

The supply chain stops when customers do not order. Chen Zheng said, "the factories in Burma and Kampuchea are still doing, but they are finished in the end of their hands, and they are finished."

New textile exports in March dropped by more than 50% compared with the same period last year. "Last month, we exported about 80000000 US dollars a month, and now we have lost 50 million US dollars a month." Chen Zheng said.

The chairman of a supply chain company, which imports and exports trucks and trucks, told reporters that the company's sales volume was 500 million yuan last year and is expected to decline by 30%~40% this year. "One of my profits is in the export tax rebate, but the goods can not get out in the middle. At present, there is a value of $230 million for the goods in the dock of Shanghai. If there is a boat to go to declare, there is no way to refund the tax without customs declaration. The tax rate is 13%, which is about three million of the capital. "

Shanghai ran Chen International Trade Co., Ltd. is small in scale, mainly through the Amazon and other platforms for the export business of 2C, such as sanitary ware, consumer goods and clothing. Taking the bathroom lamp mirror as an example, Fang Yu, manager of the development division of the company, said that sales of Amazon in the past year have been climbing steadily, with sales of around $200 thousand a month. But because of the new year and epidemic situation, suppliers can not deliver spare parts, factories can not complete the order, and overseas warehouses broke this year in February.

With the recovery of China's factory capacity, the overseas epidemic has made international transportation scarce and the cost has increased sharply. "Now the main air carriers are masks and medical supplies. The freight rate to us in the year ago was 15 yuan / kg, now it rises to 60 yuan / kilogram. It's too expensive. We later chose to ship by sea, so we did not fill in our overseas warehouse until a few days ago. Fang Yu said.

The ventral cabin transport of aircraft is the main mode of transport for China's air cargo, accounting for 70% of the total air cargo volume. Of all the international flights, the volume of the ventral cabin is 49%. Since the outbreak, flights on international routes have been greatly reduced, and transport capacity has also been affected. In March 29th, Ren Hong, a visiting inspector of the Ministry of infrastructure development of the national development and Reform Commission, said at the news conference of the joint defense and joint control mechanism of the State Council that the whole cargo flights were basically open to navigation, but the scope of access included limited capacity, so the short board was very obvious.

When the goods were shipped overseas, Fang Yu found that the mirror was not good enough to sell, and the sales volume dropped to the original 1/10. "A lot of overseas people are paid weekly, and there is no savings, so the consumption of non essential goods is decreasing."

Those who do not have overseas stores are even more difficult. Fang Yu said that Amazon now only accepts medical supplies and necessities to enter warehouses, and ordinary goods can not enter warehouses. As long as the original seller can sell goods, it is necessary to contact the overseas warehouse, and each ticket goods need to contact the warehouse for delivery. The workload has increased a lot and the cost has increased a lot.

The decline in trade volume also led to a decline in orders for export oriented factories. Fang Yu's factories are mainly small and medium-sized factories which have no ability to open up overseas markets, among which the lamp mirror factory is located in Zhejiang sea salt. "There are still many factory orders, but a lot less."

Tian Guofeng, Executive Deputy Secretary General of the China Association of trade and services, told reporters that the cross-border electricity business has become the main export oriented channel for small and micro enterprises, but there are also three major pain points: difficulties in obtaining orders, difficulties in transportation, and rejection of Chinese goods by some foreign customers.

The chairman of a supply chain company told reporters that the epidemic has seriously affected the supply chain industry. "To ensure that the global supply chain is clear, customers at the previous stage hope to turn capacity from China, and now they want to go back to China. In 3 months, the cost of turning around is not enough. "

He said: "now this situation, the freight forwarding and supply chain enterprises should be guaranteed. Especially those logistics enterprises whose annual sales volume is more than 230 million, otherwise the whole supply chain will not be smooth.

There are still orders for enterprises to rise, and the Chinese market is relatively stable.

However, not all imports and exports are in a predicament.

Annex Technology (AMKR.NASDAQ) is the world's second largest independent outsourcing testing service provider, annex packaging testing (Shanghai) Co., Ltd. is its only investment in China, and its second largest production base in the world, contributing 1/6 of the company's revenue and profits every year.

Orders for the two quarter showed that Shanghai's orders increased by about 10%. An Shanghai staff told reporters that the company's customers are mainly located in the Asia Pacific region, and the new orders are not affected. In addition, 2020 is a big year for 5G products. If the epidemic is controllable in the second half of this year, it will probably be better than last year.

For import enterprises in China, orders and business are relatively stable.

The vacuum pumps sold by Edwards Trading (Shanghai) Co., Ltd. (hereinafter referred to as "Edwards") are mainly used in the semiconductor and LCD panel industries. During the epidemic period, even the storage of the Yangtze River in Wuhan has not been shut down, so the domestic demand side has no effect at present.

Edwards currently has annual sales of 3 billion US dollars in the Chinese market, half of which comes from the production of Qingdao plants and half of its imports from British parent companies.

In February, sales of Edwards decreased by 25% from the daily average monthly sales, from $36 million to $30 million, while the decline in March dropped to 10%. "Next month will basically come up and fill the gap between 2 and March." Xu Jian, chairman of Edwards said.

But he now faces the biggest uncertainty in the supply side - whether 50% of overseas imports can be stabilized. Overseas suppliers are distributed in the UK, Czech, Korea and Japan. "Now it seems that there is no problem in Japan and Korea. During the epidemic, there is no downtime. The only worry is the supply chain in Europe and the United States."

The main components of the vacuum pump are castings and electronic control systems. The replacement of castings is relatively strong. However, 70% of the components of the electronic control system come from Asia, and the control system is assembled in the United Kingdom. "The production of the UK headquarters plant is not broken, but the output will be affected, but it can guarantee the demand of the Chinese market." Xu Jian said.

In the global sales pattern of the vacuum pumps of Edwards, China occupies 25% of the market, which is the same as that of the United States. The Asian market, including China, is the top priority, accounting for 68% of the total market share.

In the semiconductor industry of China, the market share of Eddie watts vacuum pump is 60%, ranking first, and sales exceed the sum of the sales volume of the 10 vacuum pumps. Especially in some leading enterprises accounted for a higher proportion, for example, accounted for 75% of the total storage ratio of the Yangtze River, 80% of SMIC, and about 85% of Changxin storage.

As the Chinese market is relatively stable, Xu Jian met with the head office last week, and the president asked him to stare at the Chinese market to stabilize the global business of the head office.

A foreign elevator enterprise has 75% of its business in China, but some of its raw materials and components rely on imports, accounting for 30% of the purchase amount. The instability of overseas supply also affects the business of the company.

For example, a Swiss supplier of high-end elevator doors can supply 50 doors a week, but since March 12th, the supply is very slow, like squeezing toothpaste, which can only deliver 35 doors. "It's good to have 20 doors a week, and 60% of the supply capacity is gone. Shanghai factory can't deliver without doors. " The company's global purchasing director said.

Now, the person in charge will spend a lot of time checking the order every day, and tell the supplier which is urgent and which can be slow.

In addition to ordering priorities, he has to communicate with customers, because he does not know when to restore the supply status, so whether to accept some parts from import to domestic. For example, the imported 6 millimeter orbit can now be replaced by the domestic 8 millimeter orbit.

Shanghai Waigaoqiao international trade and Operation Center Co., Ltd. is the largest and strongest Trade Logistics comprehensive service provider in Shanghai Waigaoqiao Free Trade Zone. Its controlling shareholder is 600648.SH. Official website data show that the annual revenue of Waigaoqiao international trade and operation center is more than 5 billion yuan, and the volume of import and export trade exceeds 5 billion US dollars.

"High-end consumer goods, cosmetics and medical devices are growing, and there will be no reduction throughout the year. Smart manufacturing may be flat or slightly down. " Shanghai City Waigaoqiao international trade and Operation Center Co., Ltd. Chen Yifeng said.

From the data of 1~2 months, Shanghai cosmetic and skin care products imported 5 billion 790 million yuan, up 15.23% over the same period last year. Among them, Shanghai foreign trade import and Export Co., Ltd. imported 521 million yuan of such commodities, up 13.7% from the same period last year, ranking third in the city.

Global supply chain faces reconstruction

Short term uncertainty makes practitioners cautious. Many enterprises have indicated that they should work hard and enhance their competitiveness, so as to prepare for the next round of restarting.

"As long as a ring is broken, the supply chain is completely broken." In order to prevent supplier bankruptcy, the company is providing some support for more than 10 key parts suppliers who need cash flow support, such as shortening the account period, said the head of the procurement.

"Our payment period is 90 days, and now it is shortened to 30 days." He said suppliers will also help enterprises, such as overtime.

New spinning is helping customers purchase masks and other anti epidemic materials. "H&M wants to buy 2 million masks for our country, and we will immediately transform China's masks to Europe, so that we can have income and maintain close ties with customers." Chen Zheng said.

"Through epidemic situation, we can make many friends and share friends in need." Chen Yifeng also said that Waigaoqiao international trade and operation center has made many overseas clients through the epidemic and established business contacts. Overseas customers in purchasing masks also found that China's manufacturing capability is too strong.

Some enterprises also choose to turn to the domestic market and wait for the improvement of the foreign trade situation.

Because there are domestic online sales channels, Fang Yu said that the company intends to attack the domestic market this year. "Now when we sell our products exported to Australia, we find that the exchange rate has dropped a lot, and the money has come back to a great loss, so we buy some Australian milk powder, honey, health care products and sell it back to China."

Xu Jian is still very optimistic about the future. He believes that China's semiconductor market will continue to flourish in the next 10 or 20 years. "I joined the company for 16 years, from the sales of 65 people and 100 million yuan to more than 700 yuan and 3 billion yuan sales now, the staff doubled 10 times, and the business doubled 30 times."

The stability of China's market is very important for multinational companies to make investment decisions. Recently, Xu Jian Gang talked with Waigaoqiao Group about setting up a logistics center and innovation center. "The innovation center will come out in August. We will turn China into manufacturing center, R & D center and logistics center, and move more products to China."

Because of the epidemic, the industry generally expects that the supply chain will have a rebalancing and redistribution process to achieve a new balance between supply chain stability and intensification.

International supply chain giant LLamasoft CEO Razat Gaurav told reporters that there are several risk points in the current supply chain. First, many companies consider the efficiency of supply and production on the basis of cost, including the efficiency of liquidity. Two, some companies want to keep their inventory at a relatively lean level. Three, there are still some bottlenecks and obstacles in the material flow capacity. Four, many consumer company may know only one level of supply. Who should be, but not two or three suppliers.

Based on these risk points, "we predict that there will be some major changes in the global supply chain after the end of the epidemic, so as to reduce the risk of the supply chain and ensure that the whole supply chain will not collapse because of the single link problem." RazatGaurav said that the risks of production cost, service level, product quality and epidemic situation are all important considerations.

However, after the global spread of the epidemic, many enterprises told reporters that China's supply chain has more advantages.

Chen Zheng said that the epidemic will help China stabilize its position in the global supply chain, because the global management and management capabilities of China are seen globally, which is very important for the stability of the supply chain.

Xu Jian said that the European company's supply chain ideas basically focus on the local for local, so the supply chain layout in China is for China and Asian markets.

The above foreign elevator enterprise procurement official said, from the perspective of risk management of foreign enterprises, after the outbreak of the supply chain layout adjustment will happen. He believes that eventually it will be adjusted to a diffuse pattern, and suppliers are not concentrated in one area. Ultimately, Chinese suppliers must win their orders and market share on their own competitiveness.

"On the other hand, it is forcing China's suppliers to upgrade their industries, upgrading China's industrial chain capability, and can not continue to grow in the next 10 years and 20 years in an extensive way." He said.

Loose support is needed, and reform needs more urgent.

At present, WTO economists are analyzing the consequences of the new crown pneumonia outbreak and will publish their trade forecasts for 2020 and 2021.

Although the report will not be announced for several weeks, Azevedo, director general of WTO March 25th, said WTO economists foresaw a sharp decline in cross-border trade.

According to customs statistics, imports and exports of China's goods trade decreased by 9.6% over the first two months of this year, of which exports dropped by 15.9%. In 1~2 months, the total import and export volume of Shanghai was 482 billion 449 million yuan, down 5.4% from the same period last year.

The press conference of the joint defense and joint control mechanism of the State Council in March 30th, Xin Guobin, Vice Minister of the Ministry of industry and commerce, said that the spread of the international epidemic is bound to have a greater economic impact on China's industrial chain, supply chain and export. With the further spread of the international epidemic situation, the situation of China's foreign trade import and export is likely to deteriorate further. In this regard, we must closely follow the development and change of the situation and prepare for it as soon as possible.

The situation is not optimistic. Enterprises need to support more reforms while practicing hard work.

Chen Zheng said that as the epidemic continues, the deterioration of corporate financial statements is inevitable this year. Enterprises will make various efforts to ensure that they are not seriously ill. At the same time, the government needs to provide a relatively relaxed environment to help enterprises repair their financial statements.

"For example, SASAC can have more flexibility in assessing state-owned enterprises, ignoring the level of financial data and the growth of profit scale. Otherwise, the action will be distorted and the result will be distorted. Chen Zheng said.

At present, the new textile is on the basis of maintaining stability, focusing on adjusting the structure to increase the profitability of enterprises, such as more ZARA, H&M customers, do more import business, enter the medical health sector.

Under the outbreak of the crisis, the demand for reform is also more urgent.

At present, the Waigaoqiao international trade operation center is making use of the timing of the epidemic to do some subjects, such as how to make use of the advantages of the free trade area to promote the development of offshore and entrepot trade.

After the outbreak of trade protectionism may rise, are we ready to respond? Is Shanghai's business environment fully integrated into the international arena? If we are ready, Shanghai will still have the advantage of going up. We have the advantage of first out and there are ways and means to optimize the business environment. " Chen Yifeng said.

Tian Guofeng also put forward proposals for developing cross-border electricity providers. He said that 1210 (bonded mode) and 9610 (direct mail mode) have been applied very well in the cross-border electricity supplier import. Can we make reverse duplication for export?

"We need to make the general trade cross-border electricity supplier mode to be bigger." Tian Guofeng said.