Order cancellations from fashion brands Zara, H&M and Primark to retailers Macy’s, Neiman Marcus and many more are sending shock waves across fashion manufacturers in China, making recovery even harder.
According to the National Bureau of Statistics of China, garment manufacturing fell 36.61 percent in January and February to 2.51 billion pieces versus the same months in 2019. Domestic sales of garments in the period shrunk 33.2 percent to 110.3 billion renminbi, or $15.55 billion.
Meanwhile, exports of garments decreased by 20 percent to $16.06 billion, and investments in the textile and fashion industry plummeted 50.2 percent.
Erdos, the world’s largest cashmere manufacturer, told WWD that while its factories have been running at full capacity since the end of March, OEM orders from European luxury brands have been largely canceled or postponed.
Jane Wang, vice president of Erdos Holding Group, said the situation posed a great challenge to the production planning and operation. “We are ready to be flexible so that we can meet the requirements of our clients at any time. We are also in close contact with them and working on a solution together,” she added.
Some 30 percent of Erdos’ textile comes from Europe, especially from Lombardy, the epicenter of coronavirus outbreak in Italy. In response to the delay, Wang said the company has made several plans to make sure its fall 2020 collection can be produced and delivered in time. The company employs around 20,000 people at its plants in Inner Mongolia.
The brand has also taken a hit in Japan, its biggest international market. Wang said its stores in Tokyo, Osaka, Nagoya, Hiroshima, Fukuoka and Matsuyama saw a sharp decline in footfall. Chinese visitors to the country dropped 87.9 percent in February, and its retail industry saw a 12.2 percent dip in sales for the fifth consecutive month.
For smaller factory owners, order cancellations have been keeping them awake at night since late March.
A factory owner who works with H&M, Zara and Max Mara, named Miao told Caijing, a Chinese news agency, that H&M has canceled its order for May, including a batch to go on sale for later summer and another for fall, while Zara and H&M have also canceled 30 to 40 percent of its order in her factory in Myanmar.
Manufacturers noted that certain styles produced for export – one factory is sitting on a canceled order of 30,000 seasonal lace tops – will be hard to sell domestically. Some suggested the drop in demand may go deeper than the financial crisis in 1997 and 2008.