Recently, a customer from Ningbo came to a cooperative market shop on Eastern Market of China Textile City to purchase polar fleece. He had planned to place orders in advance, then transferred the money to the dealer's bank account next month as the usual transaction, but declined by the counterpart. "The raw material price fluctuates largely, the orders signed in the previous period almost make me have a loss. The inventory increasing and poor situation make the anti-risk ability get weak. Now, if no cash transaction is accepted, I prefer not to do business." Said Mr. Wu, boss of the market shop.
Large volume of inventory requires quick cash return
Boss Wu deals in knitted fabric on the third floor of Eastern Market in China Textile City. The business this year is not better, but the big problem annoying him is the heavy inventory, hard to convert into cash. Mr. Wu said, dealers hardly foresee the current raw material market, so the quotation is hard to offer when receiving orders, specially the big orders and the orders having a long time cycle. "At present, the average dealers fear to receive the long time cycle orders. Due to the slow cash return, the capital flow is in trouble."
Such market shops focusing on domestic trade like Boss Wu relatively have less inventory, because the factory accepts the transaction on credit. The factory produced the fabrics after his call. However, things are changed. If the money is not paid in advance, the factory will refuse to produce products. Boss Wu said, although he had no special warehouse to store, an empty house of his own was occupied fully by cloths. The reasons were the dull sales on some cloths and lots of orders withdrawn. "Grey cloth factories and dyeing factories refuse to do business on credit. No money, no goods. So we had to pay for the cloths. The inventory increased when in the dull sales." In order to convert into the cash quickly, Boss Wu sells the spot goods and asks the settlement on the spot.
In the end of the year, avoid the credit
In the end of the year, the credit has become the issue concerned by all dealers of China Textile City. "Without the credit, no business will be done." This is the common sense among the dealers. However, the situation this year is totally different from the pervious. "Even the powerful dealers can only accept the credit 30% of the payment." A velvet fabric dealer of China Textile City told the reporter.
To ensure the capital's return at the end of the year, many dealers of China Textile City recently choose the cash transaction. "Without seeing the cash, I have no confidence on the business, for fear of the customer's cheat. " Mr. Chen a knitted fabric dealer of China Textile City. Since this year, the fabric sales are not optimistic, directly leading to the turnover of some dealers in China Textile City. In order to guarantee the capital liquidity and avoid the bad credit, many dealers receive the payment on the spot if the customer accept the cash transaction.
"At the beginning of next year, the situation may be even more severe. If no enough cash is saved, the capital chain will be likely to be broken." A dealer on the first floor of Eastern Market in China Textile City said it frankly. At present, the dealers are not caring about the earning of this year, but worrying about the payment of those on credit.
