Inflationary Environment, Textile Industry To Survive The Test Of The Wisdom Of

At present, China's inflation is increasingly evident

. For businesses, the inflation is pros and cons of alternate, is a survival test of the wisdom of survival of the fittest, the rest must be good business. Overall inflation, the textile companies to survive the test of wisdom. A correct understanding of inflation in China is one of the reasons for the current round of inflation in the currency liquidity surplus, is actually a redistribution of wealth, the advantages and disadvantages for enterprises symbiosis.

Positive: First, inflation in general so that their revenue growth; second, inflation generally enable enterprises to increase the value of physical assets and liabilities relative devaluation; Third, inflation, some poor financial capacity of enterprises will face closure of danger, and that for the financial strength of enterprises to provide a favorable opportunity to acquire.

Drawbacks: First, inflation is usually accompanied by the means of production prices to enable enterprises to cost growth; Secondly, the Government would normally use the method to raise interest rates to curb inflation, which will undoubtedly increase the cost of capital of enterprises; third, inflation so that enterprises devaluation of accounts receivable; fourth, increasing the risk of long-term investment.

Enterprises in the period of inflation, if we respond properly to stabilize the prices, not only assets not shrink, but will lay the foundation for further development.

Prices is the most direct way to

Inflation is usually accompanied by the means of production prices. In order to survive and profit, business is the most direct way to deal with product price increases, price hikes are divided into "hard up" and "soft rose."

"Hard up" refers to does not change the product quality, functionality, technical content, packaging attributes such as direct price increases to follow the market situation. For consumers, this price increase seems to lack "common sense reasons, well-founded," to pass the cost of the enterprise can easily lead to resentment and resistance emotion.

"Soft-Up" that is by changing some or all of the performance of products, packaging, quality, etc., in raising the case of value-added products price increase in disguise. After the price of the product due to price increases has become transparent, consumers will have "reason" by default, ignore and accept the increases in the price of that "value for money." Many companies have adopted such a clever way.

Powerful enterprises to seize the market price remains

Powerful enterprises in other enterprises have retained the original price, when prices can also use the "competitive pricing strategy," such as a cycle of price increases later than the business purpose is to make their price is always lower than the competitors, and thus a larger share market.

But to some extent in terms of the inflation and adopt "low" or "competitive pricing" strategy, companies will be directly into its own risk - lower corporate profits and anti-risk ability has been seriously weakened, while easily the industry caused by intense fighting.

Integrated product is the challenge

Inflation coming, if an enterprise product price increases across the board, in the face of a myriad of competitors, is clearly not realistic. Industrial restructuring, is undoubtedly part of the enterprises, especially large enterprises a solution. Some enterprises in order to expand the scope of consumer groups, the products are generally divided into various grades, and cope with inflation, the brand strategy can be carried out under the guidance of industrial restructuring, such as upgrade some of the low-end products, prices continued to cut debt sales of products, as well as far as possible price stability in the high-end products in order to protect the crowd of mainstream consumer brand loyalty.

Re-evaluate the long-term investment projects,

Due to the long-term occupation of financing large investment projects to build a long cycle of inflation will increase investment costs during the currency in nominal terms, a direct impact on the project financing. The inflation rate is not high, circumstances, generally in the investment estimates the cost increase can not be foreseen. However, the inflation rate is high, but also to increase a reserve fund to consider the effects of inflation spreads. Thus, long-term investment projects, enterprises need to re-evaluate fully consider the impact of inflation on the investment funds, to reduce the construction of long-term investment projects.

Appropriate hoarding of raw materials

Inflation and raw material products, prices will continue to rise, in order to avoid bear the losses caused by price increases, companies can license the cash flow conditions, due in advance to buy accumulation of a certain amount of production required raw materials. Because inflation period, bringing the cost of inventories may need to be well below the inflation caused by rising prices of raw materials costs.

Accounts receivable and inventory clean-up

To bring maximum pressure on inflation than with the business of devaluation of the currency denomination due to a substantial increase in demand. Enterprises in the normal operating conditions, the original liquidity unable to adapt to inflation, business-to-liquidity demand, combined with the contraction of bank loans for funds to enable some companies into a shortfall situation. In the initial stage of inflation, for the recovery of accounts receivable and inventories of finished products for some processed for enterprises to create more cash flow.

Multinational companies can increase the overseas expansion efforts

For multinational enterprises operating overseas operation of the market for enterprises to reduce operational risks and to provide a better condition. On the one hand, the benefits of overseas market are relatively stable, reliable, and will not end with domestic inflation and the devaluation; the other hand, some raw materials procurement costs in overseas markets would be even lower. Outstanding enterprises can seize the opportunity to merger and reorganization.

Inflation period, there must be some businesses due to lack of funds or unable to adapt to market competition and face closure or bankruptcy situation, for some excellent companies, this is a rare acquisition and restructuring opportunities. Some companies may be impossible in normal times for mergers and acquisitions in this period became possible; some mergers and acquisitions in normal times have to pay a higher cost, while the period of inflation the cost is relatively much lower. Of course, in inflation during the mergers and acquisitions on the premise that business enterprises themselves to be healthy.

Inflationary Environment, Textile Industry To Survive The Test Of The Wisdom Of

By: ryyy

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