Home / Knowledge / News / Textiles / 'Out of box thinking' to survive credit squeeze
'Out of box thinking' to survive credit squeeze
31
Dec '08
The economic turmoil across the globe is leading companies to think out of the box in order to survive the storm of the crisis. The Chongqing Lifan Group plans to exchange cars with other companies for other products, which in essence is the medieval way of trading or the barter system.

On the exchange radar are raincoats, umbrellas, shirts, tents, information calendars, etc. The main purpose behind adopting this unique medieval system is to maintain continuity in sales and reduce costs and the total barter amount is expected to be more than 10 million Yuan.

Coincidentally, in July this year, Beijing Huiyuan Juice Group exchanged 400,000 boxes of fruit juice with Qingdao Aucma Co., Ltd. for 6000 sets of display cabinets, worth of about 14 million Yuan and Shanghai Arts Development Co., Ltd. exchanged finished Yue-Sai dolls with Laweilier Toy Co, France for fabrics and PVC materials, worth US $3,000,000.

Since the beginning of the sub-prime crisis in the US, credit market is tightening and banks have restricted lending, leading to a credit squeeze. At the same time corporate finance costs continue to increase, leading to a barter system among companies, as the approach involves no cash.

In this so-called barter, companies use their own products to exchange for raw materials and consumer goods with other companies, which would have been originally purchased in cash, in order to reduce their liquidity pressure.

Director of the Beijing Center of Qingdao Aucma Business Co., Ltd. Wang Li-Ming said," Barter means no cash is involved and in the process the company can get a variety of products or services in return like raw materials, promotional materials etc., which originally would have been purchased in cash. The barter plan for next year is expected to reach 60 million Yuan, for the company”, he added by saying.

It is estimated that sales cost of a product in general is 27 percent, while the cost of barter is only 5-7 percent. The barter system came in to prominence with the unfolding of the Asian financial crisis in 1997 in Thailand, Malaysia, Japan, South Korea and other countries.

Fibre2fashion News Desk - China


Must ReadView All

Nigeria's ABP scheme targets 1 lakh cotton farmers in 2019

Textiles | On 21st Mar 2019

Nigeria's ABP scheme targets 1 lakh cotton farmers in 2019

The Central Bank of Nigeria’s (CBN) Anchor Borrowers Programme (ABP)...

Pic: CorePower Yoga

Apparel/Garments | On 21st Mar 2019

TSG Consumer Partners takes over CorePower Yoga

TSG Consumer Partners, a leading private equity firm focused...

Pic: Showcase USA

Apparel/Garments | On 21st Mar 2019

Showcase USA store helps in cross-border e-commerce sales

Leveraging the backbone of ABC Depot Logistics, the exclusive 3PL and ...

Interviews View All

Hannah Lane, Redress

Hannah Lane
Redress

Encouragement from brands will motivate supply chains to become more...

Sanjay Yagnik, Maa Tex Speciality

Sanjay Yagnik
Maa Tex Speciality

‘We suggest reducing dosage of sizing chemicals to reduce sludge...

Arvind Saraf, Triveni Sarees

Arvind Saraf
Triveni Sarees

e-Commerce is still evolving fast with constant flux and surprises

Yash Jain & Sanjeev Jain,

Yash Jain & Sanjeev Jain

Divyam Export, launched about 30 years ago, exports to 15 countries,...

Awanda Booth,

Awanda Booth

Held every year in New York City, Surtex is a global business-to-business...

Pietro Turrin,

Pietro Turrin

Industrie Tessili Bresciane (ITB) has served numerous industries and...

Prof Seokheun (Sean) Choi, Binghamton University, State University of New York (SUNY)

Prof Seokheun (Sean) Choi
Binghamton University, State University of New York (SUNY)

A team of researchers from the State University of New York (SUNY),...

Alfonso Marra, Klopman

Alfonso Marra
Klopman

It was in 1968 that Klopman introduced the concept of poly/cotton workwear ...

Justin Chan & Shyam Gollakota, University of Washington

Justin Chan & Shyam Gollakota
University of Washington

A fabric that can store data without any electronics or batteries has been ...

Sandeep and Sarah Shaikh Gonsalves, SS Homme

Sandeep and Sarah Shaikh Gonsalves
SS Homme

SS Homme celebrates the craft of traditional tailoring through the bespoke ...

Samar Firdos, Arvind Ltd

Samar Firdos
Arvind Ltd

<b>Samar Firdos</b>, Chief Manager (Design) at Lifestyle Apparel Denim...

Priya Somaiya, Usha Social Services

Priya Somaiya
Usha Social Services

The Usha Silai label from Usha International is all set for a retail...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


March 2019

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Advanced Search