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About 65 per cent of apparel exporters’ payment amounting to around $2 billion (about Rs 15,300 crore) is currently stuck with foreign buyers since overseas buyers and buying houses are now either cancelling or postponing confirmed export orders. As Apparel Export Promotion Council (AEPC) chairman Sakthivel says, with lockdowns across markets, foreign buyers are postponing orders, and asking for hefty discounts. Goods in transit goods are also not moving. Besides, the goods dispatched are also not finding any takers on different foreign ports.”
K L Magu, MD, Jyoti Apparels adds most exporters’ bank deposits today stand exhausted. Foreign buying houses have also not paid for the two to three month-old shipment, leading a huge blow to cash flow. Various manufacturers have disclosed that foreign buyers are not lifting deliveries which have already reached their ports. Sakthivel says, such cancellations and postponement of shipments are resulting in packing credits being eroded. Apparel products are tailor made, design-specific and fashion-specific and are perishable and any cancellation at this stage would make them redundant with little or no salvage value the next year.
Rajendra Agarwal, Managing Director, Donear Industries also confirmed that there has been postponement of deliveries from brands like Blackberry, Madura Garments, ITC, within India.
The fast-moving pandemic has injected a tremendous amount of uncertainty into every link in the global supply chain. Millions of people are self-isolating and the cotton and textile business is at a virtual standstill. A recent survey by the International Textile Manufacturers’ Federation (ITFM) indicated that the global textile industry had experienced a 31 per cent decline in orders by early April.
The survey also pointed out that all regions around the world had suffered a significant number of cancellations and/or postponements of orders, especially South America and Africa, where orders declined 41 per cent and 38 per cent respectively.
The international wool industry has been negatively affected by the pandemic, leaving many wool producers with uncertainty about the options available for their clips. According to the International Cotton Advisory Committee (ICAC), the effect of COVID-19 on the cotton industry is very uncertain
The National Farm Online website reported that due to lockdowns in the US and Europe, many orders had been cancelled. Hennie Bruwer, CEO of Cotton South Africa, told Farmer’s Weekly that he expected cotton consumption to be suppressed worldwide due to the slowdown of the global economy, as well as the effects of COVID-19.
However, South Africa’s cotton industry was in a good position because of the quality product produced by local farmers, which earned them premium prices.
US’ denim imports declined significantly in the first three months of the year. US companies imported 14.32 per cent less blue denim apparel – 97 per cent of which is jeans – for the year to date through February for a value of $497.08 million. The drop-off was led by a 63 per cent decline from China to $55.77 million, as factories shut down as COVID-19 swept through the country. Top denim supplier Mexico’s shipment to the US dropped 27.2 per cent in the first two months of the year to $91.98 million. Other suppliers among the top 10 that registered a decline in the period were: Indonesia, a decrease of 34.92 per cent to $9.17 million, and Nicaragua, with a falloff of 2.99 per cent to $13.85 million.
There were winners in denim import sourcing in the period, led by Bangladesh, with a 39.59 per cent increase to $90.13 million, and Vietnam, with a rise of 30.17 per cent to $65.25 million. This leapfrogged both countries over China in year-to-date jeans imports. Cambodia also posted a major gain in the period, with its shipments to the US skyrocketing 111.48 per cent to $29.15 million. Small gains were also posted by Pakistan, Egypt and Sri Lanka among the top suppliers in the period.
The COVID-19 pandemic has impacted business activity and supply chains across the globe, with numerous trade fairs and events around the world being postponed or cancelled, depriving many enterprises of business and marketing opportunities. According to global exhibition industry association UFI*, potential deals worth at least $145 billion were not concluded as events failed to take place as scheduled. To help companies rise to the challenge, the Hong Kong Trade Development Council (HKTDC) is offering a number of new platforms and special packages to capture every business opportunity available.
HKTDC Executive Director Margaret Fong said: “To help enterprises tie over the COVID-19 outbreak, we are launching a series of digital initiatives, including webinars and virtual exhibitions. We are also offering online-to-offline (O2O) promotion packages for companies to participate in our physical exhibitions and conduct promotions through our online platform, offering a double opportunity to expand their customer base and capture orders.”
Virtual connections between global buyers and supplies : The HKTDC has also launched a month-long Spring Virtual Expo on 1 April. This
digital exhibition will give businesses a new channel to establish contact and source from quality vendors. The HKTDC’s online marketplace, hktdc.com Sourcing (sourcing.hktdc.com), features around 130,000 quality suppliers and more than 2 million international buyers, with over 24 million business connections made every year. Supplier information is verified by third-party organisations to enhance buyers’ sourcing confidence.
In addition to existing users of hktdc.com Sourcing, the Spring Virtual Expo aims to attract other active online buyers. The HKTDC has invited buyers from all over the world to participate, including VIP buyers and those who have participated in HKTDC fairs.
Multiple sectors covered : To further enhance the effectiveness of business matching, the Spring Virtual Expo focuses on four themes: technology – lighting and electronics; gifts and houseware; lifestyle; and fashion and beauty. The 33 groups of products covered under the four themes will include lighting, construction and hardware, electronics and computer accessories; home products, gifts, toys, baby products and stationery; jewellery, watches and glasses; and fashion accessories, clothing, and health and beauty products.
To help meet their different sourcing needs, global buyers will receive personalised product recommendations through online channels such as social media, online advertising and email, helping buyers and sellers to seal deals more quickly.
Omni-channels to explore new opportunities : The HKTDC is offering a range of O2O packages combining online and offline promotion. “Exhibitors can showcase products at the exhibitions and promote online at the same time. This extends the fair period so businesses can reach more buyers and field orders,” said Ms Fong.
Ms Fong added that the HKTDC will organise a Summer Sourcing Week from 25 to 28 July. Featuring nine fairs located at the same venue, it will provide a one-stop cross-industry platform for global buyers to replenish their stocks. Additionally, the HKTDC is looking into O2O business-matching services at its fairs so that overseas buyers who cannot come to Hong Kong can locate target exhibitors in advance. Video conferences will be arranged between buyers and exhibitors to discuss business deals.
As per China Chemical Fibers Association (CCFA), the total production of man-made fiber reached 58.27 million tons last year, up by 7.8 percent. The viscose fiber increased by 2.8 percent, PET fiber by 8.3 percent and polyamide fiber (Nylon) by 5.9 percent. CCFA predicts that the man-made fiber production will have a reasonable uptick by 3 percent and export by 5 percent in the country
Amid waves of production being restarted across China, this “biomass regenerated cellulosic fiber with a capacity of 20,000 tons/year” in Xinxiang city, Henan Province is one of the many.
After the lockdowns has been lifted in the virus-struck cities and provinces, the investments continue to inject vitality to the new projects those were held up for strict “shelter-in-place” compliance directives to fight the COVID-19.
Bailu Group emerges as China’s man-made fibre major
Xinxiang Bailu Investment Group Co Ltd is the investor in the project. Xinxiang Chemical Fiber Co Ltd, a subsidiary pillar to Bailu Group is a large company for producing raw materials for textile industry in China, with its three main product lines respectively for regenerated cellulosic filament, best known with its brand “Bailu” (means Egret in English) for 80,000 tons, and its staple fiber for 100,000 tons and Polyurethane fiber for 120,000 tons, totaling 300,000 tons a year according to the company’s introduction on its website.
China Securities reported that Xinxiang Chemical Fiber Co. Ltd. accounted for 33% of the national viscose filament production that was recorded 210,000 tons in 2019. According to the latest report issued on April 8, 2020 by Xinxiang Bailu Investment Group Co. Ltd., its Xinxiang Chemical Fiber Co. Ltd. produced 61,422 tons of viscose filament, 8622 tons of viscose staple fiber, 82,577 tons of polyurethane fiber last year. Its national share is absolutely expected to increase when the new viscose filament project is accomplished.
Strict measures for construction as compliance post Corona
Bailu Group is taking very strict measures backed up by stringent requirements for constructors, civil building or installation workers on safety and health alerts according to (Disease Control and Prevention Musts during Construction) issued by the Group’s Construction Commanding Center.
In the construction field, 359 workers from nine different divisions in Bailu Group have registered for health eligibility through medical check- ups, in addition to a close look into the health conditions of 235 workers from seventeen subcontractors. Moreover, 14-day quarantining orders have to be obeyed by the workers who come from the other provinces or from the disease-ridden cities or counties inside Henan province. “We have for many times discussed the detailed plans for reopening our construction with the management teams in the Green Fiber Exclusive Park of National Xinxiang Economic and Technological Development Zone where our new project is stationed. We have prepared sufficient first-aids materials and medical isolation room in case of any symptom found, and carry out screening check in fragmented management from entry to exit. The whole construction field got sanitized every two or three days, leaving no stones unturned. The dormitory is kept clean and tidy, the canteen is opened to the workers at a properly-arranged time interval to avoid rush hour for food,” said Mr. Li Yunsheng, Vice President of Bailu Group, who is also head of the coronavirus task force council inside the corporation.
Bailu that means egret in English, is flapping its wings to fly when the Mother Nature is rejuvenated from wintertime inanition, in the similar way has Bailu’s investment revitalized breaking months of inactivity impacted by COVID-19.
Investments for MMF continue in Green Fiber Exclusive Park
In fact, this project broke the ground on May24 last year when Mr. Zhu Xuexin, Vice President of Xinxiang Chemical Fiber Co.Ltd, a subsidiary pillar to Bailu Group, said “this biomass cellulosic filament project (20,000 tons/year) is one of the series investments in recent years since 2014. For the past 5 years, the company effectively started with new projects that are completed from engineering design to commissioning operation on averaging 14 months for each.”
Indeed, the past five years witnessed 5.7 billion Yuan of total investment, and 4 new projects already in production of 100,000 polyurethane fiber in aggregate capacity, and one filament project for 10,000 tons/year, in addition to this new Lyocell filament project.
The Green Fiber Exclusive Park, jointly invested in a 2 billion Yuan package by Bailu Group, China Textile Academy and Gansu Lanke Petrochemical High-Tech Equipment Co.Ltd.(Lanpec), occupies land about 500 mu (Chinese volume unit for 667 square meters per mu), exclusively used for green fiber production that is expected to reach 100,000 tons per year in totality with the projected sales for 2.3 billion Yuan when all the projects inside the compound are finished.
As per China Chemical Fibers Association (CCFA), the total production of man-made fiber reached 58.27 million tons last year, up by 7.8 percent. The viscose fiber increased by 2.8 percent, PET fiber by 8.3 percent and polyamide fiber (Nylon) by 5.9 percent. CCFA predicts that the man-made fiber production will have a reasonable uptick by 3 percent and export by 5percent in the country even though the global crude oil price sharply dropped and the world economic fallout is sure to happen as a consequence of pandemic impacts.
Contributed by Mr. ZHAO Hong
He is working for CHINA TEXTILE magazine as Editor-in-Chief in addition to being involved in a plethora of activities for the textile industry. He has worked for the Engineering Institute of Ministry of Textile Industry, and for China National Textile Council and continues to serve the industry in the capacity of Deputy Director of China Textile International Exchange Centre, V. President of China Knitting Industry Association, V. President of China Textile Magazine and its Editor-in-Chief for the English Version, Deputy Director of News Centre of China National Textile and Apparel Council (CNTAC), Deputy Director of International Trade Office, CNTAC, Deputy Director of China Textile Economic Research Centre. He was also elected once ACT Chair of Private Sector Consulting Committee of International Textile and Clothing Bureau (ITCB)
Even as the COVID-19 pandemic spread across the world, fast fashion brands including H&M and Zara kept their stores open for the majority of March. Retail workers in these stores were on the front line in the middle of growing confirmed numbers of cases.
Focus on workers’ health and safety
As Aja Barber, a writer and consultant focusing on fashion’s intersections with feminism, race, and colonization, action should be taken to support the health and safety of these workers. Aja aims to shed a light on the working conditions of retail through her Instagram account. This will force people to be more critical of the entire fast fashion system.
Replying to this criticism, H&M stated they had begun closing stores in the US prior to all their stores closing on March 1. The brand also provided employees with additional pay in response to the COVID-19 pandemic. However, the brand was forced to furlough some workforce in the US due to the negative impact the pandemic had on its business.
Order cancellation leads to layoffs
In addition to impacting retail workers, the pandemic has also impacted 40 million garment workers living in low-wage countries across Southeast Asia
and Europe. As Bloomberg reports, cancelling of $1.5 billion worth orders by European companies has led to furlonging employees from about 1,089 garment factories in Bangladesh.
Many of them are women who are their family’s primary wage earner. A recent report by Worker Rights Consortium details that very few of these workers have ever been paid enough to accumulate any savings. These workers are now demanding a more equitable approach by fashion brands in sharing the financial burden of the crisis.
Over 1 million garment workers in Bangladesh have been fired or furloughed due to orders being cancelled, states a Penn State report. To deal with this, Fashion Revolution, global nonprofit calls for greater transparency in the industry, asking people to send an email to their favorite brands and demand they pay for orders already placed.
Fair treatment for supply chain workers
Barber points out, supply chain workers should be considered as employees of the companies they produce for instead of being contracted through third parties. Céline Semaan, Executive Director of Slow Factory Foundation, also views the recent treatment of retail workers as a curtain that has been lifted. This pandemic is putting the entire fashion industry on hold while placing an incredible amount of economic pressure on ethical brands and independent designers.
While most stores are closed, online shopping continues with employees for fast fashion giants like ASOS currently working at its warehouse in Grimethorpe, Barnsley. Also brands such as Everlane closed its retail stores indefinitely. This compelled it to lay off 290 employees, 14 per cent of whom were on customer experience team. They were offered two week severance while the brand was able to transition 20 customer experience team members into full time roles with benefits.
Putting workers before profit
The economic ashes of the Coronavirus outbreak will be a call for brands to put workers before profit. For the fashion industry, this would mean an industry overhaul. As Ngozi Okaro, Executive Director, Custom Collaborative, a New York nonprofit helping women in low-income and immigrant communities to develop careers in sustainable fashion views, the only way we can have sustainable fashion is if we pay sustainable wages for workers.
To this Aja adds, priortising labor rights will be responsibility of the fashion industry in future. Brands that don't will no longer be able to survive in the market.
The Cotton Textiles Export Promotion Council (CTEPC) has urged the government to provide interest-free working capital loan to export-oriented textile companies to tide over the current unprecedented situation due to the pandemic. According to the council, while overseas buyers are cancelling orders on a large scale, they are not even making payments for shipments already made.
Exporters have closed down their production facilities due to the lockdown announced by the government. Textile exporting companies are facing severe financial constraints with many finding it difficult to even pay salaries and wages to the workers during the lockdown period as per government directives, he said.
Further, there is uncertainty as to when the situation will be back to normal, he added. Exporters are looking forward to a financial package from the government so that they could sustain. Most exporters have entered into forward contracts with banks and now they are unable to surrender the committed forex under these contracts due to delay in receiving payments.
As a result, exporters have to face huge losses as they are forced to either cancel or roll over the forward contract which involves penalty and other charges. Texprocil has suggested that banks should waive off penalty charges on cancellation and roll over of forward contracts entered into with bankers by the exporters.
Tapestry will extend store closures in North America and Europe for an additional two weeks through April 24, in light of continued efforts to slow the transmission of COVID-19. While essentially all company stores in China have re-opened -- across its three brands Coach, Kate Spade and Stuart Weitzman - over the past weeks, Tapestry has been forced to close many other stores in the Asia-Pacific region including all stores in Malaysia, Singapore, Australia, New Zealand and most recently, in some prefectures in Japan.
Likewise, most of the company’s global distribution centers continue to operate, with only one in Malaysia and a third-party facility in New Jersey temporarily closed. As previously announced, employees at closed locations will continue to receive pay and benefits over this period. The company will continue to reassess store closure decisions on a bi-weekly basis and will not reopen stores until safe to do so.
With the ongoing COVID-19 pandemic and its resulting impact on the fashion and retail industry, People for the Ethical Treatment of Animals (PETA) has taken the opportunity to acquire a considerable number of shares in major fashion brands. PETA, whose efforts are directed towards protecting and safeguarding animal rights, announced that it has bought shares in around 20 businesses including French luxury giant Kering, Burberry, Ralph Lauren and Guess.
The aim behind this exercise is “to push fashion brands to stop using wool, mohair and cashmere,” the NGO said in a statement. According to the association itself, it frequently buys the minimum number of shares required to enable it to take part in a fashion companies’ decision-making meetings to allow it to influence business decisions and strategies from the inside.
The results of these meetings have also been quite impactful – for instance, after acquiring shares in Prada and Hermès, PETA’s USA branch took advantage of Farfetch’s initial public offering in 2018 to invest in the luxury e-commerce business in order to push it “to abandon fur”.
PETA has denounced the use of mohair and cashmere via surveys carried out by the association in South Africa, China and Mongolia. These surveys brought to light the cruel treatment inflicted on goats and sheep by producers while being shorn or taken to the slaughterhouse. PETA is also a shareholder in companies like: Urban Outfitters, Under Armour, Deckers Outdoor Corporation (Ugg’s parent company) and Capri Holdings, which includes brands Michael Kors, Jimmy Choo and Versace.
Inditex SA’s main import and export airport hub in Spain is ramping-up operations as business in Asia read China, picks up. The retailer uses the airport as a base to import textile products and export apparel. Under Inditex’s unique distribution model, the vast majority of its apparel manufactured outside Spain has to be sent to the country and then exported to stores around the world.
The company has been able to continue certain operations in Spain in spite of a government order to place non-essential economic activity on standstill. With the slowdown in Spain and other countries, Inditex has re-assigned the majority of its space in the airport as a base of imports of medical goods.
The Zaragoza airport is one of Spain’s three largest cargo airports, and had the second highest cargo traffic in February, before the Coronavirus crisis hit the country in full.
