FW
From January to November 2018, Sri Lanka’s apparel exports grew five per cent compared to the same period of 2017. Apparel exports to the United States during the same period increased 5.6 per cent and to the European Union it went up four per cent.
Sri Lanka’s total apparel exports were up 10 per cent in November compared to a year ago. Exports to the US in November increased 16.5 per cent from a year ago; exports to the European Union, which declined in August and September, to go up once again in November by 2.4 per cent. Following the restoration of GSP Plus, Sri Lanka’s textile and garment exports to the European Union have shown higher growth. With Sri Lanka now on track to be classified as an upper-middle income country for the second year in 2018, there is a possibility that the European Union would withdraw the GSP facility in 2021.
A country which is classified as upper-middle income for three consecutive years is no longer be eligible for GSP Plus. The industry expects around four to five per cent year on year growth in apparel exports for 2019. This is based on the assumption that there will be no hard Brexit and there will be a negotiated Brexit.
Iran’s exports of apparel and clothing increased 60 per cent in the nine months of the current year. The country exported 4,600 tons of garments, a significant 59 and 24 per cent growth in terms of weight and value respectively. Efforts are being made to make things easy for garment manufacturers to enhance exports. The decision to prohibit imports of some items has created huge opportunities for local manufacturers to increase their exports despite all challenges pertaining to the currency.
The country has taken measures aimed at renewing the country’s garment manufacturing industry, in a bid to enter international markets. Exporting apparel products to neighboring countries, including the CIS and, in particular, Azerbaijan, is on the agenda.
There are about 50,000 apparel manufacturing units in the country. Foreign representatives, branches and distributors of apparel in Iran who seek business licenses have been mandated to produce goods worth 20 per cent of their import value inside Iran and to export at least 50 per cent of this domestic production.
The initiative is aimed at increasing domestic production, creating jobs and reviving Iran’s apparel industry. Public interest in domestic products has dramatically surged over recent months. Plans are underway to establish a new apparel industrial town.
Indian textile mills are setting base in Ethiopia. Ethiopia offers ready-to-use sheds, income tax breaks and training subsidies and offers tax-free gateways into the US, Europe and China.
KPR Mills from Tirupur has started a unit in Ethiopia. Other prominent textile players to have followed suit are Raymond, Arvind, Best Corporation and JJ Mills. KPR has invested in a capacity of 10 million units, providing employment for nearly 1000 people. Raymond’s plant in Ethiopia has a capacity of two million jackets.
Besides the labor cost, which is 50 per cent lower compared to India, another big advantage is that land and building are readily available. So it is just a plug and play model with cheap power.
While Bangladesh has free trade agreements with major importing countries, the Indian industry is struggling to get into a similar arrangement. Negotiations have been more or less futile as any concession given to Indian textiles must come with commensurate concessions to other products that the textile importing country might want to export to India. Import duties generally range from 10 to 18 per cent for most European products but could go up to as much as 28 per cent for certain categories. In comparison, Bangladesh imposes little or no duty on the products it imports.
In 2019, sustainability will go mainstream and influence more aspects of our lives than ever before. The UN IPCC (Intergovernmental Panel on Climate Change) report published in October 2018 showed the urgency of change needed to avert global crisis. At the current level, the world is on course for a disastrous 3C of warming. Many of the widespread actions needed are aimed at government level, but there is so much other ‘noise’ in the world of politics. The UN itself identified that political will is the final barrier to achieving the shifts needed.
According to Statista, awareness of the sustainability issues with fast fashion is low, with sustainability currently ranking fifth (behind quality, value, price and brand) in importance when choosing clothing. The solution is to shift from a linear economy (make, use, dispose) to a circular economy in which resources are kept in use for as long as possible, then recovered and regenerated at the end of their service life. Some brands are already making strides in this area. Patagonia makes polyester fleeces with recycled plastic bottles and H&M has its garment collection scheme, and ‘conscious’ sustainable style range, but this type of offering needs to shift from a single range to the mainstream in order to meet consumer needs.
India is rolling out initiatives for the textile sector. One such is the India-specific apparel sizing which will help in taking policy decisions for the growth of the domestic industry. Embedded duties will be refunded fully and no tax will be imposed on exports.
India’s apparel and textile industry is being supported through the Amended Technology Upgradation Fund Scheme, the Scheme for Integrated Textile Parks, the Integrated Skill Development Scheme and other such schemes.
The special incentives for the textile and apparel sector will enable the establishment of larger manufacturing set-ups thereby leading to economies of scale for executing larger orders resulting in the enhancement of India’s share in global textile and apparel exports. Since 2014, Rs 35,000 crores have been invested in the textile and apparel sector.
India exports textile and apparel to all countries including China. The recovery in the US economy has given a boost to India’s textile and apparel exports. With a continuous growth in US economy, India’s textile and apparel export growth is expected to continue. India’s share in world trade in textile and clothing is estimated to be 4.95 per cent.
The free trade agreement between the EU and Vietnam is expected to be a win-win agreement for both parties, creating a resoundingly positive effect for businesses and their long-term investment plans.
The agreement will facilitate exchange and cooperation between Vietnam and Europe by simplifying customs procedures for certain products, recognising geographical indications, and applying environmental protection standards.
Vietnam is an important economy in Southeast Asia. Thanks to its political stability and open-door policies to attract investment, Vietnam has risen on the World Bank’s business rankings. Urbanisation in Vietnam is increasing rapidly, with the number of people in cities in 2015 accounting for 34 per cent of the total population, giving an indication of the great potential of the Vietnamese market.
Once the agreement goes into effect, the EU will eliminate import duties on approximately 85.6 percent of its tariffs lines on Vietnamese products. After seven years, 99 per cent of EU tariffs will be removed for Vietnamese products. Vietnamese textiles, footwear, and seafood products (except for canned tuna and fish balls) will incur no import duties within seven years after the agreement takes effect.
Vietnam will eliminate 65 per cent of its import duties on EU items and tariffs will be eliminated by over 99 per cent over the next decade.
"As per Vietnam Textile and Apparel Association, the country’s total textile and apparel (T&C) exports during the first four months of 2019 registered a 9.59 per cent growth to touch $11.43 billion. The US emerged as the largest importer accounting for 39.6 per cent of Vietnam’s export turnover. CPTPP members followed next with their imports accounting for 17 per cent of total Vietnam’s exports."
As per Vietnam Textile and Apparel Association, the country’s total textile and apparel (T&C) exports during the first four months of 2019 registered a 9.59 per cent growth to touch $11.43 billion. The US emerged as the largest importer accounting for 39.6 per cent of Vietnam’s export turnover. CPTPP members followed next with their imports accounting for 17 per cent of total Vietnam’s exports. Imports by the European Union accounted for 13 per cent and those by Korea accounted for nearly 10 per cent.
Need for policy support to boost exports
Despite this robust performance, Vietnam’s T&C exports are mainly targeted towards traditional markets and are
not promoted in CPTCPP member countries. In order to target these markets, manufacturers need to create new sources of raw materials besides improving their competitiveness.
As per HuuHieu, Executive Director, Vietnam Textile and Garment Group (Vinatex) the country’s T&A exports, even after four months of CPTPP taking effect, have not shown any signs of growth. CPTPP is currently valid in seven of the 11 member countries including: Japan, Singapore, Canada, Mexico, Australia, New Zealand and Vietnam.
Among CPTPP member countries, Canada and Australia are ideal markets for the Vietnamese textile and garment exports in the near future. The EU-Vietnam Free Trade Agreement (EVFTA), is also expected to increase Vietnam’s total export turnover to EU by around $16 billion.
Challenges to export growth
One of the challenges the Vietnamese T&A sector faces is high import of raw and auxiliary materials. To counter this, Vietnamese enterprises should prepare domestic and intra-regional materials to meet the local demand. In order to enjoy tax incentives from CPTPP, Vietnamese textile and apparel products need to be produced in Vietnam and other CPTPP countries only. Businesses should also pay attention to trade promotion and directly work with customers to avoid unnecessary intermediate costs. Moreover, enterprises should promote joint ventures and links to invest in chains. It is crucial to build centres to supply raw materials for textile and garment enterprises in all regions and areas.
As indicated by export results in recent times, without the preparation of the suitable equipment, the skill level of workers, management methods and initiatives in raw and auxiliary materials, opportunities from the CPTPP will turn into challenges. Businesses must therefore, meet the standards of foreign markets. State management agencies should also formulate policies to support enterprises and remove barriers in the process of administrative reforms.
Bangladesh’s apparel exports to new destinations grew 36.21 per cent in the first half of the current fiscal year. Among these are: Australia, Brazil, Chile, China, India, Japan, Korea, Mexico, Russia, South Africa and Turkey. Exports of knitwear products to these countries were 29.52 per cent higher than in the corresponding period previous year. Earnings from woven goods exports were up by 43.58 per cent. Traditional markets for Bangladesh apparel products are: the US and the European Union.
The main drivers for the sharp rise in exports from new destinations were policy support measures and increased cash incentives against exports. Apparel exporters now enjoy a four per cent cash incentives against exports to non-traditional markets, which encourage them to explore new destinations for their products. Additionally, these cash incentives allow apparel makers to practice competitive pricing in the global market.
Manufacturers are now participating in expos to establish contacts with buyers from non-traditional markets. This is also having an impact in terms of export earnings growth from new export destinations. Bangladesh’s export earnings from non-traditional export markets are expected to rise further as China and India are giving more importance in importing clothing products for local consumption and global retailers are opening new outlets in India.
"Gone are the days when clothes for expectant mothers were limited to ill-fitting silhouettes and long overalls. Maternity wear today is growing market with designer’s investment on pregnant women increasing over time. The latest to jump in the bandwagon is Zara with its new maternity collection. The brand has introduced 25 maternity items – including knitted dresses, sweaters, overalls and jeans – styled with other pieces from the main Zara range, which are either oversized or made from stretchy, bump-friendly materials."
Gone are the days when clothes for expectant mothers were limited to ill-fitting silhouettes and long overalls. Maternity wear today is growing market with designer’s investment on pregnant women increasing over time.
Dressing up expectant mothers
The latest to jump in the bandwagon is Zara with its new maternity collection. The brand has introduced 25 maternity items – including knitted dresses, sweaters, overalls and jeans – styled with other pieces from the main Zara range, which are either oversized or made from stretchy, bump-friendly materials.
Other high street and online retailers attempting to tap into the spending power of expectant and new mothers include H&M, Next, Topshop, Asos and Boohoo. Plus-size retailer Simply Be also launched its first maternity collection online in September. Retail analytics company Edited’s study shows the number of maternity items sold across 30 major US and UK retailers quadrupled between 2014 and the third quarter of 2017.
Maternity fashion influenced by high-street styles
As per estimates of GlobalData, the UK maternitywear market, which was worth £199 million in 2017, has seen a rise in the number of style-savvy ‘mum-fluencers’, as well as a spate of public royal pregnancies. The maternity fashion choices of the Duchess of Cambridge have boosted business for brands such as Séraphine. The brands are now focusing on Meghan Markle, the Duchess of Sussex, who is expecting her first child in the spring.
The influx of high street maternity styles is pressurising specialist retailers and brands to offer complete value to mothers investing in expensive, technical maternity and
nursing clothing, which is not always as fashion forward. London-based maternity wear retailer Isabella Oliver plans to launch an activewear range in January 2019 for expectant mothers. The brand works with sustainable fabrics with fits and designs that can be worn throughout pregnancy without having to size up. The brand invests a lot of time fitting each product on various ‘bump’ sizes, to create designs that are practical, comfortable and stylish.
Exploring styles for nursing mothers
With most nursing styles being designed for pregnancy, the market for breastfeeding clothes is still relatively untapped. Sainsbury’s Tu, in August 2018 announced its plans to expand the number of styles suitable for nursing mothers, after one of its jumpsuits was recommended on the facebook group ‘Can I Breastfeed In It?’ and sold out online within four weeks.
Other brands such as SilkFred and Closet London, for example, have edits on their websites that show customers which of their dresses are suitable for breastfeeding. With more attention being paid to the pregnancy and post-childbirth fashion, the pressure on specialist players to set themselves apart in the comfort and technical design stakes will continue to grow– promising good times ahead for this group of consumers.
Global fashion industry faces a changing environment, with an economic downturn and protectionism threatening to mark the development of the two biggest world economies. Twenty years ago, China was the seventh biggest economy, post World War, globalisation led a move to the Western world. Twenty years later, China and India, the two largest powers in the world, threaten to revert globalisation and doctrines deemed to belong to the past come back to political speeches. Brazil and Russia, which alongside China and India promised to be growth motors at the beginning of this century, have wavered, only India reached the expected growth rates.
Global fashion industry faces a changing environment, with an economic downturn and protectionism threatening to mark the development of the two biggest world economies.
Reversal of globalisation leads to new growth centres
Twenty years ago, China was the seventh biggest economy, post World War, globalisation led a move to the Western world. Twenty years later, China and India, the two largest powers in the world, threaten to revert globalisation and doctrines deemed to belong to the past come back to political speeches. Brazil and Russia, which alongside China and India promised to be growth motors at the beginning of this century, have wavered, only India reached the expected growth rates.
The five economies that will grow the most in 2019 are: Macao, Malta, Cyprus, Slovakia and Ireland, with peaks fluctuating between 4 and 6 per cent. The United States, however, will record moderate ascent of 2.5 per cent, four tenths below 2018, in part due to the tax reform driven by Donald Trump.
Europe’s growth to slow down
The Eurozone, will slow down at 1.9 per cent, one tenth below 2018 and, while Germany and France will maintain growth rates, Italy and Spain will slow down two and five 
tenths, respectively.
As for emerging economies, the best growth perspective is for Yemen, where it is expected to rise 14.7 per cent. The country, deep into a humanitarian crisis due to civil war, will see its economy relatively lifted thanks to the increase in the price of oil. Libya, Dominican Republic, Ethiopia and Rwanda will complete the top five. India is placed in seventh position, with a rise of 7.4 per cent, while China falls to 22th position, with a growth of 6.2 per cent, below 6.6 per cent in 2018 and 6.9 percent in 2017.
Global commerce will slow down as well. In September, the WTO lowered its growing forecasts to 3.7 per cent for 2019, two tenths below 2018’s figure. The organisation, which expects a growth of the economy of only 2.9 per cent, underlines in its report that the hardening of monetary policies and protectionist threats affected predictions.
A year of change
This fiscal year will be the key for many countries. On one hand, Trump and Xi Jinping trade battle, even in the truce, will impact economic development of China and India. China’s manufacturing PMI closed below 50 points in December for the first time and Shanghai’s stock market suffered several corrections during the fiscal year.
The United States’ GDP, started to slow down, once the effects of Trump’s tax reform wear off, with an increase of 3.5per cent in the third quarter, compared to 4.2per cent in Q2.
Tensions in emerging markets like Brazil, Russia or Turkey, alongside the continue terrorist threat in Europe and the refugee crisis will mark the agenda during the year where many countries have their future at stake.
