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The land under cotton acreage decreased by 15 per cent as more and more farmers have shifted to soyabean in the hope of better returns. Cotton Association of India (CAI) president Atul Ganatra has stated the drop in cotton planting is likely to see a increase in soybean planting after farmers received good rates during the ongoing season and a rise in import duties.
With Pink Bollworm attack Kapas sowing is expected to reduce by 10-12 per cent in Maharashtra and Telangana. He estimated the area under cotton could decrease to 108 lakh hectares in 2018-19 marketing season that starts at the beginning of October, down from 122.6 lakh hectares in the current year.
Besides in the last few months the soyabean prices have increased by about Rs 1,000 per quintal from Rs 28,000 per quintal to Rs 3,800 per quintal.
Textile Commissioner Kavita Gupta feels the shift in area under cotton might not be important. There may not be much decline in total production as area under cotton in other states may compensate for any decline in area in pink boll worm affected states. Farmers would shift to soyabean, if prices increase points out Pasha Patel, C, State Agriculture Price Commission (SAPC) and there would be no takers for cotton. The area under cotton in Maharashtra has gone up to 42 lakh hectares this season, while area under soybean dropped to 36 lakh hectares during this season.
Meanwhile, India has signed contracts to export 200,000 bales of cotton to China. India is expected to export 70 lakh bales of the fibre in 2017-18 against 58 lakh bales shipped in 2016-17 season.
US buyers are banking on India’s differential strength. Medium and high-end market segment is coming back to India for more luxury items, organic-based products. Buyers are optimistic about India, and especially in comparison to China. They say Indian exporters’ ways of approaching customers are much better than those of the Chinese.
New US companies are now exploring India. Boston International for example is sourcing kitchen and table linen from India. It used to source from China but found it could not get the variety of artwork and detailing that could keep customers interested. So Boston explored India for textiles and right from the start found Indian designs very compatible and the printing and overall quality in Indian products very good and consistent. In shade variation too India proved better than China.
However, delivery timing is an issue with Indian exporters and they need to improve on this. There is also a feeling Indian exporters need to study their prospective clients or customers more deeply. Not everyone is open to new ideas, and more research is a problem with many Indian exporters, but sooner or later they have to change this mindset as even within a city, buyers of similar products are quite different.
Bestseller has acquired the premium women’s wear and lifestyle brand Toast from its majority owner French Connection and founders Jamie and Jessica Seaton. The acquisition is subject to regulatory approval and is expected to be completed within four to six weeks.
The company expects the partnership to be mutually beneficial and looks forward to supporting Toast in its current growth phase with experience and knowledge on a global scale. The deal, which is subject to French Connection shareholder approval, will lead to Toast joining the Danish group’s brand line-up which includes Bestseller, Vero Moda, Jack & Jones, Only, Selected and Vila among others.
Founded 20 years ago in Swansea by the Seatons, who had retained a 25 per cent stake in the business following the sale of 75 per cent stake to French Connection in 2000, Toast has a reputation for taking traditional textiles and reimagining them in a contemporary style.
It has 13 stores in the UK and is also sold through wholesale and online channels. As a part of the deal with Bestseller it will remain an independent company and will be run by its existing staff.
Accord wanted to stay on in Bangladesh for three more years. However, now that looks unlikely. Smart Jeans has filed a writ petition against Accord after the platform of more than 200 retailers, mostly based in Europe, terminated its business relationship with the Chittagong-based garment maker. Smart Jeans is a supplier to members of the Alliance, another platform like the Accord, that composed of 28 North American retailers. But it supplies to signatories of the Accord from time to time.
There was an understanding between Accord and Alliance that they would accept the inspection certification of each other in case of common factories to avoid duplication. Since Smart Jeans is largely a supplier to Alliance members, the platform's inspectors examined the three factories owned by the group and suggested necessary remediation work. The company completed remediation and Alliance engineers also gave their seal of approval. However, Accord engineers also inspected the factories and found the corrective work were unsatisfactory.
Consequent on the petition filed by Smart Jeans, the tenure of Accord is unlikely to be extended beyond May 31. Accord on Fire and Building Safety in Bangladesh is a five-year independent, legally binding agreement signed on May 15, 2013, between more than 200 retailers and trade unions designed to build a safe garment industry in the country.
"While China presents a huge opportunity for global brands with its huge consumer base, yet there have been instances where Western brands have failed to lure Chinese consumers. The recent case is that of Marks & Spencer which has exited online retail in the country. The company recently announced it would end online sales in China through Tmall store. Shaun Rein, MD, China Market Research feels one of M&S’ problems is they tried to sell to a middle-class consumer by creating a middle-class brand positioning. Most brands which take this approach in China, fail. That’s where Marks & Spencer failed. Also, sizes for Asian body types were not considered. At Marks & Spencer’s brick & mortar stores in Beijing and Shanghai, Chinese consumers could go right next door to H&M to shop for the youthful and trendy styles that attract millennials."
While China presents a huge opportunity for global brands with its huge consumer base, yet there have been instances where Western brands have failed to lure Chinese consumers. The recent case is that of Marks & Spencer which has exited online retail in the country. The company recently announced it would end online sales in China through Tmall store. Shaun Rein, MD, China Market Research feels one of M&S’ problems is they tried to sell to a middle-class consumer by creating a middle-class brand positioning. Most brands which take this approach in China, fail. That’s where Marks & Spencer failed. Also, sizes for Asian body types were not considered. At Marks & Spencer’s brick & mortar stores in Beijing and Shanghai, Chinese consumers could go right next door to H&M to shop for the youthful and trendy styles that attract millennials.
Another issue with Marks & Spencer is how Chinese shoppers perceive value. As Rein points out, Chinese consumer behaviour is defined by ‘CMR hour glass shopping model’, meaning they shop both at the top and the bottom of the spending scale. Anything that’s not great value it doesn’t give them importance, it doesn’t give them status, it’s not an aspiration is something that Chinese don’t want unless it’s dirt cheap.
Similarly, Britain’s Asos.com too faced issues. Asos left China in 2016 the same year Marks & Spencer shut all its China retail stores after losing out to Taobao, Alibaba’s Amazon-like e-commerce platform. Asos sold low-priced garments, but with limited products available in the China market, it just could not compete. Don Zhao, Co-founder and executive director, Azoya says in the West, Asos is mainly aimed at middle-class millennials. But in China, the fashion shopping behaviour from this group is for cost-value products, which typically are under 300 yuan. Asos was also slow at getting in new products in comparison with the UK market and used European and American models, whose body shapes are different from Chinese, making it difficult for consumers to compare and make decisions. None of these factors suited the needs of Chinese shoppers, who actively seek latest fashion products and aren’t willing to wait. In China, you have to act fast to adapt to consumers’ needs. While brands can use e-commerce as an alternative to brick & mortar stores to reach more consumers, there is not a one-size-fits-all solution for every brand.
Success Mantra: Market understanding and research
Localisation, marketing to cross-border Chinese shoppers, launching on multiple channels, and supply chain optimisation are some of the major issues that companies face. Besides, brands also have to keep local competition in mind. And to avoid any operational issues later, brands looking to start retail stores in China first need to first conduct a thorough research. According to Zhao, if a retailer is thinking about expanding to China, they need to spend more time and research on what they are looking for and have very clear expectations. While selling goods through Tmall and JD.com might seem like obvious solutions, they are not necessarily the right option for everyone.
Zhao says categories that have a low re-purchase rate, no functional features, too many Chinese local alternatives, low market-entry thresholds and unreasonable pricing over 30 per cent higher than overseas markets will definitely be challenged by Chinese competitors. Foreign luggage brands are being challenged by Xiaomi’s Youpin and NetEase’s Yanxuan alternatives, who share the same supply chain resources with international big brands.
"The last few decades have brought tremendous growth for ready-made garment (RMG) exports in Bangladesh as a result, in FY 2016-17, exports stood at $28.5 billion. Meanwhile, the country has set an ambitious export target of $50 billion by 2021. And to achieve this, companies need to reinvent themselves to beat the fierce competition posed by some countries which are growing their RMG exports at a rapid pace. Technology and innovation are the right tools going ahead. Many RMG companies are now creating a culture of technology and innovation in their organisations to improve processes, smoothen production, minimise delays in delivery, reduce overall cost and improve quality so that they can provide maximum value to their customers."
The last few decades have brought tremendous growth for ready-made garment (RMG) exports in Bangladesh as a result, in FY 2016-17, exports stood at $28.5 billion. Meanwhile, the country has set an ambitious export target of $50 billion by 2021. And to achieve this, companies need to reinvent themselves to beat the fierce competition posed by some countries which are growing their RMG exports at a rapid pace. Technology and innovation are the right tools going ahead. Many RMG companies are now creating a culture of technology and innovation in their organisations to improve processes, smoothen production, minimise delays in delivery, reduce overall cost and improve quality so that they can provide maximum value to their customers.
Operational excellence tools
Value stream map (VSM) is an extremely effective tool for cutting down cycle time, reducing waste, visualising the entire production process, and representing both material and information flow. Once the VSM for any critical process is created, technology solutions can be used extensively to simplify the process complexities significantly, thus eliminating non-value added activities and leading to drastic improvements. Enterprise resource planning (ERP) solutions can help establish a smooth material flow from yarn to finished good; it can also help in tracking the inventory at every stage, accounting for losses and ensuring that the right quantity of the right stock keeping unit (SKU) is being manufactured and dispatched to the right customer at the right time. Some examples of how technology transformation can support data analytics for efficiency improvement and lead to better Management Information System (MIS) and performance monitoring are:
Stringent procurement regulations in importing countries contribute to Bangladesh’s inability in increasing prices. Enterprise applications capture historical price trends, allowing transparency in the merchandising process in order to tackle price fluctuations. Changing foreign regulations on sourcing of goods, particularly US and EU regulations, have a wide impact on export of textile goods from Bangladesh. Data pertaining to workforce allocations, profiles, safety trainings, incident reports and their periodicity can help in adherence to foreign regulations on safety standards. Cross-currency rate capturing and cost component break-ups can be tracked at transaction level using enterprise applications. Key cost factors can be broken down using analytical tools to identify specific areas of cost reduction.
Data analytics can determine factors that drive employee productivity and the insight can be leveraged to increase overall organisational performance. Predictive analysis on planned production and budgeted expenditure based on historical trends allows the tracking and reporting of production attainment vis-à-vis plan. An information repository related to equipment upgradation and maintenance assists in figuring out the consequences of inefficient machine usage on production overheads.
Adopting tried & tested methods
The RMG industry needs to quickly up its act to gain market share. On one hand, the sector has immense opportunities to grow, and on the other, it is facing fierce competition from other RMG-exporting countries. Building a competitive edge is the need of the hour. Companies that are driving operations excellence through technology transformation can make significant improvement in terms of their business performance in the long term. Through the implementation of technology transformation and innovation, the garment sector can address the major expectations of the customers—right product, right quality, right quantity, right time’.
The global western wear market is expected to register a compound annual growth rate of 4.8 per cent by 2023. Europe dominated the market in 2016 and is expected to maintain its position through 2023, growing at a CAGR of 3.8 per cent in terms of value. The region accounts for three-sevenths of the market.
However, the biggest growth will come from the Asia-Pacific. In 2016, China and Japan collectively accounted for about half of the total Asia-Pacific western wear market. Now the region is expected to register the highest CAGR, 6.2 per cent, in terms of value—with India expected to grow 12.2 per cent.
The large fashion-conscious youth population in Asian countries like China and India are expected to lead the increased demand for western wear. And women’s western wear will outpace men’s. Fashion designers have always been experimenting with women’s fashion in terms of material, design, and palette. Women held a dominant position in 2017 and would continue to maintain the lead over the forecast period.
Major players in the western wear space include Benetton, Diesel, Gap, Forever 21, Inditex, Bestseller, Marks & Spencer, H&M and Mango. On the higher end, brands like Gianni Versace, Chanel and Hermès are counted as key in the space.
In February US apparel imports from China went up by 22.2 per cent. The export boost comes amid consistent volleying between China and the US on imposition of tariff threats at each other.
China is still the top supplier of apparels and textiles to the US despite talk of the country creating a vacuum by exiting the lower end value chain. Among the other top suppliers of apparel and textiles to the US, Cambodia posted a gain of 22.4 per cent. South Korea saw exports to the US increase 17.5 per cent. Among other top Asian suppliers, Vietnam’s exports rose 5.7 per cent, Bangladesh’s shipments were up 5.1 per cent, Pakistan’s increased 4.1 per cent and Indonesia’s gained 1.7 per cent.
However, India’s shipments fell 0.8 per cent. India happens to be the second largest supplier for the category. Mexico’s shipments increased 4.7 per cent in February while Canada’s shipments rose 4.6 per cent.
During January to April 2017 apparel exports from China, Vietnam and Bangladesh constituted around 59 per cent of total apparel imports by the US. However, nine out of 10 top apparel exporting nations of the world experienced negative growth in shipment to the US in 2016.
India and Turkey are major export destinations for Nepali yarn. Along with rising demand for yarn, Nepali factories have started utilising their capacity towards upper level and have doubled their capacity utilisation from 35 or 40 per cent to 70 or 75 per cent.
Currently there are four spinning mills in Nepal that import raw materials from various countries and they are also trying to create backward linkages to maximise the benefits of yarn export. Around 10,000 people are directly employed in yarn production at present.
The four yarn producers in the country jointly produce almost 40,000 metric tons of yarn a year and production could go up if the factories operate at optimum capacity. Earlier factories were largely running below capacity as the country was facing a crippling power shortage and labor unrest.
Turkey has suspended the generalised system of preferences on export of yarn from Nepal since January on the ground that Chinese yarn is being circumvented to Turkey via Nepal. Nepali exporters who were largely focused on the Indian market are increasingly attracted toward the Turkish market as the latter fetches better prices. The country now fears about the possible adverse impact on jobs and exports of the country due to Turkey’s decision to suspend the GSP facility.
The United Nations Committee on Economic, Social and Cultural Rights has urged Bangladesh to ensure a decent wage for all workers, to revise its labor laws and to make haste with the adoption of a national employment injury scheme. The committee strongly recommended Bangladesh raise its minimum wages to ensure a decent living for all workers and their families and to reduce the gender pay gap.
In labor legislation, the committee says the Labor Act should be revised to ensure that its labor laws cover the whole industry, including the informal economy and export processing zones. The committee has called for independent and effective labor complaint mechanisms and strengthened labor inspection mechanisms and for a revision of procedures and requirement for trade union registration. At the moment, requirements are overly restrictive, while the registration process is arbitrary and rejection rates are high.
The committee recommends that cases of discrimination, harassment, intimidation and dismissal against trade union activists should be promptly and thoroughly investigated and trade union rights should be guaranteed. The perpetrators should be brought to justice and victims provided with adequate remedies. Bangladesh has been urged to speed up its commitment to adopt a national employment injury insurance scheme.
