FW
The revealed comparative advantage (RCA) of clothing industry of Bangladesh is high compared to major global competitors like China, Vietnam and India. The RCA of Bangladesh in the apparel industry was around 24 points in 2000, which increased to 29 in 2015.
Bangladesh’s high revealed comparative advantage in garments reflects the growing share of garment industry in its overall export basket. The RCA is a measure of the relative market share computed as the ratio of a country’s share in world exports of a particular item to that of the country’s overall share in world exports of all items.
However, India’s RCA in the apparel industry declined to 2.38 in 2015 from 4.47 in 2000. Since India’s liberalisation more than a quarter century ago, India’s share in the global exports of textile and footwear has declined even as smaller economies such as Bangladesh and Vietnam have seen their market shares rise sharply.
In the US market, India’s apparel exports accounted for only four per cent of US’ overall apparel imports in 2015, while Vietnam, Bangladesh and China accounted for 12 per cent, six per cent and 37 per cent market shares respectively.
Sourcing Expo will be held in Australia from November 20 to 22. It will host nearly 700 textile, apparel and footwear manufacturers and agents from 16 countries. The expo is recognized as a unique sourcing event for members of Australia’s fashion trade but it’s also a fantastic networking event that gives locals an opportunity to rub shoulders with global leaders in the industry.
This year’s show will feature a wider range of clothing and footwear than previously seen. The show will offer fashion buyers and designers the full spectrum of product and service offerings from off-the-shelf clothing through to made-to-order pieces, fabrics and functional textiles. It will attract sourcing managers for Australia’s large fashion retailers, niche fashion brands, online outlets and designers. Sourcing Expo is for anyone looking to improve or diversify their supply chain and product offering, compare production capability and costs, produce their own label or start a new sourcing business.
Exhibitors will be drawn from India, China, Bangladesh, Pakistan, Hong Kong, Fiji, Indonesia, Vietnam, South Africa, Taiwan, Turkey, Australia, South Korea, Malaysia and Singapore. Alongside all the fashion staples like jeans, active wear and T-shirts, International Sourcing Expo exhibitors surprised visitors with more upmarket fashion last year.
As per Ministry of Textiles, India possesses a great potential to become the next one stop sourcing destination for ASEAN brands and retailers. The country offers a number of competitive advantages including abundant amount of raw materials, trained man-power as well as the presence of entire textile value chain. Moreover, 100 per cent FDI is allowed in the textile segment under automatic route.
The government recently announced a special package for apparels as well as made-up sectors. The packages include various offerings such as labour law reforms, additional incentives under Amended Technology Upgradation Scheme, improved duty drawback coverage and relaxation of Section 80JJAA of Income Tax Act. Likewise, the rates under the Merchandise Exports from India Scheme (MEIS) have been enhanced from 2 per cent to 4 per cent for apparel and made-ups sector, active since 1st November 2017.
The government is also giving subsidised interest rate for pre and post shipment credit for the textile segment; and supporting exporters under Market Access Initiative (MAI) Scheme. Products like fibre, yarn, and fabric are made feasible through schemes like Powertex for fabric segment, ATUFS for all segments except spinning and Scheme for Integrated Textile Parks (SITP) for all segments.
"Forecasting firm Trendalytics has reported the evolution of streetwear from its start as a 1970’s California social movement defined by the laidback surf style of Shawn Stussy, the founder of Stüssy, into a mainstream global category estimated to be valued at $309 billion. That evolution has been fuelled by influencers—be it celebrities, athletes or the masterminds behind hype machine brands like Ronnie Kith and Virgil Abloh and the prevalence of social media as a branding tool for both brands and individuals. According to the firm, as digital natives with significant spending power, the millennial and Gen Z consumers have played an integral part in driving the growth of streetwear. The hunt continues for the most Instagrammable products, and consumers looking for unique and exclusive items are willing to pay."
Forecasting firm Trendalytics has reported the evolution of streetwear from its start as a 1970’s California social movement defined by the laidback surf style of Shawn Stussy, the founder of Stüssy, into a mainstream global category estimated to be valued at $309 billion. That evolution has been fuelled by influencers—be it celebrities, athletes or the masterminds behind hype machine brands like Ronnie Kith and Virgil Abloh and the prevalence of social media as a branding tool for both brands and individuals. According to the firm, as digital natives with significant spending power, the millennial and Gen Z consumers have played an integral part in driving the growth of streetwear. The hunt continues for the most Instagrammable products, and consumers looking for unique and exclusive items are willing to pay.
A global phenomenon
Today, streetwear has become the urban uniform for people in New York, Tokyo, London and more. A new breed of cities are emerging which is lifting the
growth of streetwear globally. These are Kazakhstan, Iceland, South Korea, etc. Kazakhstan, companies are quite fast in producing fakes by painting jean jackets, scribbling on white sneakers and making spoofs of popular logos. Iceland has all the vintage look and feel. Classic skate brands like Thrasher and Stüassy are paired with retro furry jackets and sweaters. In Nigeria, streetwear is a blend of Western fashion like jeans, T-shirts and Vans, and native elements like brightly colored and patterned cotton textiles.
In South Korea and Mexico, they have punk and rock undertones. Combat boots, leather jackets and piercings make up streetwear in Korea, while Mexico skews toward goth pieces, logo T-shirts and hats. Meanwhile, streetwear in the United Arab Emirates reflects hip-hop’s affinity for luxury brands. The report named side bags, snapbacks and colored sunglasses as key items.
Social media and influencers
In such a burgeoning growth, social media has a major role to play. Instead of relying on endorsed posts, important streetwear labels like Vetements, Bape and Palace Skateboards saw the most engagement from their own brand postings, Trendalytics said. The report highlighted that streetwear brands like Fear of God and Undefeated received nearly four-times the social actions per mentioned post than Adidas for the last year. While millennial celebrities like Zayn Malik, The Weeknd and Ansel Elgort have the highest total social post engagement from their branded posts, Trendalytics said top influencers gaining social buzz include surfers Laura Enever and Kelly Slater, each capturing more than 10-times the engagement per mentioned post than Kanye West.
Luxury marrying streetwear
Trendalytics stated that ’80s artist Jean-Michel Basquiat was known for combining high and low aesthetics by pairing streetwear and thrift store finds with formal wear, a style that still inspires streetwear influencers like Jay-Z and Kanye West. Meanwhile, Japanese artist Takashi Murakami has a developed new fan bases through his long-running and colorful collaborations with Louis Vuitton and subsequent artwork collaborations with artists like Kanye West and Kid Cudi. The artist is also working with streetwear labels like Billionaire Boys Club. The impact of streetwear on luxury cannot be understated and that influence is poised to grow as the spending power of streetwear-loving millennials surpasses older generations. Luxury brands are prepping up for this shift by attracting young designers with streetwear roots.
Sneakers have become the new ‘It’ bag and brands are leveraging their popularity to appeal to the affluent, pro-consignment consumer. In appealing to millennials who came of age during the Great Recession, luxury is able to channel the appeal of appreciation, which they had already mastered with handbags, to sneakers.
The current political tumoil in Nicaragua is affecting the apparel sourcing sector in the country with 30 per cent small and medium size textile and clothing companies operating at only 25 per cent capacity. As per Chamber of Industries of Nicaragua, this has led to temporary suspension of nearly 80 per cent workers in the sector.
Import volume of yarns and textile supplies, between the first quarter of 2017 and the same period in 2018, fell 8 per cent to 32,000 tonne. Import value during this period declined 10 per cent to $127 million.
Nicaragua is seen as a shining star among the Central American counties that are part of the Central American Free Trade Agreement. This year till May, imports of textiles and apparel from the country to the US were up 9 percent in value terms $647.93 million. On volume basis, industry imports rose 9 per cent to 239.64 square meter equivalents.
Expert fire and building safety engineers have made working conditions in Bangladesh’s readymade garment factories safer. Reasonable health and safety measures were taken. The aim was to ensure workers need no longer fear fires, building collapses, or other accidents. Brands were made to take responsibility for making their supplier factories safe, and pay towards it too.
However, life-threatening hazards at supplier factories remain. Severe anti-union violence and discrimination continues in Bangladesh often making it impossible for workers to organise and bargain collectively. This is why more than 180 brands have signed the new 2018 Transition Accord, which covers approximately two million garment workers in Bangladesh, most of whom are women.
The 2018 accord has greater scope to cover home textiles and footwear and, crucially, gives more power to workers. The new agreement meets OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector, recognising that workers are not peripheral to the due diligence process, but core to it. It upholds the importance of freedom of association in ensuring workers have a genuine say in protecting their own safety. It will also establish a training and complaints protocol to ensure that this right is respected.
Kerala-based textile company Kitex is a vertical set-up with knitting and processing of fabrics, until finished garments are done in-house. Kitex is the world’s leading manufacturer of specialized infant apparel. Its products are sold in over 18 countries. The key market for the company is the US followed by Europe.
The company has set up a design studio in the US for value-added design services. Kitex clocked a marginal top-line growth of 2.04 per cent over the previous year. The company has been allotting regular capex for improvement of technology and infrastructure and is in the process of upgrading its current facilities so as to expand its capacity.
The facility in Kerala covers an area of 1,80,768 sq ft, one of the largest in the world under one roof. The garmenting unit uses latest machinery for pattern Computer-Aided-Design, plotting and grading. It has automatic spreader machines which enhance the speed of spreading and automated cutting machines for faster and precision cutting. Kitex employs nearly 4,372 people with a daily capacity to manufacture 3,60,000 units of infant garments.
Kitex will invest Rs 400 crores in subsidiary companies to increase manufacturing capacities. Having an integrated and traceable value chain which meets global standards at various stages of the product supply chain is the key differentiator for Kitex.
India’s trade deficit with China is a matter of concern as it has been increasing over the years. In 2010-11 to 2013-14, India was a net exporter of textile and apparel products to China. However, after that India’s trade deficit with China started widening.
Among the few items where India is more competitive than China is cotton based textiles like yarn, fabric and made-ups. However, competing countries such as Vietnam, Indonesia, Pakistan and Cambodia enjoy duty free access to the Chinese market while Indian products carry 3.5 per cent, 10 per cent and 14 per cent duty on yarn, fabric and made-ups respectively.
India is a market leader in cotton yarn but lost almost 50 per cent of its market to Vietnam over the last three years, creating excess capacity in the system. India’s cotton yarn exports to China have decreased 53 per cent from 2013 to 2017 while Vietnam’s exports of cotton yarn to China have increased by 88 per cent during the same period. Moreover the profit margins in cotton textile industry are thin, in single digits. Therefore, the industry is sensitive to even small changes. If a level playing field is given to India, like its competitors, it can double its exports plus reduce its trade deficit with China.
German luxe fashion brand Hugo Boss’ sales in the second quarter of fiscal 2018 went up six per cent. Sales from the group’s own online business soared 47 per cent. In the wholesale business, sales picked up significantly by 10 per cent.
Ebitda before special items remained virtually unchanged compared to the prior-year period. Hugo Boss online store saw positive growth. Ebit was below the prior-year level, mainly due to the non-recurrence of other operating income recorded in the previous year. Following improved financial result, the decline in the group’s net income was lower as compared to Ebit.
The renovation of existing retail stores and the cross-channel integration and digitisation of the group’s own retail activities were the focus of investment activity in the second quarter. Overall, Hugo Boss recorded currency-adjusted sales growth of five per cent in the first six months of fiscal year 2018. Ebitda before special items was unchanged over previous year.
The group continues to expect currency-adjusted sales growth in the low to mid single-digit range. In addition, Ebitda before special items is expected to develop within a range of minus two to two per cent compared to the prior year.
Gujarat will come out with a new textile policy by the end of August. The policy aims at attracting Rs 1 lakh crores in investments and creating 10 lakh jobs in the textile industry over the next five years. The new policy is expected to dole out several incentives, including cheap power, to attract industries to the state. The textile industry will have GST reimbursed. The reimbursement will be given in lieu of sops given to the sector under the earlier value added tax regime.
Meanwhile, all schemes under the textile policy of 2012 will be continued in the new policy as well. The current textile policy, announced in 2012, will expire this September. A task force has been forced to study incentives offered under the textile polices of other states like Maharashtra, Andhra Pradesh, Telangana, Tamil Nadu and Uttar Pradesh. It may replicate many of their schemes given the geographical and industrial similarities between Gujarat and these states.
The new policy envisages a special thrust on garments and technical textiles and creating a direct link between cotton growers and industry. There will also be a focus on establishing textile parks within GIDC estates and in other parts of the state.
