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Both China and the European Union are locked in their own trade disputes with the US, and China has been seeking common ground with the EU in opposing what Beijing sees as US protectionism.
China and the EU had a common interest in defending the global multilateral trading system as both sides believe that they must resolutely oppose unilateralism and trade protectionism and prevent such behavior from causing volatility and recession in the global economy. Both have already announced retaliatory measures against punitive US tariffs.
China will impose additional 25 per cent tariffs on 659 US goods worth S$50 billion in response to the US announcement that it will levy tariffs on Chinese imports. Tariffs on $34 billion of US goods including agricultural products such as soybeans will take effect from July 6. The EU also imposed tariffs on a range of US goods in response to import duties on EU steel and aluminum by the US administration.
US-based Worker Rights Consortium (WRC), an independent labour rights monitoring organization focused on protecting the rights of workers, has released a 29-page report assessing India’s biggest apparel exporter, Shahi Exports. The report claims mid-level professionals of the export house threatened and misbehaved with workers asking for wage increase. There are many more serious allegations of abuse and violence on the managers of the company.
With a turnover of $850 million (Rs 5800 cr.) and nearly one lakh workers, Shahi Exports has more than 50 garment manufacturing units across India. This report is based on recent developments at one of the Bangalore based units of the company.
The WRC claims to have prepared this report on the basis of interviews with more than 30 workers. Insisting on corrective action and remediation, the report demands those workers who have been physically assaulted and suspended from their jobs must be allowed to return to work with full back pay, compensation for their injuries, pain, and suffering, and loss of personal property from the April 4 attack. In addition, the report demands a written apology from the company for the injustice.
It has also been demanded that those managers and supervisors, involved in such violations, either actively or by allowing such practices to occur on factory premises, must be meaningfully disciplined, before these employees, who were the victims of the violence and other abuses at the factory, return to work. Also, termination of all those identified, in this report, for directing or perpetrating physical violence or death threats against workers, has been sought.
Shahi Exports is quoted saying the management was not involved in the altercation. They claim that there was no physical attack from Shahi’s management and the altercation that occurred happened outside the factory and just between workers. It is further claimed that it was the suspended workers who initiated the violence and the management believes they were the aggressors.
The third edition of textile symposium, The Fabric Year 2018, was held in Albstadt last week. The symposium was attended by around 150 participants from over 20 countries from America, Asia and Europe. It provided detailed into the current market developments. The conference was inaugurated by Eric Schöller, Member of the Executive Board Groz-Beckert. The first presentation of the day by Dr Josef Braml, Deutsche Gesellschaft für Auswärtige Politik, focused on the global competition between the US and China, as well as implications for Europe. Later Andreas Engelhardt, Groz-Beckert Product Marketing and Innovation, presented key messages from his established yearbook The Fibre Year.
Gail Strickler, President of Global Trade Brookfield Associates spoke on the Transpacific Partnership from the Asian perspective, the status of negotiations and the expected implications of the agreement for the global textile trade. Andreas Engelhardt and Martin Weiler gave insights into the developments of further key textiles markets.
A second presentation from Gail Strickler provided exciting insights into the US trade policy and status of negotiations for the North American Free Trade Agreement (NAFTA). An interesting outlook on the Italian fashion market was provided by Davide Bonassi, from the Italian Hosiery Association. Engelhardt and Weiler completed the block of presentations with a worldwide summary, with an outlook through to 2022
A seminar on trends in fabric forming will be held in Gujarat on September 8 organised by Textile Association of India (TAI). The seminar aims to give an opportunity to textile technologists to share their thoughts on meeting challenges. The interaction is expected to be highly productive and beneficial.
The seminar will be attended by experts from different parts of India who will present their papers to over 200 equally high profile practicing technologists and technicians. Topics covered include: technological developments in preparatory processes such as warp preparation, sizing, warp and weft knitting, trends in technical textile and its future in India, value addition through yarn dyeing and knitting, air engineering for weaving, importance and scope for energy conservation and weaving technology for quality fabrics.
Textile Association of India (TAI) founded in 1939 provides professional growth of technologists, managers, traders, researchers, entrepreneurs, teachers and consultants in the Indian textile scene. It caters to the needs of fibers, products and all sectors of the Indian industry. It organizes seminars, conferences, workshops, refresher courses and exhibitions of textiles and allied machines.
Among its aims are to promote the use of scientific knowledge in textiles, from fibers to garments; to implement programs of continued education in textile technology and management.
ICE cotton futures rose more than one per cent, supported by a rebound in commodity prices but the natural fiber marked its worst week in nine months amid escalating trade tensions between the United States and China. The most active cotton contract on ICE Futures US, the third-month December contract, settled up 1.01 cent, or 1.2 per cent, at 85.3 cents per lb. It traded within a range of 84.2 and 85.62 cents a lb.
The third month contract fell about five per cent for the week, the biggest weekly decline since mid-September. The US is the world's biggest cotton exporter, while China is the top consumer. Fundamentals remain supportive, apart from the trade dispute. The US crop has been struggling during this planting season and needs to prove itself in the months ahead, while the supply pipeline will be about as tight as it has ever been at the end of summer.
Speculators cut their net long position in cotton by 16,164 contracts to 93,044 in week to June 19. Total futures market volume fell by 4,972 to 18,131 lots. Data showed total open interest fell 3,880 to 261,946 contracts in the previous session. China will probably still have to import more cotton over the coming years, even from the US.
Net sales of tailored brands increased 4.5 per cent to $818.0 million in the first quarter of fiscal 2018. Retail net sales went up by 4.1 per cent while retail segment comparable sales grew by 2.1 per cent. Corporate apparel net sales increased by 9.6 per cent, or $5.5 million, due to the impact of a stronger British pound this year compared to last year.
On a GAAP basis, consolidated gross margin was $345.2 million, an increase of $12.8 million, primarily due to the increase in net sales. As a percent of sales, consolidated gross margin decreased to 42.2 per cent. On an adjusted basis, consolidated gross margin decreased 40 basis points, primarily due to a decrease in retail gross margin rate.
On a GAAP basis, retail gross margin was $328.8 million, an increase of $12.1 million. As a per cent of sales, retail gross margin lowered to 43.6 per cent. On an adjusted basis, retail gross margin increased $10.7 million while the retail gross margin rate decreased 30 basis points primarily due to increased promotional activities, mostly offset by lower occupancy costs as a percent of sales.
RMG exports from India have been falling continuously over the past few months. Apparel exports have been plummeting since October 2017. There was a sharp fall of 16.6 per cent in May 2018. The main problem faced by the garments industry is the block in GST refunds, slow disbursements in Rebates on State Levies (RoSL) and the sharp decline in RoSL rates which has led to working capital’s drying up.
While the larger units have somehow managed to survive, many small units are not in a position to take orders. Exporters have not been able to book orders in the peak summer season and losing markets to competitors from other countries such as Bangladesh and Vietnam.
To help garment exporters, the Merchandise Export from India Scheme for garments and made-ups has been extended indefinitely. Under the MEIS scheme, garment and made-up exporters get duty exemption scrips, freely transferable for cash, worth four per cent of their total exports. The rate of incentive for the two sectors was doubled to four per cent from two per cent in October 2017 when exports started slipping. As a result, India’s overall cotton exports are likely to rise 21 per cent for the cotton year ending this September.
The global luxury market is set to grow six to eight per cent this year. Customers are responding to targeted strategies, and top performing brands are already winning over the customers of tomorrow. Currency fluctuations will have an impact, but the healthy trend is expected to continue across all regions and customer segments. Chinese consumers continue to stand out as a growth driver for the industry, and are more fashion-savvy and digitally advanced than ever before.
Canada is growing while performance in Latin America is mixed. The region as a whole is expected to grow between three to five per cent in 2018. Mainland China is expected to account for the lion’s share of growth in 2018. Brands are learning how to cater to local consumers, often young and heavily influenced by social media.
Across rest of Asia, Hong Kong and Macau continue on their recovery trajectory. South Korea benefits from visitors from China, but political tensions in the region could have a crucial impact on 2018 growth trends. Dubai remains stable and supported by international tourists, while Australia is set to benefit from a larger store footprint. Online continues to gain ground as boundaries blur with traditional physical channels.
As per the new economic reform program, Ethiopia has opened up its markets for foreign direct investment. The country received $3 billion in aid and investments. The financing agreement includes $2 billion inward net FDI inflow on productive investments in industrial parks, manufacturing, hospitals, hotel and mall. An additional $1 billion will be deposited into the National Bank of Ethiopia to address the temporary forex constraints.
Recently, the government also announced plans to privatise some of the country’s most valued public enterprises, including the Ethiopian Airlines Group, as well as the state-owned EthioTelecom, to attract more FDI. Ethiopians will be offered 5 per cent in the new firms, and 30 to 40 per cent will be sold to telecoms players globally.
It also agreed to jointly invest in four seaports with Mogadishu as the two nations seek to attract foreign investment. Ethiopia also has an agreement with Somaliland signed in March to manage the Berbera port, with Addis acquiring a 19 per cent stake in the port.
The resolution plan for bankrupt Alok Industries offered by Reliance Industries and JM Financial Asset Reconstruction is not a done deal yet. Some creditors have objected to the contours of the proposal and this would delay the process. The proposal says the lenders should assign their entire debt in favor of JM Financial ARC, which if done would take away their right to invoke personal guarantees given by the promoters of Alok Industries.
The dissenting creditors, around 18 per cent of the lenders in terms of the total debt, are opposed to assigning their debt in favor of JM Financial ARC. The sole bidder had offered a Rs 5,050 crore cash payment to settle the company’s debt of Rs 29,500 crores, implying that the lenders would get only 17 per cent of what Alok Industries owes them. However, in case of liquidation, the creditors would receive less as the liquidation value is only Rs 4,200 crores.
In almost all cases, banks have done a one-time settlement of loans while retaining the right to recover dues from promoters, but in this case, assigning debt means transfer of debt along with security from the books of the lenders to ARC.
