Cambodia’s preferred trade status with the European Union is at risk. This allowed Cambodian textile and apparel products to enter the European market duty free. The EU is reviewing Cambodia’s eligibility for this preference.

Cambodia's deteriorating respect for the rights of workers will be an important part of the EU's review process. Lately, however, progress on workers' rights in Cambodia has slowed significantly. While the government still allows some independent unions and workers'-rights organisations to operate, the space for them to advocate effectively is shrinking.

A number of labor union and human rights leaders have been targeted for official harassment, and some have been arrested or criminally charged. In several high-profile cases, labor leaders who were charged with baseless crimes in 2013 still have those charges pending against them.

A law restricting freedom of association, adopted in 2015, restricts the activities of a wide range of non-governmental organisations, including those advocating on behalf of workers. Another law adopted in 2016 places onerous constraints on those who wish to form new unions and sharply curtails the rights of union members to strike or engage in public demonstrations.

Suppliers in Cambodia provide western–based apparel and footwear companies with rapid, high-volume production at low costs. These suppliers employ more than 7,00,000 people and represent 63 per cent of the nation’s export income.

Big fashion brands are pressurising their suppliers to deliver more quickly and cheaply, which is contributing to labor abuses in factories that manufacture garments, footwear and textiles, according to a new report.

According to the report by Better Buying, a Delaware-based group that rates purchasing practices of brands and retailers, more than half of these surveyed supplied were affected by cost negotiation strategies that cut into their profits, These suppliers, in turn, put pressure on workers, leading to abuses. The impact of this on workers included excessive overtime, underpayment of benefits, insufficient wages, and use of unauthorised sub-contractors.

The index included ratings from 319 suppliers across 38 countries and measured the performance of 67 retailers and brands, including Esprit, Nike and Gap. Supplier ratings indicated that one third of buyers did not pay bulk order invoices on time. More than 20 per cent of the orders received from retailers or brands were not priced to cover the cost of social, environmental, quality and other compliance requirements.

"In face-to-face interviews conducted with 234 buyers and 72 exhibitors, Centrestage, a fashion brand-promotion, launch platform and trade exhibition organised by the Hong Kong Trade Development Council (HKTDC) noted that many industry players are optimistic about their sales prospects over the next 12 months. Around, 87 per cent buyers and 91 per cent exhibitors expected their sales to either remain steady or increase over the next 12 months. Around 58 per cent of the buyers expected the retail price of their products to remain stable in 2019 while 31 per cent expected them to increase and 11 per cent foresaw a decrease."

In face-to-face interviews conducted with 234 buyers and 72 exhibitors, Centrestage, a fashion brand-promotion, launch platform and trade exhibition organised by the Hong Kong Trade Development Council (HKTDC) noted that many industry players are optimistic about their sales prospects over the next 12 months. Around, 87 per cent buyers and 91 per cent exhibitors expected their sales to either remain steady or increase over the next 12 months. Around 58 per cent of the buyers expected the retail price of their products to remain stable in 2019 while 31 per cent expected them to increase and 11 per cent foresaw a decrease.

Around 38 per cent exhibitors expected retail price of their FOB products to increase, compared to 17 per cent noted in the 2017 survey; while only 8 per cent of them expected them to decrease versus 13 per cent last year. Casual wear attracted the highest level of endorsement from both buyers and exhibitors followed by fashion accessories.

Sourcing and production costs to increase

Around 45 per cent buyers expected their sourcing prices and production costs to increase, while 51 per cent anticipated them to remain unchanged. Only 4 per cent, however, predicted a decrease. Among exhibitors, 75 per cent expected their production costs to increase, while none expected a fall. Around 60 per cent exhibitors, among the traditional markets, Japan and Taiwan have the greatest potential for growth in 2019, followed by Hong Kong, South Korea, Australia and Pacific Islands. Chinese Mainland continued to receive the biggest endorsement as the emerging market from exhibitors followed by ASEAN countries and the Middle East.

No impact of Sino-US trade war

As apparel and made-up textiles (of HS chapters 61 through 63) are not included in any of the currently effective US 301 tariff lists, 68 per cent buyers and 71 per cent exhibitors did not expect the US-China trade war to have any significant impact the export performance of their products. While around 30 per cent of buyers and exhibitors expected a negative impact.

Optimal Product Development Strategies

Around 47 per cent respondents noted ‘crossover/joint promotions’ to be the most effective product development strategy in the coming year. This was followed by ‘celebrity or key opinion leader-endorsed fashion collections’ and ‘limited edition collections’. Among buyers, the next most important strategies were ‘brand-licensing products’ and ‘collections made from new materials’ while exhibitors believed ‘collections made from new materials’ and ‘sustainable fashion’ to be most effective product development strategies for 2019.

E-tailing to add 40 per cent of sales revenues

Exhibitors also voted for e-tailing as an effective product development strategy. On an average, e-tailing accounts for 40 per cent of the total sales revenue of fashion companies with an e-commerce presence. As per this year’s survey results, half of the respondents currently engaged in e-tailing. Of the companies currently engaged in e-tailing, 61 per cent sourced from Mainland China, followed by Hong Kong, Japan, South Korea and the ASEAN countries.

Of the companies currently not engaged in e-tailing, 29 per cent plan to start selling online within the next two years, a rise from the previous year when only 19 per cent respondents showed such an intention.

At Expoprotection Paris, to be held from November 6-8, 2018, wear2wear will establish closed-loop textile recycling across national European boundaries and economies: through intermediary Sympatex. The European textile partnership will in future collaborate with an association comprising the French government, industry and agencies on the “Green Deal”. Specifically, the parties will develop far-reaching synergies between wear2wear and FRIVEP (Filière pour le Réemploi et Recyclage des Vêtements Professionnels) in order to bring used polyester fabric back into circulation in a way that ensures value retention.

During the initial 15-month pilot phase, the French mail service, the French rail company (SNCF), the City of Paris and the national police, will collect more than 20 tonne of clothing. The aim is to reuse most of the textile raw materials in the functional clothing sector.

The findings from this will also be fed back into new tender specifications to facilitate the recycling process, aiming for a homogenous material composition wherever possible in future, starting as early as the clothing design stage. As a number of successful government projects in the past have shown, combining materials with the recyclable, PFC-free and PTFE-free Sympatex membrane made of pure polyether/ester allows the upcycled polyester fabric to subsequently be laminated again, thereby producing single-variety functional textiles that in turn are recyclable.

A new leadership team has been elected at the International Cotton Association (ICA) following its annual general meeting, which took place last month during the association’s Hong Kong 2018 trade event. Bill Ballenden, CEO, Dragontree has been appointed as new President of ICA. He will be supported by Azeez Abdul Syed, Senior Vice President, Olam Cotton as First Vice President and Alex Hsu, Managing Director, Formosa Trading Co Ltd as Second Vice President.

Newly appointees are: Pierre Chehab, Platform Head EBS, Louis Dreyfus Company Suisse SA; Shafiqul I. Sarker Sohel, Managing Director, Purbani Group and David Wookey, Director, Sterling Cotton.

Ballenden joined the cotton business in 1996 as a trainee at Ralli Brothers & Coney in Liverpool. After spending a number of years in Liverpool and a year living in Abidjan, he moved in 2001 to join The Seam to build and manage their international cotton trading platform. In 2007, he joined Louis Dreyfus Company (LDC) as a trader in Geneva. He then spent the years 2008 to 2014 managing LDC’s cotton businesses in India and China, living in Gurgaon and then Beijing, and eventually managing the Asia region out of Beijing. In 2014, Ballenden once again moved to Geneva and managed the European & Black Sea regions, China, Singapore and Australia for LDC. At the end of 2017, Ballenden left LDC to start his own company, called Dragontree, focusing on online auctions for commodities.

The combined ITMA and CITME shows were held in China, October 26 to 30, 2018. The exhibition welcomed over one lakh visitors from 116 countries and regions and recorded a 10 per cent increase in domestic visitors compared to the 2016 show. About 20 per cent of the visitors were from outside China. There was a large pool of qualified buyers.

Among overseas participants, Indian visitors topped the list, reflecting the strong growth of its textile industry. Following closely were trade visitors from Japan, China, Taiwan, Korea and Bangladesh.

Leading textile machinery manufacturers from around the world attended the event. The combined shows offered a cost-effective platform for their products and services in Asia.

In a global market, textile makers are sourcing innovative solutions and upgrading their facilities. The drive for better technological solutions is expected to grow in Asia, especially China. Hence, leading brand names had a large presence at this event. The last such combined show in 2016 welcomed 1,673 exhibitors from 28 economies and had over 1,00,000 visitors from 102 countries.

To enhance the country’s position in the global value chain, China has drawn up a roadmap to upgrade industries through innovation. The strategy aims at driving manufacturers swiftly toward smart industrial production and value-added manufacturing.

The garment industry has welcomed the package announced by the Centre for the MSME sector as growth oriented and visionary. Rahul Mehta, President, Clothing Manufacturers' Association of India (CMAI), the apex chamber of the garment industry pointed out that over 75 per cent of the garment industry was in this sector and the 12 announcements covered in the package would therefore benefit most units in this industry.

Identifying scarcity of working capital as a major constraint for the industry, Mehta said the 2 per cent interest subvention for new loans, 2 per cent additional subvention for export credits and clearance of loans within 59 minutes would immensely help the garment industry to address working capital problems. Credit based on upcoming receivables under e-discounting system is another welcome step in this direction.

Garment industry being the most labor intensive segment of the manufacturing sector, complying with the requirements under various labor laws is a major responsibility for the industry. The present government had initiated some labor reforms for the segment earlier under a special package. Stricter regulation of visits by inspectors and stipulating that returns under 8 labor laws and 10 union regulations have to be filed now only on annual basis have taken this process further. Mehta also welcomed the social security measures contemplated for workers in the MSME sector.

The Union government might consider more incentives for textile exporters, to bridge the gap between costing of products originating from the world’s least developed countries and India. Under the global preferential treatment rules, textiles imported from countries such as Bangladesh, Pakistan and Vietnam are preferred over those from India. Earlier extension of lower import duty in developed countries including America, to Indian exporters, is no longer valid. Reason: growing size of Indian economy — it has crossed the threshold size and became the world's six largest economy in 2017.

The total in differential duty works out to nearly 9 per cent between products from India and the other smaller economies. With the present incentives offered by the government and the rupee's recent depreciation, the total duty differential works out to 5 per cent, on which the government announced a two per cent export incentive under the Merchandise Exports from India Scheme.

The US government has complained about the Indian incentives at the World Trade Organisation (WTO), as legally unsustainable. WTO has set up a committee on the issue.

Under the package, MSMEs registered under the goods and services tax will get a two per cent interest rebate on incremental loans up to Rs 10 million. A web portal has been launched through which such units may avail of loans up to this size. The segment accounts for about 45 per cent of the sector's manufacturing output and around 40 per cent of export.

Raw material imports by Germany dropped 9.4 per cent in August as textile production sank 3.3 per cent. Clothing production fell three per cent. While textile production price increased 0.9 per cent, clothing production price increased 0.7 per cent.

Because of the development of the entire German economy and the long summer months, a turnaround in the situation looks likely. Expectations are markedly lower. There is still hope for a changing trend in autumn, but the general economic risks, such as foreign trade or raw material prices, are weighing heavily. Both textile and clothing proceeds fell in August 2018.

Order intake increased steadily in textiles in August by 0.1 per cent above July. Clothing had a 13.1 per cent lower order intake. German retail has increased proceeds by 3.1 per cent above 2017.

Germany has overtaken the United States and become the largest export market for Bangladesh’s readymade garments. Due to strong economic activities in Europe, especially in Germany, and preferential treatment received by Bangladeshi exporters, Europe’s largest economy has become the largest market for Bangladeshi garment products. Bangladesh’s readymade garment exports to Germany grew 8.65 per cent in fiscal ’18 against a growth of 2.84 per cent in the US market.

Over the past few years, Dubai has steadily positioned itself as the regional hub for fashion entrepreneurs, stylists, designers and international retail brands. This growth is also being fuelled by up and coming local and regional designers, who are capitalising on the diverse cultural experiences to provide a tailored product range for their customers.

Global brands as well as big names such as Dolce & Gabbana and Tommy Hilfiger have launched their own modest fashion collections. Technology, from an e-commerce point of view, has also played a huge role in providing a platform to startups to reach their consumers directly at a much lower cost than they would have expected to bear about a decade ago.

All of these factors create an environment that is ripe for further disruption and evolution in the coming years and Dubai, as always, has set itself up at the forefront of this fashion revolution. The region's first dedicated fashion and design institution, College of Fashion and Design, aims to nurture local, regional and international talent.

There is a clear gap in the market for skilled fashion professionals and CFD hopes to equip students with international standard education and training in the business of fashion.