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"The yarn market across the globe has witnessed some significant changes in recent times mainly due to China’s declining cotton yarn import. The narrowing price parity between domestic yarn and imported yarn has contributed majorly for the reduced cotton yarn import in China."
The yarn market across the globe has witnessed some significant changes in recent times mainly due to China’s declining cotton yarn import. The narrowing price parity between domestic yarn and imported yarn has contributed majorly for the reduced cotton yarn import in China.
World feels the heat for China’s declining import
Clearly, there has been a mixed impact on the global supply scenario due to China’s declining numbers. The impact on the global supply scenario in short term, reveals demand for imported yarn to slow down owing to worldwide sluggish market conditions and increasing cotton prices. However in the long term, chances are there that China may become a self sufficient country as far as yarn supply is concerned, whereas there still will be scope for certain varieties of fabrics as China is moving towards value added products.
“Indian yarn manufacturers to sustain have already started working on adopting two pronged strategy, increase investments in downstream industry so as to increase yarn consumption in the domestic market in addition to diversification of market mix so as to decrease dependence on Chinese market” says N. Ravindranathan, Director, TEXPROCIL
India’s and Pakistan’s loss is Vietnam’s gain
In recent times Vietnam has emerged as a strong market increasing its market share in the global scene and Chinese weavers and knitter are increasingly souring from Vietnam due to narrowing price parity. While India and Pakistan are losing market share in China, Vietnam is gaining market share boosted by the fast developing spinning sector to Xinjiang. In spite of India being the most competitive country for cotton yarn in the world, there is imports duty on Indian yarn while Vietnam and Indonesia are duty free.” This of course forces the garment industry to pay more for yarn, and makes other countries like Bangladesh, India more competitive where they get access to the best and cheapest possible yarn from across the world.” says Sanjay Jain, Managing Director, TT Ltd and President NITMA.
“Even though there is a steep increase in import of yarn from Vietnam in recent months, but it is to be seen if the quality concern has been resolved. There have been reports by importers that as far as quality is concerned, Indian yarn is much better than supply from Vietnam. Moreover if TPP kicks in, Vietnam will need all the home spun yarn for their domestic captive consumption. Apart from this, Xinjiang autonomous region is planning to add 18 million new spindles by the end of 2020, which is likely to result in drastic decline in yarn import into China. In view of these factors, Indian manufacturers and suppliers are working on suitable strategy to consolidate spinning sector and increase yarn consumption in downstream textile value chain in India” avers Jain.
Rising concern to force India to rework on its strategy
The recent volatility is going to be a major concern, believe most industry experts. For Cotton based markets like India, however the worry remains that cotton fibre would gradually lose more ground to man- made fibres which are relatively stable. “In short term, Indian spinners have been forced to cut production to match the demand and supply situation. The disparity of cotton and yarn this time has been the highest ever – spinners are facing huge losses. In July exports of yarn from India to China fell by 75% - such severe disruption will of course create a lot of pain to the Indian industry. However this shrunken supply, will create sudden pressure on availability when peak season starts from November. ”explains Jain.
Further experts believe that for India to retain its position, tariff barriers need to be broken down in order to set up an efficient global supply chain. By discriminating on import tariff of yarn and fabric from India against other nations like Vietnam, Korea, Indonesia and Pakistan it is the end consumer who is losing out and being put at a disadvantage.
"As the battle between e commerce marketplaces and traditional fashion retailing continues, a recent layoff at one of the biggest fashion brands comes as a major blow. The layoff at Los Angeles based fashion label which is known for superb fabric, cutting-edge styles and trendsetting ways once again indicated the changed mindset of the millennial consumers and the tough competition that fast fashion retailers are facing from the popular ecommerce portals."
As the battle between e commerce marketplaces and traditional fashion retailing continues, a recent layoff at one of the biggest fashion brands comes as a major blow. The layoff at Los Angeles based fashion label which is known for superb fabric, cutting-edge styles and trendsetting ways once again indicated the changed mindset of the millennial consumers and the tough competition that fast fashion retailers are facing from the popular ecommerce portals.
The category which has been hit hard by this raging war is premium denim wear where private-equity firms and investment groups in recent years bought out the established labels like True Religion, J Brand, 7 For All Mankind, Joe’s Jeans and Hudson Jeans. As per report revealed by Fitch Ratings True Religion, acquired in 2013 by Tower Brook Capital Partners for $824 million, is in high risk of going bankrupt the company’s revenues are down to $408 million after coming in at $420 million and its institutional term loans amount to $485 million.Explaining the reason behind Andreas Kurz, a former chief executive of 7 For All Mankind and now President of Akari Enterprises says “The premium-denim market has contracted. People are working with an old recipe where they import Italian or Japanese fabric to Los Angeles, make it in Los Angeles and try to sell a jean for $200 to $250. That doesn’t work anymore. Consumers are more price-conscious.”
New tech based retail practices causing revenue loss for traditional retail
Technology and internet based retail practices are changing the age old dynamics of retailing. Moreover, department-store shoppers have been playing with attractive bargains but younger consumers now rather looking for USP of the product. “The consumer is being more frugal and to expect more for less, and that is tough on brands” said Lloyd Greif, president and chief executive of Greif & Co., a downtown Los Angeles investment banking firm. Three Los Angeles labels hard hit recently are 7 For All Mankind, Splendid and Ella Moss, sold to Israeli company Delta Galil earlier this year for $120 million by VF Corp. However, the change has prompted laying off more than 100 employees of the brand at its headquarters in LA. “This is a clear sign that these brands are in their maturity and are on a downhill slope. Whether Delta Galil turns them around or milks them until there is nothing left is still to be seen.” says Delta Geli.Another denimwear brand struggling is J Brand which has now been acquired by Uniqlo, the parent company of Japanese giant Fast Retailing Co. at $290 million in 2012. The acquisition forced Fast Retailing to take a $145.8 million impairment loss during fiscal 2016.
Apart from Denimwear brands, brands which primarily sell through departmental stores are also downsizing. BCBG Max Azria is laying off 123 people as it tries to come out from under a load of debt that is owned principally by Guggenheim Partners, the company’s major shareholder.
Experts believe, that the concern is not for California only rather this trend is clear across the world. US. specialty stores have been downsizing for the last two years as many go out of business or have low credit ratings, making it difficult for clothing manufacturers to get financing from factors and banks to sell to these retailers.“The same thing that is going on in California is going on in New York,” said Paul Zaffaroni, managing director at Roth Capital Partners. “These are problems that are more of the industry.” However Rob Greenspan, president of Greenspan Consult, says “When business gets bad, the smart business has to do the smart thing to survive,”.
Time to thing long term instead of downsizing for survival
But market experts believe rather than downsizing for survival brands should look into developing long terms strategies based on the new market demnds and practices. “ “We have seen brands come out of nowhere and go from zero to $30 million in sales in two or three years—all online. The old way of opening independent stores and department stores—that model is broken.” adds Zaffaroni.
Also quality products are still in demand. Brands need to fit with the trends in the world at the time and maintain a core position. Quite a few brands in the premium-denim market,so far struggling , are now tweaking their merchandise mix to compete with the athleisure movement. Denim companies are offering denim pants with spandex to make them more comfortable—even making jog jeans that have the feel of a knit but the look of denim.
While product and price are two things most apparel companies are dealing with but digital promotion is proving to be one major hurdle for many brands and retailers.
Falling textile exports have prompted India to tap new markets like the ones being serviced by competitors such as China. In its bid to promote Indian textiles in new markets, the ministry is planning to conduct road shows.
The plan to conduct road shows abroad comes in the wake of a 3.3 per cent decline in exports in 2015-16 to $40 billion from $41.4 billion last year due to India losing its competitive edge to Bangladesh and Vietnam. The textiles sector is among the largest contributors to India’s exports with a share of almost 11 per cent. The US, European Union and parts of Asia are the main markets for Indian textile and apparel exports.
It may be recalled the Central government, had in June, announced a Rs 6,000 crores package for the textiles and apparels sector to help it wrest a bigger share of the global market. Besides pushing exports, road shows abroad will also benefit the domestic textile industry which employs about 40 million workers and 60 million indirectly. The textiles ministry, which has set a target of doubling textile exports in 10 years, plans to enter into bilateral agreements with Africa and Australia along with working on a new textile policy to promote value addition.
Due to a lower demand for readymade garment (RMG) in US and UK, Bangladesh’s export earnings from the two countries fell in the first quarter of the current financial year (2016-17). Export earnings in the July-September period of FY16 from the US, the single largest export destination for Bangladesh, fell by 10 per cent to $1.40 billion from $1.55 billion in the same period of FY15, according to the Export Promotion Bureau data.
RMG export to the US in July-September FY16 fell by 12.04 per cent to $1.26 billion from $1.43 billion in the same period of FY15. Export to the UK, the third largest destination, declined by 2.47 per cent to $843.78 million in the first quarter of FY16 compared to $867.60 million in the same period of FY15. RMG export to the UK in the first quarter of FY16 decreased by 2.23 per cent to $780.52 million from $798.37 million in the same period of FY15.
Experts say shipment suspension during long holidays for Eid-ul-Fitr and Eid-ul-Azha, two biggest Muslim religious festivals, and a slump in demand for RMG products in US and UK markets resulted in the negative growth for the Bangladesh’s exports to the markets. A decreased number of shipments due to holidays for two Eid festivals and a five-day strike enforced by trailer operators at Chittagong Port were the major reasons for the negative growth in the UK market.
Export to Italy fell 0.45 per cent to $306.99 million in the July-September period of FY16 from $308.36 million in the same period of FY15. Export earnings from Japan increased by 3.75 per cent while earnings from France in the first quarter of the FY16 grew 5.64 per cent to $384.31 million. Export to China in the July-September period of FY16 grew by 25.72 per cent to $195.93 million.
The Namaste France festival is an excellent platform for French people to view and understand historically rich cultural traditions of India. And a part of this festival, the French European Indian Fashion Week will be held from October 21 to 23 in Paris. For long, India-France bilateral relationship has witnessed a significant cooperation in various sectors like defence, scientific research, space, culture, education etc. Now, it is the turn of cooperation in the field of fashion designing.
Several Indian fashion designers continue to be inspired by French fashion styles. Drawing inspiration from this, World News Network through its 'French European Indian Fashion Week' is trying to promote the cooperation between Indian and French fashion designers.
In addition, several global fashion designers will show their latest designs to Parisians. This Fashion Week coincides with the ongoing ‘Namasté Francé’ cultural extravaganza being organised by the Embassy of India, Paris from September 15 to November 30 in various cities of France.
The Namaste France festival provides an excellent platform for the people of France to view and understand historically rich cultural traditions of India. Recognizing the importance of exchanges in the field of fashion, Namasté France cultural festival will also associate with the French European Indian Fashion Week.
On the other hand, the French European Indian Fashion Week will take place at the Eiffel tower on October 21-23. The president of French European Indian Fashion Week Satish Reddy will introduce a unique and iconic Fashion Week on the 1st level of the Eiffel Tower.
Curtains of ITMA ASIA + CITME, China’s most important trade fair for textile industry will go up at Cheminitz, Germany on October 21. Visitors to the fair would be able to familarise with latest textile trends and machinery for textile production. For example, Terrot Group, manufacturer of circular knitting machines will exhibit two machine models of the brands Terrot and Pilotelli. Its circular knitting machines are produced at the site of Chemnitz, Germany whereas Pilotelli’s are made in Italy.
Among the exhibits will be the SL4 version, latest generation of Pilotelli’s sinkerless technology that incorporates newly engineered technology that is patented by Terrot. The machine guarantees high output and reduced maintenance. The model stands for extremely reliable plating technology, especially in use of elastane, low maintenance up to 10 times lesser and user-friendly operation. It masters fine fabrics up to gauge E40 and the stitch forming technique is in a stationary point of the cylinder. Consequently one obtains superior uniformity of stitch and a total absence of vertical lines. This improves fabric quality and supports easy maintenance and energy saving.
In traditional machines, sinkers must be replaced after a certain period of time because of the wearing out caused in the knock-over area. The SL-4 model is available with tubular frame or open width frame and is also available in special configuration for high-speed production. This machine model is ideal for the production of leisure wear textiles.
Vietnam’s textiles and apparel industry has seen major FDI in the past few years. For example, in 2014 and 2015 it saw massive inputs of foreign funds. In 2015 alone, $2 billion worth of foreign direct investment (FDI) capital came into the textile and garment sector. The three biggest projects in the sector registered a capital of $1 billion.
Hyosung Dong Nai, a Turkish invested yarn manufacturer, has an investment capital of $660 million. Meanwhile, a textile and garment material factory developed by Polytex Far Eastern from Taiwan has registered capital of $274 million and Worldon Vietnam, a Hong Kong invested enterprise, $160 million.
However, the wave of FDI pouring into the sector has seen a lull this year. As per Foreign Investment Agency (FIA), the list of large FDI projects registered in the first five months of the year did not include textile and garment projects. Meanwhile, the projects capitalized at hundreds of millions of dollars were all in paper production, real estate, electronics and wind power.
Pham Xuan Hong, Chair of the HCM City Textile, Clothing, Embroidery and Knitting, observed that foreign investors have decided to delay their projects because they need to wait for TPP (Trans Pacific Partnership Agreement), not because they see problems in Vietnam economy. Nguyen Hong Giang, deputy chair of the Vietnam Cotton & Yarn Association, commented that though capital flow has slowed, Vietnam is still attractive to foreign investors. In the past, Bangladesh was the priority country. However, with complicated political issues, the country is no longer as popular. Vietnam on the other hand has attractive production costs and preferential tariffs.
Five years after international chain Zara opened its first Australian store in Sydney, fast fashion is now the norm in Australia. Australians spend an average of $2,288 on clothing and footwear each year. There the fastest growing household waste is clothing with around $500 million worth of fashion clothing dumped in 2013, records state.
Australians are buying more pieces of clothing than they have every in history. In fact, it's almost doubled in the last 20 years. It is also said that there's a lot of information that suggests that fast fashion pieces of clothing are produced with disposability in mind. And they're typically designed for 10 wear or less. But even as international chains like H&M, Zara, and Topshop gain market share, these companies have also become wary of consumer demand turning to more environmental and ethical clothing. Following other retail chains including H&M and Topshop, Zara launched its first sustainable collection last month with green initiatives such as recycling old garments.
Euromonitor International says, consumers are looking more and more to sustainability in goods and a circular economy. These are defined as an industrial economy that produces no waste or pollution. Fast fashion usually takes trends displayed at fashion week and creates pieces that are available for mass consumption. It is a short production cycle of around four weeks. The lower cost clothing is made to last only around one season and the high turnover means customers are enticed to come back to those stores to buy new clothes, with fresh lines usually delivered weekly.
Exports of India’s cotton yarn fell 11.58 per cent in value terms and 4.44 per cent in terms of volume in the April -June period this year compared to the same period last year. Exports to China, the main buyer of Indian cotton yarn too has declined.
China imported 149.66 million kg of cotton yarn in the first three months of last financial year (2015-2016) and it dropped to 99.09 million kg during the same period this year. The decline in exports started in April 2014. Then the total cotton yarn exports from India used to be 140 million kg a month that has dropped to about 100 million kg now, informed M Senthil Kumar, Chairman of Southern India Mills’ Association.
With a drop in demand in the domestic and export markets, capacity utilisation in textile mills has also gone down. With existing capacity, India can produce up to 500 million kg of yarn a month. However, production is only about 470 million kg now. Bangladesh is the second largest buyer of cotton yarn from India. Exports to Dhaka went up by 38.87 per cent in value between April and June this year and 52.1 per cent in terms of volume during the same period. This year, India’s exports to Pakistan improved in terms of value and volume.
Competitiveness of Indian cotton yarn in the international market should improve. Further, fluctuations in cotton price have hit the textile mills, Kumar said. The government should give two per cent under the Merchandise Export Incentivisation Scheme and three per cent under the interest equalisation scheme for one year. This will help India increase export to other countries too, Kumar summed up.
The Bangladesh government has launched the Essentials of Occupational Safety and Health (EOSH) program. Under this, eight lakh ready-made garment (RMG) workers across the country would benefit. EOSH, is an innovative training package developed by the International Labour Organisation's (ILO) International Training Centre in Turin. The training programme is being delivered by the Bangladesh Employers Federation (BEF) with the support of the ILO and financed by Canada, the Netherlands and United Kingdom, according to a release.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) have also supported the training. The launch marked the third phase of an initiative that has seen a core group of 114 master trainers from BEF, BGMEA, BKMEA and RMG factories train 8,038 RMG managers and supervisors in occupational safety and health.
In the latest phase, this group would now go on and build awareness of key OSH issues amongst 800,000 workers in 585 factories by June 2017. In addition to the EOSH training, the initiative would also see 585 company representatives oriented on the formation of Safety Committees at factory level. The goal is to establish 110 functioning Safety Committees at company level by January 2017. Covering the areas of managing safety and health, and establishing Safety Committees, the modules form part of an OSH kit to be distributed to all RMG factories.
