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For the third consecutive year, the Japanese parent company of Uniqlo, Fast Retailing is poised to surpass its own forecasts for annual profits as the brand’s expansion in the Western markets and recovery in China business continues to drive growth.
As per the estimates of 15 analysts compiled in a study by LSEG, the company’s operating profit grew by 24 per cent to 478.3 billion yen during the 12 months ending Aug ’24. This slightly exceeds Fast Retailing's earlier forecast of 475 billion yen, which it raised in July after strong second-half performance.
Moving forward, key factors like the success of its fall and winter collections in Japan, as well as efforts to revitalise its business in China are likely to help drive the company’s profits. The company’s investors are likely to shift focus on strategies in Greater China to reverse earnings declines caused by weak consumer sentiment and intensified competition, says Mark Chadwick, an independent analyst.
With over 900 stores in China, Fast Retailing is considered a prominent name in China’s retail sector. While COVID-19 restrictions hampered the company's performance in the country for years, it currently struggles with a sluggish economy affecting consumer confidence. In July, Pan Ning, CEO- Greater China, acknowledged, market’s maturity led the company to scale back new store openings and adopt a ‘scrap and build’ approach to underperforming locations.
During the pandemic, when China’s sales were hit by lockdowns, Fast Retailing shifted its focus to expanding in North America and Europe. The company recorded strong sales and profits in both regions in the first nine months of fiscal 2024. Tadashi Yanai, Founder, believes, in the post-COVID world, consumers’ are increasingly opting for value over luxury, a trend that aligns with Uniqlo’s brand proposition.
China has long been the world's textile and apparel manufacturing powerhouse, but recent years have seen notable shifts in its domestic and global trade dynamics. Evolving consumer demands, supply chain disruptions, and rising manufacturing costs have all played a role in reshaping the industry.
A shifting trade landscape
Despite fluctuations, China's textile and apparel exports has shown resilience, remaining a significant contributor to the global market. Imports on the other hand have steadily increased, reflecting a growing domestic demand for higher-value and specialized products. In the global market while still dominant, China's share has gradually decreased, suggesting a diversifying global supply chain.
Table: China’s textile trade and market share
Metric 2019 2020 2021 2022 2023 Exports ($ bn) 282 291 330 340 325 Imports ($ bn) 45 40 48 55 50 Global Market Share (%) 38 39 37 35 33
In the export front, the US remains a significant market for Chinese textiles and apparel, despite trade tensions. Other key export destinations include Japan, Vietnam, Germany, and Bangladesh. China imports textiles and apparel primarily from Vietnam, the US, Japan, Italy, and Australia. It may be noted that trade disputes, particularly with the US, have impacted China's textile and apparel exports. Tariffs and trade barriers have prompted some companies to diversify their sourcing and production locations. The textile and apparel industry is characterized by complex global value chains. China's role in these chains is evolving, with some production shifting to other countries while China increasingly focuses on higher-value activities like design and research & development.
At the same time growing awareness of environmental and social issues in the fashion industry is driving demand for sustainable and ethical products. Chinese manufacturers are responding by adopting more sustainable practices and certifications. The domestic market too has seen its share of changes. China's economic growth has led to significant increases in wages, eroding its cost advantage in labor-intensive manufacturing. This has pushed some production towards lower-cost countries in Southeast Asia and Africa.
Meanwhile, a burgeoning middle class with increasing disposable income has pushed up domestic demand for higher-quality and more diverse apparel. This has encouraged Chinese manufacturers to upgrade their production capabilities and focus on domestic consumption.
Moreover China is actively investing in automation and advanced manufacturing technologies to enhance productivity and competitiveness. This shift towards "smart manufacturing" is transforming the industry and mitigating the impact of rising labor costs.
Looking ahead
China's textile and apparel industry is undergoing a period of significant change. While it continues to be a major player in global trade, its role is evolving. China is moving towards higher-value activities, focusing on innovation, technology, and domestic consumption. The coming years will likely see further shifts in global value chains, increased competition from other production hubs, and a greater emphasis on sustainability. The ability of Chinese companies to adapt to these changes will determine their future success in the dynamic global textile and apparel landscape.
India's polyester industry is at a crossroads. Even while domestic production of essential raw materials like Monoethylene Glycol (MEG) is increasing, there is significant reliance on imports. This dependence has now sparked a trade dispute, with Reliance Industries Limited (RIL), a domestic production giant, leading the charge against alleged dumping practices by exporters from Kuwait, Saudi Arabia, and Singapore.
A delicate balance
The polyester industry is heavily reliant on MEG and Purified Terephthalic Acid (PTA). As detailed in "India's Polyester Raw Material Landscape: A Tightrope Walk Between Domestic Products and Imports," domestic production, though growing, struggles to meet the surging demand. This gap necessitates substantial imports, creating a complex interplay of domestic and international forces.
The allegation of unfair pricing
Reliance Industries, through the Chemicals and Petrochemicals Association of India (CPMA), has filed an anti-dumping petition with the Directorate General of Trade Remedies (DGTR). The CPMA contends that MEG originating from Kuwait, Saudi Arabia, and Singapore is being sold in India at prices significantly below those in their domestic markets, causing ‘material injury’ to Indian producers. This claim hinges on the price disparity between domestically produced and imported MEG. Statistics show imported MEG is priced lower than its domestic counterpart, potentially undercutting Indian producers and impacting their profitability.
Meanwhile, the DGTR has initiated an anti-dumping investigation covering the period from April 2023 to March 2024. The investigation will scrutinize trade data, production costs, and pricing practices to determine whether dumping has indeed occurred. If the DGTR's findings support the CPMA's claims, anti-dumping duties could be imposed on MEG imports from the implicated countries.
Balancing industry interests
The outcome of this investigation holds significant implications for various stakeholders:
Domestic producers: Anti-dumping duties could offer a lifeline to domestic MEG producers like Reliance, potentially levelling the playing field and safeguarding their market share.
Downstream industries: Increased import costs due to duties could squeeze margins for downstream industries reliant on MEG, such as textile manufacturers. This could, in turn, affect their global competitiveness.
Consumers: Ultimately, higher production costs could translate to increased prices for end consumers of polyester-based products.
This anti-dumping investigation reflects the intricate dynamics of international trade. While free trade is generally encouraged, safeguards exist to protect domestic industries from unfair pricing practices. The DGTR's investigation will need to carefully weigh the evidence and potential consequences before reaching a decision.
Indeed, India’s polyester industry faces challenges as it walks the tight rope between cost-effective raw materials and protection of domestic producers. The DGTR's investigation into alleged MEG dumping is a crucial step in navigating this complexity. Its findings will significantly impact the future of the industry and its various stakeholders.
India's polyester industry, a significant contributor to the nation's textile sector, is passing through a complex landscape with fluctuating raw material prices, a growing domestic demand, and reliance on imports to bridge the supply gap.
Domestic demand
India's burgeoning middle class and rising disposable incomes have resulted in consistent demand growth for polyester products. This translates into a robust appetite for MEG (mono-ethylene glycol) and PTA (purified terephthalic acid), the key raw materials for polyester production, in India. While precise figures for domestic demand by volume are challenging to obtain, industry estimates suggest a steady annual growth rate of 6-8 per cent in recent years. This growth is driven by increased consumption of polyester fibers in apparel, home textiles, and industrial applications.
Domestic production and supply
Despite being a major polyester producer, India's domestic production of MEG and PTA falls short of meeting the surging demand. Reliance Industries (RIL) dominates the domestic production landscape, with a significant share of the market. However, other players like JBF Petrochemicals and MCPI also contribute to the supply chain.
|
Year |
MEG Production |
PTA Production |
|
2021 |
1,200 |
3,500 |
|
2022 |
1,300 |
3,800 |
|
2023 |
1,400 |
4,100 |
Source: Industry estimates and company reports
The deficit between domestic production and demand necessitates significant imports of MEG and PTA. India primarily imports these raw materials from countries like China, Taiwan, South Korea, and the Middle East.
Table: Estimated MEG and PTA imports (in metric tons)
|
Year |
MEG imports |
PTA imports |
|
2021 |
800 |
1,000 |
|
2022 |
900 |
1,200 |
|
2023 |
1,000 |
1,400 |
Price disparity
The price gap between imported and domestically produced MEG and PTA is a critical factor influencing the industry's profitability. While domestic prices are often influenced by local market dynamics and government policies, import prices are subject to global supply and demand forces, currency fluctuations, and freight costs.
Table: Average prices in Rs
|
Raw material |
Domestic price |
Import price |
|
MEG |
55-60 |
50-55 |
|
PTA |
80-85 |
75-80 |
This price difference, though seemingly small, can significantly impact the margins of polyester manufacturers, especially in a competitive market.
The polyester industry faces several challenges like volatile crude oil prices (which impact raw material costs), fluctuating import prices, and logistical bottlenecks. However, the government's focus on promoting domestic manufacturing and initiatives like the Production Linked Incentive (PLI) scheme offer hope. These measures are expected to boost domestic production and reduce reliance on imports in the long run.
Overall, the MEG and PTA scenario in India is mix of domestic production, imports, and price fluctuations. While the industry currently relies on imports to meet its raw material needs, efforts to boost domestic production are underway. The success of these initiatives will be crucial in determining the future trajectory of India's polyester industry.
Global fiber production increased to unprecedented levels in 2023, reaching a historic peak of 124 million tons, marking a 7per cent increase from the previous year reveals Textile Exchange's latest Materials Market Report. This growth indicates a doubling of production since 2000, with projections suggesting a further rise to 160 million tons by 2030.
Dominance of synthetics raises sustainability concerns
Virgin fossil-based synthetics, notably polyester, continue to dominate the market with a staggering 60.5per cent share, amounting to 75 million tons in 2023 alone. This dominance underscores concerns over the environmental impact of non-renewable resources and their implications for sustainability goals.
Table: Global fiber production in 2023
|
Fiber type |
Production (mn tons) |
Market share in % |
Notes |
|
Virgin Fossil-Based Synthetics |
75 |
60.5 |
Polyester: 57% |
|
Plant-Based Fibers |
31 |
25 |
Cotton: 20% |
|
Manmade Cellulosic Fibers (MMCF) |
7.9 |
6.4 |
|
|
Animal-Based Fibers |
1.3 |
1 |
Certified mohair & cashmere: 47% market share each |
|
Recycled Fibers |
9.8 |
7.9 |
Recycled polyester: 12.5% market share |
|
Total |
124 |
100 |
The table shows despite growing calls for sustainability, recycled fibers faced setbacks in market penetration. Recycled polyester, for instance, saw its market share dip to 12.5per cent, highlighting the economic challenges posed by cheaper virgin synthetics and current limitations in recycling technologies.
While cotton production experienced a slight decline, sustainable practices maintained a stable 29per cent share of the market. Conversely, certified wool, mohair, and cashmere demonstrated positive growth, reflecting consumer preference for responsibly sourced animal-based fibers.
Emerging trends in Manmade Cellulosic Fibers
Manmade cellulosic fibers (MMCF) showed promising growth, with 6.4per cent of the market share in 2023. This trend signals a potential shift towards more sustainable alternatives within the fiber industry.
There are several reasons for this shift. Lower price of virgin synthetics compared to recycled alternatives and natural fibers remains a significant barrier to sustainable sourcing. Then there are technological limitations as current recycling technologies are not advanced enough to handle the complexities of textile-to-textile recycling at scale, hindering the growth of recycled fiber market.
While consumer awareness of sustainability is growing, it hasn't translated into widespread demand for eco-friendly products that can incentivize large-scale shifts in production practices. And there is a lack of policy support. Policies and regulations that incentivize sustainable fiber production and recycling are crucial but currently lacking in many regions.
Industry experts emphasize the urgent need for transformative action. Claire Bergkamp, CEO, Textile Exchange, underscores the critical gap between sustainability aspirations and current industry practices. The report serves as a clarion call for intensified efforts in textile-to-textile recycling, technological innovation, policy support, and consumer education to drive meaningful change.
The 2023 Materials Market Report paints a complex picture of the global fiber landscape, highlighting both progress and challenges. As the industry navigates towards a more sustainable future, overcoming barriers to recycled fiber adoption and supporting transitions to preferred materials will be pivotal in mitigating environmental impact and meeting climate targets.
On September 28, in a landmark move towards environmental sustainability, California governor Gavin Newsom signed Senate Bill 707, the Responsible Textile Recovery Act of 2024, into law. This legislation establishes the nation's first extended producer responsibility (EPR) program for textile recycling, aiming to curb the growing issue of textile waste and its environmental impact.
All about the Act
The Act mandates apparel and textile producers take responsibility for the entire lifecycle of their products, including repair, recycling, and reuse. This means producers will be required to join a producer responsibility organization (PRO) and submit a plan to the Department of Resources Recycling and Recovery (CalRecycle) for the collection, transportation, and processing of textile waste. The program is set to be implemented by January 1, 2028, with convenient drop-off locations for used textiles to be established across the state.
The fashion industry is a major contributor to global carbon emissions and pollution. The Responsible Textile Recovery Act of 2024 specifically addresses the environmental impact of fast fashion and the throwaway culture it has given rise to. By holding producers accountable for the end-of-life management of their products, the law aims to promote a more sustainable and responsible approach to textile production and consumption.
Act’s impact on market and supply chain
This legislation is expected to have a significant impact on the textile industry, both within California and potentially nationwide:
Reduced landfill waste: By promoting textile recycling and reuse, the law aims to drastically reduce the amount of textile waste ending up in landfills, which currently stands at approximately 1.2 million tons annually in California alone.
Circular economy: The Act encourages a shift towards a circular economy for textiles, where materials are kept in use for as long as possible, reducing the need for virgin resources and minimizing environmental impact.
Innovation and investment: The legislation is expected to drive innovation in textile recycling technologies and infrastructure, creating new opportunities for businesses and potentially boosting job creation.
Supply chain changes: Apparel and textile producers will need to adapt their supply chains to incorporate end-of-life management of their products, potentially leading to increased costs and logistical challenges. However, it could also incentivize more sustainable production practices and the use of recycled materials.
Consumer awareness: The establishment of widespread textile drop-off locations and public awareness campaigns are likely to increase consumer awareness about textile waste and encourage responsible disposal and recycling practices.
With this legislation, California is setting a precedent for other states and countries to follow in tackling the growing problem of textile waste. The Responsible Textile Recovery Act of 2024 represents a significant step towards a more sustainable future for the textile industry and the environment.
However, some industry stakeholders have raised concerns about the potential costs and logistical challenges associated with implementing the new requirements. Therefore, the success of the program will depend on effective collaboration between producers, recyclers, and consumers.
Ministry of Textiles recently organised a roadshow in Coimbatore to promote India’s largest global textile exhibition, Bharat Tex 2025.
Attended by Rachna Shah, Secretary, Ministry of Textiles as the Chief Guest, the roadshow also witnessed the presence of other dignitaries including Arun Roy, Industries Secretary, Government of Tamil Nadu; Rajiv Saxena, Joint Secretary, Ministry of Textiles, Governemnt of India, Bhadresh Dodhia, Co-Chairman, Bharat Tex; A Shakhtivel, Hon Chairman, Tiruppur Exporters Association, etc.
Scheduled to be held from Feb 14-17, 2025 at Bharat Mandapam in New Delhi, Bharat Tex 2025 aims to showcase India’s capabilities in textile manufacturing, covering the entire value chain from raw materials to finished products.
To be organised by 12 Indian Textile Export Promotion Councils (EPCs) and supported by the Ministry of Textiles, the event will help attract global attention to India as a premier textile sourcing destination.
The previous edition of Bharat Tex was attended by over 3,500 exhibitors and 3,000 buyers from over 100 countries. On the other hand, over 5,000 exhibitors are expected to attend the upcoming 2025 edition along with more than 6,000 international buyers, and over 120,000 visitors at a venue of spanning across more than 220,000 sq m.
Rajkumar, Past Chairman, CITI, has requested the organisers to reduce participation fees for MSMEs like the Powerloom sector besides accelerate implementation of the Powertex program.
Highlighting the importance of the event in strengthening India’s position as a global textile hub, Shah commended government initiatives such as the Production Linked Incentive (PLI) Scheme and PM Mitra Parks Scheme, for their role in modernising India's textile sector. These initiatives will help generate Rs 25,000 crore in investment under the PLI scheme and Rs 70,000 crore under the PM Mitra scheme, creating approximately 20 lakh jobs in the coming years, she said.
The event will also play a crucial role in promoting India as a favored destination for textile sourcing globally, she added.
Textile products weighing 9,500 tons and worth $23.5 million in value were exported by Iran during the first six months of the current Iranian calendar year, from Mar 20-Sep 21, 2024, as per data from the Islamic Republic of Iran Customs Administration (IRICA).
The data shows, Iran registered a 7 per cent rise in the value of its textile exports and 8 per cent growth in the volume of textile shipments during this period compared to the same period last year. Over the years, Iran has made significant improvements in the quality of textile exports to meet rising global demand.
Advancing textile exports is a part of Iran’s broader strategy to diversify its economy and reduce dependence on oil revenues. By strengthening its textile sector, the country aims to boost foreign exchange earnings and create more job opportunities in labor-intensive industries. Encompassing fabrics, garments, and related products, the textile sector continues to be one of the country's key non-oil export contributors.
To boost Iran’s position in the global textile market, Iranian authorities encourage manufacturers to enhance its production efficiency and product quality. The country continues to modernise production processes and foster stronger trade relationships to continue expanding its textile exports in the coming years.
The Telangana Government plans to set up a Yarn Depot for the power loom sector at Vemulawada in the Rajanna Sircilla District.
A proposal for the establishment of this Yarn Depot was first initiated by Commissioner of Handlooms & Textile and Apparel Exports Parks, Hyderabad.
The government will set up this Yarn Depot with an investment of Rs 50 crore, with most of this fund being used for procurement and maintenance of the required yarn as buffer stock at the depot. Telangana State Handloom Weavers Society Cooperative (TGSCO) will act as the nodal agency for this project.
Shailaja Ramaiyer, Principal Secretary (Handlooms, Textiles & Handicrafts), Department of Industries and Commerce, Government of Telangana, states, permission for the establishment of this Yarn Dept has been granted after a careful examination of the proposal. A corpus fund of Rs 50 crore to run the Yarn Depot has also been sanctioned under Special B.C Welfare Budget.
Valued at $174.79 billion in 2023, the global woolen textiles market is projected to reach a value of $236.28 billion by 2032, growing at an expected CAGR of 4.4 per cent during the forecast period.
As per a study by Archive Market Research (AMR), woolen textiles encompass fabrics and material that is woolen or spun from wool, which is mainly procured from the sheep. Woolen textiles are known to be flexible, insulation-free, soft natured, durable and possessing the ability to absorb or repel moisture. Some of the products made from this material include sweaters, coats, scarfs, blankets, upholstery and carpets. It covers fashion accessories and home furnishing commodities.
As per the AMR study, some of the emerging trends in the woolen textiles market include an increasing concern for sustainability and responsible sourcing of the wool, innovations in material processing to make it softer and more versatile, and increasing the consumption of greens and natural textiles in the fashion industry. The industry also benefits from the 'luxury-consumer' or 'high-end' apparel consumers as well as the demands for permanent detailed fabrics in luxury and casual wears.
The AMR study classifies the global woolen textiles market into three product-based categories: Woolen Apparel, Woolen Blankets, Woolen Carpets. The report concludes with in-depth analysis of the business operations and financial structure of leading vendors in the Global Woolen Textiles market. It also includes information on various marketing channels and well-known distributors in this market. Overall, the study serves as a rich guide for established players and new players in this market.
