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The French government is developing a scoring system for clothing, grading from A to E. The scoring system incorporates environmental impacts into consideration, such as carbon footprint of clothing production and transportation, water needed for clothing production, toxicity of fabrics and dyes, and whether clothes can be recycled or reused.
The highest score was A, and the most serious pollution was E. The purpose of the system was to make consumers better understand the way and process of clothing production. In early February, the French government passed a law prohibiting clothing brands and retailers from destroying unsold and returned products. France took the lead in formulating the Loi Anti Gaspillage. The anti waste law covers electrical appliances, sanitary products and cosmetics, and must take measures such as ‘re-use’ (reused), ‘redistribution’ (redistributed) or ‘recycling’ (recycled). The bill contained 130 clauses and was passed by the Senate and the national assembly in January 21, 2020.
The purpose of the new law is to reduce the consumption of resources by 30 per cent between 2010 and 2030 according to the proportion of GDP output value. Compared to 2010, the amount of non-toxic waste is reduced by 50 per cent in 2025. Before 2025, the target of one hundred percent plastics recycling and recycling is reduced; greenhouse gas emissions are reduced: 8 million tons of extra carbon dioxide emissions can be avoided each year through plastic recycling measures. Create up to 300 thousand extra jobs, including new jobs.
A Northern India Textile Mills’ Association (Nitma) delegation recently met Ravi Capoor, Secretary Textiles to discuss issues facing India’s textile sector. The Nitma delegation comprised president Sanjay Garg, vice-president Mukesh Kumar Tyagi, and others spoke on the anomaly in the FTA (free trade agreement) with Indonesia and Vietnam, resulting in the closure of MSME spinning mills.
The secretary assured them India will enhance textile sector competitiveness across the entire value chain. Yarn manufacturing sector will be provided a level playing field. Nitma pointed out the surge of imports, particularly from Indonesia and Vietnam, has hit Indian spinning mills. This surge has been happening of late, as some existing duties — which acted as a safeguard against imports in the pre-GST period — were removed. Post-GST, with the removal of Cenvat and SAD, polyester yarn is being cleared with zero duty.
Operating profits of polyester yarn manufacturers in India are set to rise next fiscal. Reasons include a rise in operating margins, a healthy demand for polyester, and higher blending in garments and other products. The price of purified terephthalic acid (PTA) – a key raw material that accounts for more than half of the sales price of polyester yarn – is expected to be under pressure in the near term. Moreover, PTA capacities in Asia are set to rise 20 per cent over the next couple of years, which will keep prices in check.
Garments exports from Philippines are projected to register flat growth this year, as firms struggle to alternative sources for raw materials outside of crisis-hit China. Nearly all of the country’s apparel production is stopped due to the disrupted shipment of raw materials from source countries, particularly China. The Asian superpower is wrestling with its Coronavirus crisis that forced many factories to shut down.
The Philippines has to find alternative sources for fabric, textile and accessories, as it has no respectable domestic output for these items. This was largely why the garments industry, which is trying to make a comeback through public and private efforts, is tempering growth forecast this year, expecting export receipts to stay the same or increase by just 1 percent.
The industry is anticipating new players to come in when the Citira bill becomes law, as it will reduce corporate income tax to 20 percent by 2029, from 30 percent at present—the highest rate in the whole of Southeast Asia. In terms of market, the United States will keep its status as the country’s largest buyer of clothing products this year. The country will further solidify this position if it expands the Generalized System of Preferences (GSP) of the Philippines to garments.
As a GSP beneficiary, the Philippines can ship a total of 5,057 products to the US at zero tariff. Data from the Philippine Statistics Authority showed that exports of apparel and clothing products last year declined nearly 7 percent to $906.28 million, from $974.44 million in 2018.
Last year, the Board of Investments unveiled a road map seeking to bring back the Philippines as one of the world’s largest exporters of garments. In the short term, the industry is required to grow by 12.3 percent annually starting this year to enter the circle of the world’s top 20 by 2022.
Coronavirus (COVID-19) has led to factory closures and layoffs across Asia. Low-wage workers are particularly vulnerable to any global economic downturn triggered by travel restrictions and quarantines. Factories in Southeast Asia are dependent on China for supplies like cloth, buttons and zippers. In Cambodia 10 factories have decided to suspend operations. Some 200 factories are expected to slow or stop production in March, affecting 1,00,000 of more than 850,000 employed in the sector, which is Cambodia's largest employer.
In Bangladesh, the world’s second largest garment manufacturing industry after China, factories are still running but anxiety is growing. Bangladesh has about 4,000 garment factories employing some four million workers. Almost 70 per cent of its woven fabrics come from China and if the goods do not arrive on time, the readymade garment industry will be affected. If the crisis in China is prolonged, the impact would be severe. Neighboring Myanmar has a smaller industry but is more dependent on China. Half of the nation’s 500 factories could shut down by March if the crisis persists. China supplies about 90 per cent of the fabrics sent to Myanmar.
Asia’s textile industry accounts for 60 per cent of the world’s readymade garments, textiles and footwear.
A well-entrenched global group known to offer “End-to-End Solutions in Air Treatment”. One of the fastest growing adsorption technology groups in the world today, the Pahwa Group focuses on energy smart and green technologies. Operating within a broad framework of 'environment and energy', the group offers advanced environmental control solutions to a wide array of companies. It plans to display some of these most advanced technologies at ACREX India 200- South Asia's largest exhibition on air conditioning, heating ventilation and intelligent building. At this exhibition, the group will display Arctic Coolers, Treated Fresh Air Units (TFA), Energy Recovery Wheels (HRWs), Energy Recovery Ventilators (ERV), Active Chilled Beams (ECB) and Evaporative Cooling Pads. Varun Pahwa, President, DRI-Pahwa Group, "With Desiccant at its core, in relation to air" elaborates Pahwa.
Present in India since the last 30 years, the Pahwa Group offers air treatment solutions and products. “Our products offer a comfortable ambience to garment workers who constantly toil in high temperatures. We offer an air draft close to the worker, which ensures constant supply of fresh air and reduces chances of transmitting infections. This creates a wholesome environment in the factory,” notes Pahwa.
According to him, since air-conditioning a factory may not be viable for the owner, he can opt for evaporative cooling. “This ensures deliverance of cool air through ducts at one-tenth cost of air-conditioning as the only inputs used are a water source and a motor,” he says.
The garment industry in India employs workers on contract basis. “Providing these workers with a clean environment will reduce attrition rates in the garment industry. It will also enable the factory owner to save time and money,” adds Pahwa
The Pahwa Group caters to all shopfloors. “Exporters can assure buyers of the congeniality of their products by using our services. Our services also help domestic manufacturers retain their contract laborers,” he affirms.
Pacific Textiles Limited, a big name in China knitting textile industry, announced a production bouncing back up to more than 80 percent of its capacity as of February 25, from its 40 percent production level on February 14. It restarted its operations on February 12, reflecting a gradual job return amid on-going tightened efforts to prevent and control the Coronavirus epidemic.
Pacific Textiles Ltd. is a leading manufacturer of customized knitted fabrics in textile industry with its headquarters based in Hong Kong and its production base in Panyu District of Guangzhou, capital city of Guangdong Province, South China, the city is the top GDP producer of China.
Even though government has called for resuming production wherever the conditions are improving in terms of the disease control, lot of efforts are still being done both inside and outside the factories to keep a safe and clean workplace as workers have to travel from various place back to work. The production is resuming, but still full flow would take time, which impacts the company’s performance temporarily. The three-week long pause in production prior to the restart of on-site operation for normal leave during Spring Festival and the shortfall in full-capacity running, together with other uncertain factors in this special period, will roughly cut off 400 -450 million Hong Kong dollars in business income on estimated basis as against the previous production schedule.
It is noticed that in many places, the initial returning rate of operators is somewhere at 20-40 percent, leaving more than half of the job position short of hands due to quarantine measures and traffic flow control. Even if the process of restarting the work has started and reaching up to 80 percent of installed capacities at few places, yet for full-fledged operations , there is still sometime, it seems, that too if the epidemic is fully in control.
Pacific Textiles Ltd. is has an integrated services of knitting, dyeing, printing and finishing with scalable water treatment facility and cogeneration power plant, with annual production capacity of approximately 87million kg and work force of 6500 in production area, covering its production and workforces in Vietnam, Bangladesh and Sri Lanka etc. The company has the full conviction that the plant in Panyu District in Guangzhou will run full throttle soon and its clients orders will be fulfilled, as the situation improves.
Contributed by Mr. ZHAO Hong
He is working for CHINA TEXTILE magazine as Editor-in-Chief in addition to being involved in a plethora of activities for the textile industry. He has worked for the Engineering Institute of Ministry of Textile Industry, and for China National Textile Council and continues to serve the industry in the capacity of Deputy Director of China Textile International Exchange Centre, V. President of China Knitting Industry Association, V. President of China Textile Magazine and its Editor-in-Chief for the English Version, Deputy Director of News Centre of China National Textile and Apparel Council (CNTAC), Deputy Director of International Trade Office, CNTAC, Deputy Director of China Textile Economic Research Centre. He was also elected once ACT Chair of Private Sector Consulting Committee of International Textile and Clothing Bureau (ITCB)
The Coronavirus (COVID 19) outbreak in China is likely to affect Indian textile and apparel industry, in many positive ways. A recent press release by the Clothing Manufacturers Association of India (CMAI) reveals, the prevailing situation along with uncertainty over the commencement of production is posing a major issue for Indian manufacturers who are dependent on raw material supplies from China. However, it is also compelling global apparel brands to look at India as an alternate manufacturing destination.
On an average, India exports 20-25 million kg of cotton yarn a month to China. Prices of cotton yarns declined 3-4 per cent in domestic market as traders are anticipating a decline in demand from China on account of the prevailing situation. Any further prolonging of the virus will result in a decline in China’s imports of cotton yarn, impacting India’s exports. India will have to divert its surplus cotton yarn to the domestic market, further reducing the price of cotton yarn.
Diversification to increase lead times and costs
India imports synthetic yarns worth $460 million and $360 million worth synthetic fabrics from China annually. It also
imports over $140 million worth accessories like buttons, zippers, hangers and needles. With the outbreak of this epidemic, textile factories in India have halted operations since the Chinese New Year. If this situation prevails, Indian garment manufacturers will have to look for alternate sourcing modes including local sourcing, which in turn may increase the cost of their finished goods by 3-5 per cent. Moreover, identifying vendors in such a short time can take a toll on lead times, quality and cost.
China imports large quantities of medical protective gears such as surgical masks and protective clothing from across the globe. This has raised sales of such products in other South East and Western nations to such an extent that its supply is not able to keep up with the demand.
Indian manufacturers fail to emerge as perfect alternative
On January 31, 2020, the Indian government banned exports of all personal protection equipment, including clothing and masks to avoid any shortage in India. However, it soon lifted this ban to help China battle the disease. The government also provided a major relief to Chinese synthetic yarn manufacturers by abolishing the 2.5 per cent of anti-dumping duty levied on Purified Tephthalic Acid (PTA) in order to strengthen the country’s synthetic textiles industry. However, as most of central China and Hubei is at a virtual standstill, importing PTA from China is not a viable option at the moment.
This situation can be advantageous for India as buyers who travel to China from Europe and USA to negotiate with garment exporters can be diverted to the country. One factor that plays in China’s favor is that a number of companies have already produced garment for the Spring/Summer season.
However, if the situation prevails for next couple of months and China fails to control the virus epidemic, buyers will be left with no option but to explore other sourcing destinations. In such a situation, Bangladesh and India stand more than Vietnam, Cambodia or any other South East Asian supplier. On its part, India scores on account of its robust supply chain. However, manufacturers neither have the scale nor the cost competitiveness to present themselves as credible alternate.
One of the biggest threats to the Chinese luxury industry since the 2008 financial crisis is the ongoing Coronavirus (COVID 19) outbreak that has prevented as many as 1,000 Chinese fashion buyers from attending Europe’s top fashion shows this month. Besides, the outbreak is also disrupting supply chains for more mid-market apparel, with retailers and fashion brands expressing concern about the ability of Chinese factories to deliver autumn-winter collections as planned. As Luca Solca, a luxury goods analyst at Bernstein, luxury sales in China during the first quarter of the current financial year could be heavily impacted with revenues falling by low to mid-teens digits.
Lack of Chinese buyers effect luxe brands
Many US-listed luxury companies also depend on China for their sales. For instance, Tapestry-a US-based modern
luxury lifestyle brand has been increasing revenues in China by three times faster than the overall group. Chinese factories can churn out everything from coats to swimsuits for fashion brands from H&M and Next of the UK to higher-end designers such as Tory Burch.
However, due to the outbreak five Chinese designers have cancelled their fashion shows scheduled for the Paris Fashion Week next week. Chanel and Prada have also postponed separate events planned for May in China. As per an estimate by the National Chamber of Italian Fashion, Italian exports are likely to fall by a minimum of €100 million in the first quarter and €230 million if the crisis prolongs further for the first half of the year.
To attract Chinese buyers back to the market, Kering’s Gucci brand live streamed the catwalk show for Autumn/Winter women’s collection in Milan, using Weibo, one of China’s biggest social media platforms. Similarly, other luxury groups activated contingency plans that include closing stores and offices in China, scaling back product launches and advertising, and clamping down on staff expenses globally. Some have instituted hiring freezes.
Mid-market fashion brands in China are more exposed to the contingencies in supply chains than their luxury peers. Rising labor costs do not affect luxe players much as they easily diversify their manufacturing to other cheaper countries. However, China still remains a major source of fabrics for garment makers in places such as Bangladesh and Vietnam. These brands are likely to face delays in manufacturing and dispatch of their autumn winter collections. For instance, brand Next has about £20 million inventory at risk in China. This is leading to increased insecurity for both Chinese factory owners and its brands.
The European Union’s volume-wise apparel imports fell 1.42 per cent from January to November 2019. However, in the same period, the value of imports increased by 4.29 per cent.
Europe’s changing retail landscape is one reason for the dip in import volumes. As consumer preferences are changing, and they are looking for more personalised clothing, many companies are now producing garments within Europe, which further results in lower imports. The European Union as a whole remains a leading producer of both textile and apparel.
China’s apparel exports to the EU fell in both value and volume by 6.51 per cent and 0.20 per cent respectively in the 11 months. Bangladesh, the second top garment exporter to EU after China, managed to rake in growth marginally in volumes, while growth was significant in value terms. Vietnam, on the other hand, dipped by 5.84 per cent in its quantity-wise exports and got a boost of 10 per cent in values of apparel exports to the EU. India’s exports to the EU from January to November ’19 dipped 0.92 per cent in volume, while value surged marginally by 2.20 per cent.
US-based Quantum Materials is investing in new manufacturing equipment to meet the increased demand for domestic production capabilities. Quantum, founded in 1985, is fully vertically integrated with expertise in mono- and multi-filament extrusion, texturing, twisting and weaving. The company is known for creating suspension fabrics for office seating, including one of the best-selling and most iconic office chairs in the world. In developing high performance mono-filament elastomeric yarns, now known as the original 5280 yarn technology, Quantum has built a reputation for innovation and quality among leading contract furniture manufacturers and other manufacturing industries.
The company is diversifying its business with customized state-of-the-art manufacturing equipment to support research, development and manufacturing for non-traditional and high-performance woven textile solutions. The company supplies a range of specialized, custom fabrics to companies with needs in an array of industries, including filtration fabrics, woven tire cord, tubular belting, transparent window screens and other confidential government associated projects.
Quantum has a vertically integrated structure to manufacture a wide range of high-performance yarns and fabrics offering advanced textile solutions to its diverse customer base. Its team has been working on proprietary, custom equipment designed to give it the flexibility to work in any textile-related industry needing specialized yarns and/or fabrics.
