FW
Indonesia’s exports of textiles are projected to grow five to six per cent next year. The country is aggressively signing trade agreements such as the European Free Trade Association, India, Australia, Algeria, and Morocco. The aim is to increase exports to Australia, the EU, Chile, Mozambique, Tunisia, Morocco, and the Regional Comprehensive Economic Partnership. In the meantime efforts will be made to harmonize tariffs from upstream to downstream and have competitive energy prices.
Heavy import duties on purified therephtalic acid, which is a raw material for polyester and plastic, as well as on polyester mean that Indonesia’s products are less price competitive than other countries’ products. The country’s main destinations for its textile exports are Europe, the United States and Japan.
In the textile sector too there are investments, especially in the intermediate or midstream sectors. Currently, some Chinese investors are interested in investing in the country and building production facilities. The third largest textile company in China is currently finalizing plans to invest in the fabric and dyeing sector in Indonesia, which is weak and needs heavy investment. The company is a producer of high quality fabrics, especially for premium brand shirts, such as Hugo Boss.
India is preparing a package for exporters. There have been challenges for the export sector over time and one big challenge is credit. There has been a sharp decline in credit to the export sector. The package would focus on labor intensive sectors such as leather, textile and marine products as they would help in creating jobs.
Another challenge the export sector is facing is related to GST. A e-wallet mechanism may be introduced to effectively address the woes of exporters who have been complaining of delays in refund of taxes under the GST regime. They get refunds over a period of time. They have to first pay upfront and in that working capital gets locked up.
With an e-wallet, exporters do not have to pay the tax first. A notional credit would be transferred to exporters’ accounts based on their past record and the credit can be used to pay taxes on inputs. To reduce transaction costs for exporters, there may be multi-modal transport, which will help enhance efficiency in the logistics sector. Each logistics company will be rated by a regulatory organisation, which will be created by the industry.
India’s exports grew by a meager 0.80 per cent in November. During April to November, exports rose 11.58 per cent.
Textile firm Arvind recently launched its greenfield garmenting facility in Ranchi. The facility, set up with an investment of Rs 300 crore, will add capacity of 16 million garments annually to the company's current garmenting operations and generate additional revenues of Rs 700 crore.
This launch is part of capacity expansion strategy where Arvind will be developing three large garment clusters in Jharkhand, Gujarat and Andhra Pradesh. Each of these clusters will employ nearly 10,000 workers. The company aims to convert 50 per cent of its fabric into garments over the next five years from the current capacity of 10 per cent. It has charted out an investment of Rs 500 crore per annum for the next five years and aims to double revenue from its textile business to Rs 12,000 crore.
Arvind currently employs over 45,000 people and once these clusters are fully operational at optimum capacity, the employment numbers are expected to more than double.
Egypt aims at increasing readymade garment exports by 10 per cent. Other goals are to increase the number of small and medium class exporters, to participate in specialised expos and promotional missions and increase the number of the sector’s workers from about one million to two million.
Egypt’s location qualifies it to be a logistical hub for the textile industries and products, imported from Africa, along with the free trading agreement that Egypt signed, linking it with a number of countries. But challenges abound. Payment of export subsidies is erratic and irregular. There has been a dramatic increase in production costs, including transport costs and energy costs, since the floatation of the Egyptian pound in November 2016. A huge proportion of raw materials has to be imported.
Some of these are being worked on. Economic reforms are being undertaken. Exporters are being offered financing and training facilities in order to double Egyptian garment exports. Exporters’ base is being expanded by attracting small and medium companies. This has already succeeded in attracting about 25 new factories to the sector. About 85 per cent of Egypt’s readymade garment exports are to the US and European countries like Spain, Germany, France and Turkey.
The European Union has fined US clothing company Guess for illegally blocking cross-border sales in Europe, part of a crackdown against illegal practices blocking e-commerce in the EU. Guess’ distribution deals with retailers restricted them from using the Guess brand names and trademarks for online search advertising and also prevented them from setting the retail price independently.
Retailers were also required to get authorisation from Guess before selling online, while the criteria for such approval was not based on any specified quality criteria. Sellers were also not allowed to sell to consumers outside their authorised areas. This system allowed Guess to partition off certain European markets, resulting in retail prices five per cent to ten per cent higher in central and eastern Europe than in western Europe.
In the 2017-18 financial year, Guess’ total operating income improved by 37 per cent. In the same period of time, its operating margin grew from 2.9 per cent to 3.6 per cent. Guess is on a steady growth track in Asia, notably in China, where it opened 25 new stores in the last quarter. China will in fact be a strong focus for the current financial year, during which the plan is to open 60 stores in Asia.
The Accord, the inspection agency of more than 200 retailers and brands, has started handing over the remediated factories to the Remediation Coordination Cell (RCC) as they have fully fixed structural, fire and electrical loopholes. The Accord will hand over all remediated factories to the RCC in phases as the newly formed entity will monitor the progress of the remediation after the departure of the Accord as well as the Alliance, another garment factory inspection body.
The Accord has been inspecting and remediating more than 1,600 garment factories to strengthen workplace safety through fixing structural, fire and electrical loopholes. Among the major loopholes, 97 percent of the Accord factories lacked safe means of egress. Locked gates, storing of materials blocking exits and inadequate exit lighting were the most common forms of hazards. Some 91 percent of factories required an adequate fire detection and alarm system.
"A recent report on State of Fashion 2019 by Mckinsey/BOF notes the top challenges for the fashion industry are: volatility, uncertainty, speed of changing consumer preferences and sustainability. To tackle these, the reports advises industry leaders to be nimble, digitally skilled, experiment with new trends Mckinsey predicts a lower growth rate of 3.5 per cent for 2019 over 4.5 per cent in 2018. However, this growth rate is likely to differ by geography and segment. This calls for building resilience and productivity improvements."
A recent report on State of Fashion 2019 by Mckinsey/BOF notes the top challenges for the fashion industry are: volatility, uncertainty, speed of changing consumer preferences and sustainability. To tackle these, the reports advises industry leaders to be nimble, digitally skilled, experiment with new trends Mckinsey predicts a lower growth rate of 3.5 per cent for 2019 over 4.5 per cent in 2018. However, this growth rate is likely to differ by geography and segment. This calls for building resilience and productivity improvements.
New products, business models to tackle novelty issue
According to a survey in Britain, one in three young women considers clothes to be old after wearing them once or twice. Also, an average person buys 60 per cent more clothes compared to 15 years ago. They are also retained for only half as long time. To solve the challenge of newness, the brands need to respond quickly to changing trends, launch the right products and innovate their business models.
Technology, social media to reduce gratification time
From in-store assistants of brands and retailers, consumers’ inspirations have shifted to multiple sources like the social media,
influencers and celebrities. According to a 2017 study, about half the respondents were influenced by bloggers, influencers compared with just 20 percent placing faith on the in-store assistants. To minimise the time between the want moment to have moment, players need to use technology solutions. Also, offline retailers need to promote products in-store with social / influencer credibility with real-time intelligence.
Emphasis on key areas to guarantee returns
With a potential slowdown in global economy by 2020, players will look for key opportunities to boost productivity compared to previous years. They need to work on certain key areas to get maximum returns on invested capital. This can be achieved by using technology/big-data to drive decisions along with human intuition, using cutting-edge prediction model to decide volume bets, shifting to sophisticated stock deployment using cognitive technology enabled replacement or replenishment models.
Start-ups to improve market relevancy
As per Mckinsey millennial survey, young generations are more likely to follow up-and-coming brands. These brands show high saliency and engagement in social media. The incumbents need to build a way to stay relevant by learning how to think small, working with start-ups, building innovation bandwidth internally or through an incubator
Exploring demand model through data analytics, automation
Innovations in the data analytics and automation will enable players to explore "on demand" model of fulfilling demand. However, with the help of social media consumers are establishing trends as opposed to brands and retailers. To retain their brand identity players need to induct data based demand sensing tools in the development process and nearshore products
"The 2013 Rana Plaza collapse in Bangladesh and the 2012 factory fire in Pakistan city kick started a series of litigation processes, public awareness campaigns and safety inspections kick-started in the aftermath of the two fatal incidents. Although some compensation was paid to the victims' families, but did these tragedies succeed in teaching a lesson to European companies, consumers? Interestingly a Bangladeshi court recently decided to evict European safety inspectors from its factories. This group of inspectors comprising over 200 firms — including global clothing giants such as H&M and Zara-owner Inditex —are signatories to the Accord on Fire and Building Safety in Bangladesh, sealed after the Rana Plaza factory collapse in 2013."
The 2013 Rana Plaza collapse in Bangladesh and the 2012 factory fire in Pakistan city kick started a series of litigation processes, public awareness campaigns and safety inspections kick-started in the aftermath of the two fatal incidents. Although some compensation was paid to the victims' families, but did these tragedies succeed in teaching a lesson to European companies, consumers?
Eviction impacts ties and economy
Interestingly a Bangladeshi court recently decided to evict European safety inspectors from its factories. This group of inspectors comprising over 200 firms — including global clothing giants such as H&M and Zara-owner Inditex —are signatories to the Accord on Fire and Building Safety in Bangladesh, sealed after the Rana Plaza factory collapse in 2013.
Bangladesh government established a national regulatory body to take over Accord’s work. In May, a Bangladesh court ordered the European safety inspectors to halt operations following a petition filed by a local readymade garment supplier against the agreement. The European inspectors' inability to inspect factories is likely to result in severing of ties with many suppliers and also have a negative impact on Bangladesh's economy.
A survey by ActionAid Bangladesh, an international non-profit group, revealed earlier this year that nearly 48 per cent of the survivors of Rana Plaza
incident are out of employment due to their physical and mental weaknesses. The report stressed apart from mental trauma, many survivors suffer from headaches as well as hand, leg and back aches, which have rendered them unable to return to work in Bangladesh's multibillion dollar garment industry.
Trial and pressure
In 2015, a group of people affected by the Karachi factory blaze filed a case against KiK at a German regional court in Dortmund. They are demanding €30,000 in compensation from KiK and accuse the company of being jointly responsible for inadequate fire protection measures at the Ali Enterprises garment factory. KiK however rejects the claims. The company has agreed to pay a total of $5.15 million (€4.7 million) to the affected families and survivors following a negotiation overseen by the International Labour Organization. It however refused to make compensation payments for injuries incurred, as it could not be held responsible for the fire.
Policies to safeguard worker’s rights
In September, Saage-Maass, a human rights activist and lawyer working with the European Center for Constitutional and Human Rights in Berlin blamed lack of certification process of these tragedies. It is clear that pressure on European companies to ensure safety and better conditions for workers in South Asian factories has increased in the past few years.
At the same time, the Bangladeshi court's decision to evict European inspectors shows how local capitalists can pressure their governments into ignoring workers' safety to maximise profits. Rights groups say it is crucial that European governments pile pressure on South Asian leaders to force them to implement proper policies to safeguard workers' rights.
"Export of knit T-shirts by India registered an export value of $570.17 million in Q2 FY 18-19. This is a 9.62 per cent decline over the previous quarter. This trend of falling exports is an indication for exporters to move towards more value added apparel exports, rather than competing with countries like Bangladesh. In Q2 FY 18-19, India’s exports of knit T-shirts to the US declined 13.50 per cent to $126.52 million. Export of cotton T-shirts declined by 10.80 per cent while those of T-shirts made from other fibers declined by 19.32 per cent."
Export of knit T-shirts by India registered an export value of $570.17 million in Q2 FY 18-19. This is a 9.62 per cent decline over the previous quarter. This trend of falling exports is an indication for exporters to move towards more value added apparel exports, rather than competing with countries like Bangladesh.
The dip countrywise
USA:
In Q2 FY 18-19, India’s exports of knit T-shirts to the US declined 13.50 per cent to $126.52 million. Export of cotton T-shirts declined by 10.80 per cent while those of T-shirts made from other fibers declined by 19.32 per cent.
Nigeria:
Nigeria’s total knit T-shirts imports from India were valued at $ 23.27 million in Q2 with growth of 43.11 per cent over the previous quarter. India exported T-shirts made of cotton and other textile fibers. Cotton T-shirts exports totaled $17.31 million whereas T-shirts made from other fibers totaled $5.95 million.
U.A.E.:
India’s exports of knit T-shirts to UAE were worth $136.88 million in Q2 FY 17-18, a drastic fall of 40.76 per cent. Exports of cotton T-shirts totaled to
$43.69 million, a fall of 14.25 per cent in Q2 FY 18-19 over the previous quarter. Exports of T-shirts made of other fibers totaled to $24.45 million with a negative growth of 4.49 per cent over the previous quarter.
Germany:
India’s knitted T-shirts exports to Germany totaled to $53.51 million in Q2 FY 18-19 with negative growth of 3.50 per cent over the previous quarter. Cotton knitted T-shirts rule the basket with an export value of $37.99 million. T-shirts made of other fibers perceived a positive growth of 12.07 per cent to $13.18 million in Q2 FY 18-19.
UK:
United Kingdom’s knitted T-shirts imports from India witnessed a fall of 12.22per cent in the Q2 FY 18-19 to $40.44 million. Cotton T-shirts exports dropped 14.81per cent to $31.13 million. T-shirts made of other fiber were exported to the UK with a value of $7.45 million, growth of 1.78per cent.
France:
Exports to France totaled to $26.41 million in Q2 FY 18-19. Cotton T-shirts exports dropped 41.77per cent in the Q2 over the previous quarter, with exports totaling to $20.26 million.
South Africa:
India’s knitted T-shirts exports to South Africa have improved by 48.90 per cent over the previous quarter in the Q2. India exported only T-shirts made of cotton, synthetic fibers and other fibers to South Africa. Out of which T-shirts made of other fibers dropped by 33.46per cent, totaling to $3.5 million. Cotton T-shirts exports totaled to $19.61 million in Q2 FY 18-19 with a growth of 87.30per cent over the previous quarter.
The Netherlands:
Knitted T-shirts exports to the Netherlands too dropped by 42.03 per cent to $17.97 million in Q2 in FY 18-19 over the previous quarter. Cotton T-shirts exports totaled $11.4 million and T-shirts made of other fibers was $5.29 million in the Q2 FY 18-19.
Italy:
India’s knitted T-shirts exports to Italy dropped in the Q2 FY 18-19 over the previous quarter by 12.85. Exports value totaled $11.26 million in Q2 FY 18-19. Cotton T-shirts exports dropped 10.20 per cent over the previous quarter, while T-shirts made of other fibers dropped 25.79 per cent.
With consumer attitudes beginning to change, people are becoming much more aware of the environmental impact of their choices, and the need to reduce, reuse and recycle gowns are made from Finnish birch trees. The dress was designed using innovative loncell technology.
Ioncell uses a range of materials, including wood, recycled newspaper, cardboard and old cotton, to make fabrics with less of an environmental impact than the processes used to make cotton and viscose. It can also be recycled. A fabric made from Ioncell is soft to touch. It has a lovely sheen and falls well. Most importantly, it’s an environmentally sustainable option.
Making durable, recyclable clothes from wood means carbon emissions can be reduced since the carbon is stored in the lifespan of the fiber. Finland’s forests are also sustainably grown – each year, the growth actually exceeds harvest – and they require no watering. Ioncell produces cellulose-based textile fibers, like viscose, but unlike viscose production, the process uses a safe, non-toxic ionic liquid instead of harsh chemicals, which can end up polluting local water sources.
The fibers are biodegradable and don’t release harmful microplastics into the environment as they break down, or when they’re washed. The technology is still at the research stage, but the aim is for an Ioncell pilot production line by 2020.
