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Pakistan and China have agreed to amend the bilateral FTA to ensure Pakistani exports get enhanced access to the Chinese market. The FTA has largely been responsible for Pakistan’s growing trade deficit with China. According to UN-run database Comtrade, China accounts for 46 per cent of Pakistan’s total trade deficit. The agreement was signed in 2006 and became operational a year later. Post the FTA, bilateral trade zoomed by 220 per cent from $4.77 billion in 2007 to $15.27bn in 2016.
China’s savvy marketers disproportionately benefitted from this rise. From 2007 to 2016, Pakistan’s exports to China rose by 159pc to $1.59bn while imports from China skyrocketed by 229pc to $13.68bn.
Hence, Pakistan’s trade deficit with China, which was $3.54bn in 2007, went up by 241pc to $12.09bn in 2016. Under trade concessions offered by the two countries, the FTA tariff reduction modality provided for tariff reduction or elimination on the agreed number of products from 2007 to 2012. China here also has been the major beneficiary. As per a 2013 study by the Pakistan Business Council, Pakistan’s concession list covered 59pc of its imports from China, whereas China’s concession list covered only 5pc of imports from Pakistan. China is better placed than Pakistan on almost all key economic parameters.
Pakistan’s top three global export products, home textiles ($3.80 global exports), knitted garments ($2.34bn) and woven garments ($2.25bn), have a marginal presence in the Chinese market: $25.78 million for home textiles, $16m for knitted garments and $20m for woven garments. Pakistan’s export-interest products either face high tariffs in the Chinese market or have suffered preference erosion post China’s FTA with countries in the Association of Southeast Asian Nations (Asean). The tariff for rice is 65 per cent, while average tariff for home textiles, knitted garments and woven garments is 4 per cent, 7 per cent and 9 per cent, respectively.
Asean countries face zero tariffs for home textiles, knitted garments, and woven garments under the FTA, while for rice the applied Chinese tariff is 35 per cent. This places Pakistan’s key products in a relatively disadvantageous position in the Chinese market. Pakistan wants China to accord its export interest-products the same level of preferential treatment enjoyed by imports from Asean.
Pakistan’s textile exports increased 7.18 per cent in the first seven months of current fiscal year. Exports of raw cotton grew by 48.72 per cent. Knitwear exports increased 13.27 per cent while exports of yarn (other than cotton yarn) increased by 29.93 per cent. Bed wear exports from the country increased 5.62 per cent while towel exports increased by 1.01 per cent. Exports of readymade garments increased by 13.93 per cent while exports of art, silk and synthetic textile increased by 93.54 per cent.
During the period under review, exports of made up articles (excluding towels and bed wear) also increased by 6.72 per cent. However, exports of cotton yarn declined by 1.42 per cent while exports of cotton (carded or combed) decreased by 95.71 per cent. Exports of tents, canvas and tarpaulin decreased 33.39 per cent.
Among the reasons for increase in exports are: flow of cash under the PM's incentive package, payment of sales tax refunds as well as the depreciation of the local currency, which improved exporters’ liquidity situation. Major measures have been introduced to facilitate duty drawback of local taxes. Pakistan’s textile exports rose ten per cent in December 2017 compared to December 2016.
Nordstrom has been chosen favorite premium fashion retailer among shoppers. Nike takes top spot for footwear. Macy’s topped for e-commerce purchases. These are the results of an annual fashion retail study conducted by Market Force.
Kohl’s ranked first for its loyalty card program as well as for delivering high value for its prices. Lane Bryant, Nordstrom and Dillard’s were at the bottom of the list for high value for the price.
Best merchandise selection, atmosphere and checkout speeds went to Nordstrom. But Lane Bryant was the leader for the ability to create and look and for ease of finding items.
Customers are often assisted at Lane Bryant and Nordstrom and assisted the least at Kohl’s and Old Navy. Nearly 75 per cent of shoppers interact with their favorite fashion retailer online, a 103 per cent increase over the previous year. Despite the online growth, consumers are still hitting physical stores for fashion. According to the survey, 76 per cent have shopped at one of their favorite retailers’ physical stores at least once in the past 90 days, and 48 per cent shopped there at least three times.
Retailers spend good money to market, promote and advertise their brands to lure shoppers into their door, but if their front-line representatives are failing to engage customers and deliver on the brand promise and fundamental customer service basics, they could easily lose that sale to their competitor next door.
During the calendar year 2017, India’s share in home textile exports to the US remained stagnant YoY at 33 per cent. The country’s market share (in dollar terms) in cotton sheets increased 1ppt YoY to 50 per cent during the above mentioned period. India has been consistently gaining a 1ppt market share in cotton sheets each year since the above mentioned period.
Also in the period under review market share for towels fell 1ppt to 39 per cent, led by multi-year low market share (sub 35 per cent) reported for the past four months.
Cotton Association of India data shows the pink bollworm infestation in major cotton producing regions of India resulted in an increase in cotton prices since mid-Dec’17 (+5 per cent to R111/kg) and 2 per cent reduction in cotton crop estimate for 2017/18.
Further, appreciation of the rupee (6.4 per cent YoY during the calendar year 18’YTD) continues to remain an issue. In Dec’17, India’s cotton sheet market share (dollar terms) came in at 50 per cent, a fall of 1ppt YoY. The calendar year ‘16market share rose 1ppt YoY to 50 per cent. This is the 6th year in which India saw a 1ppt YoY increase in market share. During the same year, China’s market share fell 2ppt YoY to 20 per cent, while Pakistan’s share remained flat YoY at 16 per cent.
India’s share in the terry towels segment fell sharply by 8ppt YoY to 30 per cent in Dec’17. The calendar year ‘17 market share also recorded a fall of 1ppt to 39 per cent. In calendar year ‘17, China’s market share increased 1ppt YoY to 24 per cent, while Pakistan’s lost 1ppt YoY share to 21 per cent. India’s calendar year ‘17 exports of cotton sheets to the US (in dollar terms) increased 1.9 per cent YoY to $717mn (as against a 0.3 per cent decline in world cotton sheet exports to the US), led by a 2.9 per cent rise in volumes, partially offset by a 0.9 per cent decline in realisation.
‘High-Tex from Germany’ expo is set to present technical textiles, textile machines and textile-processing machines at Techtextil North America and Texprocess Americas from May 22 to 25, 2018. Around 66 companies from German textile, textile-machinery and garment-technology industries will make presentations. Exhibitors will get a chance to introduce their products and services in lectures, demonstrations and multi-media presentations at the ‘Plaza’.
Marc Lorch, Member of the Board of Zwissler Holding and Exhibitor President of the participating companies says, the USA is one of the most important export markets for German textile companies. For them as representatives of the German textile sector, the joint presentation within the framework of ´High-Tex from Germany´ is a great opportunity to cultivate existing contacts in the USA and to make new ones. With this exhibition, we are bringing our technologies to our customers in the USA.
At Kufner, trade visitors from the outdoor, fashion and sports industries will find insoles and, at Südwolle, technical yarns. Also in the field of functional apparel are the flame-resistant textiles by Pyrotex, which can also be found in the automobile and aviation sectors, in architecture and building, as well as in contract textiles. New developments in the nonwoven field will be shown by several exhibitors including Frenzelit, Polyvlies, Sandler, Smart Polymer and Tenowo.
The range of exhibits in the textile-machine segment and machines for processing technical textiles covers the entire textile manufacturing and processing chain. Expert International present CAD/CAM technologies. JBF Maschinenbau stands, inter alia, for textile machines for processing yarns, twine, ropes and ribbons.
Georg Sahm, Dietze and Schell Maschinenfabrik will show latest bobbin-winding machines while Dornier presents weaving technologies. Cutting machines will be shown by Schoen and Sandt Machinery. Exhibitors of high-performance sewing machines include RSG Automation Technics and Strobel Spezialmaschinen. Everything revolves around embroidery at ZSK Stickmaschinen.Machines for fixing, backing, scattering and ironing are core areas of expertise of Maschinenfabrik Herbert Meyer.
In 2017 Gucci’s turnover was up 41.9 per cent. Over the last three years, the company has been seeking to break the historical rules of the fashion industry, building its success on well-defined values and a corporate culture focused on people, creativity and innovation, empowering its teams at every level and encouraging them to challenge the status quo.
It is now seeking to evolve toward an even more agile structure, sustained by a corporate culture that permits it to anticipate market needs and matches the desires of its clients, while accelerating the decision-making process at every level of the organization.
The brand has decided to overhaul its management structure into four new areas that will better support the CEO. These are merchandising and global markets; indirect channels, outlet and travel retail; brand and customer engagement; and finally digital business and innovation.
The fashion house’s ultimate goal is to strengthen and deepen the brand’s relationship with its clients, establish and maintain a constant and personalized conversation across all channels and strengthen the emotional engagement with them while leveraging emerging technologies. Gucci has had strong sales in mainland China. Gucci has made its official China website into an e-commerce portal for Chinese consumers. The new site intertwines creative content marketing with online shopping, letting customers use Chinese payment systems like WeChat and Alipay.
Gap Inc. has announced Jeff Kirwan, President and CEO of the brand Gap will quit the company. Art Peck, CEO of Gap Inc. notes Jeff’s achievements, “Under Jeff’s leadership we made significant progress on the operating model of Gap brand. We are faster and more responsive than ever before, we radically improved quality and fit, and we centred the brand on the aesthetic that our customers love: Casual, optimistic and American. We have also seen the results of exceptional marketing and customer engagement reflected in increased traffic, improved sales and the strength of the digital business.
“While I am pleased with our progress in brand health and product quality, we have not achieved the operational excellence and accelerated profit growth that we know is possible at Gap brand. As we move into the brand’s next phase of development, Jeff and I agreed it was an appropriate time for a change in leadership,” he added.
A search is underway for a new president. In the interim, Brent Hyder, current Gap Inc. EVP, Global Talent and Sustainability will oversee the brand. Prior to his current role, Hyder served as Chief Operating Officer at Gap brand. He also served as Vice President and General Manager of Gap Japan K.K., leading all aspects of the Gap Inc. business in Japan.
FESPA has announced the launch of Print Make Wear, a new, interactive visitor feature designed to replicate a fast fashion factory. Print Make Wear will be free to attend for registered visitors to FESPA Global Print Expo 2018, which takes place at Messe Berlin, Germany, from 15-18 May 2018.
The feature, focused exclusively on fashion textiles, garments and printed accessories, takes the form of a live production environment highlighting every step in the screen and digital printing production process, from initial design to finished product. It will bring together collaborators from all areas of the printed fashion sector, including fashion brand owners, designers, garment printers and producers, to explore the latest production possibilities, exchange experiences and share knowledge in the interests of a more sustainable fashion value chain.
Demonstrating an integrated, end-to-end production environment, the Print Make Wear fast fashion factory will feature a screen-printing carousel, washing and drying equipment, digital direct-to-garment printing, cutting and sewing, and solutions for welding and embellishment. The following technology and materials brands are already confirmed participants in the feature: Premier Textiles, Magna Colours, Brother, Juki and Vastex. In addition, design and technology experts from the contributing exhibitors will be on hand.
Bangladesh government, in a bid to infuse accountability among buying houses in the export-oriented apparel industry, is set to frame a policy for their functioning. Last month, the commerce ministry prepared a draft and sent it to all stakeholders for approval. The draft asks buying houses to register with the Export Promotion Bureau and warns without registration, no buying house will be able to handover letters of credit on behalf of buyers to manufacturers.
Md. Abdur Rahim Khan, Deputy Chief at the commerce ministry's textile cell says this was a first draft and is aimed at expanding the export market by creating a favourable reputation for their sector. The move comes post a few cases of fraud by some buying houses. Last year, 26 Bangladeshi garment exporters became victims after two local garment buying houses, Vanguard and ASM Apparels, placed work orders on behalf of the ‘importer’ Y&X, saying the latter is owned by a Bangladeshi-born British citizen named Manjur Billah.
The duo offered higher prices on the condition that the raw materials have to be bought from select textile factories in China. The deception was noticed post the first batch of consignments was unclaimed for over one month at a UK port.
Currently, there is no policy on buying houses and there is no controlling authority for them, Md. noted. The final draft policy will be out in a month or two. Kazi Iftaquer Hossain, President, Bangladesh Garment Buying House Association, stresses that they have been demanding a policy for the last 10 years to bring in discipline in the sector.
Apart from BGBA, there are many buying houses operating in the country, totalling 1,500. A policy would play an instrumental role in resolving issues or disputes that occur among buyers, buying houses and exporters. As per the draft policy, buying houses and apparel manufacturers will have to carry out business based on contracts and send the copies of contracts to their respective organisations.
In December 2016, at a seminar organised by the BGMEA ‘Taking Bangladesh Apparel Sector Forward’, the state minister for foreign affairs Shahriar Alam said, last fiscal, from July 2015 to June 2016, the country’s garments exports touched $28.09 billion whereas in the calendar year ending in December 2016, exports were $28.67 billion. To reach the target of $50 billion in 2021, the export rate needs to grow at a 12.25 per cent cumulative rate.
Past growth rates have been in double digits, but given the current international economic and trade environment, whether it is possible for Bangladesh to continue gain double-digit growth rates is doubtful. Asia-Pacific Trade and Investment Report 2016 notes, price growth of export goods of Bangladesh will fall in 2017 as against the current year, however, volumes will significantly increase.
At a recent conference at Harvard organised by ISDI, all stakeholders including representatives from buyers and labour unions unanimously felt the price of clothing has been falling in recent years. The downward pressure on price, from the demand side, has been two-fold: Consumers are now buying more high-end products and apparel and footwear sellers are losing consumer big bucks to healthcare, rent, home-related products, electronics and cars.
An additional reason for the lower price is that with greater prosperity, basic needs such as food and clothing have low price elasticity. The commerce minister Tofail Ahmed last month asked labour bodies to press buyers to raise RMG prices. Ahmed urged union leaders to connect with their counterparts in importing countries to use their influence on buyers and consumers. He said labour organisations of the RMG sector should tell buyers to raise product prices, which would help increase labour wages in the sector.
Readymade garments exporters have recently demanded higher cash incentives and devaluation of the Taka against the US dollar. To retain market share in the low-cost-and-high-efficient region, the path to profitability and export growth is increased efficiency, higher productivity and quality management.
