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International Finance Corporation (IFC), a member of the World Bank Group, has joined hands with Sri Lanka’s leading local apparel manufacturer Hela Clothing to boost trade for Sri Lanka’s apparel industry through a trade-supplier finance facility. With this, Hela Clothing becomes the latest apparel company in the country to join IFC’s Global Trade-Supplier Finance program.
IFC will provide a supplier finance credit line to Hela Clothing against receivables from selected international buyers and provide working capital directly to the company. Supplier finance is a scalable and manageable method for suppliers in emerging markets to access affordable financing against receivables from customers. The product offers suppliers an additional source of flexible, affordable funding and may allow the buyer to negotiate longer payment terms or better prices.
Established in 2010, the IFC Global Trade Supplier Finance program is a $500 million multi-currency investment and advisory program that provides short-term finance to emerging market suppliers and small and midsize exporters. The program also helps banks that offer supply-chain finance to increase their presence in emerging markets. The GTSF program offers differentiated pricing based on the social and environmental performance of suppliers.
Sri Lanka is a priority country for IFC. IFC’s committed portfolio in Sri Lanka is now $230 million and covers projects across a range of sectors including infrastructure, tourism, renewable energy, finance and healthcare.
It also provides advisory services to promote sustainable growth among small and medium enterprises by facilitating access to finance, and by offering capacity-building and training opportunities.
In order to strengthen its sales and after-sales functions, analysis of industry and product trends, expand business and improve customer satisfaction, Huntsman Textile Effects has streamlined its India commercial organization. With dedicated sales teams covering North, Central and South India and Sri Lanka regions, the teams are now more geographically aligned with the customer base in India. Being seriously focused on a smaller region will improve operational efficiency, customer focus and response time for each sales team as they benefit from more agile and quicker decision-making.
Headquartered in Mumbai, the sales teams will be supported by a full-fledged technical resource team and regional marketing team aimed at enhancing the performance of each function. These teams will also provide dedicated strategic marketing and higher level of after sales support. Recently, the company also made significant investments in research & technology and technical services. The increased capabilities of its R&T and technical service laboratories facilities in its office complex will improve sales and after sales service offerings.
The company is confident that these investments will lead to a higher level of customer satisfaction through increased efficiency and customer focus.
The Myanmar Garment Manufacturers Association (MGMA) doesn’t foresee immediate adverse effects on exports from the Brexit vote even though UK is one of the largest European garment importers.
Europe is currently the second largest importer of garments from Myanmar after Japan. Among the 28 European Union countries, Germany, the UK and Spain are the major players in garment product trade.
While the vote to exit the European Union has been cast in late June, the official two-year separation process is yet to begin. So it will not negatively impact the Myanmar garment sector, it is understood.
The United Kingdom is second-largest trading country among the EU. The Brexit process will take two to two and a half years. The impact may be felt in 2018-19, it is also gathered.
Myanmar’s garment exports rely on countries that Myanmar has a General System of Preferences (GSP) status with. The EU offered GSP status to Myanmar in 2013. And that is why exports to the region have increased.
If the UK continues Myanmar’s GSP status post removal, there will be no impact on the sector. In the previous fiscal year, garment trade volume between Myanmar and EU reached $460 million.
Myanmar’s garment export reached $1 billion in 2012-13, $1.4 billion in 2013-14, and $1.6 billion in 2014-15 fiscal year, according to a statistics released by MGMA.
Once upon a time, handloom attire was regarded as ideal attire for politicians and villagers. Even as mass-market clothing still dominates, it's seeing a revival with demand of handloom dress material being sourced for ethical fashion.
India is among the biggest manufacturers of textiles and apparel in the world supplying leading international brands. But the domestic market being large too, it accounts for more than 40 per cent of the industry's revenue.
The sector is dominated by small and medium-sized firms that are under enormous pressure to reduce costs and produce garments quickly. Many use forced labour, while abuses including withheld salaries and debt bondage are rife, it is gathered.
Wages in India's textile and garment industry are about $1.06 an hour, compared with $2.60 in China, according to the World Bank.
The pressure on margins trickles down to cotton farmers. More than 90 per cent of cotton in India is genetically modified and as those seeds cannot be replanted, farmers have been seen struggling with rising input costs and lower prices for cotton.
Tens of thousands of indebted cotton farmers in the western state of Maharashtra have killed themselves in the past two decades.
It was the plight of these farmers that drove Apurva Kothari, who was working in technology in San Francisco, to return to India and set up apparel brand No Nasties in 2011.
The company sources organic cotton and audits its supply chain to ensure that there is no child labour workers receive fair wages, he observes.
No Nasties and Do U Speak Green are among a handful of Fairtrade-licensed clothing brands in India. They source from producers including Rajlakshmi Cotton Mills which deals in organic and fair trade cotton and pays fair wages and Chetna Organic whose seed conservation project has organic seedbanks from which farmers can withdraw seeds.
They are getting a boost from Fairtrade India, which set up office in 2013, and has stamped its distinct circular logo on a small range of products including tea, coffee, rice and sugar.
It is also working with Amazon India to make Fairtrade-certified products available online.
Working conditions and wages in South Asia's garment industry have come under greater scrutiny since the April 2013 Rana Plaza disaster in Bangladesh, in which more than 1,100 workers died.
But efforts of retailers to clean up supply chains will have little impact unless consumers in India demand more ethically produced goods, analysts say.
Brands can take inspiration from success stories including Fabindia. Set up in 1960 to market diverse craft traditions, the company appeals to both young and old consumers, the wealthy and the not-so wealthy.
Apparel retailer Gap faced a smaller-than-expected drop in quarterly sales, largely due to higher customer visits to its Old Navy stores in June. Comparable sales at Old Navy, a bright spot in recent years, were flat after two-quarters of declines. Analysts had expected a decline of 1.20 per cent. Gap also estimated adjusted profit of 58 to 59 cents per share for the second quarter ended July 30. Analysts were expecting a profit of 48 cents.
The company saw higher traffic to its stores in June. Sales at established stores fell two per cent in the latest quarter. Analysts had expected a decline of 2.60 per cent. The company plans to focus on North America and shut 75 Old Navy and Banana Republic stores outside the region.
Mall traffic has also steadily decreased as millennials have taken to the internet to shop for apparel and accessories. Comparable sales at Banana Republic stores fell nine per cent, the sixth straight quarter of decline. The company's net sales fell 1.3 per cent.
US apparel retailers are struggling to draw shoppers who are increasingly seeking steep discounts and are choosing cheaper and trendier clothes offered by fast-fashion retailers.
While a decline in imports accelerated a possible sign of weakness in the world's second-largest economy, China's exports fell again in July by an unexpectedly wide margin. Exports fell by 4.4 per cent to $184.7 billion, of course, a slight improvement over June's 4.8 per cent contraction, the country’s customs data showed. On the other hand, imports fell 12.5 per cent to $132.4 billion rising from a decline of 8.4 per cent.
Weak global demand has hampered efforts to shore up Chinese trade and stave off job losses in export industries. The fall in imports reflects possible weakness in the domestic economy but the figures also are depressed by a decline in prices of oil and other commodities.
Chinese economic growth held steady at 6.7 per cent in the quarter ending in June compared to a year earlier though that was the lowest quarterly level since the aftermath of the 2008 global crisis. The declines in both exports and imports were worse than many forecasters expected.
Garment and footwear exports from Cambodia to the US fell by eight per cent during the first half of the year. Garments comprise the largest component of Cambodia’s export basket to the United States, the country’s biggest single country export market. In 2015, garment shipments accounted for $1.7 billion of the country’s total $3 billion exports to the US. It’s expected that the decline in exports would continue through the end of 2016 as garment and footwear manufacturers shift their production to more competitive countries such as Vietnam, China and Bangladesh.
Investors are wary of setting up factories in Cambodia. The country’s reputation as a low-cost production base has been deeply damaged by strikes, labor unrest and wage hikes. The garment sector employs about 7,00,000 workers. However, the US decision to grant Cambodia a tariff exemption on travel goods under its Generalised System of Preferences (GSP) program could boost its local garment industry.
Cambodia has a clear competitive advantage in terms of producing travel goods. The GSP expansion to include travel goods made in Cambodia has the potential to greatly increase exports to the US and create tens of thousands of new jobs for Cambodians.
India’s largest man-made fabric (MMF) hub in Surat would be adversely affected by the finance ministry’s decision to impose definitive anti-dumping duty on purified terephthalic acid (PTA) imports from China, Iran, Taiwan, Indonesia and Malaysia. Industry says the anti-dumping duty on PTA imports from foreign countries will create a monopoly of big spinning houses and small and medium-scale spinners in Surat and Mumbai will have to suffer. This will further escalate yarn prices by Rs 3 to Rs 5 per kg in the domestic market thereby increasing the final cost of the polyester fabric manufactured in Surat.
As per government notification, the PTA imports from China, Iran, Taiwan, Indonesia and Malaysia will attract duty ranging from $85.67 per ton to $168.76 per ton. The high import duty will prevent small spinners in Surat and other places in the country from importing PTA, main raw material for manufacturing of yarn. PTA, a white, free flowing crystalline powder, is the primary raw material for the manufacture of polyester chips, which in turn is used in a number of applications in textiles, packaging, furnishings, consumer goods, resins and coatings.
Surat Art Silk Cloth Manufacturers' Association (SASCMA) secretary Dinesh Zaveri sounded a word of caution when he said that there was an urgent need for anti-dumping duty on fabrics and not PTA imported from China and other foreign countries.
In its 6th edition, Techtextil India Symposium is scheduled next month from September 8 – 9 at the Holiday Inn, Mumbai. Textile Commissioner Kavita Gupta is expected to deliver the keynote address on government policies and schemes. The symposium has emerged as the primary conference for highlighting the prowess of technical textile and non-wovens sector across the globe with several editions of the conference held in far flung places like Frankfurt, India, Middle East and Russia.
In India, the symposium has been the center of discussions, deliberations and dialogues between key stakeholders, be it at a standalone symposium or in association with the premier Techtextil India exhibition where the industry gathers every two years. Over the last couple of years, India has been growing at a steady pace in the technical textiles with perceptible signs of growth being observed in a few specialised fields. The working group on technical textiles for 12th Five Year Plan (FYP) has projected the market at Rs 1.58 lakh crore for year 2016-17 with a growth rate of 20 per cent during the 12th Five Year Plan.
Application areas and developments in technical textiles sector aren’t slowing down, as a matter of fact the market is advancing as new technologies keep on emerging. The two day symposium will cover six specialised tracks ranging from emerging new technologies for advanced technical textiles to future prospects of the technical textile industry; to growing market for active-wear/performance-wear; and from the right time for investment in medtech and hygiene sectors and high performance applications of non-wovens as well as the growing sectors of protech and composites.
With the Indian government actively working towards accelerating the usage of technical textiles for both institutional and industry buying, Techtextil India symposium’s business-oriented approach will prove highly valuable for machinery and end product manufacturers, raw material and fabric suppliers, and textile industry players.
"After hovering around 60 cents to 65 cents for the past two years, cotton prices are up 16 per cent, selling at around 70 to 72 cents a pound. Upland cotton grown in the United States is selling for 80 cents to 85 cents a pound after bouncing around at 60 cents or below for most of the spring."
After hovering around 60 cents to 65 cents for the past two years, cotton prices are up 16 per cent, selling at around 70 to 72 cents a pound. Upland cotton grown in the United States is selling for 80 cents to 85 cents a pound after bouncing around at 60 cents or below for most of the spring.
Jon Devine, senior economist at Cotton Inc, the research and marketing company in North Carolina that represents upland cotton producers and importers of cotton and cotton textile products, cotton prices started to rise since the past month or two.
A number of reasons have triggered the price hike. Pakistan, the world’s fourth- largest cotton producer, saw its crop decline last year by 500,000 million metric tons, or 2 million bales, due to bad weather and bugs. Since Pakistan’s crop was down, they imported a lot more cotton from India. And India’s shipments was too aggressive exporting cotton to Pakistan. Therefore, supplies have gotten tight in India, and Indian mills have looked to import cotton, which is pushing up prices, said Devine.
Reduction in cotton acreage
Lower cotton prices earlier this year and last year prompted farmers in China to plant other crops, which will result in a 3 to 4 per cent reduction in cotton acreage planted there. Moreover, a number of trading firms are starting to buy up cotton, which was not the norm. In recent weeks, commodities are coming back in people’s financial portfolios and cotton is a commodity, said Karin Malmstrom, Director, Cotton Council International, for China and Northeast Asia. The beginning stocks from May to June came down a bit. If stocks are lower and demand is steady or higher, prices go up.
The USDA estimates global stockpiles of cotton will drop by 9 million bales to 91.29 million bales by July 2017, which are 3.4 million bales lower than the agency’s previous estimate because of increasing Chinese demand. China is the largest cotton consumer in the world and still the largest fabric manufacturer. For sourcing, China remains the most competitive and largest textile source. But for the first time in years, China’s cotton crop this year fell below 5 million metric tons while India produced 5.8 million metric tons. In 2012, China’s cotton harvest totaled 7.6 million metric tons.
Malmstrom opined this as a significant change. China is prioritizing food crops over cotton, which is grown primarily in Xinjiang province in the far west. While the United States is the third-largest cotton producer in the world with a recent 2.8 million metric ton harvest, it is the No. 1 cotton exporter in the world with China historically being its main customer, followed by Turkey.
With consumption outpacing production, it is uncertain whether cotton prices will inch up or dip down. Pakistan’s cotton harvest is expected to return to 2 million metric tons this after declining to 1.5 million tons last year. Pakistan is one of the first to harvest in the next month or two, Devine observed.
Uncertain future
Meanwhile, India’s cotton crop is looking uncertain due to seasonal rains. And, in the United States, the concern is about West Texas, which grows about 60 per cent of the country’s cotton. Because the cotton fields there do not have irrigation and rain deficit could cause problems.
Interestingly, no one thinks cotton prices will go sky high like they did in early 2011, when it was selling at $2.27 a pound, the highest since the US Civil War. To cope with high cotton prices, manufacturers added more polyester and rayon to their clothing, and big department stores raised prices by $1 to $2 to maintain profit margins.
