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As per a recent research by the Australia Institute, Australians purchase more clothes per person than any other nation and spend significantly less on each item. Australia has surpassed the United States as the leading consumer of textiles per capita, the study reveals. Australians buy an average of 56 clothing items annually compared to 53 in the US.
Co-authored by Nina Gbor and Olivia Chollet, the report urges the Federal Government to implement new policies and taxes to curb fast fashion and regulate the industry. It indicates, the average value of clothing items purchased by Australians notably lower at is $13 than the averages in the United Kingdom ($40), the United States ($24), Japan ($30), and Brazil ($16).
Highlighting the detrimental effects of Australia’s clothing consumption habits on both health and environment, Nina Gbor, Director-Circular Economy and Waste Program, Australia Institute, emphasises on the need to reduce waste at its source by penalising brands that mass-produce low-quality, inexpensive clothing, often worn just a few times or discarded unsold.
Praising the upcoming national clothing product stewardship scheme, Scheme, Gbor argues that the 4 per cent tax to fund domestic recycling initiatives and reduce clothing waste is insufficient to alter brand behavior, and should be increased to at least 50 cents per item. She also calls for additional measures, such as a fast fashion tax, to hold the industry accountable.
With Shein and Temu projected to generate over $2 billion in sales this year, the Federal Government could redirect some of these profits to combat clothing waste and support domestic recycling and a circular textiles industry, adds Gbor.
The report also recommends introducing a tax on fast fashion, similar to France's legislation, and increasing supply chain transparency, akin to New York state’s Fashion and Social Accountability Act. Additionally, the authors advocate for establishing textile labeling standards, subsidising textile repairs, and banning the export of textile waste from Australia.
As per the polls by the Australia Institute, around 63 per cent of the Australians are concerned about the environmental impact of textile waste. Furthermore, 71 per cent believe businesses should be held responsible for eliminating it, followed by 57 per cent who consider it to be the responsibility of consumers and 54 per cent who hold the government accountable for eliminating the textile waste.
The research also highlights a lack of awareness, with 46 per cent recognising petroleum as the source of polyester and only 27 per cent knowing that over half of the clothes sold in Australia are made from plastic.
A new McKinsey report, based on a global survey of apparel Chief Procurement Officers (CPOs), suggests a significant shift in the way fashion brands approach their supply chains. The study, ‘Reimagining the apparel value chain amid volatility’, highlights a growing emphasis on efficiency, resilience, and sustainability. These factors are prompting a potential paradigm change in sourcing strategies, particularly for brands in the US and EU.
The survey, encompassing CPOs from companies with a combined annual sourcing spend of $110 billion, sheds light on five key themes reshaping apparel sourcing:
Prioritizing agility: The traditional model of apparel sourcing, characterized by long lead times, mass production, and a focus on low costs, seems to be nearing its end. Consumers demand faster turnaround and more responsive designs. Survey results highlight a growing urgency among brands to address volatility in the market. This translates to a heightened need for agility and responsiveness to consumer demands.
Building resilience: Supply chain disruptions have underscored the need for diversified sourcing strategies to mitigate risk.
Sustainability as a focus: Environmental and ethical concerns are a growing priority for both brands and consumers. CPOs are seeking suppliers with strong sustainability practices.
Collaboration over competition: The survey indicates a move away from a purely transactional relationship with suppliers. The survey underscores the growing importance of supplier relationships. CPOs are prioritizing closer collaboration with suppliers to achieve greater transparency, resilience, and ultimately, a competitive edge. This could mean a move away from a purely transactional approach towards a more strategic partnership model.
Digital transformation: Embracing digital tools for supply chain management is crucial for improved transparency, efficiency, and responsiveness.
Impact on traditional sourcing hubs
These shifting priorities have implications for traditional sourcing powerhouses like China, Mexico, Bangladesh, and Turkey.
China: While China will likely remain a major player, its dominance may wane. Brands may look to diversify their sourcing base to mitigate geopolitical risks and ensure compliance with stricter labor and environmental regulations.
Nearshoring: The report suggests a potential rise in nearshoring, particularly for the US and EU brands. Sourcing from geographically closer locations can improve agility and reduce transportation costs. Countries like Mexico, Turkey, and those in North Africa could benefit.
Focus on sustainability: Countries with strong sustainability credentials will be better positioned. Bangladesh and Vietnam, for instance, are investing in cleaner production processes.
The survey also highlights a crucial gap in digital adoption within the apparel supply chain. Most CPOs rated their organizations' and suppliers' digital maturity as low. Investing in digital tools for better visibility, data-driven decision making, and real-time communication will be essential for building a more efficient and resilient supply chain.
The McKinsey survey paints a picture of an apparel industry in flux. While the full impact on sourcing locations remains to be seen, the focus on agility, resilience, and sustainability will undoubtedly reshape global supply chains. The ability to adapt and embrace these new priorities will be key for both brands and sourcing countries in the years to come.
This report analyzes the financial performance of 12 listed Chinese apparel companies in 2023 and the first quarter of 2024. Some of the companies in the list are: HLA, Youngor, Semir, Meters/bonwe, Peacebird, Septwolves, Hodo, Lancy Share, Ellassay, JOEONE, Busen, and GRN.
Market situation
The apparel companies are showing signs of recovery with an increase in total revenue and net profit compared to previous years. However, the growth rate is weaker compared to 2021, indicating a slow recovery. There is significant differentiation among brands. Some companies like HLA and Semir are experiencing strong growth, while others like Meters/bonwe and GRN are struggling. The significant difference in profit margins between companies suggests fierce competition in the market. While gross profit margins remain high, net profit margins have decreased significantly, indicating rising costs and intense competition. The decrease in net profit margin compared to gross profit margin indicates a need for companies to adapt to changing consumer demands and business models. To cope up, companies need to adapt to changing consumer demands and personalize their offerings to stay competitive.
Table: Key financial metrics for 2023 and Q1 2024
|
Metric |
Year 2023 |
Q1 2024 |
|
|
Total Revenue |
81.474 bn yuan (4.59% YoY growth) |
20.733 bn yuan (4.17% YoY growth) |
|
|
Net Profit |
8.891 bn yuan (14% YoY growth) |
2.996 bn yuan (6.13% YoY growth) |
|
|
Non-recurring Net Profit |
7.475 bn yuan (6.2% YoY growth) |
2.876 bn yuan (10.25% YoY growth) |
|
|
Inventory Turnover Days (Average) |
255.4 days (7.4% decrease YoY) |
238.53 days (11.27% decrease YoY) |
|
|
Asset-Liability Ratio (Average) |
45.48% (3.3% decrease YoY) |
43.9% (2.46% decrease YoY) |
Overall, the Chinese apparel market seems to be in a stage of weak recovery. While companies are regaining profitability, adapting to a changing market landscape remains a key challenge.
Over the years, Vietnam has emerged as a major trading partner for the United States, but a closer look reveals a fascinating twist. The Southeast Asian nation's impressive trade surplus with the US is intricately linked to its import-heavy relationship with China.
US surplus backed by China
World Bank statistics and Reuters’ analysis reveal a fascinating trend. The increase in Vietnamese exports to the US coincides almost perfectly with a rise in Vietnamese imports from China. In 2022, the US imported goods worth over $114 billion from Vietnam, more than double the amount in 2018. This rise tracks closely with the increase in Chinese imports to Vietnam. In the first three months of 2024, US imports from Vietnam totalled $29 billion, while Vietnam's imports from China amounted to $30.5 billion.
Table: Vietnam’s export/import to US and China
|
Country |
Vietnam exports ($bn) |
Vietnam imports ($bn) |
Trade surplus (deficit) ($bn) |
|
USA |
90.7 |
43.4 |
47.3 |
|
China |
74.1 |
132.8 |
-58.7 |
Experts see this as a potential case of trade deflection. Darren Tay, Lead Economist at BMI, a research firm, believes Chinese firms might be routing goods through Vietnam to bypass additional tariffs imposed by the US on Chinese import. This strategy allows them to remain competitive in the US market while Vietnam enjoys a growing trade surplus. Tay feels Chinese firms could be using Vietnam to circumvent the additional tariffs imposed on their goods. This could potentially lead to future trade actions by the US against Vietnam.
Textiles and apparel lead growth
Vietnam's booming textile and apparel industry is a key driver of this surplus. The Vietnam Textile and Apparel Association estimates garments and textiles make up almost 65 per cent of Vietnam's exports to the US. This translates to a significant portion of the surplus - estimated at around $58.8 billion in 2022 based on US Census Bureau data.
This industry thrives due to several factors:
Low labor costs: Vietnam boasts competitive wages compared to developed nations, making it an attractive destination for apparel manufacturing.
Free trade agreements: Trade deals like the Trans-Pacific Partnership (TPP) have granted Vietnamese apparel duty-free access to the US market, further boosting exports.
The China connection
Interestingly while Vietnam ships finished garments to the US, a closer look reveals many of these products began their journey in China. China acts as a crucial supplier of raw materials (like fabric) and intermediate goods (like zippers and buttons) that are then assembled in Vietnam for export. This dependence on China creates a unique situation.
Balancing act: Vietnam's trade deficit with China helps it to offset surplus with the US. In essence, Vietnam acts as a middleman, importing parts from China and then exporting finished products to the US.
Potential scrutiny: The US may view this situation with suspicion. There's a concern that some Chinese companies might be routing their goods through Vietnam to avoid tariffs imposed on Chinese imports. This could lead to future trade actions by the US against Vietnam.
The relationship between Vietnam, China, and the US is a delicate dance. While Vietnam benefits from increased exports to the US, it relies on China to keep its factories running. This dependence leaves Vietnam vulnerable to potential changes in US-China trade relations. If the US were to impose tariffs on Vietnamese goods to counter perceived trade deflection, Vietnam's economic house of cards could come tumbling down. Therefore, Vietnam needs to diversify its supply chain and focus on innovation to ensure sustainable long-term growth.
A premier international event for the textile, leather, and apparel industry, Première Vision Paris will showcase the Autumn/Winter (A/W) 25-26 collections from over 920 international exhibitors at its upcoming edition in July 2024.
The upcoming edition of the exhibition will feature 434 exhibitors of fabrics, 202 manufacturers, 50 designers, 66 exhibitors of leather products, 115 accessories exhibitors, 25 yarns exhibitors, and 33 Smart Creation exhibitors.
The exhibitors to be featured in the exhibition include spinners, knitters, weavers, tanners, textile designers, accessories makers, and garment manufacturers from around 40 countries such as Italy, France, Spain, Portugal, Japan, the UK, Belgium, South Korea, Turkey, China, and more.
Having met with a resounding success in its February 2024 edition, the Hosted Guest program will be reorganised in July 2024 with an €1 million investment from the GL events Group. This program will help strengthen industry links and develop strategic partnerships.
The Hosted Guest program will be complemented by the new Export program run by Business France, the National Agency for internationalising French companies. This government-subsidised program helps finance visits of key foreign decision-makers to France besides organising export business meetings between buyers and French companies.
Introduced in early 2024, the Matchmaking program has also been renewed. The program facilitates collaborative opportunities, having arranged 587 meetings between exhibitors and brands in its initial run.
The PVCube will provide visitors from luxury brands an opportunity to interact with a fashion expert for a more personalised and confidential sourcing process. This tailored experience provides access to 300 fabric samples and 50 new leathers among the season’s most iconic materials.
As a leading organiser of international events for the fashion industry, Première Vision supports the entire industry through its extensive programs and solutions. These initiatives aim to foster business discussions, promote sustainability, encourage digitalisation, and support the development of innovative collections.
Montforts has installed the MontexCoat coating unit at the DBL Group plant in Bangladesh. This versatile unit supports various applications, including full PVC coatings, pigment dyeing, minimal surface treatments, and solvent coatings. It accommodates knife coating, roller coating, and screen printing, providing flexibility and efficiency in energy and raw material use.
Monforts has also introduced the Coattex for single-sided applications with paste or foam.
Dedicated to air knife and knife-over-roller coating, Coattex can either be integrated into existing finishing ranges or installed with new Monforts lines, such as the Montex stenter systems.
With the support from Bengal Technology and Engineering, Monforts has realised over 100 fully integrated line installations in Bangladesh over the last 30 years of its operations.
Founded in 1884 in Mönchengladbach, Germany, Monforts specialises in providing advanced fabric finishing technology. The company manufactures its machines in Europe, with a primary plant in Austria. Specialists in drying, stretching, heat-setting, and coating, Montex stenters are celebrated for their energy efficiency and robust performance. They have set new standards in the denim and home textiles industry.
Committed to saving energy, Monforts strives to reduce its CO2 footprints, especially in the energy-intensive finishing part of the textile production chain. The company has launched various innovations like the VarioMatex padder, which mechanically squeezes out water, and the EcoApplicator, ideal for functional sportswear, for this purpose.
Monforts has also developed heat recovery and energy optimisation options for Thermex hotflue and Montex stenter solutions to save upto 40 per cent energy. An air/air heat exchanger, The Universal Energy Tower saves upto 25 per cent energy while integrated into the Montex stenter chamber, the ECO Booster heat recovery system saves upo 35 per cent energy.
Monforts' Thermex hotflue dyeing systems are widely used in denim production with around 150 systems employing the Econtrol® processes for efficient dyeing. The latest CYD yarn dyeing system integrates new functions to enhance quality and productivity.
Monforts' Qualitex 800 visualisation software allows operators to store and recall settings for thousands of treatment processes, ensuring efficiency and customisation.
Less than a fortnight remains until the commencement of Intertextile Shenzhen Apparel Fabrics 2024, poised to unfold in the heart of Shenzhen’s bustling CBD from June 5th to 7th. With anticipation running high, stakeholders across the textile value chain are primed to unveil innovations, illuminate prevailing global fashion trajectories, and furnish timely insights into industry dynamics. The event, slated to span across Halls 1, 2, and 9 at the Shenzhen Convention & Exhibition Center (Futian), is poised to host a diverse array of exhibitors hailing from 11 distinct countries and regions.
A diverse tapestry of fabrics and accessories awaits attendees, encompassing an extensive spectrum ranging from ladieswear and casualwear to denim, suiting, functional wear, and sportswear, alongside swimwear and lingerie. Suppliers hailing from China, the Asia-Pacific region, and beyond are set to converge, showcasing offerings spanning organic and man-made fibers to finished apparel, promising a comprehensive sourcing experience for buyers.
Central to the fair's allure is its pivotal role in facilitating market access for Asian suppliers into South China's vibrant textile landscape. This year, the Japan Zone, Korea Pavilion, and Taiwan Pavilion are anticipated to draw substantial foot traffic, complemented by a myriad of domestic pavilions representing key textile hubs including Changshu, Haining, Huzhou, Shaoxing, and Shengze.
Innovation emerges as a focal point for prominent exhibitors, with a notable emphasis on sustainability and functionality. Idole Trading, for instance, champions eco-conscious practices through its innovative blend of Australian wool and Japanese tri-acetate yarn, yielding fabrics characterized by breathability, glossiness, anti-static properties, and wrinkle resistance. Similarly, Kurabo Industries from Japan harnesses advanced technologies to craft sustainable fabrics from natural fibers, underscoring a commitment to comfort and environmental stewardship.
Augmenting the fabric showcase, a multifaceted lineup of fringe events promises to offer attendees a deeper understanding of prevailing market trends, innovation pathways, and sustainability imperatives. From a discourse on bioinspired super fibers by the Nano and Advanced Materials Institute (NAMI) to insights into textile AI exploration and prospects by HKRITA, the seminar agenda reflects a convergence of diverse perspectives shaping the textile industry's trajectory.
As Intertextile Shenzhen Apparel Fabrics 2024 unfolds concurrently with Yarn Expo Shenzhen and PH Value, the event stands as a collaborative endeavor orchestrated by Messe Frankfurt (HK) Ltd, Messe Frankfurt (Shenzhen) Co Ltd, the Sub-Council of Textile Industry, CCPIT, and the China Textile Information Center. With the stage set for a confluence of innovation, style, and industry foresight, the event is poised to catalyze transformative dialogues and propel the textile domain into new frontiers of excellence.
Stoll, a leading name in the flat knitting industry and a division of the Karl Mayer Group, is set to unveil its latest advancements at the ITM 2024 trade fair, running from June 4-8 at Istanbul's Tuyap Fair and Congress Center. Turkey, a market with immense potential for Stoll, will witness the debut of revolutionary machinery, software solutions, and the new Nocturno Trend Collection.
Located in Hall 3, Stand 303A, Stoll will showcase four machines designed to meet the diverse needs of Turkish knitters. Highlighting the lineup are two machines from the CMS series, tailored for high-volume, trend-driven production under cost constraints. The CMS 530 ki BcW E7.2, known for its versatility, will display its prowess in technical textiles by producing a baby seat cover using sustainable, zero-waste methods. Meanwhile, the latest ADF 530-32 ki Flex E7.2 machine promises unparalleled flexibility and creativity with advanced features like automatic needle bed adjustments, plating, intarsia, and weave-in technology.
In addition to hardware, Stoll will present its innovative software suite, knitelligence. This includes the Create Plus programming system and the PPS production planning tool, both designed to enhance efficiency and transparency across the production chain. Create Plus offers a user-friendly interface for sophisticated pattern programming and integrates seamlessly into digital workflows, significantly reducing time to market. The web-based Stoll PPS tool ensures optimized production planning, faster response times, and improved on-time delivery.
A special highlight of Stoll's presence at ITM will be the debut of the Nocturno Trend Collection, inspired by the allure of nightlife. Created by Stoll's Fashion & Technology department, the collection features intimate apparel crafted from shiny, transparent materials in dark shades, showcasing innovative knitting techniques and sophisticated designs.
With these cutting-edge machines and digital tools, Stoll is poised to empower Turkish knitters, driving innovation and efficiency in the flat knitting industry.
Bangladesh, a global leader in apparel exports, has traditionally relied heavily on textile imports, particularly from India. However, recent data suggests there has been a significant decline in textile imports like fibres, yarns, and fabrics, particularly from India, in recent years. This trend raises concerns for India's textile industry, which has traditionally been a key supplier to Bangladesh.
Table: India's textile exports to Bangladesh compared to China (figures in $ bn)
|
Product category |
FY23 (India) |
FY23 (China) |
Change (India) FY22-23 |
Change (China) FY22-23 |
|
Cotton fabrics |
1.2 |
2.5 |
-15% |
+5% |
|
MMF fabrics |
0.8 |
3.2 |
-10% |
+8% |
|
Yarns (cotton & MMF) |
0.4 |
1.8 |
-8% |
+3% |
Why is India losing market share?
There are several reasons why India is losing ground in Bangladesh texto;es market.
Global economic headwinds: The ongoing global economic slowdown is impacting demand for Bangladeshi garments, leading to a decrease in raw material imports, including textiles.
Shifting focus: Bangladesh is aiming to move towards manufacturing higher-value garments, which may require different types of fabrics not readily available from India.
Competition: China remains a major competitor, offering competitive prices and a wider variety of textile options.
China's growing presence in Bangladesh's textile imports is due to several reasons. It has economies of scale as China's massive textile production capacity allows them to offer competitive pricing on bulk orders. Also, product diversification is their forte. China offers a wider variety of textile products, including high-tech fabrics, catering to Bangladesh's evolving garment industry. And they have established supply chains and efficient logistics infrastructure to ensure faster delivery times.
Meanwhile Indian exporters too face numerous challenges and payment delay is a major one. Delays in banking and finance transfers from Bangladesh can hamper smooth business transactions. Then there are logistics bottlenecks. Complexities in cross-border movement of goods can add to lead times and costs.
Initiatives from both ends
Both India and Bangladesh need to address these challenges. India needs to streamline customs procedures, offering competitive pricing strategies, and exploring faster financing options like buyer's credit can be beneficial. Bangladesh on its part needs to diversify import sources beyond China to reduce dependence and explore options for pre-payment or faster transfer mechanisms can help. Both governments are exploring trade facilitation measures and potential Free Trade Agreements (FTAs) to ease import processes. Textile industry bodies from both countries are in talks to address logistical bottlenecks and explore financing solutions.
They are looking at alternative payment mechanisms like Letters of Credit or exploring collaborations with financial institutions to expedite transfers can be helpful. And both governments could explore initiatives like pre-shipment financing or export insurance schemes to mitigate risk for Indian exporters.
Regaining its market share in Bangladesh requires India to address competitiveness, streamline processes, and collaborate with Bangladesh to find mutually beneficial solutions. Both countries stand to gain from a more efficient and vibrant bilateral textile trade.
Shein and Temu, the online retail giants, have taken the world by storm. Their business model revolves around ultra-trendy clothing and accessories at rock-bottom prices. But their success story is facing head winds with potential tax hikes. Both companies have come under fire in the EU and US for allegedly exploiting a loophole that allows duty-free import on individual shipments below a certain value threshold.
Shein boasts of over 10 million active users and a staggering $10 billion in revenue (2022). Their average order value falls comfortably under the US's de minimis value of $800, allowing them to bypass import tariffs. Temu a brainchild of Chinese tech giant Pinduoduo, Temu is a rising star, mirroring Shein's strategy. Even though data on their revenue is limited, their aggressive marketing and low prices suggest a similar approach to customs duties. Their success hinges on ultra-low prices. The average Shein item costs around $11, while Temu boasts smartwatches as low as $25. This affordability is partly due to loophole in import duty regulations.
The de minimis loophole
The US and EU both have de minimis thresholds, which exempt low-value shipments from import duties and customs inspections. This speeds up delivery and reduces costs for both retailers and consumers. However, critics argue that Shein and Temu are exploiting this system.
|
De minimis thresholds |
region |
|
European Union |
€150 (around $163) |
|
United States |
$800 |
Lawmakers and established retailers are crying foul, arguing that the de minimis policy is being exploited. Here's why:
Lost revenue: Governments lose out on import duties, a significant source of income.
Uneven playing field: Brick-and-mortar stores and traditional online retailers have to pay duties, putting them at a price disadvantage.
Human rights concerns: There are allegations of forced labor in some Chinese factories supplying these companies, and the de minimis loophole allows shipments to bypass proper inspections under the Uyghur Forced Labor Prevention Act (UFLPA) in the USA.
Policy pushback
Now the tide is turning both in the US and Europe. In the US a House report accused Shein and Temu of violating tariff laws and evading human rights reviews. Proposed legislation aims to close the de minimis loophole for certain categories of goods. Congressman Earl Blumenauer (D., Ore.) says this loophole allows them to undercut American businesses and potentially import goods made with forced labor.
Similarly in the EU, Germany, a major retail hub, is pushing for an EU-wide reform to eliminate the tax break for low-value parcels. Their argument is the current €150 duty-free threshold creates an uneven playing field, favoring Shein and Temu over brick-and-mortar stores that pay full customs dues. “The current system encourages a flood of small, untraceable packages, making it difficult to ensure product safety and fair competition,” opines Hans Peter Sattler, Head, German Retail Association.
However, Shein and Temu giants aren't going down without a fight. Shein argues their business model benefits consumers and they comply with all relevant laws. They also say, lowering the de minimis threshold would harm consumers by raising prices. They've also expressed willingness to work with policymakers to find a solution. Temu on the other hand hasn't issued a public statement yet, but similar arguments about consumer benefit and legal compliance are likely.
A shaky fashion future
Meanwhile if the proposed policy changes take effect, Shein and Temu could face significant challenges.
Higher costs: Increased duties and customs processing fees would translate to higher prices for consumers, potentially dampening their appeal.
Slower delivery times: More thorough customs checks could slow down the delivery process, impacting their fast-fashion model.
Compliance scrutiny: They might face stricter scrutiny regarding labor practices and potential violations of the Uyghur Forced Labor Prevention Act (UFLPA) in the US.
Shifting strategies: The companies might explore alternative shipping methods or raise minimum order values to qualify for bulk discounts and lower per-item duty rates.
While the outcome of this policy tug-of-war remains to be seen, but one thing is certain the days of frictionless duty-free imports for Shein and Temu might be numbered.
