FW
The 15th Preview In Daegu Fair provided an excellent opportunity to network with textile buyers from all over the world.
The recently concluded 15th Preview In Daegu Fair (PID 2016) held at the 1F EXCO, organized by Daegu Gyeongbuk Textile Industries Association was well received by the industry across the world. There were over 272 participating companies from over 25 countries including China, Taiwan, US, India, Japan, France among others. The fair was categorized under yarn, fabric, functional, industrial, eco fabric, design home textile, accessories, etc.
The three-day PID fair from March 9 to 11 also had events like Trend Forum/Seminar, BiZMatching, Textile Experience Zone, etc. and visited by the Korean President. According to Alkanes Lee from Turkey Clothing Manufacturing Association and Director of ‘Nani,’ “The Fair offered excellent fabrics and textile machinery to show, something that Turkey is still missing.” He was looking for networking opportunities and to establish good relations with companies engaged in 3D stereoscopic synthetic fiber, fabric materials, knit wear suppliers etc. Italian MCS men’s fashion brand marketing director Aovid Pickens Earl averred he was at the fair to watch latest fashion trends and was fully satisfied.
Said Keun Hoo PARK, Senior Manager, Hansoll Textile Fabric, R&D in patterns is important in fashion industry. To cope with the latest trend and market implications, manufacturers should do proper R&D first.
According to Seoongho BAE, Managing Director, Hyungji Sourcing, “Due to instability in the industry and low growth of local market, consumers will spend less on clothes. So it is important to introduce appealing patterns and designs to attract more consumers.” Jay Yoon, Managing Director said his company is geared to make use of the prevailing market situation by focusing on ladies sportswear by making use of their manufacturing facility in Vietnam at competitive prices.
Commenting on PID, Indian Ambassador to Korea, Vikram K Doraiswai emphasized the need to strengthen ties between India and Korea. For this, he said, “The most important thing to be done is to work sector by sector, to pick areas of Korean expertise, where India can use Korean partnerships. The garment industry is one of the biggest job generators. For us the fastest way to move up the value chain would be to expand our capacity to produce high quality garments in high volumes for export and for the domestic market. That would reduce our reliance on textile imports,” he opined. Korea offers India that great opportunity since its textile industry is looking for partnerships. The higher cost of production makes it imperative for them to find new markets. So India and Korea needs to build these partnerships, added Doraiswai.
According to John Lee, Director, Exhibition Project Division, (PID, KOREA) rather than attracting a large number of people in the exhibition, PID is looking for more profitable quality exhibitions. The management of materials, buyers, information of products are necessary and important than the sheer size. Buyers at Preview In Daegu was happy to have time to see higher quality textile materials and variety of products with great innovation, Lee added.
This year’s PID provided an excellent chance to meet and network with textile buyers from all over the world. It was an excellent opportunity for companies that are looking into Asia Pacific market (China, Vietnam, US, Indonesia, Japan). This year, especially overseas big buyers increased steadily. Many big buyers actively participated. Takesada from Japan, Osmanbey from Turkey, Gerard Darel & Pablo from France, Scott Sport from US, Performance Day from Germany were a few of the big names at the fair.
"While talking on the sidelines of Intertextile Shanghai to industry leaders, the feeling is, contrary to the general impression of much hue and cry about China growth story slowing down, industry experts and leaders outside China are not pessimistic and are ready to give a leeway to China considering its robust economy and growth."
Recently at the annual National People’s Congress in Beijing China’s Prime Minister Li Keqiang announced a punchy GDP growth target of 6.5-7 per cent for 2016, along with the means he hoped would secure it: a bigger budget deficit than had been planned for last year and faster credit growth.
With sufficient stimulus China will avoid a sharp economic slowdown. But Li did not simply open the macroeconomic spigots. He hinted that the fiscal boost would be designed to help rebalance the economy: China is aiming for just 3 per cent growth in government revenue this year, suggesting that more of the deficit will come from tax cuts to private firms. He made clear that reforms to reduce overcapacity in low-end and inefficient industries were a priority. And by switching from a single-figure growth target to a range, Li gave himself more flexibility in trading off some GDP growth for more reform.
Look closer, though, and there is little sign of any real commitment to reform. Promises to slim industries such as steel and coal sound tough - the government expects nearly 2 million workers will be laid off but the planned reduction would make only a small dent in oversupply. Instead the government seems to be doubling down on its well-worn recipe of debt- and investment-fuelled growth.
Economy still in growth mode
While talking on the sidelines of Intertextile Shanghai to industry leaders, the feeling is, contrary to the general impression of much hue and cry about China growth story slowing down, industry experts and leaders outside China are not pessimistic and are ready to give a leeway to China considering its robust economy and growth. According to Michael Scherpe, President and CEO, MesseFrankfurt, France, “The Chinese market is really not slowing. It’s still going strong, investments keep happening in Vietnam, Bangladesh, Cambodia, and where not. Otherwise also overall global textile economy is not really shrinking. The evolving global economy is possibly polarizing. It is a connected world, the impact of economy is all around.”
Ercole Botto Poala, President, Milano Unica believes China at the upper end is facing somewhat softening demand. “But overall growth remains sanguine as new bucket of consumers keep coming up as the economy continues to be in the growth mode. Therefore, it’s not really doing that bad. Case in point is Milano Unica grew by 9.8 per cent in China & 8.4 per cent in Hong Kong in 2015 after all. Especially wool segment is showing a lot of promise. And new normal of GDP growth of approximately 7 per cent on incremental base is surely credible.” Percentage interpretation is generally misleading, Poala points out “we don’t sell fabrics in percentages, we sell in meters and China is still growing on such a robust base,” added Poala. Opined Silvio Albini, Cotonificio Albini S.p.A., Ex-President Milano Unica that China’s slowing down impact on upper end is to be seen more so at cotton end. “But increasing perception is that economy is bottoming out. And it may take a few years to bounce back. As for that matter whole world is living in turbulent environment.”
Steady Growth
However, due to the influence of global weak consumption, export competition of China knitting industry intensified dramatically in 2015. The whole industry ran steadily with a growth in spite of the industrial transfer or overseas relocation that was gradually showing up to respond to the trade protectionist arrangements by the developed countries, according to the National Bureau of Statistics. Similarly, China’s economic operation of dyeing and printing industry in the year 2015 ran steadily in general.
However, Kawashima, Senior Director, JFW (Textile Div.) is of the opinion that China is witnessing a slowdown and its here to stay. “Recovery is not going to come in hurry. Surely it’s likely to have far reaching consequences. But it’s really difficult to put a number to the extent slowdown is going to hurt internally or externally.”
Opined Laurent Le Mouel, Nelly Rodi, a design company that Chinese slowdown is not really palpable because generally global trade is shrinking and world is experiencing some bit muted growth. So risk off is new normal, he added.
The international market is difficult to improve greatly as it is affected by the continuous fatigue of global economy in 2016 and the main power in the industrial development in China will rely on domestic market driven by supply-front reform. For China’s textile industry, how to respond to various layouts and competitions allocated by developed countries in ASEAN will be a question that is worthy of attention and thinking. China is active in the creation of free trade agreements and formulation of a variety of supporting policies for cross-border e-commerce, making it possible for foreign trade enterprises in their textile industry to apply its own technological advantages and fully enjoy the system dividend to form the long-tail power through the internet.
In 2015, China’s dyeing and printing industry ran steadily in general thanks to the accelerating structural adjustment and transformation and upgrading with the exception of output produced by enterprises above the designated size that was in a mire of further downslide from January to November.
Stable operation
During January to November 2015, the main business income was 352.562 billion Yuan an of 3.73 per cent year on year with 1.2 percentage points higher, profit was 17.295 billion Yuan which grew up by 8.2 per cent year on year, with an increase of 4.77 percentage points. Profit ratio of sales was 4.91 per cent, up by 0.24 percentage points compared with year 2014, which indicated that the economic operation improved gradually along with deepening of transformation and upgrading.
Strengthened industrial cluster
During January to November 2015, the production of dyeing and printing cloth was 46.721 billion meters, down by 14.55 per cent year on year with 3.48 percentage points dropped compared with the first half year. Production in the east coast which included five provinces (Zhejiang, Jiangsu, Fujian, Guangdong and Shandong) was 46.721 billion meters, accounting for 95.87 per cent of the total volume.
The enterprises above the designated size on the east coast of five provinces increased production of dyeing and printing cloth year on year with 3.44 percentage points up by 95.87 per cent in 2015 from 92.43 per cent in 2011 and the production area concentrated to the east coast fatherly, since the 12th Five-Year programme.
Investment fall
From January to November 2015, the actual completed investment in fixed assets in dyeing and printing enterprises was 39.443 billion Yuan (excluding any projects with investment less than 5 million Yuan), up by 14.41 per cent year on year with 6.71 percentage points dropped. At present, enterprises mainly invest in promoting technological equipment, transforming environmentally protective facilities, researching and developing new products, etc. with 807 construction projects, up by 11.62 per cent year on year and down by 4.06 percentage points. From 2011 to 2015, the actual investment finished by the dyeing and printing enterprises maintained a rapid growth
The economic performance in 2016
The global economy is expected to continue to recover slowly in 2016. The new endogenous impetus for economic growth is taking shape gradually in China and the industrial growth is expected to rise although the economic situation in China is still grim. The economic operation in dyeing and printing industry will run smoothly in 2016 with expected growth in main business income, profit margin, investment, exports, etc. in challenging downward pressure.
The US seed company Monsanto is free to leave India if it does not want to lower prices of genetically modified cotton seeds as directed by the government, a minister commented recently, indicating that the rift between New Delhi and the firm is widening. The comments come as Prime Minister Narendra Modi's nationalist government expects to develop its own genetically modified (GM) cotton varieties early next year to end Monsanto's dominance; it controls over 90 per cent of cotton seed supply.
According to experts, new technologies are critical to lifting India's poor farm productivity, although even if India did develop a home-grown GM cotton variety in 2017, it would struggle to sustain a programme that needs to refresh seeds every decade or so. The introduction of Monsanto's GM cotton seeds in 2002 helped turn India into the biggest producer of the fiber, while other crops like pulses continue to suffer as transgenic food is banned and local research has stalled.
Despite the gains GM cotton brought for more than 7 million cotton farmers in India, some of them and their associations, including one affiliated to Modi's ruling party that promotes self-reliance, have complained Monsanto overprices its products.
Textile maker Alok Industries' resolution for its lenders to convert loans into controlling equity has been forestalled by a court order until a winding-up petition by HSBC is worked out. Alok had taken the decision as part of a corporate debt restructuring.
However HSBC's petition filed on behalf of a consortium of unsecured lenders, led by VTB Capital, is pending. It concerns Alok’s liquidation and settlement of outstanding dues, part of a loan the company had taken. The matter has been adjourned till March 22 in the hope that the involved parties will come to an agreement, allowing the takeover process to continue.
In January, a joint forum of 25 banks led by State Bank of India that had loaned around Rs 13,000 crores to Alok had decided to convert loans into a 65 per cent equity stake. SBI Capital Markets was mandated to run a formal auction process to sell the core businesses as a whole or in parts. However, this process has no proposals for unsecured lenders though it accounts for repayment of its secured lenders, mostly public sector banks.
The court's decision to stop lender action may set a precedent. In several similar pending cases, secured lenders are engaging with unsecured lenders out of court to arrive at haircut ratios and repayment schemes because court proceedings could hold up repayment for all concerned.
It maybe recalled PE funds TPG Capital Management and KKR & Co LP are competing with domestic textile companies Vardhman Group, Trident and a brand new special situations joint venture between Ajay Piramal Group and Brescon to take control of debt-ridden Alok Industries.
The potential suitors are believed to be keen on individual assets than taking control of the listed Alok Industries. Some have expressed their discomfort about governance quality, given that the company's statutory auditor Delloitte Haskins & Sells LLP quit last November within five months of coming on board.
www.alokind.com/
German retailers are supporting sustainable development of Myanmar’s textile industry. The partnership will initially run for three years. The core of the project is the creation of structures which enable a sustainable textile production with fair working conditions. Through training and seminars local textile producers will be encouraged to improve their standards, productivity and product quality.
Economic and development cooperation will work together to improve the supply chain’s social standards. The ultimate aim is to help Myanmar’s garment industry compete in the global market.
Myanmar has not only ambitious growth targets for its textile industry but wants to make this growth sustainable. By 2024, the textile industry in Myanmar is targeting a revenue of $10 billion. Currently exports of the textile industry are at about $1.8 billion.
Germany is Myanmar’s principal trading partner in the European Union. Germany’s main imports from Myanmar are garments and its principal exports to Myanmar are machinery, data processing equipment, electrical and optical goods, chemical products, motor vehicles and vehicle parts and pharmaceutical products. Of Myanmar’s garment exports, woven garments have driven the growth of exports while exports of knit products have been flat over the years.
A British newspaper bitterly criticised German retail giant Lidl recently for selling garments produced in Bangladesh at prices that were too low. Lidl recently launched a 58-piece denim collection, which includes women's jeggings priced at less than 6 pounds (around $8.60) a piece, the newspaper said in its report published on March 13.
‘Lidl is a cheap buyer. The company does not want to increase the prices. It always puts pressure on the garment makers for downward prices,’ allegedly said a supplier of garment items to Lidl in Bangladesh, seeking anonymity. It is surprising that customers in even Germany and the UK can buy a pair of denim pants at Lidl stores at prices cheaper than any store in Dhaka.
The newspaper said the campaign hit more than 600 UK stores last week, as part of Lidl's 'We Love Denim' promotion. The report pointed out that the reason the retailer could sell them so cheaply was because they were made in Bangladesh, where the minimum hourly wage for a garment worker is 23 pence, or about 48 pounds a month (roughly $69).
Lidl has made no secret of its sourcing in Bangladesh. In fact, Markus Reinken, the company's buying director, spoke last September of their plans to increase apparel orders from the Asian nation by 20 per cent because other countries had become too expensive due to higher production costs and a shortage of workers.
Ethiopia’s one of the largest vertically integrated textile company, Almeda Textile which supplies apparel to Sweden’s fast fashion retailer Hennes & Mauritz has concluded its expansion that took place over the past six months in Adwa city to increase its fabric production capacity by 100 per cent.
Focused on mainly replacing machinery with the latest products, the expansion is the first of three stages. The company imported Rieter brand C-70 carding machines, a New Draw Frame finisher machine and an Open End R-35 from Germany and Switzerland, as well as a Muratec winding machine from Japan. The new machinery saves energy and takes lesser time to power on and off. They are easy to manage and enhance their productivity, said Tekelemariam Tesfu, general manager of the factory.
Spinning, the production of thread, which used to yield 20,000kg per day, will now increase five-fold. This will enable the company to fulfill its own production requirements, and also look for export opportunities.
For the remaining production processes, resources and capacity will be better utilized. Because of the increase in the production at the spinning stage, the weaving and fabric making will also increase, making use of existing machinery for the latter two. Weaving will reach 32,000m of textile roll from the former output of 24,000m a day - an increase of 33pc; while the fabric making will be doubled to 7,000kg.
Pakistan’s cotton production has fallen short by 4.7 million bales year-on-year during this season. There are issues facing the agriculture sector in general and cotton crop in particular in Pakistan.
Cotton growers want all taxes on agricultural inputs, including general sales tax, eliminated, to ensure growers get a good price for their produce. They also want the export subsidy on sugar to go and regulatory duty to be imposed on sugar imports. They feel there should be a ban on sugarcane growing in cotton areas.
Inferior quality seed is seen as a major reason for the crop failure. Growers want an assured supply of certified seeds. Above all they want a fair price. There are concerns the free market policy for agriculture produce is allowing easy access to cotton and other farm produce from across the border which is hurting growers. Growers feel if they can buy inputs and sell their farm produce at world prices they would be able to produce more and bring in prosperity for themselves and others.
An exportable surplus would mean that growers can get an international price for their produce and keep cultivating more and more cotton. Growers feel a strong marketing network would help them raise production.
India’s readymade garment industry will continue to get duty benefits till 2019 in the EU markets under the European Union's scheme of generalised tariff preferences. The EU has recently announced its scheme of generalised tariff preferences for the next three years (2017-19). GSP was scheduled to end on December 31, 2016.
Under the scheme, India's readymade garment sector will continue to enjoy 20 per cent duty preference on exports for the next three years in EU markets. The EU is India’s largest market for textiles. Demand from Europe accounts for almost 41 per cent of the country’s garment exports.
Currently, while Indian mills have to bear an export duty of 9.6 per cent for supplies to Europe, those in competing countries like Bangladesh and Pakistan have zero-duty access to that market. Indian apparel exporters work on very thin margins. But now, with the availability of tariff preferences and with Chinese textiles becoming uncompetitive due to rising labor costs and Bangladeshi textiles facing quality issues, they are hopeful that exports from India can surge.
What textile exporters are looking forward to is a rate subvention of three or four per cent. This, they feel, can help them compete in the export market better.
