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There has been a 17.6 per cent overall decline in exports from India. Textiles initially appeared to buck the slowing trend in exports but it has now been dragged into the decline. Readymade garment exports in April had crossed Rs 10,000 crores but a gradual but steady decline through the April to September period brought down the number to Rs 7,545 crores.
India's bilateral trade with China is skewed in terms of having more imports than exports. The devaluation of the Chinese currency is expected to lead to an expansion of the deficit in bilateral trade with China.
The immediate task at hand for Indian players is to hold their ground in the trade scene with China. Rate negotiations in commodities such as cotton yarn take place in trade fairs. A recent one in China showed Tamil Nadu’s textile players the intensity of this imbalance. The yarn exhibition in China showed there is an immense pressure on pricing. Indian manufacturers struggled to get a good rate for their yarn.
It was then they realised they need a local presence. The idea of a common office in China has been mooted. The industry wants direct selling offices in China, with the industry funding the expenses and the ministry facilitating the setting up.
Spinning mills in Tamil Nadu say Chinese yarn buyers and traders are crushing Indian yarn manufacturers by forming a cartel. A cartel is an agreement between competing firms to keep prices under control or check any new competitor’s entry into the market. Under this sellers or buyers agree to fix prices of selling, prices of purchase, or to lower production.
Yarn manufacturers want to be allowed to open common selling offices in China. They say this would help avoid exploitation by buyers, besides strengthening Indian players with updated and constant market intelligence.
The industry wants textile-specific trade pacts with various untapped markets to be initiated. Exports of cotton yarn and fabrics showed a positive growth of five per cent in September. The industry feels that with a huge capacity within the country, a little push and coordinated efforts will beat the downtrend in exports, helping the spinning and garment sectors to come out of the current trend of losses.
India’s yarn exports to China have declined by 20 per cent. Exporters have tried to make up elsewhere and there has been a slight rise in yarn exports to Sri Lanka, Bangladesh and Vietnam in recent times.
According to the Ministry of Labour, Invalids and Social Affairs (MoLISA), across Vietnam, a pilot labour inspection campaign in the apparel industry uncovered 1,786 violations at 152 businesses in 12 cities and provinces.
MoLISA inspectors, in co-ordination with the International Labour Organisation (ILO), the Vietnam General Confederation of Labour, and the Vietnam Chamber of Commerce and Industry, conducted the inspections from May to September, 2015.
Huynh Van Ty, MoLISA Deputy Minister, said that because the apparel industry was chosen for the test inspections, it had been a key foreign currency earner for Vietnam in recent years. It brought in 13.6 per cent of the country’s export revenue and 10.5 per cent of total gross domestic product. Between 2008 and 2013, the sector posted an annual growth rate of 14.5 per cent.
In Vietnam, there are about 6,000 apparel enterprises that are operational and they employ more than 2.5 million workers, which comprises of about 25 per cent of the industrial workforce. Ty said that most employees were manual labourers with limited professional skills.
Nguyen Tien Tung, MoLISA Deputy Chief Inspector, said that the most common violation was overtime hours exceeding the stipulated excess time and he said that 60 companies committees the violation. Besides, 17 firms did not provide sufficient overtime or night shift pay, while salaries in 11 businesses were lower than the region-based minimum wage levels set by the State.
Moreover, many enterprises did not have safety and instructional signs, and did not give information about how to escape during an emergency. The regulations and escape route maps were also not posted in visible areas. Shortage of protective gear, not using the equipment correctly by labourers was also common. About 90 businesses lacked sufficient occupational safety training.
www.ilo.org
Before the Indian industry become uncompetitive the Free Trade Agreement (FTAs) with European Union countries (EU) and a pact with US should be signed, advocated the Apex Industry body ASSOCHAM.
The chamber has stated that the estimated $500 billion potential consists of domestic sales of $315 billion and exports of $185 billion, in a note submitted to the government.
An ASSOCHAM release stated that to achieve this huge target, great planning and action are required by both, the industry and the government. This looks ambitious but is not impossible as China, by introducing various pro-industry policies, has progressed in the same in the last 10-15 years. D S Rawat, ASSOCHAM’s Secretary General said that the domestic market has to grow at 16-17 per cent from the present $68 billion to around $315 billion.
The total cotton exports by 2025 would be around $ 55 billion and other textiles would be around $ 14 billion, assuming that cotton exports would grow about 10 per cent at CAGR. This would leave a target of $ 116 dollar, which MMF/ Filament Yarn only can achieve.
ASSOCHAM stated that exports of MMF/Filament Yarn were currently $ 10 billion and for MMF/Filament Yarn to reach the target level of $ 116 by 2025, this segment would have to grow at more than 25 per cent CAGR.
The industry body however said that for the last 10 years, they had been regularly failing to achieve our export targets again and again because our concentration remains high on cotton. The MMF/Filament Yarn industry, which could have given the much desired growth, has not been given its due attention. They said that the time had come that we give due focus on the MMF to attain our exports and desired growth for the Textile Sector.
www.assocham.org
Vietnam’s textile and garment exports to the US in January to September were up 13.6 per cent year-on-year. The country exported nearly 17 billion dollars worth of apparel in the first nine months of this year, with the US market accounting for almost half of it.
The US market was followed by Japan and South Korea. Japan’s apparel imports from Vietnam were up six per cent year-on-year and South Korea’s imports were up 0.6 per cent.
Vietnam’s apparel makers expect their exports to increase when free trade agreements, especially the Trans-Pacific Partnership, come into force. Vietnam’s apparel is currently subject to 17 to 30 per cent US tariffs but the rates will be gradually brought down to zero in the TPP.
Vietnam’s apparel exports to the US have inched up 12 to 13 per cent annually in recent years while US imports from other markets have risen by only three per cent on an average. Vietnam makes up just nine per cent of America’s total apparel imports, so there is room for Vietnamese apparel firms to boost shipments.
Foreign firms make up around 25 per cent of Vietnam’s 3,000 textile and garment enterprises but contribute over 60 per cent of the country’s apparel export turnover.
In a carefully-planned and phased handover, Uster Technologies is to have a new Chief Executive by April 2016.
The current CEO Geoffrey Scott will take early retirement at his own request and Thomas Nasiou, who is presently the company’s Head of Textile Technology, will take over from Scott. USTER’s foresight in formulating a succession plan for the leadership of the company into the future is highlighted by this announcement.
Scott said about his early retirement that since the formation of Uster Technologies in 2003 following the first Management Buyout, they had been through some exciting and challenging times, including being publicly listed on the Swiss SIX Exchange, managing through the financial crisis, the investment and subsequent takeover by Toyota Industries and most recently the successful acquisition of Jossi Systems.
The CEO for the past 16 years added that they had developed a profound focus on the needs of their customers and were committed to providing the best solutions to help them. He said that the work was enjoyable but demanding and now it was time to slow down a bit. He also felt that it was the right time to step back from the CEO role and hand over the leadership role to a ‘new set of hands’, and believed that that now is an optimal time from the viewpoint of both, the company and the customers.
Scott will continue to provide support to the company and to the USTER management in future as a member of the Board of Directors, and the new CEO will take over from April 1, 2016, next year.
www.uster.com
Activists globally and Turkish workers for the British luxury handbag brand Mulberry, are celebrating after winning a campaign to uphold human rights in their factory.
A nine-month union busting dispute between factory management and workers ended recently, where discussions led to an agreement that full compensation would be paid to all workers involved and court cases against the union would be dropped.
After management at SF Leather, a Turkish supplier of handbags and purses for Mulberry, fired workers who had joined the fledgling union ‘Deriteks Sendika’ workers had been asking for their human rights to be respected. In turn, the management attempted to sue them on trumped up charges, and offered to rehire them only if they gave up union membership.
In partnership with the Clean Clothes Campaign and the Union League, the nine-month campaign ended in actions held outside stores and factories across the globe including Istanbul, Hong Kong, Copenhagen, Bristol, New York, Bangalore and others. an international petition was signed by more than 11,000 people to Mulberry.
Abdulhalim Demir from Clean Clothes Campaign, Turkey said that the real victors were the fourteen workers who held a round-the-clock protest to get their jobs back and their human right to organise a union. saEngin Çelik from Deriteks said that as per the agreement, SF Leather is now obligated to act in accordance with ILO convention no. 87 and 98. They too will follow this agreement and it is most important that SF Leather respects workers' right to organise a union, Çelik further stated.
SF Leather, employs 190 workers and 90 per cent of the factory's production is for Mulberry.
www.mulberry.com
Pakistan may have a trade policy by November. Over the last two years the country has faced a downward trend in exports.
The policy will offer incentives to the business community to improve its exports in terms of value addition and quantity. There will be a speedy export refund mechanism on value addition and incentives on import of machinery that improves value addition. The institutional framework for promotion of exports will be strengthened. New markets like African countries will be targeted.
Afghanistan has emerged as a major trading partner and has become Pakistan’s third largest export market. Pakistan used to export naphtha, a petroleum product, to the UAE. But then the UAE established its own plants and stopped importing naphtha from Pakistan altogether. This caused a big dent in the country’s exports.
The duty on the import of jewelry for export purposes caused the export of consequent value-added jewelry to cease. This duty will be looked at afresh and revised.
In addition the slowdown in China has hurt Pakistan’s export performance. Energy deficit, the law and order situation and devastating floods have added to the problems faced by the industry. Pakistan wants to take its exports from $24 billion now to $35 billion by 2018.
The 31st IAF World Fashion Convention held in Istanbul held on October 14, 2015, saw over 700 participants from North America, South America, Europe and Asia. Christophe Auhagen, CBO, Hugo Boss and Gordon Richardson, Creative Director, Topman’s were some keynote speaker among others.
‘Making it Better’, the theme of the convention reflected in all sessions. Following the theme, the 3D digital product development by Hugo Boss was displayed, which drastically reduced the average number of physical samples they need.
Innovative forms of horizontal collaboration to make things better, including shared ‘platforms’ for complex products and shared technological knowledge through informal networks was presented by Ahler’s Jan Hilger. The use of innovative financial instruments can free working capital caught in inventory, creating money for investments improving the supply chain further was showcased by GT Nexus’s Kurt Cavano.
The ability of Turkey to play a major role in fulfilling the industry’s needs for fast response and also by coordinating production outside of Turkey, in neighbouring countries was shown by Achim Berg of McKinsey in a session led by Roland Shuler of Peek & Cloppenburg.
Also, the power of collaboration to improve company’s individual efforts to improve CSR and sustainability was displayed by Han Bekke of Modint, Leyla Ertur of H&M and Murat of Attun of Inditex.
www.iafconventionistanbul.com
Challenges faced by the denims players
Credit-fueled spending, according to Antoshak has given way to tight budgets as consumers continue to pay off their debts from the years leading up to the recession. As a result, sales of jeans in the United States, for example, have declined over the past several years, while the popularity of low-cost knitted athletic wear has gained considerable market share. And smartphones along with other such gadgets are grabbing the attention of today’s consumers. He says that while the extreme high end of the jeans market remains robust, but the mass market for denim around the world has stalled.
Another factor has also affected the denim market is synthetic fibers. He observes that in an effort to lower the cost of mass-market jeans production, many manufacturers have replaced cotton with some polyester. Stretch fibers have, of course, been a force in denim for many years but since cotton prices soared to over $2/pound in 2011, both mills and apparel companies have scrambled to find more economically priced fibers for use in their denim. Of course, cotton prices have since moderated, but so has the price of polyester solidifying gains by synthetics, he avers.
What all these factors have led to is an oversupply of denim worldwide and while the jeans business is cyclical, skepticism has plagued the market. Antoshak says that due to anemic demand, and an increasing switch to blends, global denim prices are relatively weak and the overcapacity situation has further dampened price levels. He cautions that the demand is likely to further fall over the next few years.
Denim’s survival depends on tapping opportunities
However, on a positive note Antoshak states that over that time, as excess capacity will be shed around the globe, some countries will actually step up construction of new mills. So along with a continuing decline in aggregate denim capacity is likely over the next few years as inefficient mills in Europe, North America and Asia are dismantled, at the same time new capacity comes on-line in China, India, Turkey and Brazil. The growth in these countries and a smaller number of other producers, such as Vietnam, will in time grow to offset declines in less efficient capacity elsewhere, he says.Looking out to the end of the decade, he points out that there will be increased demand for more elaborate variations of denim than had been the case previously and that the stretch qualities of elastomeric products will help maintain denim sales for some producers globally.
Antoshak further says that from the mill perspective, countries/regions such as North America, Europe, selected Asian suppliers like Indonesia, Korea and Taiwan will see consolidation and countries like China, Turkey, Brazil, Vietnam, India and Pakistan will witness growth. He says that there will be great changes in Asia, with China taking on a greater and greater role in the world market for denim, since the country is learning how to make quality cloth at much lower prices than other suppliers.
On the other hand, North America, according to him will be subject to greater imports of denim cloth and apparel containing denim. This in turn will drive more domestic mills out of the market, which means that Mexico, in particular, will become less of a force as the decade progresses, he says.
Questioning the rise of athleisure trend, Antoshak asks what will happen as young consumers age? Will they still want to wear the sweats ever day? Not likely. As a consumer product, jeanswear has survived fashion changes and economic challenges many times before. In part this success is due to the versatility of the product itself, he argues.
www.olah.com
