FW
In Bangladesh textile and apparel sector lured the maximum amount of foreign direct investment during the first three months of 2018. Gross FDI inflow during January-March 2018 in the textile and apparel sector was over 24 per cent of the total FDI flowing into country over the same period. In 2017, FDI in Bangladesh’s textile and apparel sector rose 16 per cent over 2016.
South Korea was the number one investor in this sector followed by Hong Kong and British Virgin Islands. Bangladesh is seeking FDI from Singapore, India, Japan, China, Thailand and other countries. The country is expecting an FDI inflow of about $7 billion in fiscal 2017-18. This is a huge jump, considering the highest Bangladesh has received in recent years is $2 billion. This can be partly attributed to the development of 100 economic zones in Bangladesh.
Since the garment sector is growing fast in Bangladesh, foreign investors choose the country as an investment destination in the textile sector. The available workforce at a reasonable wage, duty-free market access to major export destination, preferential location in the heart of the Asia-Pacific region and policy support have acted as a catalyst to attract foreign investment in the textile and apparel industry.
Commercial Bank of Ethiopia (CBE) has earmarked a $500 million financial boost to the country’s manufacturing sector. The banking company has increased the budget allocation by $200 million in comparison to the $300 released in March. However, key market players have, urged for more finances in the sector as the industry tries to reach its potential capacity.
The manufacturing sector in Ethiopia offers a variety of business opportunities for its investors. The country is building several industrial parks as a springboard to its economic development. One of these, the Hawassa Industrial Park was inaugurated in 2016 and is the largest park of its kind on the continent. Another, Bole Lemi I Industrial Park serves the textile and leather products. The government further plans to build 15 industrial parks by June next year. Ethiopia plans to be Africa's industrial hub by 2025 and has recorded a consistent economic growth. Its industrialisation efforts have been backed up by Government support as well as investors.
Mass-produced luxury brands such as: Michael Kors, Ralph Lauren, Tory Burch and Calvin Klein appeal to the aspirational Chinese, thanks to American culture’s pull.
In China, American brands have been incredibly successful in owning category and new behaviors. Starbucks has created the coffee culture. Disney is the exemplar family destination. Apple still dominates premium consumer technology and Tesla has captured the imagination of China’s future-focused middle class.
As Chinese consumers increasingly use fashion and luxury to express their lifestyle and identity, American brands have a profound head start on other nationalities in terms of precedent and aspiration. Michael Kors’ revenue rose by double digits in China in the last quarter. Ralph Lauren is likewise seeing double-digit growth. PVH Corp, which owns Calvin Klein and Tommy Hilfiger, was buoyed by a year-on-year increase in China sales in the 2017 financial year.
Some US fashion designers have benefited from the race by luxury e-commerce websites to build up their brand portfolios. China’s wannabe consumers, or those who are aspirational, would be the fastest-growing consumer segment by 2020.
Compared to European brands, US brands have their own advantages. European luxury brands have a long history, but most US brands are newer and not limited to intrinsic design elements.
China and Mauritius have agreed on a bilateral free trade agreement. The FTA covers a wide range of areas including trade in goods and services, investment and economic cooperation. This is China's first bilateral free trade agreement with an African country. China is open to signing more free trade agreements with African countries.
The China-proposed Belt and Road (B&R) initiative requires unimpeded trade and financial integration of countries on the B&R routes. The China-Mauritius FTA will establish the regime and clear obstacles in the way of those goals.
Mauritius is a fairly developed country, but its economic structure is relatively simple. An FTA with China will not just attract more Chinese tourists to the country but also attract more investment to boost its economy. And Mauritius is keen on attracting Chinese investment. At present, China has invested hundreds of billions of dollars in Africa. China's increasing investment in Mauritius will drive the development of the African state and will help it establish logistics transit centers and industrial parks.
Mauritius is a country which can boast of having one of the best infrastructures in Africa. It has a population of 1.2 million with the main languages being English, French and Creole.
Bangladesh wants investments to flow in from Canada. Out of Bangladesh’s exports to Canada, 95 per cent are garment items. Bilateral trade has been growing at a faster rate now, due to duty free market access. Canadian entrepreneurs are being encouraged to engage in trade, investment and technology transfer from Canada to Bangladesh.
If the trade facilities offered by Canada remain unchanged, Bangladesh’s exports to Canada will reach $3 billion by 2021. In enlarging its trade volume in the Canadian market, Bangladesh is planning to showcase its products especially leather and diversified jute products as there is a huge opportunity for growth.
Bangladesh and Canada may form a blue ribbon panel to explore possibilities of expanding trade and investment. The signing of a bilateral investment treaty between the two countries would go a long way toward increasing foreign direct investment from Canada to Bangladesh.
Sustainable economic growth, health, and education are the three areas Canada wants to work on in Bangladesh. The country is also working to strengthen garment worker safety in Bangladesh. Canada wants to expand in the services sector in Bangladesh, such as aircraft safety. Bangladesh’s textile products enjoy duty-free access to Canada.
Canada is a country of some 37 million people, with French and English as official languages. It is a leading as well as growing trading partner of Bangladesh, providing export opportunities.
Industry leaders have suggested that China and African countries, represented by African Union, should launch a feasibility study on free trade and investment facilitation negotiation to completing the detailed text of their investment plan before their next summit, and guarantee high-level standards for trade and investment facilitation by 2025.
The recent developments in Africa and the rest of the world could prompt China and Africa to consider more ambitious trade and investment plans. Early this year, African leaders met in Rwanda and signed the agreement for establishing the African Continental FTA, which is a landmark pact that could promote African integration amid the de-globalisation, isolationist, protectionist policies being adopted and the bullying tactics used by certain economies. If China and the African countries keep sending such positive trade and economic signals by inking an FTA, they would inject new vitality into the global economy. Such an FTA would be a concrete step toward achieving the goal of mutual prosperity by institutionalising Sino-African economic activities.
Accord has cut ties with Super knitting & Dying Mills and all factories which are part of Supertex Group, that supply to US retailers Sears and Macy’s. Super Knitting was a signatory of the European retailer-based Bangladesh Accord for Fire and Building Safety and it failed to adhere to the outlined safety requirements. The decision will be remain effective for 18 months during which time the factories will be illegible for to re-qualify.
Super knitting & Dying Mills was inspected by the Accord for structural, fire and electrical safety in April 2014. After many attempts by the Accord staff the factory failed to make adequate progress in CAP implementation. Another company to have its business terminated, as a part of a raft of terminations in August, is SB Knitex. The company was inspected by the Accord for structural safety in June 2016 and for fire and electrical safety in November 2016. After many attempts by the Accord staff the factory failed to submit a Corrective Action Plan.
"Following a strong industry retail report of growth of 6.6 per cent and 6.4 per cent in June and July versus the previous year, and stellar results posted other leading like Urban Outfitters, much was expected from the company Gap Inc. However, the performance of the brand Gap left much to be desired. Gap Inc’s comparable sales increased only 2 per cent as against the expected 1.5 per cent, while comparable sales of the Gap as a brand fell 5 per cent against the expected decline of 2.3 per cent. However, the growth of company was led by Old Navy, followed by Banana Republic as these brands performed in-line with estimates. As per analysis of Forbes, the following factors may influence the brand’s future performance:"
Following a strong industry retail report of growth of 6.6 per cent and 6.4 per cent in June and July versus the previous year, and stellar results posted other leading like Urban Outfitters, much was expected from the company Gap Inc. However, the performance of the brand Gap left much to be desired. Gap Inc’s comparable sales increased only 2 per cent as against the expected 1.5 per cent, while comparable sales of the Gap as a brand fell 5 per cent against the expected decline of 2.3 per cent. However, the growth of company was led by Old Navy, followed by Banana Republic as these brands performed in-line with estimates. As per analysis of Forbes, the following factors may influence the brand’s future performance:
Accelerating store openings
Gap has speeded up Old Navy store openings. The brand opened over 30 stores in FY 2017, and 28 in H1 2018,
along with 85 remodels. The performance of these stores is exceeding expectations and remodels are outperforming the fleet by an average spread of five comp points. The company further plans to double store openings as compared to FY 2017, which should help increase revenues.
Introduction of plus collection
Old Navy will launch its plus collection, which was previously available only online, in 75 select stores. The women’s plus-size market is growing at a higher rate than the overall apparel market. According to NPD, even with just the online business, Old Navy falls within the top 10 women’s plus-size brands and the expansion of the category in the stores represents a significant growth opportunity.
Focus on Athleta and Old Navy
Sales in the activewear category increased 2 per cent, valuing the market at roughly $48 billion in 2017. The brand registered a double-digit growth in its second quarter and the momentum is expected to continue through FY 2018. The company expects its future store openings to be focused on Athleta and Old Navy, with closures weighted toward Gap and the Banana Republic.
Excess inventory impacts margins
The company was saddled with excess inventory in the first quarter, which consequently impacted its sales from this brand as well as its ability to optimise its margins. The overall gross margins of the company fell by 10 basis points in the quarter, after a 20 basis point decline in Q1. Looking ahead, the company has cut 30 per cent styles heading into the second half of the financial year, which should help to improve the performance.
Improvement in online business
The company has one online platform for all its brands, ensuring customers can purchase items for in one place. This also ensures recognition for its new brands which would not have been possible if they had had a separate web presence. An upshot of this is that the company was able to deliver strong growth from its online and mobile channels in the second quarter, and is on track to garner over $3.5 billion in digital sales this year.
Gap Inc. is increasing store count of Athleta, Old Navy, and the factory and outlets at the Banana Republic and Gap. Consequently, in the first half, the company opened 60 stores, largely Old Navy and Athleta, and closed 38 stores, primarily Gap and Banana Republic.
Industrialists in the powerloom weaving sector have accused the Tax Research Unit (TRU) under the Union ministry of finance of denying the utilisation of accumulated input tax credit (ITC). TRU had thus superseded the decision taken by the GST Council to allow refund of ITC on fabrics in its 28th meeting on July 21, 2018. The meeting decided to allow refund of accumulated ITC because of inverted duty structure on the MMF fabrics, which attracts 5 per cent GST. It was also decided that the ITC shall be allowed only with the prospective effect on the purchase made after the issuance of the notification.
Weavers say, a meeting was held under the Chairmanship of Finance Minister Piyush Goyal along with Revenue Secretary Hasmukh Adhia, Textile Minister Smriti Irani and members of the textile industry from Surat on July 20. The meeting unanimously decided not to refund the accumulated credit of the past period, but income tax would be levied on the credit amount up to July 2018. The refund of accumulated ITC would be allowed on the inputs after August 1.
Jack & Jones, which in its last 18 years, has progressed from a premium denim brand to one of the Europe’s leading producers of menswear, is planning to restart manufacturing denims. The brand recently modernised its logo and includes the ampersand formed by two Js – and communication materials emphasise the four brand values: Masculine, Social, Refresh, Craftsmen. The primary color of the logo is blue. The brand conducted extensive consumer research for reviving its identity. It set up an internal taskforce team consisting of people with different skills and competencies. It also hired an agency to implement its ideas.
Other initiatives that the brand include plus-size collections and collections for boys aged 08-16 years. The latter is known as Jack & Jones Junior. It further plans to develop its business on several parameters in the years to come
