FW
The EU textile and clothing industry, over the last 10 years, has invested almost € 50 billion into modern manufacturing and service facilities and technologies, creating safer and higher added value European jobs.
The industry’s turnover, since 2013, has grown by 14% to € 181 billion and extra-EU exports by 15% to € 48 billion, while employment and company numbers have been maintained.
The General Assembly 2018 on June 7, Brussels, will showcase the remarkable growth of the EU Textile and Clothing sector through investment cases and success stories from a diversified group of European companies.
Keynote speakers at the event will include Mrs. Irmfried Schwimann, Deputy Director General at DG GROW, European Commission, Company owners/ managers of Amann & Söhne (Germany), Beaulieu International Group (Belgium), Cotoblau (Spain), Eurojersey (Italy), Innothera (France), Lenzing (Austria), Rovitex (Hungary), and Valérius (Portugal).
European consumer group Beuc has recommended the use EU ecolabelled products.
The label already restricts the use of all chemicals that may cause cancer, change DNA, or harm reproductive health as well as some allergens and endocrine disruptors.
The restriction will apply 24 months after publication in the EU Official Journal. This will follow its scrutiny by the European Parliament and Council. Once in force, clothing and related articles, textiles and footwear containing the listed substances – whether produced within the EU or imported – will not be allowed on the EU market.
Beuc has also welcomed the EU action to restrict 33 carcinogenic, mutagenic or reprotoxic (CMR) substances but it believes that more needs to be done to protect consumers against harmful chemicals in textiles such as endocrine disruptors or allergens.
"Having developed textile operations in 1958 in Northern region and in 1970 in Southern region, Vietnam’s textile industry has come a long way, dominating global textile dynamics today. In 2016, Vietnam was recognised as the third top garment exporter in the world where the top two were China and Bangladesh. Apparel exports account for 16 per cent of the country’s total exports (2017). Today there are about 6,000 textile and apparel manufacturing companies working with 2.5 million employees while the population in Vietnam is about 90 million."
Having developed textile operations in 1958 in Northern region and in 1970 in Southern region, Vietnam’s textile industry has come a long way, dominating global textile dynamics today. In 2016, Vietnam was recognised as the third top garment exporter in the world where the top two were China and Bangladesh. Apparel exports account for 16 per cent of the country’s total exports (2017). Today there are about 6,000 textile and apparel manufacturing companies working with 2.5 million employees while the population in Vietnam is about 90 million.
Apparel and textile products of Vietnam are exported to 180 countries and territories around the world. Garment manufacturing accounts for 70 per cent of the total businesses in this sector in Vietnam with CMT (Cut, Make, Trim) being the main method (85 per cent) of export. Main market for Vietnam textile and garment products are US, Europe, Japan and South Korea. The US has retained its position as the largest importer of Vietnamese textiles and garments, followed by Europe, which has led to rapid development of the country’s textile and garment industry.
Even after facing challenges like the abolition of the Trans-Pacific Partnership (TPP) trade deal in 2017, the country was able to exceed its 2017 target of
$30bn with an export turnover of over $31bn, an increase of 10.23 per cent over previous year. Le Tien Truong, Deputy Chair of the Vietnam Textile & Apparel Association (Vinatas), says major markets of the US, the European Union, Japan and South Korea maintained good growth, while there were breakthroughs in exports to other markets such as China, Russia and Cambodia. The South Korean market grew and came close to the Japanese market, reaching an export value of $2.7 billion in 2017 while Vietnam’s textile and garment exports to China reached $3.2 billion, the same as the export value to Japan.
Domestic market
Meanwhile Vietnam’s domestic market demand too is growing powered by young consumers, increasing urbanization, and growing disposable incomes. These markets are attracting major international brands. Country’s retail sales are rising at 20 per cent annually, and spending on apparel is the second highest in Vietnam, following spending on food items. As Vietnam Textile & Apparel Association stats show, the domestic textile and garment market has grown year-on-year at 10 per cent in 2017.
A recent report by Textiles Intelligence forecasts the country’s textile production capacity will rise 12-14 per cent per annum from 2016-2020 and export potential is forecast to increase 15 per cent per annum. Owing to such expanse, the Vietnamese textile and apparel industry will reach $50 billion by 2020. Le Tien Truong opined that the balance in development of the domestic market and the foreign market has been an important point for the local textile and garment industry to ensure jobs for the employees and to maintain development of the enterprises.
FDI spectrum
The first 11 months of 2017 witnessed a steep 11.9 per cent spurt in FDI in Vietnam as compared to the previous year, shows a government release, where Vietnam received a sum of $16 billion in FDI, mainly driven by manufacturing sector. FDI in Vietnam’s flourishing textile and apparel industry is increasing rapidly, which is making the country one of the most popular destinations in Asia for textile investment. According to the data from Vietnam’s Foreign Investment Agency (FIA), FDI investments in Vietnam were up 152.78 per cent year-on-year in the first two months of 2017, and investment in Vietnam’s textile and apparel industry now accounts for 21 per cent of the country’s total FDI.
FIA also reports that Chinese investors have registered 123 investment projects in Vietnam between January and February of 2017. One of the largest among these Chinese investments is the $220 million invested in a Vietnam polyester synthetic fiber plant in central Tay Ninh province. Chinese investment in Vietnam’s textile plants will enable it to have more advanced technology and increased capacity in its textile and apparel productions. Additionally, textile investment from South Korea in Vietnam is also on the rise. By early 2017, South Korea’s Sea-A Group has committed a total of $2 billion in capital in Vietnam’s textile and garment industry.
Katie Bickerstaffe and Pip McCrostie have joined M&S. Bickerstaffe is the outgoing boss of Dixons Carphone’s UK business. McCrostie brings extensive experience in finance and transactions from a career at Ernst & Young where she transformed and led the Global Corporate Finance business.
Under-pressure M&S has beefed up its board with two new non-executive directors offering the kind of retail and business experience it needs. It's believed that the retailer will accelerate its store closure program as sales continue to fall. The retailer has been encouraged by results so far where store closures haven't seen sales in those areas plunging. Instead, shoppers have switched to other M&S stores nearby.
The number of full line (i.e. those selling both general merchandise and food) store closures will rise to 100 from the 60 originally planned. M&S reset its strategy in November. The plan is to speed up store closures, accelerate the relocation and downsizing of other stores, and reposition its food offering. This year it has also detailed changes to its technology function, clothing and home logistics and food marketing.
Jill McDonald was appointed in October as clothing and home managing director. She has been tasked with delivering the sustained sales and profit growth that has eluded Britain’s biggest clothing retailer for a decade.
Intertextile Pavilion Shenzhen will be held in China from July 5 to 7, 2018. Buyers will have around 38 per cent more suppliers to source from this year. With a strong focus on women’s wear, the fair features a wide range of premium women’s wear fabrics, lingerie and swimwear fabrics, printed fabrics, accessories and much more.
Intertextile Pavilion Shenzhen has consolidated as the go-to platform for Chinese women’s wear sector due to its location in the country’s fashion capital, while it is being increasingly used by suppliers from around Asia, in particular Japan, Korea and Taiwan, to gain access to all the big Chinese and global retailers who source at the fair.
Last year saw significant increases in domestic fast fashion-oriented buyers and online and designer brands, with many exhibitors offering flexibility in terms of small MOQs and on-demand deliveries to take advantage of these trends. The Fine Japan Zone will house around 12 companies, with a focus on high-quality cotton and manmade fabrics for women’s wear and casual wear. The Korea Pavilion will provide women’s wear fabrics including manmade, embroidery jacquard, tri-acetate woven and printed options, as well as knits, functional fabrics and faux fur. The Taiwan Pavilion features knitted, jacquard, woven functional and denim fabrics, as well as lace and embroidery.
The textile industry in South India wants a relaxation in cabotage rules for movement of cotton from Gujarat to Tamil Nadu by sea. It’s believed this will bring down the transport cost of cotton. Cabotage refers to the practice of imposing restrictions for movement of domestic cargo by foreign flag vessels.
The southern states account for almost 60 per cent of the spinning capacity in the country. However, a substantial volume of raw material —cotton — comes from Gujarat and Maharashtra. The industry sees scope for a 50 per cent reduction in transport cost if the cotton is moved by ship instead of lorries as done now.
About 10 lakh bales of cotton are being moved by ships from one domestic port to another for the last couple of years in Indian flag vessels. Relaxation of the rule will enable several foreign flag vessels to move cotton from one Indian port to another at competitive prices.
Every year, mills in Tamil Nadu buy 60 lakh bales to 70 lakh bales of cotton from Gujarat. This cotton (Shankar 6 variety) is popular for use in hosiery items. Textile processing facilities are spread across clusters in different states and hence transport cost is key to determining the cost competitiveness of the industry.
Gujarat’s textile and garment exports have fallen by 30 per cent after the cut in incentives that came with the implementation of GST. Export incentives for cotton and polyester reduced roughly by four per cent. This makes products more expensive in the international market and reduces exporters’ competitiveness.
The situation with apparel exports is no different. Exporters used to get duty drawback of 7.5 per cent before GST implementation. This has been slashed to 2.5 per cent, due to which there is a significant impact on exports. As incentives have been cut, the prices of products have increased.
For apparel manufacturers, it was a double whammy, as some key global markets like UAE imposed VAT on apparel exports from India. With duty drawback slashed, exporters were already struggling to generate export volumes at competitive prices, and they now face a stiffer competition in these regions due to changes in tax rates.
Sri Lanka and Middle Eastern countries are some of the key markets for garment manufacturers from Gujarat. With a cut in duty drawback, there is stiff competition from the likes of Bangladesh and Vietnam, both of which get tax incentives in addition to export incentives. Besides, these countries are preferential importers for several global markets. Gujarat accounts for 12 per cent of apparels exported from India.
The European Union is preparing to impose a new tranche of sanctions against Myanmar’s democracy-suspending, coup-installed military regime.
More than 2,000 civilians have been killed by junta forces, 14,000 have been arrested and more than 7,00,000 displaced. However there is a feeling sanctions would mainly impact already vulnerable female workers in the country’s export-oriented garment sector – and not meaningfully hit the military junta’s revenue streams.
Many garment sector jobs have already been lost because of Covid and the coup. There are supposed to be around 5,00,000 workers in Myanmar’s manufacturing sector. Currently, trade unions are banned and 301 union leaders have been arrested and 55 killed.
The EU reinstated Myanmar into its privileged trade scheme in 2013 during the quasi-democratic government. The Everything But Arms (EBA) trade scheme grants some of Myanmar’s export goods tariff- and quota-free entry to European markets.
In 2016, in response to the country’s democratic progress, the US restored much of Myanmar’s trade benefits that had been suspended for chronic abuses under direct military rule.With greater access to western markets, Myanmar’s garment exports increased five-fold from 2012 to 2019. In 2019, they were a third of Myanmar’s total export value that year. The EU was the largest purchaser of Myanmar-made apparel before Covid.
Surat textile weavers and processors have entered their third critical point in one and a half years. In November 2016, high-value currency notes were withdrawn, immobilizing Surat as its economy was largely cash based involving small processors and migrant employees. Last July, the industry was shut for long after the Goods and Service Tax was imposed, rendering a big blow to textile processors, whose cost increased sharply along with compliance burden.
Post GST, there has been a fall in Surat synthetic fabric production by a third. Daily operating shifts have reduced from three to two. Polyester yarn prices have increased six per cent to eight per cent in the past one month and 12 per cent to 15 per cent in the past three months.
This is happening at a time when fabric demand is low. Demand will revive only when the festival season begins a few months later. Due to an extra month in the Gujarat calendar, festivals will start with a month’s delay. Power looms have another problem. Synthetic fabric has five per cent GST but yarn attracts 12 per cent GST. This means when selling fabrics, they will not be able to claim full GST paid of yarn and hence huge amount of unused tax credit will remain in their books.
China is offering the United States a package of trade concessions and increased purchases of American goods aimed at cutting the trade deficit with China. The package includes elimination of Chinese tariffs already in place on US farm products including fruit, nuts, pork, wine and sorghum.
US aircraft maker Boeing would be a major beneficiary of the Chinese offer if Trump were to accept it. Boeing is the largest US exporter and already sells about a quarter of its commercial aircraft to Chinese customers.
China wants the US to set aside threats of tariffs on Chinese goods and US investment restrictions on Chinese companies. China also wants a relaxation of US export controls that ban American firms from selling certain high-technology products to China.
But getting to a reduction of the US China trade deficit on a sustainable basis would require a massive change in the composition of trade between the two countries. The United States’ two biggest exports to China are cars, aircraft and soybeans.
Agreeing to a deal focused primarily on reducing the trade deficit could also weaken America’s original tariff goal of pressuring China to end policies that it says are aimed at misappropriating US technology.
