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Chinese investments in Vietnam have been increasing continuously over the last decade. In Vietnam, China ranks third in the number of projects and fourth in total investment value. China has become the second largest FDI contributor to Vietnam, after Singapore.
The FDI flowing in from China now covers textiles, garments, services, metal processing, manufacturing, and processing industries. They amount to 50 per cent of the total capital investment.
Chinese industrialists and investors have used a diversified strategy over the years. They began by entering into joint ventures and later graduated to 100 per cent fully foreign owned businesses. In the previous year alone they set up 284 fresh projects totaling 1.41 billion dollars.
There are mixed reactions in Vietnam about these investments. Some cite risks like industrial pollution, use of outdated technology by the Chinese and migration of Chinese labor, all of which can disturb Vietnam’s economic and social environment. Most Chinese-invested projects in Vietnam are concentrated in areas which have cheap labor but face a high risk of pollution such as garment and textiles, hydropower, steel production, chemicals and cement.
However, there are others who welcome Chinese capital on the grounds that Vietnam needs investments especially in high technologies, startup development, and key industries.
Chinese entrepreneurs plan to expand the garment industry in the industrial zones in Yangon. Currently, Myanmar’s textile industry is rapidly growing as entrepreneurs from Japan, China, South Korea and Taiwan have opened several joint-venture garment factories in the country and the number of garment factories in the country has crossed 400. In 2016, the garment sector created 350,000 jobs, with female workers representing 90 per cent of the total workforce.
The garment industry has long been practicing Cut-Make-Pack (CMP) system for over 20 years. But it is not in a position to shift from the CMP system to the FOB system due to lack of infrastructure, transparency in banking system, information and investment power. In 2017-2018 FY, export earnings from CMP garment sector hit $2.58 billion. It is one of the top export items with Japan and European countries being the top importers.
China’s Fosun has acquired a majority stake in Austria’s Wolford. Fosun invests in the global fashion and consumer goods industry. Wolford, based in Austria, makes tights, bodysuits, and innerwear. The capital increase guaranteed by Fosun will sustainably strengthen the equity base of Wolford, enabling the brand to expand its online business and redesign its market presence.
As China continues to drive the global luxury market, Wolford can leverage Fosun’s resources to grow and strengthen its high luxury positioning while maintaining its exceptional high quality of production in Europe.
Wolford has 16 subsidiaries and markets its products in approximately 60 countries through over 270 own and partner-operated retail stores, 3,000 trading partners, and online. It reported a loss before interest and tax of 7.4 million dollars for the six months through October, an improvement of 21 per cent on the previous year’s first half.
Chinese firms are buying famous brands in the hope of upgrading their image. Buying famous foreign brands is seen as helping them build up their own brands, and proper management and deployment of sales channels may help them gain more popularity with domestic consumers. Chinese e-commerce players are also moving quickly into western markets.
Indian entrepreneurs have begun to look at the domestic market. A few manufacturers have come up with new brands and marketing campaigns to woo local buyers. They are confident of creating over a dozen clothing brands that can rake in Rs 500 crores in revenue in the domestic market.
This is true especially in Tamil Nadu. Traditionally evolved as an export-oriented ecosystem, manufacturers of Tirupur or Coimbatore have had to decode currency undulations, rising labor costs and make do with a lighter incentive basket even as states such as Gujarat and Telengana gave periodic boosts to manufacturers. On top of that remains the heightened competition from Bangladesh, Vietnam and Cambodia, which enjoy duty-free access into the European market.
Exporters also want to have a share of the widening e-commerce market, as a hedge against the vagaries of the exports market that they have been faced with for the past few decades. The online fashion market in India is projected to grow nearly 3.5 times from the current size and entrepreneurs do not want to miss the wave.
Global apparel trade has been seeing sustained sluggish growth. In the absence of free trade agreements, or because of similar arrangements enjoyed by competing nations, Indian entrepreneurs have become conscious of the need to get deeper into the domestic market.
When global brands source from China or Bangladesh, some ethical issues are involved. Brands save money by making clothes in substandard conditions overseas instead of paying higher wages at home. Children make garments or stitch sequins. Sequins have been the focus of a number of investigations into child labor practices. While there are machines that can perform the delicate task of sewing sequins onto fabric, they are costly and, if the finished product is to be sold cheaply, rarely purchased by overseas manufacturers. Instead, the task is often given to women or to children, whose tiny fingers apparently mean they work faster than adults.
Fashion behemoths like H&M and Zara share the same manufacturing bases, Sri Lanka, Bangladesh, Ethiopia or Cambodia. But a lot of clothing companies won't include the place of manufacture on the collar tag. Multiple garments labeled as made in New Zealand, for instance, are manufactured in China or Bangladesh.
Global fast fashion giants have hollowed out artisanal manufacturing worldwide. Global luxury brands have retained their value by dictating where their products are made. Such practices are now being considered unethical and their products are no longer considered luxury or even desirable.
BIGTEX will be held in Bangladesh from May 10 to 12, 2018. This is a garment and textile machinery expo. Manufacturers, dealers, suppliers and importers will display garment and textile machinery, equipment, technology and accessories.
Among participating countries are: Bangladesh, China, England, France, Germany, Hong Kong, India, Indonesia, Japan, Korea, Sri Lanka and Turkey.The fair will encourage local manufacturers and producers to export their goods while foreign buyers will also visit to check new trends and quality garment and textile machineries, equipment, technology and accessories.
Bangladesh is the second largest apparel exporter in the world, top denim exporter to the European Union and the second largest knitwear exporter in the world. To continue this growth the industry needs proper machinery, raw materials, yarn, fabrics, dyes and chemicals.
The fair will be held in Chittagong, the major seaport of Bangladesh. Chittagong handles almost the entire import-export trade of the country. Chittagong is the second apparel hub after Dhaka.
The event will be held along with two other shows: Bangladesh International Fabrics and Yarn Expo and Bangladesh International Print, Pack and Signage Expo. The organizers are Well Group, Bangladesh Indenting Agents Association, Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association, and Bangladesh Knitwear Manufacturers and Exporters Association.
Clothing retailers and brands are flocking to Bangladesh to source the best value-added denim. New technologies in washing and polishing as well as increasing use of finer fabrics and designs are allowing Bangladesh to add more value to denim products.
The export of value-added denim jeans is increasing from Bangladesh. Bangladesh exports denim goods worth more than $3 billion a year and has already overtaken China to become the top denim supplier to the EU. Globally, use of denim products is on the rise because of the change in fashion, especially in the western world. Denim trousers and shirts are worn at both formal and casual events.
Previously, Bangladesh used to produce denim trousers for $5 or $7 a piece, but now the price range has gone up to $10 or $11. In 2014, the size of the global denim market stood at $56.20 billion and it is projected to reach $64.10 billion by 2020. Bangladesh's share is forecasted to be seven billion dollars by 2021. The production capacity of the 31 denim mills in Bangladesh is more than 40 million yards a month against a demand for nearly 70 million yards. The rest of the demand is met through imports from countries like China, India, Pakistan, and Turkey.
"While e-commerce has been growing its expanse in India, yet it is sometimes quite challenging to live upto consumers’ expectations based on search keywords. To circumvent this problem, many e-commerce giants are slowly incorporating visual search to aid customers. Buyers have to submit the photo of the item they are searching, and the get almost precise results. While the technology is still under development, many customers who have used the feature are quite satisfied with it. For instance, Asos launched the visual search feature on their website. The visible search feature assists the customer in buying the exact thing without any issues."
While e-commerce has been growing its expanse in India, yet it is sometimes quite challenging to live upto consumers’ expectations based on search keywords. To circumvent this problem, many e-commerce giants are slowly incorporating visual search to aid customers. Buyers have to submit the photo of the item they are searching, and the get almost precise results. While the technology is still under development, many customers who have used the feature are quite satisfied with it. For instance, Asos launched the visual search feature on their website. The visible search feature assists the customer in buying the exact thing without any issues. The screenshot from an Instagram page, the look of passerby while crossing the road, can all be uploaded to the website and the search engine will return the result according to it.
Associated benefits
The customers will be able to search for a specific product more easily. The customers can use the camera
application of their phone to click the photo of the object they want to buy. Later, they can upload the picture on the retail website and get results accordingly. With the help of this technology, the e-commerce companies will be able to provide more customer-driven search results. Sometimes for individualised services, the visual tool might ask the customers to fill a questioner and upload their photos. According to data provided by the user, the e-commerce site can create a personalised fashion suggestion. Pinterest recently launched a tool, ‘Shop the Look’, which analyses the pinned products by the customers, wishes to buy and provides a search result according to it. The result might include products available with the major retailers.
Visual tool to the aid
E-commerce players like Mode.ai and Asos are the early entrants in visual search. Even Amazon has developed an optical search model where customers can take the photos of a specific product from the default camera application of their smartphone and use the image to search the catalog of the website. Another significant player in developing the visual search engine is Google. It is attempting to create products like Google Lens and Google Badges, which works to combine the optical search technology. The earlier product will be able to recognize objects and forward information associated with the object to the users. The following product will try to leverage the visual cues provided by the search engine to offer more user-centric results.
With the progress in technology, fashion is becoming more accessible to customers. Once visual search technology takes shape, the buyer will not have to depend on keywords to search for specific products. With the help of visual cues, the customer can quickly get hold of their desired product without any hassle. This futuristic technology can help the lower end vendors who create the merchandise at a cheaper rate for the customer. The high-end fashion houses can use the same technology for reaching a new customer.
During the first quarter of 2018, US apparel imports were up in both value and volume terms by 1.63 per cent and 1.71 per cent respectively. However, unit prices neither decreased nor increased, which helped the US keep the balance between imported apparels and the dollars spent on them.
China lost share by 2.34 per cent in the quarter. China is still the top supplier of apparels and textiles to the US. Vietnam too lost share in the US apparel market, registering a 14.86 per cent share in overall US apparel imports in the latest quarter as against a 15.26 per cent share in the previous year.
India plunged significantly both in value (0.79 per cent) and volume (2.53 per cent) terms. Indonesia’s exports dropped 5.78 per cent and 8.26 per cent in value and volume respectively. Other top apparel suppliers were: Cambodia, South Korea, Mexico, Canada, Bangladesh and Pakistan.
During January to April 2017 apparel exports from China, Vietnam and Bangladesh constituted around 59 per cent of total apparel imports by the US. China has been slashing unit prices to stay competitive in the US and thereby convincing buyers to purchase more quantities.
A Coimbatore court has said exotic forex derivatives sold by banks to garment exporters during the global financial crisis in 2008 were illegal. The Tirupur Forex Derivatives Consumer Forum, which was formed by 25 exporters from Tirupur, who lost more than Rs 400 crores in the issue, moved court in Coimbatore saying that as many as 19 banks were involved in the fraud by selling the product that was not authorised by the Reserve Bank of India.
The court observed that the products sold by the banks were against the country’s laws and public policy, and also against RBI rules and guidelines. Garment exporters incurred losses due to fluctuations in currency rates while getting payments from overseas buyers. Banks were involved in the fraud, which was responsible for at least Rs 38,750 crores moving out of the country.
Exporters are now upping the ante seeking a CBI probe into the issue. In 2007-08, the rupee appreciated sharply to 39 to the dollar from 46 in just 15 days. At Rs 25,000 crores, Tirupur accounted for 45 per cent of total exports of readymade garments from the country last year. Exports fell short of the targeted Rs 30,000 crores with Brexit and the subsequent fall in the pound value upsetting calculations of exporters.
