FW
Nepal’s readymade garments exports in the first half of the current fiscal increased 11 per cent compared to the corresponding period of the previous fiscal. However, the expiry of the multi fiber agreement in 2005 has hit the industry hard. The agreement provided duty-free access for Nepali garments to the US. Since then, over 85 per cent of garment factories have pulled their shutters.
Nepali readymade garment producers feel if they are given facilities they can be more competitive in the global market. As of now the high cost involved in importing raw materials and exporting finished products is the major reason for Nepali garments being less competitive in the international market.
Incentives to the sector can have a significant impact on the growth of small and medium enterprises, ancillary industries and also generate jobs. A garment processing zone is being developed to promote the export of readymade garments. The aim is to revitalize the garment sector by providing low-cost financing for investment in the latest machines and kick start the economy. The industry has asked for tax incentives and export incentives.
Major export destinations for Nepali garment products are the European Union, India and the US, among others.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has filed an application before the Supreme Court, seeking another year for relocating its office, constructed at Dhaka's Hatirjheel in violation of environmental laws. On October 8 last year, the Supreme Court had given the BGMEA seven more months to demolish its office. A five-member apex court bench, headed by Chief Justice in-charge Abdul Wahhab Miah, passed the order.
The 16-storey building was constructed in the Hatirjheel area in 2006. The headquarters, popularly called BGMEA Bhaban, was built in a prime location in violation of the Wetlands Protection Act. The Rajdhani Unnayan Kartripakkha (Rajuk) has allocated a land in Sector 13 of Uttara in Dhaka for constructing the BGMEA office complex. But BGMEA needs more one year time for relocating its 15-storey building from Hatirjheel area.
The BGMEA has been ordered to demolish the 15-storey building named ‘BGMEA Complex’ which stands on a critical spot in the capital, blocking the connection between two large water bodies Hatirjheel lake and Begunbari canal. If BGMEA would fail to follow through, Rajuk was instructed to take over the work within 90 days of receiving the copy of the verdict. In this case, they would get the cost of the demolition from BGMEA.
The BGMEA building was built about two decades ago, endangering wetlands in Dhaka. In 1998, then Prime Minister Sheikh Hasina laid the foundation stone of the building. The construction began the same year. The building was inaugurated in 2006 by Khaleda Zia as the prime minister.
The BGMEA has created a fund for constructing its new office-building and the construction work is going on.
Bangladesh is looking to extract viscose from raw jute. This semi-synthetic fiber is seen as a substitute for cotton and capable of meeting the growing demand for cotton. Bangladesh has sent raw jute to Finland and Sweden for further feasibility studies for its possible use for viscose production. Viscose yarns are soft, strong, bright and of highly quality. Cellulose, a basic component in green jute plants, is the main element of viscose. About 65 per cent cellulose content in jute plants is the basic ingredient of viscose.
Bangladesh’s textile mills import cotton in huge amounts. A positive outcome would help Bangladesh save huge amounts of foreign exchange annually now spent for cotton imports. The country annually produces just 1.50 lakh bales of cotton against the domestic demand for 55 lakh bales.
Bangladesh is the largest cotton importer and consumer worldwide. More than 90 per cent yarns and fabrics are made from cotton. The country imports more than 60 per cent of its required cotton from India, the single largest source of the raw material for the country. The shorter lead time is very necessary for the garment business. Bangladesh is the only country that is still dependent on raw cotton for making yarns and fabrics.
"While designers are busy offering trendy clothes every season but is that enough? In the millennium it’s the tech edge that will help fashion retailers win over consumers. At a recent conference, Tommy Hilfiger reflected on the importance of technology. In fact they were the first to do a chatbot with Facebook (Messenger)…and believe in Snap:Shop (an app that lets consumers instantly shop items from the moment models hit the runway). In a recent advancement, Hilfiger has a digital showroom that has no garments but allows buyers to view a big screen that they can also view from home."
While designers are busy offering trendy clothes every season but is that enough? In the millennium it’s the tech edge that will help fashion retailers win over consumers. At a recent conference, Tommy Hilfiger reflected on the importance of technology. In fact they were the first to do a chatbot with Facebook (Messenger)…and believe in Snap:Shop (an app that lets consumers instantly shop items from the moment models hit the runway). In a recent advancement, Hilfiger has a digital showroom that has no garments but allows buyers to view a big screen that they can also view from home. From this, they make their apparel, shoe and accessory selections, put them in the different store doors and choose their floor plans, and in a couple of clicks, they have their entire seasons mapped out.
Technology gives the edge
Nancy Johnson, Founder, President & CEO, Optimyze, points out multiple forms of technology are essential to stay competitive in today’s fashion business. Whether it’s through their marketing, or stores, or information they are capturing at their point of sale, all these are allowing companies to create their competitive advantage by using big data. Nesli Danisman, Founder, Angora Group explains new RFID hangers that move from the sales floor to checkout to track what individual customers are buying, allowing stores to sculpt future tailored marketing for each shopper. Anthony Bruce, CEO, Applied Predictive Technologies, refers to how his firm helps retailers and brands test and learn about any new retail action on a small scale, before doing a full rollout. Prior to putting in new fixtures or rolling out new products or changing operating hours, their philosophy is to try it first. That includes more tailored communications with consumers. He explained how data drawn from a test run could prove to be successful.
Johnson says, other applications are also helping to put a new spin on customer experience. Companies are working with augmented reality, like AR mirrors that allow you to walk into a fit room and see different things on your body. For instance, Zara was meeting the tech challenge with its new pop-up store in London. Tabea Soriano Hughes, Managing Partner, Futuremade opines consumers can place online orders, and make returns and exchanges. Associates have big iPads to help with selection. The retail space isn’t for store inventory, its more for larger fitting rooms and interactive mirrors. If you try on one item, the mirror shows other recommendations in suitable sizes and colours. Customers can check out via the Zara app, with their smartphones or with self-checkout. Delivery can be same- or next-day. Similarly, LVMH has bought shape-shifting mannequins that expand into multiple sizes to adjust in a much more customised way.
Making purchase decision
According to Cotton Incorporated Lifestyle Monitor Survey, currently, just over half of all consumers (54 per cent) say they love or enjoy clothes shopping. Seven of 10 purchases are planned, with shoppers buying clothes 19.2 times per year in-store and 8.4 times online. Monitor data shows two of five consumers (43 per cent) would be interested in apparel brands and retailers using virtual reality to enhance their shopping experience either online or in a physical store. This percentage increases with younger consumers.
For most consumers (75 per cent), fit is the top factor when making an apparel purchasing decision, according to Monitor Research. That goes for whether people are slow to change styles (38 per cent) or consider themselves fashionistas (36 per cent). Bruce informed that retailers should be more specific to take advantage of patterns of success. Those that invest in these tailored and targeted responses are the ones that are going to not just survive but thrive.
Pakistan’s textile industry has witnessed dwindling investments over the last decade. Currently around 35 per cent of the textile industry’s production capacity is impaired. Prospective investors are reluctant to make new investment decisions due to high cost of doing business. As a result, the industry lost technological advantage over its competitors.
The sector will need an additional 10.3 million bales of raw cotton, 345 million kg of manmade fiber, 1.983 billion kg of additional yarn and an additional 7.928 billion square meters of processed fiber. Cotton-producing area and cotton production, however, have declined 30 per cent and 38 per cent respectively in Punjab since 2011.
Readymade garments have shown an impressive growth over the years despite the overall poor performance of the textile sector. Exports of readymade garments registered 5.55 per cent year-on-year growth against the overall flat growth of the textile sector.
The industry wants long-term financing facility for indirect exports, Islamic financing and building of infrastructure for garment plants. It has also sought a long-term policy which includes consistent energy prices across the country, removal of the surcharge on the electricity tariff along with extending the duty drawback scheme for five years with drawbacks to be increased every year by one per cent for garments (up to 12 per cent) and made-ups (up to ten per cent) against realisation of export proceeds.
Apparel Textile Sourcing will be held in Miami, May 21 to 23, 2018. It will bring in over 200 exhibiting companies and 2500 visitors from the US, Latin America, and Caribbean. The centerpiece of the event will be The Americas Pavilion, a section devoted to manufacturers from Latin America with an emphasis on the fashions and production benefits of sourcing from Latin America.
The Latin American region is one of the world’s leading producers of apparel and textiles. The pavilion will showcase the products of Mexico, Guatemala, Honduras, Nicaragua, and El Salvador. Mexico is the second largest exporter of blue jeans to the US; it is also the third largest exporter of knits and the fourth exporter in cotton pants. Worldwide, Mexico is the 13th largest exporter of textile products, and in the footwear sector, it ranks among the top 10.
Latin America produces 15 per cent of all apparel purchased in the US. The Americas Pavilion will feature a curated selections of companies gathered to build communication channels between suppliers and buyers. Product categories exhibited on the show floor will include: apparels for men, women, children, active and intimate wear, socks, home textiles, bed and bath, denim, knits, synthetics, linen, and accessories like handbags, hats, wallets, ties, and more.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is unlikely to dent India’s export prospects meaningfully due to the absence of its key market, the US. Instead it will cut tariffs in nations that together make up for just over 13 per cent of the global economy. With the US, it would have represented 40 per cent of world GDP.
CPTPP is the mega Asia-Pacific trade pact signed by 11 nations, including Japan and Singapore. But the deal could see more pressure being put on India to help conclude the 16-nation Regional Comprehensive Economic Partnership (RCEP) agreement at the earliest without being too emphatic about its own demands in the services sector.
The absence of the US is a relief for India’s garment industry. The US was the original proponent of the TPP but decided to withdraw from it fearing it would be the death blow for American manufacturing. The CPTPP is not expected to impact India much as six of the 11 CPTPP countries are already part of the group negotiating the RCEP in which India is also a participant.
CPTPP comprises Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Fears of key competitor Vietnam gaining duty-free access to the US, India’s single-largest market for such products, have abated.
Seed companies have threatened to halt supplies to cotton farmers in India in protest against a plan to cut prices. Seed companies would also stop producing for the next season beginning June 2019. Farmers start planting the crop in June and July. Lower supplies of seeds could delay plantings and hit output. India is the world’s top cotton producer and the second-biggest exporter of the fiber.
India is mulling lowering the price of genetically modified cotton seeds by 7.5 per cent to help farmers whose fields have been ravaged by pests. Cotton seed prices have dropped drastically in the past few years, but fuel, labor, chemical and supply chain costs have risen sharply, squeezing margins of most seed makers. Other than cutting the prices of GM cotton seeds, India is likely to impose another cut to Monsanto’s royalties paid by domestic companies for its GM cotton seeds.
The latest reduction risks another row with the US company, the world’s biggest seed maker, which threatened to leave India in 2016 when its royalties were cut by more than 70 per cent. India approved the first GM cotton seed trait in 2003 and an upgraded variety in 2006, helping to transform the country into the world’s top producer of the fiber.
Australia famously rode to prosperity on the sheep’s back during the 20th century, fine tuning Merino breeds to produce a soft, durable and natural fiber. Demand comes from Europe and has now extended to Asia, and China in particular. But high wool prices are having an impact on clothing makers. Australia provides about 90 per cent of the world’s exported fine wool used in clothing manufacturing.
Prices for very fine wool used for clothing have hit a record high, thanks in large part to ferocious demand from Chinese garment makers. That’s more than three times the price during the early 1990s. Those who can shift their wool are still making hay. Unlike most agricultural commodities, wool can hold its value for many years if properly stored.
Australia’s wool output is set to grow just 1.4 per cent over the next 12 months. Australia’s sheep count is at 70.4 million, representing the fourth lowest level on record. That is well under half the flock in the early 1990s. However, Australia’s modest growth is still expected to outpace global competitors. World-wide wool output is expected to increase 0.5 per cent this year amid unfavorable weather conditions in competitors Argentina and South Africa. New Zealand production is also forecast to be stagnant as farmers cull sheep and lambs to capitalise on high meat prices.
"Bangladesh has been setting examples with factory automation in textile and factories. The classic case is of Mohammadi Fashion Sweaters factory in Dhaka where a few dozen workers supervise 173 German-made machines which knit black sweaters for overseas buyers. Surely, this is a huge transformation compared to a few years ago, when hundreds of employees could be found standing over manual knitting stations for up to 10 hours a day. Mohammadi’s owners began phasing out such work in 2012, and by last year, the knitting process was fully automated."
Bangladesh has been setting examples with factory automation in textile and factories. The classic case is of Mohammadi Fashion Sweaters factory in Dhaka where a few dozen workers supervise 173 German-made machines which knit black sweaters for overseas buyers. Surely, this is a huge transformation compared to a few years ago, when hundreds of employees could be found standing over manual knitting stations for up to 10 hours a day. Mohammadi’s owners began phasing out such work in 2012, and by last year, the knitting process was fully automated. Rubana Huq, MD, Mohammadi Group, says it doesn’t make sense to slowdown and not automate. The company makes sweaters for H&M, Zara and other Western brands. The factories replaced about 500 workers with machines and may buy more.
A 2016 International Labor Organization study predicted that some Asian nations could lose more than 80 per cent of their garment, textile and apparel manufacturing jobs as automation spreads. While plenty of labour is available in countries like Bangladesh, Cambodia and China, increasing labour costs have been pushing companies to move towards automation. At the same time, technology is becoming so advanced that machines can increasingly handle difficult tasks such as manipulating pliable fabrics, stitching pockets and attaching belt loops to pants.
Erik Brynjolfsson, Director, MIT Initiative on Digital Economy, feels developing countries are in the bull’s eye of this automation revolution as robots master repetitive tasks once dominated by poor nations. Most jobs of the future require significant skills training—and that is where more-developed nations thrive.
Analysts estimate Bangladesh needs roughly two million new jobs a year to keep pace with its expanding labour force, with garments offering many of the best opportunities. Yet the number of new jobs added by the garment and textile trades has fallen to 60,000 a year, from over 300,000 annually between 2003 and 2010, according to World Bank data. Bangladesh’s apparel production has been fueling growth with help of automation. From 2013 to mid-2016, annual Bangladeshi garment exports increased by 19.5 per cent and the garment sector jobs increased by 4.5 per cent over the same period. On the demand-supply imbalance, Zahid Hussain, the World Bank’s lead Bangladesh economist, stated that if companies cannot absorb young people in productive activities, they will do something. And the something they will do may not be socially pleasant. It’s a social time bomb.
Advantages of technology
Automation has many advantages, especially in richer countries. By boosting efficiency, new technologies help keep consumer prices for jeans and other fast fashion products low. Automation could also help bring some apparel production back to places with more-expensive labour, including the US. In Bangladesh, Nazma Akter, a union leader, says savings from automation has emboldened factory owners to resist worker demands. In a recent labour dispute, factory owners threw up their hands and said if workers wouldn’t agree to management’s plans, they would simply automate jobs. Factories that earlier had 300 workers now have 100 workers only, says Akter, President, Sommilito Garments Sramik Federation. In such a situation, some of the biggest clothing producers feel they have little choice but to automate as cost pressures intensify.
Consumers, accustomed to a widening array of inexpensive fashions, have resisted price increases that could help pay for them. The emergence of new competitors, including East African nations, has added further pressure. Mostafiz Uddin, Chief Executive, Denim Expert, sums up well, if companies don’t change themselves, they will lose out on the entire business.
