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"China is the number one textile and clothing exporter to the world, producing more than 43.1per cent of global demand. As per the 13th five-year plan of Chinese Government for the year 2016 to 2020 period, China strategically is moving towards more value adding tech intensive products. The plan is to maintain traditional market share and to grow more on the high value adding product range. But real market data shows that the country is losing its export market drastically from 2015 in almost all product sectors in the textiles and clothing arena."
China is the number one textile and clothing exporter to the world, producing more than 43.1per cent of global demand. As per the 13th five-year plan of Chinese Government for the year 2016 to 2020 period, China strategically is moving towards more value adding tech intensive products. The plan is to maintain traditional market share and to grow more on the high value adding product range. But real market data shows that the country is losing its export market drastically from 2015 in almost all product sectors in the textiles and clothing arena.
Textile & clothing industry is too much stretched in China and there are eight major categories such as garment, cotton fabrics, chemical fabrics, wool fabrics, silk fabrics, knitted fabrics, textile machinery and bast fibre. Production capabilities of all categories T&C is unparalleled in the world. According to China Textile Industry Development Report (2014/2015), textile fibre production in China exceeded 50 million tonne, accounting for 54.36 per cent of world share. As much as 64.2 per cent of the world’s chemical fibres, 64.1 per cent of synthetic fibres and 26.2 per cent of cotton were produced in China. On the other hand, apparel production in China reached 29.9 billion units in 2014, which is 10.4 per cent higher from 2013. This massive production capacity of China is showing a clear view that very likely China will remain the top apparel-sourcing goal for world’s buyers.
Hi-tech gaining a stronghold
Total value of China’s exports of apparel and clothing accessories in the world was $147.79 billion in 2016, which was $162.35 billion in 2015 and $173.44 billion in 2014 and $165.04 billion in 2013, according to ITC (International Trace Corporation) data from World Trade Organization (WTO). This data clearly shows that Chinese apparel export was having sharp growth till 2014 and afterwards it is having sharp decline. In 2014, Chinese global apparel export was the highest ever and afterwards in two years, it has lost 14.79 per cent of its exports.
In March 2016, China’s Ministry of Industry and Information Technology (MIIT) released its development plan, the 13th Five-Year Plan for period 2016-2020, for the apparel and textile industry, where China itself is expecting a slower growth for the industry (growth rate was 8.5per cent in 2011-2015 whereas the plan set a 6-7per cent goal for next five-year). Similarly, fibre end-use ratio and annual labour productivity growth rate were set lower than previous plan. Making the T&C industry sustainable, the plan set a conservative target for energy and water consumption (per unit of industrial value added) and emission of total pollutants. At the same time, China set a target to build a more tech-intensive textile & clothing industry.
Investment scenario
Textile industry of China is shifting gears for several reasons such as higher costs of production and scarcity of a skilled labour force. Exports are on a decline but the sector still maintains its pole position in the world market. On the other hand, textile production in 2017 will continue to update with depreciation and the rise of cotton prices. However, whatever the export growth or decline is, China as a vibrant manufacturing country will surely maintain core value adding sustainable business portions in textile and apparel value chain. With great rise in domestic consumption, Chinese companies are becoming global giant day by day.
Cotton has traditionally been an important cash crop in Malawi. The crop is grown on about 30,000 hectares and supports about 1,20,000 small holder farmers, three ginning companies and three main input providers.
Because of a number of cotton development initiatives, the average yield has increased. The crop is often cultivated with maize and other drought-tolerant small grains.
Cotton production has declined largely because of mixing of different grades, limited grading by farmers and polypropylene contamination, declining productivity, low Ginning – Out – Turn etc. Recent years have also witnessed a decline in area under cotton cultivation due to a shift from cotton production to other crops because of reduced international prices and the inefficiencies in the sector.
Agriculture accounts for 33 per cent of GDP while manufacturing accounts for only 12 per cent. Nearly 22 per cent of the GDP comes from the distribution sector and is mainly accounted for by trading.
Under utilisation of ginning capacity is a matter of concern. The textile industry too has been declining. Until the 1990s there was an integrated cotton textile and garment chain in Malawi with inter-sector linkages. Since then the chain has in effect been broken.
Presently, the garment industry is small and is generally focused on low value garments suitable for the mass market and discount stores.
During the first 11 months of the current fiscal year Pakistan’s textile and clothing exports fell 1.98 per cent year-on-year to $11.234 billion mainly due to lower proceeds from raw material and low value-added products, such as cotton yarn and fabrics.
The decline in export proceeds was also evident in rupee terms during the July-May period of 2016-17.On a month-on-month basis, the export proceeds fell 12.24pc in May negating the government’s claim of reviving the growth in the sector despite offering huge subsidies.Overall export proceeds in July-May were down 3.13pc to $18.540bn.
Product-wise details show exports of ready-made garments rose 4.15pc while those of knitwear dropped 1.85pc in July-May. In primary commodities, exports of cotton yarn witnessed a year-on-year decline of 3.64pc while those of cotton cloth and yarn dropped 5.81pc and 27.32pc, respectively.
Exports of raw cotton also recorded a year-on-year decline of 47.14pc and made-up articles grew 52.85pc. Proceeds from textile exports declined 33pc while the preferential access to the European Union under the GSP+ scheme hasn’t boosted proceeds due to a slump in demand.
From Jan 15, the government has not only increased the rebate to 7pc for readymade garments, but also allowed cash support of 4pc on yarn and grey cloth under the Rs180bn package announced by the prime minister. Also an amount of Rs12.5bn was the annual allocation for drawbacks on export of non-textile value added sectors.
Spinning and ginning sector have been included in the long term financing facility. The export finance rate is currently at 3pc, which is the lowest in a decade.The duty free import of textile machinery was continued for fiscal year 2015-16. The sales tax zero-rating regime for the five export sector was continued in the fiscal year 2017-18.
According to recent statements from Denis Manturov, Russia’s Minister of Industry and Trade Russian government is considering creating the ideal conditions for attracting foreign investment in its laundry and cleaning industry in the coming years.
The current situation in the Russian laundry and cleaning industry remains complex, as the majority of local players experience a shortage of funds needed for their further development even though the ongoing recovery of the Russian economy from the financial crisis and its consequences.
The reason is because of the inaccessibility of cheap Western loans and poor lending conditions in Russia. As per the latest predictions of analysts of the Russian Ministry of Industry and Trade, the industry has good conditions for further growth, due to the ever-recovering demand for laundry and cleaning services in Russia.
In the case of foreign investment, it is planned that particular attention will be paid to attracting investors from China. The plan is the majority of these laundries will be established in large cities. In the meantime, the authorities of Moscow and St. Petersburg have already promised investors benefits for the implementation of the project, in particular tax and customs remissions and exemptions.
According to Minister Manturov, the development of the laundry and cleaning industries has never been among the priorities for the Russian government. On the other hand, there is a possibility that such a situation will change in the near future, as the government is considering providing support to both foreign and domestic investors, which plan their development in this field.
BhimYudhistira an economist, of BhimYudhistira Institute for Economic Economics and Finance (INDEF) has asked the Indonesian government to be more firm in opening imported faucets mainly from China. Bhima has also helped changing the orientation of Indonesia's cooperation with China which has tended to be lame. He says that the government's main problem with Indonesia's trade with China is supply chain imbalance.
According to Bhima, most of Indonesia's export products to China are raw products such as coal, CPO, and rubber. For the moment, China then exports finished materials with added value to Indonesia. The government is asked to provide incentives to local producers in order to compete with Chinese products. Not vice versa, where the incentive for import is actually multiplied.
Indonesia's trade balance trends continue to show a surplus until May 2017, but the numbers continue to be thinning. The Central Bureau of Statistics (BPS) recorded a trade surplus value in May 2017 of 470 million US dollars, down from the previous month's surplus of 1.33 billion US dollars. While the value of Indonesian imports in the same month was recorded at 13.82 billion US dollars, up 15.67 percent compared to April 2017.
BPS Deputy for Social Statistics Sairi Hasbullah says that the realization of Indonesia's imports since the beginning of 2017 to date was recorded at 52.32 billion US dollars, up 11.39 percent from last year's realization of 46.97 billion US dollars. Imports of consumer goods rose 11.78 percent, from 5.05 billion dollars to 5.64 billion dollars.
Meanwhile, imports of raw materials / auxiliary materials during January-May 2017 was recorded at 47.24 billion US dollars, up 17.63 percent from 40.16 billion US dollars last year. Meanwhile, capital goods imports stood at 9.48 billion dollars, up 9.13 percent from 8.69 billion dollars last year.
Japan occupies the second position as the country of origin of the largest imports with a value of 5.82 billion US dollars or 11.12 percent of all Indonesian imports. Followed by Thailand with import value 3.77 billion US dollars or 7.21 percent.
Rapid growth in urbanisation and increasing requirement of industries are the major factors driving the global yarn market growth. The shift in consumer perception of affordable and comfortable clothing increases the demand for high-value fabrics such as viscose, silk, and hemp. Blended varieties of fibres are also growing exponentially due to significant features of artificial and natural yarn thus opening up new markets and growth opportunities in the coming years.
Instability in production of plant and animal source yarn and stringent regulation on trade of textile yarn products are restraining factors in the international textile yarn market. The international textile yarn market classification is based on sources such as chemical, animal, plant or others. Depending on use, the market is split up into home textile, apparel and industrial. Based on artificial subtypes, the market is separated into categories such as viscose, polyester, acrylic, and nylon. The type segment is bifurcated into artificial and natural type. Further down the line, the natural subtype segment is sub-divided into flax, wool, ramie, cotton, hemp, jute, and silk. Diversification of the global market can be categorised into regions such as Asia Pacific, North America, Europe and the rest of the world.
Asia-Pacific is the leading region in the global textile yarn market, followed by North America. Polyester and cotton are widely used textile yarn products in the region. Changing consumption pattern, increasing population, disposable incomes, the increasing demand for clothing along with home furnishing products in Asia-Pacific region are major growth factors.
The North American market is projected to grow at a quick pace following increasing investment from the multinational manufacturers in the US and Canada thus spiralling up market growth. Markets in the Latin America and the Middle East are expanding following the developing apparel industry and high levels of product development.
Major market players in the international textile yarn market are Parkdale Mills Incorporated, the Hengli Group, Kairuide Holding., Vardhman Textiles and Birleþik Koyunlulular Mensucat. The other influencing market players in the global market include Weiqiao Textile Company, E SAN. A.Þ., Low & Bonar, Raymond, Huvis Corporation, and Grasim Industries.
Collection Première Moscow has announced the start of a global cooperation with German publishing house “Burda” which is celebrating its 30-year presence on the Russian market in 2017. First stage of the cooperation on August 31st, will see the final of the annual “Burda Fashion Start” for young designers being held on the CPM Catwalk at the Expo Centre venue.
The “Burda Fashion Start” project is designed as a reality show with 10 episodes. The competition final is a gala fashion show where the winners and prize-winners are named. The main prize not only includes extensive PR support for the young designers in the print media and online editions of the Burda publishing house but also features a trip to Offenburg to the Burda Fashion Factory where Burda’s clothing styles and designs are produced.
Starting in June 2017, Burda Fashion Start” registration will run for one month. There will be 20 participants. Furthermore, a new jury, partner and expert committee line-up has been announced. The main prize has already been publicized, the manufacture and online sale of a complete collection by private shopping club Kupi VIP as well as the opportunity to take part in CPM in February 2018.
First of all as part of the global cooperation programme between CPM and the Burda publishing house readers and subscribers of Burda magazines Lisa, Dobryesovety, Otdokhni and Moirebenok as well as readers of the online projects Burdastyle and Verena will have access to the latest events on the most important business platforms in the fashion sector in Eastern Europe.
The next CPM – Collection Première Moscow will be held at the Moscow’s Expo centre exhibition centre from 30 August to 2 September 2017. National and international manufacturers will showcase their collections for the 2018 Spring/Summer season.
Vardhaman Textiles has cut its earnings per share estimate. There are two reasons for this. One is that it expects international cotton prices to fall up to eight per cent. Second is the uncertainty with regards to GST.
Since the area under cultivation next year is expected to be much higher, and the overall crop seems to be better compared to this year, there is an expectation of higher inventory and so a drop in prices. The company feels that going by all the input credits available on the services and other things, there may not be any adverse impact on the cotton yarn side.
Vardhaman makes almost all types of yarn, barring a few synthetic yarns like 100 per cent polyester. Otherwise it is a pioneer in cotton, cotton blended, cellulosic. Vardhaman has 1.1 million spindles and it makes 6,00,000 tons of yarn a day. Of the total capacity one-third goes for captive consumption. Another one-third goes for the Indian market. And one-third goes for exports. The company uses innovative fiber blends and it has special products to cater to customers’ needs. Today 50 per cent of its production is of value added yarns for India.
For the third quarter of financial year 2017 Vardhaman Textiles’ consolidated revenue for the quarter saw a 0.3 per cent year on year decline.
Indian fabrics and apparel major Raymond will export garments to Europe and the US from its Rs. 100 crore plant in Ethiopia. The company has set a target of an annual revenue of about Rs. 250 crores within a year from the plant by exporting mainly to the two developed markets.
The 27,000 square meter plant has a capacity to produce 1.4 million suits per annum. It will only produce suits and exports will start from early next month. The facility currently makes 500 suits a day and the company plans to increase it to 4,000 per day by next year.
Ethiopia has duty free access to Europe and America. Ethiopia has a low labor cost, low land cost, subsidised power and availability of readymade industrial sheds.
The company would create employment for 7,000 people towards the end of its final phase. It currently employs 500 locals. The green field suit plant will be operated by Silver Spark Apparel Ethiopia, a wholly owned subsidiary of Raymond. Raymond feels the plant would be significantly cost competitive and would lure global buyers to source the suits from Ethiopia.
Raymond is also looking to expand its retail presence to about 1,500 stores by 2020 The company will open nearly 150 to 200 stores this year. Raymond has more than 1,000 retail stores that are franchise based.
Textile Minister Smriti Irani unveiled the world’s largest cushion representing ‘Fabrics & Embroideries of India’ in New Delhi. This textile masterpiece called Cushion Kari was unveiled at the Heimtextil India and Ambiente India (June 20-22) being held at Pragati Maidan, New Delhi. Over 180 companies from six countries including top home fashion players. The three-day joint fairs organised by Messe Frankfurt Trade Fairs India have brought together companies from India, Bangladesh, China, Korea, Nepal, and Thailand.
Addressing the industry at the inauguration, Minister Smriti Irani says that India’s home textile business this year has contributed 12 per cent to the country’s overall shipments globally. The initiative, organised by Messe Frankfurt India, has witnessed a 30 per cent increase in exhibitors this year, which shows the capacity of Indian businesses to come up with new ventures as well as the appetite of the country’s consumers or buyers.
Renowned retail buyers and purchase managers from top hospitality industry chains came to visit the fair. Hotel Purchase Managers’ Forum (HPMF) was associated with the event. Nitin Nagrale, Founder and General Secretary stated, the company is continuously seeing new names coming up in the market. This platform is giving a wonderful opportunity for the buyers and sellers to meet.
India has taken long strides in home textiles space worldwide with the country emerging as the second largest supplier of home textile products only after China. Shift in the consumer’s lifestyle, influencing spends and retail growth is also impacting domestic consumption of home fashion and furnishing products. The co-located fairs which host more than 180 exhibitors target the entire chain of home fashion through its Dining, Living, Giving, and Furnishing segments.
