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Vietnam’s textile and garment companies are experiencing tough days with falling turnovers. Some have had to scale down production, while others are facing closure. They have to try to take any job they can to survive. Foreign partners try to force prices down. If the companies don’t accept lower prices, they lose orders. If they do, they incur losses. So companies have to accept a price decrease of 10 to 15 per cent and sometimes 20 per cent for some orders.
Vietnam now has to compete fiercely with Bangladesh and Cambodia. Orders are leaving Vietnam for countries which give support to their enterprises and can enjoy preferential tariffs when exporting products to large markets. Meanwhile, Vietnamese enterprises are burdened with social insurance, healthcare and unemployment insurance premiums. While the profit is modest, just four to six per cent per annum, the cost has increased by tens of per cent.
Vietnam recorded a six per cent export increase in the first half of this year. There was a growth in export value to major markets. Exports to the US rose by 5.9 per cent, to Japan increased by 2.9 per cent, and to South Korea increased by 15.58 per cent.
Knitwear products are not going to be benefitted by the tax slabs proposed under Goods and Services Tax (GST) as the present rate of taxation on textile products is much lower.
However, the Tirupur knitwear cluster as a whole can rejoice when the GST bill finally gets implemented since it would ease taxation procedures through synchronisation of excise duty, state Value Added Tax and service tax uniformly across the country. Said S Dhananjayan, a senior member of Institute of Chartered Accountants of India (ICAI) that rates of taxation for certain products like textiles are only going to scale up under the GST system as present accumulated tax on textile products is in the range of seven to eight percent whereas GST has a cap of 18 per cent.
Pointed out R M Senthil Kumar, a former chairman of ICAI (Tirupur chapter), the transparency in movement of goods would improve as tax payments at various stages could be monitored online under GST which, in turn, reduce the black marketing.
Meanwhile, G R Senthivel, secretary of Tirupur Exporters and Manufacturers Association, feels tax slabs under GST should be brought down from the proposed 18 per cent.
Italian warp knitting seamless (WKS) specialist Cifra reported strong growth in manufacturing orders for some of the world’s leading sportswear brands. The Milan headquartered company says its sportswear business is up around 20 per cent this year alone and is growing rapidly.
Currently Cifra produces between 10,000 and 15,000 pieces of sportswear and athleisure per week, a massive jump from a standing start just four years ago. Previously the company was totally focused on the fashion sector with seamless warp knitted fancy hosiery being its specialisation. But when the hosiery market collapsed it decided to make the strategic move into sportswear.
Now, sportswear accounts for 70-80 per cent of Cifra’s output and it lists Adidas, Lululemon Athletica, Falke, The North Face, Diadora, Biotex, Decathon and Zerofit amongst the companies it manufactures for.
Meanwhile, Cifra owner and CEO Cesare Citterio describes the company’s move into sportswear with warp knitting seamless for its rapid rise in just a few years.
Chemically protective suits made of fabrics coated in self-healing, thin films can prevent farmers from exposure to pesticides, soldiers from chemical attacks and factory workers from accidental release of toxic materials.
Fashion designers use natural fibers made of proteins like wool or silk that are expensive and are not self-healing. The material to be coated is dipped in a series of liquids to create layers of material to form a self-healing, polyelectrolyte layer-by-layer coating. This coating is deposited under ambient conditions in safe solvents, such as water, at low cost using simple equipment amenable to scale-up. Polyelectrolyte coatings are made up of positively and negatively charged polymers.
Many toxic substances can be absorbed through the skin. Organophosphates, for example, which are used as herbicides and insecticides are absorbed through the skin and can be lethal. Some of these chemicals have also been used as nerve agents. A garment coated with a self-healing film containing an organophosphate hydrolase, an enzyme that breaks down the toxic material, could limit exposure.
The squid ring teeth polymer is self-healing in the presence of water, so laundering would repair micro and macro defects in the coating, making the garment rewearable and reusable.
Chinese sports brands have thrown themselves into the Brazil Olympic Games, sponsoring the event itself and supplying apparel for athletes from more than ten countries. For example, 361 Degrees is an official games sponsor and is providing official clothing to the thousands of volunteers and technicians who will ensure the event runs smoothly. It has also more than doubled the number of places its goods are sold in Brazil, to 900.
The brands that medal-winning athletes wear always become popular after the games. That’s what Peak Sport Products, which is sponsoring apparel and footwear for athletes from various countries, believes. Chinese brands may use the games to gain international recognition, but whether the returns are worth the investment is open to question. This aggressive expansion is a risky strategy. Sportswear sales don’t really rise after a brand attaches itself to these types of global events. And Brazil may not be the place to have hopes pinned on because the economy there is weak and local brands are also very competitive.
Apart from this, Chinese brands have a lot of fine tuning to do. Many don’t have defined strategies. One brand, for example, has dithered terribly over the years, with eight different taglines in ten years.
In a significant development, GOTS has announced Lori Wyman as the new Global Organic Textile Standard (GOTS) representative for North America and Elif Yarasik is the new regional representative in Turkey.
Prior to joining GOTS, Wyman was Senior Auditor with Control Union Certifications and has served as an inspector to textile programs for over ten years. She had previously worked in the membership and marketing departments of the Organic Trade Association (OTA). She is excited to draw upon past partnerships with brands, retailers, regulatory agencies, NGOs, organic certification agencies, and educational textile programs to strengthen the visibility of the GOTS program. Wyman will be based in Massachusetts.
Meanwhile, Turkey is the country with the second most GOTS certified facilities worldwide (469 in 2015) which make it a very important sourcing market. Previously, Yarasik has worked in textile both in manufacturing and sourcing industry since 1993, among others for Turkey offices of Nike, Hanes brands, Next and Puma and for big vertical garment suppliers of Turkey. She has an extensive experience on understanding manufacturing and sourcing side of business in addition to technical side. Her main expertise is the implementation and managing the ecological, environmental, social compliance requirements of textile suppliers as per brand specific requirements which includes global legislations.
For the first quarter of financial year 2017 Arvind’s revenue has increased by 17.76 per cent as compared to same period in the previous financial year. EBITDA too has risen by 16.35 per cent on a yearly basis. EBITDA margin contracted by 12 basis points to 11.5 per cent in the first quarter of financial year 2017 as compared to the same period in the previous financial year. Net profit has gone up by 87.86 per cent as compared to the same period in the previous fiscal. Arvind’s net profit margins expanded 132 basis points to 5.37 per cent on a yearly basis.
On segmental revenue front, Arvind earned 67.15 per cent from textiles, 26.05 per cent from branded apparels, 0.08 per cent from the internet and the remaining 6.72 per cent from others.
Arvind is a vertically integrated textile company. The company manufactures cotton shirtings, denim, knits and bottom weight fabrics, and jeans and shirting garments. Its portfolio includes international brands like Arrow, US Polo, Izod, Elle and Cherokee. Arvind also operates a chain of apparel value retail stores, called Mega Mart. It also operates specialty retail stores under licensing arrangements with international brands Debenhams and Next.
Branded apparels may get costlier due to the Goods and Services Tax (GST), expected by April 2017. The tax incidence on branded apparels and other finished textile products could rise at least three to four per cent, assuming textiles come under the merit list of GST.
Branded garments may be put under the luxury tax slab, which could be higher than 18 per cent. As a value chain, many inter-state transactions happen in textiles. Hence, GST is likely to bring in ease of doing business across the whole value chain.
The immediate incidence of three or four per cent, assuming a 12 per cent rate and an almost 10 per cent incidence in case of 18 per cent, will result in inflationary trends. However, a merit rate of 12 per cent for fabrics and 16 to 17 per cent for garments tends to be revenue neutral. In such a case, it may not have any inflationary pressure on garments.
The tax neutral rate in textiles comes to around eight or nine per cent. Once GST comes into play, the industry is expecting a lower rate of 12 per cent, out of the two slabs of 12 and 18 per cent. But even at a lower rate, the sector will end up paying higher duties, thereby increasing prices. Hence, from the textiles perspective, it will be inflationary.
Scientists in Sweden have created a low-cost, flexible and light-weight textile material that may be used in light-emitting clothing, signs and architecture. Their work shows that ultra-flexible light emission on large areas can be realised on very lightweight textile electrodes. Traditionally, this was hard to come by as these electrodes are typically quite rough. But the scientists have demonstrated that the light-emitting electrochemical cell's inherent fault tolerance is ideally suited for this type of transparent substrate.
The advantages of this new transparent fabric are its high flexibility, light weight, and low cost. The fabric electrode consists of a weave of silver-coated copper wires and polymer fibers that are embedded in a polymer matrix, all of which is coated with a conductive ink. The new textile emits highly uniform, bright yellow light for more than 180 hours, with the efficiency and luminescence increasing over time.
As of now, the most common transparent and flexible light-emitting device technology is the organic light-emitting diode (OLED), whose fabrication process involves expensive vacuum technology.
The light-emitting textile developed by researchers is made by spray-coating a light-emitting electrochemical cell onto a transparent fabric-based electrode, which results in a simpler and less expensive fabrication process compared to that used to make OLEDs.
The national heritage property, The Science Museum has teamed up with Fashion UK and launched a new line of branded apparels. Together, they will develop new daywear, nightwear, underwear and socks for boys and girls featuring a range of designs based on the museum’s popular themes of space, flight and robots. On the other hand, Fashion UK will be looking at incorporating technology into their products to offer a scientific interactivity to its range.
On the partnership, Laura Clowes, licensing manager of Fashion UK said they were excited by the possibilities on product innovation that the partnership the Science Museum and will bring them. The signings follows recent critical successes for The Science Museum that includes three nominations in the Brand and Lifestyle Licensing Awards including Best Licensed Heritage or Institution Brand of the Year.
The museum has also recently re-signed with two of its most successful licensees, Clementoni and Wow Stuff who are developing new toy lines based on the Science Museum brand.
