FW
India’s textile and garment exports rose 0.6 per cent in the first half of the current fiscal from a year before. The share of textile and clothing exports in the country’s overall exports has risen to 13.5 per cent this fiscal. At present, man-made fibers like polyester attract a 12 per cent excise duty, but cotton, the competing fiber, attracts none. This duty disparity has distorted the domestic consumption pattern in favor of cotton, which is contrary to the global trend.
The industry has long been complaining that the duty disparity is preventing domestic producers from scaling up operations and, consequently, hurting India’s export competitiveness in man-made textiles. While man-made fibers account for around 70 per cent of the world’s total fiber consumption, they make up for less than 30 per cent of India’s demand.
There are plans to rationalise duties on man-made fibers, simplify labor laws and facilitate more working capital to mills. The excise duty on man-made fibers may be reduced to six per cent from the current 12 per cent. Women may be allowed to work at night, especially in garment factories. The textile and garment sector is the largest job provider after agriculture, employing around 45 million people.
As per a Asia Development Bank study, Bangladesh textile value chain is rising faster than any other Asian country. Reason: shift of low cost manufacturing from China to Bangladesh. In fact, companies Singapore, Japan, Taiwan and South Korea, which have traditionally relied on low cost production in China, have had to adjust. Intraregional trade within the labor-intensive Asian textile industry is still increasingly dominated by China but Bangladesh and Vietnam are emerging as important players, says the ADB report on Asian Economic Integration, 2015.
In the meantime, domestic value added shares of Japan, Korea and China have declined six to eight percentage points during 2000 to 2011. Apart from rising domestic value added shares, the foreign value added to Bangladesh and Vietnam exports is also increasing at a much faster pace than that experienced by the rest of their peers (excluding China).
With rising production costs in other economies, operations are being set up in countries like Bangladesh and Vietnam. Governance gaps and lack of focus have undermined performance in some special economic zones in Asia, while successful zones have managed to build close ties with the domestic economy. Bangladesh has attracted FDI in garments and generated new trade, but has had limited success in upgrading and diversifying special economic zone exports.
"As per IndustriALL Global Union affiliate, the Southern African Clothing and Textile Workers Union (SACTWU) an estimated 2,000-3,000 workers have been losing their jobs every year. There is a strong labour architecture in South Africa and the working conditions in the garment industry are better than in many other parts of the world. This is due to the bargaining strength of the union, which has also resulted in better wages in the South African garment sector"
While South Africa enjoys the status of being one of the biggest garment producers on the African continent, production has been declining in the country over the last one decade. This has led to massive job cuts leaving thousands unemployed. However, the situation seems to be changing with the industry ready for a bounce-back business and job creation.
SACTWU initiates ways to increase employment
Several factors such as trade liberalisation, increased imports from Asia and the relocation of South African producers to neighbouring countries and lower wage regimes in Lesotho and Swaziland made an adverse impact on the flouring garment industry in South Africa over the last 15 years. Estimates suggest that almost 150,000 jobs were lost in the industry when South African clothing manufacturers found themselves in a fix as the influx of cheaper clothing from Asia began flooding the local markets. They had to pull shutters on their businesses.
As per IndustriALL Global Union affiliate, the Southern African Clothing and Textile Workers Union (SACTWU) an estimated 2,000-3,000 workers have been losing their jobs every year. There is a strong labour architecture in South Africa and the working conditions in the garment industry are better than in many other parts of the world. This is due to the bargaining strength of the union, which has also resulted in better wages in the South African garment sector.
There are several minimum wages in South Africa and the unions are working to close wage gaps. A top wage for a skilled garment worker is around 950 Rand (US$67) per week. For a lower skilled worker it could be around 700 Rand (US$49) per week. SACTWU prioritises centralized bargaining as the mechanism to achieve the best wage outcomes for workers. SACTWU negotiates in three national bargaining councils for the clothing, textile and leather sectors and the outcomes affect over 100,000 workers. In 2015 sectoral wage increases were above inflation.
Gradual turnaround on the cards
However, the garment industry in South Africa is now slowly witnessing business growth. Despite job losses, SACTWU has remained well organised with about 80 per cent of workers in the sector belonging to the union. SACTWU is fighting back hard against retrenchments, downsising and closures while building its influence and engaging on policy at a national level. The union has upheld its tradition as a fighting union, yet it engages employers and government in dialogue and has made significant gains on sourcing locally and pushing back on trade liberalisation.
Simon Eppel, Researcher at SACTWU points out, while the industry continues to lose jobs even today, the numbers are down substantially with the efforts of SACTWU. On balance employment in South Africa’s textile industry is growing – it is up by 1.5 per cent in the last year. With the government support and SACTWU’s campaign for jobs, employment in the garment industry seems to be on a positive growth path. The South African government is also advocating greening of the industry to make it more sustainable by implementing energy efficiency measures and assisting companies to replace old machinery with more modern equipment.
Another effort to revive the growth potential is SACTWU’s ‘buy South Africa campaign’, where the union enters into agreements with major companies and institutions to support the local industry. Since the early 2000s, SACTWU has been running a campaign to buy locally-produced textile products by appealing to consumers on how buying South African will affect the community. Through mass campaigns and fashion shows with factory workers to showcase the clothes they make, SACTWU engages with consumers to influence the choices they make. Even government departments and state-owned companies are encouraged to buy South African products when tendering for public procurement.
Retail sourcing sees a change
In June 2015, a South African clothing textile and leather tripartite seminar called by SACTWU, was held in Cape Town. The event was held alongside the Cape Town Fashion Festival with the key address given by Minister of Economic Development Ebrahim Patel who spoke of the government’s commitment to a green manufacturing sector. Presentations at the seminar included supportive policy and initiatives from the government to maintain the sector and jobs as well as best practices by industry for greater efficiencies in production and energy and water consumption that have been achieved with state support.
South African retailers mostly depend on the traditional retailing model which often results in two scenarios but they are under pressure to change their model because of increased competition from foreign retailers that have entered the domestic market. Now retailers use technology to analyse what is being bought in store, understanding what customers want, when they want it, so instead of placing orders on forecast demand for a whole season ahead, current trends are analysed to present the customers with the most attractive products in the shortest possible time.
Together with inflation in Asia and a weak Rand, many believe that quick response provides opportunities for South African producers. The model relies on close proximity of the producer to the retailer, with a maximum lead time of six weeks. South Africa is well placed because industry support and a commitment from local producers has resulted in better standards and efficiencies, reducing lead times.
Now SACTWU has called for the clothing industry to submit a report on actions taken to implement the commitments made under the Youth Employment Accord (YEA). The union is of the view that instead of just complaining about the problem of youth unemployment, it is time that every signatory of the Youth Employment Accord (YEA) must take accountability for what they have done to meet their commitments.
Sactwu.org.za
China’s trade performance remained weak in November, with exports falling by a more-than-expected 6.8 per cent from a year earlier. Imports fell 8.7 per cent. The country will have to do more to stimulate domestic demand given persistent weakness in overseas markets. China’s trade performance remains weak as the trade value is likely to drop 8 per cent for the whole of 2015 versus an increase of 3.7 per cent in 2014. This clearly reflects a de-leveraging process in the manufacturing sector that has dragged down the demand for commodities.
Economic growth dipped to 6.9 per cent in the third quarter, dropping below the seven per cent mark for the first time since the global financial crisis. China has allowed its currency, the yuan, to slowly weaken to near four-month lows against the dollar, but its exports will be significantly helped only by a drastic devaluation.
A number of policies were announced last month to encourage foreign trade and help exporters, admitting that the picture for foreign trade was complicated and grim. The central bank has already cut interest rates six times since last November and reduced the amount of cash that banks must set aside as reserves while the government has eased restrictions on home buying to boost the sluggish property market and is trying to ramp up infrastructure spending.
Robust growth of the automotive sector in emerging markets and increasing applications of technical textiles in the construction industry are key factors fuelling the demand for technical textiles. Increased spending on healthcare and growing awareness on environmental conservation and sustainable manufacturing are other key factors driving demand for technical textiles globally.
Asia Pacific is the most lucrative market for technical textiles, with demand expected to reach 11,468 thousand tons by the end of 2015, up from 10,715 thousand tons in 2014. China and India are expected to be at the forefront of the demand for technical textiles, with these two countries collectively accounting for a 74 per cent share of the Asia Pacific technical textiles market.
The cost of procuring raw materials and manufacturing technical textiles is higher than other substitutes, owing to which adoption is lower in price-sensitive markets. On the basis of application, the key categories of technical textiles include Agrotech, Buildtech, Hometech, Indutech, Sportech, Packtech, Mobiltech, Meditech, Clothtech, Geotech, Protech, and Oekotech.
Hometech is expected to witness the highest demand, reaching 2,015 thousand tons by 2015 end, up from 1,910 thousand tons in 2014. Indutech is expected to gain 62 basis points between 2015 and 2020 and account for nearly 14.68 per cent of the overall market in terms of revenue. In terms of volume, demand for Indutech is expected to reach 2,832 thousand tons by the end of 2015.
Lepton-id has developed a security thread that can help determine whether a piece of clothing is authentic or fake. Lepton-id is a product security company based in the US. To test the fabric, and determine authenticity, one can scan the piece of clothing, made with Lepton-id’s optically responsive thread, with one of Lepton-id’s optical detectors.
Optical security taggants are applied within the fibers of thread through a special procedure. The miniscule technology is placed inside the fibers of the thread in a way that prevents the technology from being washed away. Removing the taggants from the thread is virtually impossible—the technology can only be removed by cutting out every piece of thread that was used to make the clothing.
Lepton-id has created two different types of optical detectors. One type, the VI1170, detects the taggants placed into the thread. The VL6300 has the ability to spot the entire hidden image that is created when the thread is sewn into the apparel. While checking the garment’s authenticity, the person conducting the examination would have to know where the taggant should have been placed—a misplaced taggant would quickly prove that the garment is fake.
The specialised thread can be placed into any type of sewing machine that uses that size of thread. Since the correct size is being used, the thread won’t clog the machine during the sewing process.
www.lepton-id.com/
A new report published by the two leading global trade associations forecasts strong market demand for nonwovens materials through the next five years, according to the Worldwide Outlook for the Nonwovens Industry, 2014-2020.
The highlights of the report include production is forecast to increase 5.7 per cent annually through to 2020; China will lead the growth in production, adding an additional 1.2 million tons from the end of 2014 through to 2020, representing a 7 per cent annual growth rate; and across the nonwoven technology methods, drylaid/carded hydroentangled production will expand at the fastest rate, adding 7.6 per cent annually.
“The worldwide nonwovens industry’s prospects are excellent and it remains an exciting industry in which to be involved,” said the report’s co-authors Jacques Prigneaux, market analysis and Economic Affairs director at EDANA and Brad Kalil, director of Market Research and Statistics at INDA.
This comprehensive new report provides in-depth information and analysis of global nonwoven macro drivers; supply and demand forecasts and statistics; and regional trade analysis; among other topics. The report includes detailed regional information and forecasts on production, technology and investment requirements for North America, Greater Europe, Asia and South America. The report further features regional views of economic growth, population, production by end use, and trade flows.
www.edana.org
www.inda.org
Consumer demand for activewear has been increasing rapidly, with some of the world’s largest fast-fashion companies moving into this segment. To provide exhibitors with more opportunities to capture this trend, the featured Functional Lab zone debuts at Intertextile Shanghai Apparel Fabrics – Spring Edition 2016 after its successful first-time appearance at the 2015 Autumn Edition.
Featuring a wide range of smart, outdoor and sports fabrics, as well as performance textiles, the Functional Lab will be the centre of the activewear market next March. In 2015, a total of 69 exhibitors from six countries and regions took part in this debut zone. Some of the global brands and companies that participated to gain better access to their target buyers were Huvis (Korea), Hyosung Corporation (Korea), Invista (USA), Nylstar (Spain), Santoni (Shanghai), Toray Chemical Korea (Korea), Toyobo (Japan) and Unifi Suzhou (China).
“We met a lot of international customers here such as big fashion brands from Europe, as well as sports and outdoor brands from North America. Also fabric mills from China and Asia. I visit a lot of other fairs, but this one is one of the biggest in the world which is what we like. The Performance Lab is a great idea. For the buyers, it’s very easy to find what they’re looking for, so it’s great,” said Hongjun Ning, Vice President Sales and Marketing, Unifi Textiles (Suzhou), China.
www.intertextileapparel.com
Knitwear exporters, who have to as of now file a bulk set of export documents to claim refund/rebate on various taxes levied under Value Added Tax Act, are eagerly awaiting the announcement of Goods and Services Taxes (GST) regime.
Along with many other advantages that this policy would bring, the most awaited one according to exporters is the ‘time-bound’ disbursal of tax refunds to them through a speedy online process. Currently there is not set deadline for the disbursal of the Value Added Tax refunds. GST is also expected to ensure the benefit of input tax credit for the raw materials purchased from other states.
In GST regime, exports were proposed to be ‘zero-rated’ which means the export goods will not suffer any actual tax liability. However, according to M. Veluswamy, an apparel exporter and Chairman of Confederation of Indian Industry, Tirupur, the real benefit of the refund scheme can be obtained only when the same gets implemented by the authorities.
And for apparel exporters in the small and medium scale sector, the process of accounting and preparation of annual financial statements for individual export firms will become easier with the GST roll-out since it would integrate the refund of accumulated credit or rebate claims presently mentioned in the VAT Act.
Owing to the growth of Vietnam's textiles industry, which is expected to export $28billion this year, the country’s cotton imports will increase close to those of top-ranked China. The US Department of Agriculture's Hanoi bureau has hiked to a record 5.37million bales forecast for Vietnam's cotton imports in 2015-16.
The figure, representing an increase of more than one million bales year on year, is some 520,000 bales above the USDA's official forecast, although this is up for revision later on Wednesday. And it would put Vietnam, which a decade ago was importing fewer than 700,000 bales of cotton a year, with Bangladesh and China in the club importing more than five million bales of the fibre a year.
Experts point out that this upgrade reflects Vietnamese consumption which “continues to increase in order to meet strong demand from its expanding textile industry”, the bureau said in a report. In the yarn sector, the number of spindles reached 6.3million as of last season, up 24 per cent in three years - with a further 30 per cent spurt to 8.2million spindles expected by 2016-17. The report forecasts Vietnam's yarn exports hitting a record 950,000 tonnes in calendar 2015, up 10.7 percent year on year.
