FW
Bangladesh is yet to bring subcontracting garment factories under a regulatory framework. These units violate the requirement for minimum wages and are not members of any recognised association. Out of 3,500 factories, about 800 are subcontracting units. Most of them are small and medium enterprises, doing subcontracting jobs for big factories. They remain outside the purview of the fire, electrical and structural safety assessment of Accord and Alliance. They do not follow the government’s wage structure, and their rates are only four and three per cent those of approved factories.
Maternity leave and allowances are not paid in 26 per cent of these non-member units. The performance of the non-member factories in terms of safety and other compliance issues as well as payment of wage and overtime bills is poor.
To complicate matters many of these units do subcontracting jobs for big factories, which are members of recognised associations like the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) or the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
The government is working to bring discipline to these subcontracting industries and finalising a policy. First of all, units that do subcontracting have to be documented. They have to be induced to get themselves registered with apparel apex bodies.
Next month’s ITMA, perhaps the most important international showcase for textile and garment manufacturing technologies, will witness a line-up by Busi Giovanni, the leading Italian socks knitting machines producer. Michele Castagna, Export & Marketing Manager, Busi said that the brand is set to display its brand new MEDICAL PANTYHOSE 4.5", which boasts unique technical features and knitting performance for today’s medical-hosiery industry.
Twin Layer, Busi’s new model had recently bagged the European patent due to its unique technology. This model is a high production single cylinder sock machine with latch needles in the dial that enable it to produce technical sports socks with twin fabric. Besides, early last month the family owned company also announced the launch of two new medical hosiery knitting machines for large sized medical hosiery.
Busi’s aim of completing their range of models solely devoted to knitting class 1, 2 and 3 certified medical socks has prompted the company to launch the new MEDICAL PANTYHOSE (needle counts from 226 to 366) and MEDICAL TERRY PANTYHOSE (needle counts from 226 to 280) machines. Both these are available in a 4.5" diameter, enabling the production of large socks and pantyhose, said Castagna.
India’s cotton production is expected to drop in the next season starting October 1 on account of deficient rains. Lower output may drive up domestic cotton prices in 2015-16 and further dent exports, as local prices are already ruling above global levels. India’s output could touch 37.7 million bales for 2015-16 compared with 38.3 million bales in the current marketing year.
The cotton crop has been affected by deficient rains, which dropped 14 per cent from the benchmark long-period average so far this year. While Gujarat and Karnataka could witness smaller harvests in 2015-16 than a year before, drought-hit Maharashtra is projected to have a bigger harvest next year than in 2014-15.
While cotton imports are projected to remain unchanged, exports are expected to suffer in view of a slowdown in its largest buyer, China. China, which usually accounts for over 70 per cent of India’s cotton exports, has cut down on purchases in a bog way. Even the depreciation of the rupee against the dollar isn’t going to help Indian textile exporters much, as the recent yuan devaluation by China has made its imports more expensive. Cotton consumption within India is forecast to rise 3.2 per cent from a year earlier.
Pakistan’s total textile exports for August were up by 11 per cent year-on-year. All major segments (except yarn) reported higher volumetric and dollar sales over August 2014. Most textile segments reported a decline in terms of both volume and value.
Cotton yarn and knitwear exports showed improvement by 10 per cent and 19 per cent year-on-year in terms of volume respectively. One segment with a volumetric increase for the eight months of 2015 is yarn. Yarn exports were higher in volume by 13 per cent year-on-year but due to depressed international prices export earnings were down by 8 per cent. Knitwear had a 17 per cent increase in volume but a paltry one per cent improvement in value. Other than that, the remaining textile items witnessed a decline in volume.
Competition from India, Turkey, and Bangladesh continues to take its toll on the industry. Exporters have to compete with lower prices. Readymade garments have been the star of the show. For the eight months ended 2015, readymade garment exports increased in value by 12 per cent year-on-year despite lower volume sales. This is because readymade garments - and the value-added segment in general - offer superior margins and are more price-inelastic relatively to their non-value added counterparts.
Global fashion biggies enter South Africa
The majority of clothing sold in South Africa by domestic apparel retailers such as The Foschini Group (TFG), Truworths, Mr Price and Edcon is still sourced from Asia. However, competition from international brands such as Zara and H&M is growing, as they expand in a sector whose value rose to more than 200 billion rand ($15 billion) at the end of 2014 from 8 billion in 2001.
One among the continent’s most brand-conscious consumers, South African households spent an average of 5.3 per cent, or 582 rand, of monthly income on clothing and footwear in 2014 says the Bureau for Market Research at the University of South Africa. Keeping an eye on rising consumer interest in fashion Zara opened its first store in South Africa four years ago. The brand, now operates six stores. Australian chain Cotton On has also called the country its fastest growing market while Britain’s Topshop and Forever 21 have also ventured into the market recently.
H&M is set to launch a big 50,000 sq. ft. store in Cape Town’s trendy V&A Waterfront mall next month. The Swedish retailer plans to open another one in Johannesburg this November. While Inditex following its fast fashion approach replenishes store shelves with new garment styles twice a week sourced from suppliers in Portugal, Turkey and Spain, H&M, which sources most of its requirements from Asian unites, is expected to follow the suit.
Domestic RMG follow ‘fast fashion’ route
To compete with these global names and safeguard their market share, South African retailers such as the Foschini Group plan to closely work with local suppliers to bridge the gap between production and retail. About 65 per cent of its women’s wear is now made in South Africa.
Some South African factories are trying to get fresh garments into stores within 32 days or a maximum cut-off target of 42 days, which obviously is still slower than fast fashion giants like Zara. South Africa has about 900 clothing factories, just over half an estimated 1,600 plants at the sector’s peak in 1996, according to data from the clothing manufacturing industry bargaining council.
From 2010 to 2014, productivity jumped 36 per cent while employment in the clothing, textile, footwear and leather industry rose to 88,657 in the year to March 2015 from 87,386 a year earlier, still much lower than the 1996 peak of 228,000 jobs, before Chinese imports started making a negative impact by dumping cheap garments in the local market.
With manufacturing costs continuously increasing in China and across Asia, importing nations are exploring new apparel sourcing destination. Many companies are diverting their sourcing needs to new countries and African continent is emerging as the answer to their quest.
Italy’s textile industry revenues for 2015 are expected to close five per cent higher than the prior year. The expectation is based on a forecast of the euro exchange rate in line with the current trend. There is also an expected 6.5 per cent increase in revenues for the first half of 2016.
Significant investments are slated for the promotion of Italian-made fashion and textile products. There is finally a clear sign of recovery following many difficult years of economic struggle for the industry. The Italian textile and fashion industries went up 2.7 per cent in 2014 over the year before. Italy holds the unquestionable supremacy of the textile market worldwide. Italian textiles and fabrics are famous all over the world for their high quality obtained through innovative machinery, techniques and processes that lead to the introduction of new fashion fabrics and textiles.
During the last few years the industry has moved out of basic textile product segments and into end products. The Italy’s textile industry has a global market share of seven per cent and is the second major producer behind China. Italy is also a pioneer in the premium market segment. The country has been a pioneer in exporting yarns and woolen fabrics.
Vietnam is emerging as a potential destination for foreign investors as China is scaling down its domestic production for export due to increasing labour and land costs. Tran Bac Ha, Chairman, Bank for the Investment and Development of Vietnam (BIDV) during a workshop said that Vietnamese enterprises though, would have to restructure if they wish to compete and integrate effectively. BIDV has committed to offer $2 billion to garment firms over the next five years. This will be channelled into material area development, trade promotion and market expansion.
According to Phan Chi Dung, Director of the Light Industry Department under the Ministry of Industry and Trade, Vietnam will gain deeper access to the world’s large economies by joining bilateral and multi-lateral free trade agreements (FTAs). Besides, due to this, the country will be able to penetrate deeper in its main markets of garments, such as the European Union, the US, Japan and Korea. He underscored tariff eliminations that would result from FTAs as an expected boost for Vietnamese exports.
Do Hai Thang, Industry and Trade Deputy Minister, says that garment-textile is among those sectors that will most benefit from FTAs once in effect. However, there major challenges for the sector, along with opportunities. These include origin specifications and regulations issued by import countries. Besides, he added that that capital mobilisation is also challenging the garment and textile businesses; most of them are small- and medium-sized ones.
Sri Lanka's exports earnings declined 2.6 per cent, year-on-year, in July 2015. Exports of all sub categories of the industrial sector, except transport equipment, petroleum products and animal fodder, declined in July 2015, owing to the weak global demand.
Earnings from textiles and garments, which account for more than 44 per cent of the country’s total export earnings declined marginally by 0.3 per cent in July 2015 compared to last year. There was a decline in garment exports but textile exports grew 34 per cent over July 2014.
On a cumulative basis, earnings from exports declined marginally by 0.9 per cent during the first seven months of the year mainly due to the lower performance of agricultural exports despite the positive growth in industrial exports. The import bill also declined by 16.9 per cent, year-on-year, in July 2015.
The US has announced new rules for apparel imports from Sub-Saharan countries. The rules are a new 12-month cap on duty- and quota-free imports. They would be applicable for 12-month beginning October 1, 2015. The quantitative limitation for the 12-month period, will be an amount not exceeding seven per cent of the aggregate sq. mt. equivalents (SMEs) of all apparel articles imported into the US in the preceding 12-month period for which data are available.
Of this overall amount, apparel imported under the special rule for lesser-developed countries is limited to an amount not to exceed 3.5 per cent of all apparel articles imported into the US in the preceding 12-month period. These quantities were calculated using the aggregate SMEs of all apparel articles imported into the US. Apparel articles entered in excess of these quantities will be subject to otherwise applicable tariffs.
The African Growth and Opportunity Act (AGOA) is a nonreciprocal trade preference program that provides duty-free treatment to imports into the United States of certain products from eligible sub-Saharan African countries. AGOA came into force in 2000. It offers incentives to African countries to open their economies and build free markets.
trade.gov/agoa/
September 2015 US cotton crop is forecast at 13.4 million bales. September’s projection is a 2.6 per cent increase from August. Total US cotton planted area in September 2015 was reduced nearly four per cent. US upland production is approximately 17.5 per cent below the 2014 crop. In the previous 20 years, September upland cotton forecast was below the final estimate 11 times and above it nine times.
US cotton crop development continued to lag last season. As of September 13, 46 per cent of the area had bolls opening, compared with 49 per cent a year ago and the 2010-14 average of 51 per cent. In contrast, US cotton crop conditions remain above the last several seasons.
As of September 13, 52 per cent of the 2015 crop area was rated good or excellent, compared with 49 per cent last year, while 13 per cent was rated poor or very poor compared with 18 per cent a year ago. The 2015-16 US cotton export forecast was raised slightly this month as a result of the larger US crop and the expected competitiveness of US cotton this season. As a share of world trade, US cotton exports are projected to account for about 30 per cent of global shipments in 2015-16.
