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Manufacturers and Exporters Association (BGMEA) has so far found 144 factories in satisfactory levels amid concerns about COVID-19 pandemic in the country. Headed by six directors, the BGMEA’s audit inspected a total of 147 factories.
The team has suggested immediate corrective action plans for three factories to resume operations. A total of 1,061 factories out of BGMEA’s 2,274 members resumed operation in limited scale from April 26. The audit teams have been paying sudden visit to factories in Dhaka Metropolitan, Savar, Ashulia, two zones in Gazipur, and Narayanganj and Narshingdi.
The tests will be done free of cost among apparel workers for detecting coronavirus. Besides, workers of other sectors would also get access to test COVID-19 free of cost there.
AEPC recently organised a webinar to urge COVID-19-impacted Indian apparel exporters to diversify revenue sources by producing Personal Protective Equipment (PPE) to meet global demand. The webinar was attended by about 2,000 participants mainly apparel exporters from across the country.
AEPC chairman A Sakthivel said he expected domestic demand for PPE to be worth Rs 10,000 crore for the next one year while international demand would likely be worth $60 billion in 2025. India has done only $260 million so far last year.
Though many PPE products needed for frontline health workers are banned for exports currently, APEC expected demand to pick up once local manufacturers satisfy Indian demand.
Besides the webinar, AEPC intends to have a separate cell for PPE kits as it aims to provide sufficient kits domestically to prevent further imports.
The Department of Revenue Communication has stated that garment and made-up exporters who have Rebate of State Levies (ROSL) Scheme arrears will receive it in the form of scrips.
The ROSL Scheme, which reimburses the State levies that garment and made-up exports incurred, was discontinued on March 7 last year and replaced with the Rebate of State and Central Taxes and Levies scheme.
In order to clear pending claims under the ROSL scheme, Rs 464.13 crore has been allocated for issue of duty credit scrips by the DGFT to exporters who have pending claims, according to the communication.
The Cotton Textiles Export Promotion Council has welcomed the move, while pointing out that exporters can use the funds for imports too
Worst affected by the Coronavirus pandemic, the lifeboat of American department stores is fast sinking with some of the biggest names planning to file for bankruptcy. Foremost amongst these is JC Penney, the retailer which skipped a mid-April interest payment. The pandemic has sidelined many of the brand’s turnaround plans besides forcing it to close all stores.
Similarly, Macy’s, with its liquidity drying up, has tapped advisors at investment bank Lazard and law firm Kirkland & Ellis to explore options that include new financing. Nordstrom in early April raised $600 million by placing a handful of its real estate assets.
As per Mastercard Spending Pulse shoppers have been shifting away from malls. This past holiday season, department store retailers saw sales decline 1.8 per cent from November 1 through December 24. The decline happened even as overall holiday retail sales grew 4.1 per cent the National Retail Federation said.
Brands like Nike, Coach and Levi’s — that department stores have long relied on -- have taken note, opting to invest in their own stores and websites to sell
directly to consumers, leaving the middlemen struggling.
Department stores face worst crisis
Coming out of a dismal 2019 holiday season, each department store operator had laid out strategies to bounce back. These included shutting underperforming stores while opening smaller location; launching new in-house apparel brands; improving merchandising; and growing sales online by offering more convenient pick-up options. Cowen & Co estimates these retailers can make it four to seven months with their stores shut, bringing in $0 in brick and mortar sales.
These companies are facing a test unlike anything they have ever been through before. Among the usual options for companies in distress are: restructuring debt directly with creditors, restructuring with court assistance in bankruptcy or liquidating entirely. The last choice could be unsavoury if stores remain closed. However, creditors would recoup less money if shops cannot hold going-out-of-business sales. Sporting goods retailer Modell’s, for example, was able to temporarily suspend bankruptcy in March, stating the pandemic outbreak had made its liquidation sales.
JC Penney defaults on payment
In the last two years, JC Penny reported profit only during its holiday quarter. The brand’s revenue too declined for eight straight quarters. To tide over this crisis, the brand withdrew $1.25 billion from its revolving credit line in March.
Beginning March 19, all 850 of its stores closed. The majority of its 85,000 employees have been furloughed. S&P Global does not expect them to repay debt. Instead, the firm expects the brand to pursue restructuring either with or without court assistance.
JC Penney has roughly $4 billion of long-term debt. Fitch Ratings reveal the brand’s $105 million bond repayment is due this June, which is also to decline its sales by over 25 per cent this year.
Macy’s to turn to real estate
The impact of COVID -19 is also being felt by Macy’s. Three weeks before the Centers for Disease Control and Prevention announced cases of COVID -19 spreading within the US, Macy’s had planned to shut 125 stores in weaker shopping malls over the next three years. Although it closed more than 100 stores since 2015, it still operates 551 of its namesake department stores, 34 Bloomingdale’s shops and 19 shops. Now the brand plans to issue new bonds backed by some of its real estate to come up with extra cash, reports Bloomberg. Its revolving credit agreement allows the company to issue $500 million additional debt backed by real estate or other non-inventory-related assets. Cowen expects Macy’s to be able to at least temporarily lift its covenants, preventing bankruptcy.
Nordstrom cuts costs, raises revenue
Despite issuing a warning that its financial situation could become distressed if its stores stayed dark for much longer because of COVID-19 on April 8, Nordstrom appears to be in a better shape The brand expects results for the quarter ended May 2 and beyond to be adversely impacted in a significant manner. The brand has already taken a number of measures to cut costs and raise additional liquidity, including furloughing the majority of its workforce, suspending its quarterly dividend payment effective in its fiscal second quarter, drawing down $800 million on its revolving credit line.
Kohl’s turns to curbside pickup
Since Kohl’s stores are typically situated along open-air strip centres, not enclosed in shopping malls, the brand is better positioned to ride out the pandemic than other department stores. Fitch expects the brand to accelerate its market share gains post the discretionary downturn. The ratings agency expects Kohl’s sales to fall about 20 per cent in 2020. Kohl’s has more than 1,100 stores. Under the leadership of its Chief Executive Michelle Gass, the brand has focused on opening in smaller locations. It has also divided some of its existing and bigger stores, to be able to lease out the extra space to gym and grocery operators. And it has been betting on its tie-up with Amazon — where it accepts Amazon returns at all of its locations — to drive traffic, and ultimately sales.
It recently secured a $1.5 billion asset-based revolving credit facility, increasing its liquidity by roughly $500 million. The company has borrowed the full $1.5 billion and used part of those proceeds to repay the $1 billion outstanding debt.
These retailers are doing what they can to move merchandise online. They are sending out a steady stream of emails and online ads tout flash sales, free shipping and buy-one-get-one offers on spring merchandise. Nordstrom is urging shoppers to create a home sanctuary and Kohl’s is telling people to make home a “happy place,” J C Penney is coaxing people to spruce up their home offices, primp for those video conference calls and get outside in the backyard for games and grilling.
They are unsure of their plans for the upcoming holiday season, which is typically a make-it-or-break-it time for sales. They expect operating incomes to decline by up to 40 per cent in 2020, the worst decline for any retail sector.
When the COVID-19 crisis finally ends, the next big challenge for the industry would be to dispose off unsold inventory particularly the spring/summer merchandize that currently waits in factories, distribution warehouses distribution centres, in the port-side storage and the shuttered brick and mortar stores.
This predicament will become manifold once stores reopen as they will be the first stop for much of this unsold inventory. As Doug Cahn, Founder of corporate responsibility consultancy point out, to offload much of the unsold stock, brands will resort to heavy discounts leading to dramatic reduction in prices. Some experts also predict markdowns to meet the Great Recession levels of 70 per cent or more.
Discounts to be of little help
However, these discounts pose their own problems for the industry which is already caught in a vicious cycle of markdowns As Morten Lehmann, Chief 
Sustainability Officer of the Global Fashion Agenda believes, a lot of unsold apparels will be put up for sale. Right now, the industry is generating a huge amount of waste and discounting won’t help these brands to clear enough of goods from store shelves.
The period post-COVID-19 may help the industry bury some of its excess inventory, views Steven Bethel, Founder of Ottowa-based Bank & Vogue. While the pandemic may finally right the fashion’s seasonal calendar, in line with the actual season and consumers’ buy now, wear now wants, its unclear whether consumers would be tempted to buy a spring product remanufactured for fall.
Complex supply chain makes redesigning difficult
Lehmann advises manufacturers to upskill themselves by remaking or redesigning goods for the coming season. However, this too comes with its own sets of challenges. According to him, the complex structure of the supply chain prevents them from selling their clothes in local markets as sizes don’t match the required standards.
Yet, interest in this option is ramping as Bethell reveals who advises brands interested in this to consider options that can supplement the garments they have in hand like a silhouette change, etc.
Beyond remanufacturing for this year, some brands and retailers may look to spruce up spring/summer ’20 goods and hold them off for spring/summer ’21, but the issue there becomes one of storage. Some of the unsold inventory may make way to discounters like T.J. Maxx and Ross Stores, which will be spoilt for choice when it comes to merchandise to take These retailers will have a hard time convincing stores in this discovery shopping category to take too much of the same thing.
Impact on the second-hand market
The trickle-down effect of unsold textile goods across the globe will weigh down on the secondhand market, which, itself, will be overloaded with inventory. Besides this, there’s the logistical consideration of getting unsold goods to various new recipients. If the glut of garments can’t be sold at markdown to discounters or on the secondhand market, brands will either have to turn to charity or recycling.
In such a situation, innovation will be the key and if the industry can get sorting sorted and fold circularity into its considerations, there could be new opportunities to use recycling to turn sitting goods into sustainable ones
However, the societal responsibility that has come as a side effect of the coronavirus, could keep spring/summer ’20 goods out of the dumps. Right now, there’s so much pressure on companies to do the right thing that they are going to try hard not to produce excess clothes.
Thus there’s little way fashion can win financially as it struggles with an inventory conundrum that has been piling up even before the pandemic.
A newly released study by the U.S. International Trade Commission (USITC) suggests that the African Growth Opportunity Act (AGOA) and its “third-country fabric provision” are critical for US apparel sourcing from sub-Saharan Africa (SSA). Specifically:
U.S. apparel imports from SSA grew faster than the world average. During 2016–19, U.S. apparel imports from SSA enjoyed a compound annual growth rate (CAGR) of 11.8 percent (compared with 1.3 percent CAGR of all countries), from $1.0 billion in 2016 to $1.4 billion in 2019. However, SSA overall remained a small apparel supplier to the U.S. market, accounting for only 1.7 percent of the market shares in 2019 (lower than 2.7 percent in 2004, but was a record high since 2015).
The report suggests that the duty-free preferences awarded under AGOA and the liberal rules of origin available for apparel under the “third-country fabric provision”* are the key competitive advantages of SSA serving as an apparel sourcing destination for U.S. companies. Due to limited yarn and fabric production in SSA, the third-country fabric provision remained critical for SSA exports of apparel to receive duty-free entrance to the United States. Notably, nearly all U.S. imports of apparel from SSA countries entered under AGOA (98 percent). Of these imports, virtually all of them (95.8 percent) used the third-country fabric provision in 2018.
In a presentation at the Kingpins24 online event, Kingpins founder Andrew Olah stated that denim fabric design is shifting as a result of COVID-19.
All of the designers at the presentation agreed that with many fabric presentations moving to digital means, they must get creative with how they describe their new collections. And many agreed that this requires significantly reducing their collections.
Kingpins typically sees an array of 4,800 fabrics, with 60 denim mills each presenting around 80 pieces in their collections. Baldi noted that those numbers are highly unnecessary.
And because customers can no longer rely on touching fabrics and scanning the room for materials and innovations that interest them, mills must use other methods of communicating their unique properties. According to Yenici, this is where marketing comes in.
It forces mills to focus on a minimal collection that has a massive impact—and the quality over quantity approach is one that the fashion industry as a whole has been contemplating since the beginning of the pandemic. In Vogue’s Global Conversations series, many designers discussed the concept of slowing down and producing more mindfully for the sake of the environment, the consumer and the designer. By placing more of an emphasis on sustainability and purpose, fashion can become a force for good, they argued.
And that may be why all three panelists pointed to vintage denim as the sector’s most exciting trend. Despite all of the latest innovations in design, it’s often history that inspires the future.
Far Eastern New Century Corporation (FENC) has developed a new microfiber for medical masks which addresses a shortage in meltblown non-wovens.
According to the Taiwanese group, the fiber can surpass the daily demand of 13 million facemasks by making up to 20 million per day.
It can be used as the filtration layer of masks to replace meltblown nonwoven. The nonwoven made by this kind of material has a multilayer structure based on close to nanoscale fibers. This structure gives the nonwoven the ability to capture every small particle and allows these facemasks to be washed in water and reused.
According to the recently released data by General Administration of Customs, China’s sewing machinery exports escalated by 1.27 per cent in 2019 to $ 2.49 billion in 2019.
The export was dominated by industrial sewing machines in 2019, which accounted for around 49.37 per cent of the total export; however, it marked a Y-o-Y decrease of 4.21 per cent to clock US $ 1.23 billion revenue.
The Asian countries continued to see growth in importing sewing machines from China. Vietnam topped the tally with US $ 373.21 million worth of sewing machines imported from China in 2019, marking 11.48 per cent growth on Y-o-Y basis.
Of overall import by Vietnam, industrial sewing machines accounted for US $ 193.94 million, noting 14.38 per cent growth.
India’s imports increased by m 23.17 per cent to $ 297.68 million. The share of industrial sewing machines was $ 114.58 in overall import value, which declined by 0.85 per cent on the yearly basis.
Affected by Sino-US trade war, China’s sewing machine export to USA declined by a massive 28.30 per cent to $ 109.95 million of which industrial sewing machines contributed just US $ 32.38 million, falling 12.75 per cent. On the other hand, exports to Bangladesh plunged by 1.56 per cent to $ 99.27 million.
In first two months; Jan-Feb 2020, according to the data from National Bureau of Statistics, the man-made fiber industry saw a freefall in profits by 74.78 percent, PET fiber down by 132.01 percent and polyamide fiber (Nylon) down by 15.64 percent in profits. The total number of man-made fiber companies running in ‘red’ accounts for 48.7 percent. Profit/Sales ratio is reduced to a poor 0.48 percent in the troubled two months.
The growth and fall in man-made fiber industry considerably depends on consumption market of the midstream and downstream products. China’s retails in January and February fell by 30.9 percent in shop sales for the category of garments, shoes, caps (hats) and knitwear. The brick-and-mortar sales doesn’t seem to have necessarily diverted to the e-commerce retail which also met with a 16.1 percent drop in wearable goods online, thus significant drop rippled nearly all the manmade fiber related supply chain and products.
The individual drop was in Cotton blended yarn 42 percent, chemical fiber made yarn 29.46 percent, cotton blend fabric 52.37 percent, fabrics made of manmade fiber staple 22.96 percent, nonwoven 11.02 percent and in the tire cord fabric 4.14 percent. The export also shrunk for all the textiles and apparel in the country in the first two months that saw a downfall of 20 percent, consequently impacting on the manmade fiber industry.
Production:
The national stats show an obvious drop of man-made fiber production by 13.64 percent to turn out 7.2723 million tons in January and February. The breakup sector wise is as in viscose staple for 448,300 tons, a drop by 33.71 percent, PET fiber for 5.5889 million tons, a decrease by 11.92 percent, polyamide fiber (Nylon) for 508,600 tons, a fallout by 27.11 percent, and polyurethane fiber (Spandex) for 122,300 tons, up by 4.18 percent as a result of rising market demand for coarse-denier Spandex for the ear-loop of face masks.
International Trade:
The import and export of manmade fibers both faced slide down with exception of few product lines. As the data from Chinese Customs shows, the first two months of the year witnessed 114.500 tons in imports, down by 17.2 percent which reflected sectorwise drop in PET staple for 25,400 tons and PET filament for 15,000 tons, both fell respectively by 8.59 percent and 6.85 percent. To be more specific, polyamide filament registered an import of only 9600 tons, a freefall by 34.27 percent, and viscose staple by 27.46 percent for 25,700 tons.
On the export side, China shipped out 638,800 tons of manmade fibers in January and February that saw a descent by 12.33 percent, more specifically, PET staple for 109,900 tons, a 24.11 percent sliding down, and PET filament for 366,900 tons, 14.06 percent less than the previous growth in the same period last year. The show down picture is also seen in the export of polyamide filament for 39,800 tons with 4.41 percent drop, but in the viscose filament and polyurethane fiber, both enjoyed growth up by 20.36 percent and 9.69 percent, respectively.
Investment in fixed assets
The investment plummeted by 35.7 percent in the first two months of this year, 31.9 percentage points lower than the corresponding months last year because some big projects under construction were called to a halt in case of coronavirus spreading.
Economic Profit and Loss
According to the data from National Bureau of Statistics, the man-made fiber industry slided down with a freefall by 74.78 percent in profits of 397 million Yuan, break up for important sectors like PET fiber down by 132.01 percent and polyamide fiber (Nylon) down by 15.64 percent in profits on balance sheet reports. The number of companies running in red accounts for 48.7 percent of the total man-made fiber companies eligible in the national statistics system with the loss of money up by 39.49 percent.
With the sharp fall in profits, the profit/sales rate is reduced to a poor 0.48 percent as the sales income itself ran into a predicament with a significant fall by 28.39 percent to finish with 83.584 billion Yuan in the troubled two months.
A glimpse of Manmade Fiber Production in 2019 (Jan.-Dec.)
| Unit: 10,000 ton | ||
| Products | Jan. – Dec. | Growth Change |
| Manmade Fiber in Total | 5827 | 7.8% |
| --breakdowns as in | ||
| Viscose Fiber | 412.4 | 2.8% |
| -its staple | 394 | 3.0% |
| -its filament | 18.4 | 0.5% |
| PET Fiber | 4751 | 8.3% |
| -its staple | 1020 | 9.7% |
| -its filament | 3731 | 7.9% |
| Polyamide Fiber | 350 | 5.9% |
| Acrylic Fiber | 58 | -5.7% |
| Polyvinyl Fiber | 9.2 | -5.4% |
| Polypropylene Fiber | 38.5 | 7.2% |
| Polyurethane Fiber-Spandex | 72.7 | 9.2% |
| Source: China Chemical Fibers Association |
Contributed by Mr. ZHAO Hong
He is working for CHINA TEXTILE magazine as Editor-in-Chief in addition to being involved in a plethora of activities for the textile industry. He has worked for the Engineering Institute of Ministry of Textile Industry, and for China National Textile Council and continues to serve the industry in the capacity of Deputy Director of China Textile International Exchange Centre, V. President of China Knitting Industry Association, V. President of China Textile Magazine and its Editor-in-Chief for the English Version, Deputy Director of News Centre of China National Textile and Apparel Council (CNTAC), Deputy Director of International Trade Office, CNTAC, Deputy Director of China Textile Economic Research Centre. He was also elected once ACT Chair of Private Sector Consulting Committee of International Textile and Clothing Bureau (ITCB)
