FW
Bangladesh’s earnings from exports of sweaters have grown 15.82 per cent over the last year. Sweater manufacturers have upgraded machinery and technology to go from manual to automated. Technological upgradation has contributed a lot to increase exports earnings. Installation of new technology has improved the quality of products as well as capacity. As a result, global buyers place more work orders, which has pushed export earnings up. Bangladesh has gained from the ongoing trade conflict between the United States of America and China. While wages in China went up, higher US tariffs, promoted buyers to shift their business to other countries, especially Bangladesh. The country offers quality products at a lucrative price, giving it an opportunity to grab a bigger share of the sweater market.
However, with rising export earnings, there has been no jump in profit margins because of the sharp rise in production costs. Buyers have become stingy in paying. The country is moving toward value addition and better productivity in order to remain competitive in global markets and sees a huge scope for expanding its export earnings as it has the production capacity to meet any rise in demand.
India’s leather exports to the US grew about seven per cent in the last four months. The US-China trade war offers huge opportunities to Indian leather exporters to raise shipments to the United States.
India is making efforts to boost leather exports. Despite the global economic slowdown, production and employment in the leather sector have increased. Also, this is the only industry where exports of value-added products are almost five times more than the import of inputs/components/accessories and capital goods. The industry is undertaking a multi-pronged approach including product and market diversification, attracting investments, increasing capacities and also developing skills of workers so as to increase its global market share in the coming years. Currently, Europe accounts for about 70 per cent of leather exports from India. The sector employs about 42 lakh people and is labor intensive. The footwear sub-sector accounts for half of India’s leather exports. The leather garment sub-sector produces 16 million pieces a year and accounts for one-tenth of exports.
The entitlement rate for leather garment sector for duty-free imports of raw material may be increased from three to five per cent. The move would help in increasing the availability of raw materials at affordable rates.
Millennials and Gen Z are becoming aware of the massive ecological damage that fast fashion is having on the planet. It’s no secret that fast fashion has been responsible for a catastrophic level of environmental pollution. Overt use of raw materials, water pollution and greenhouse gas emissions are only part of the story. This circular buy, wear and toss behavior is impacting landfills and becoming a major carbon contributor. Fast fashion has also played a very dark role in contributing to black market trafficking of forced labor.
There is evidence the seemingly unstoppable growth of fast fashion giants H&M and Zara may be slowing, or at least changing. H&M plans to close 160 stores. The fashion giant was hit hard in mid-2018, after accumulating huge unsold inventory, forcing significant discounting to clear out the goods. The effect of this resulted in unexpected reductions in profits for the sixth straight quarter.
Contrary to the forces behind fast fashion, there is evidence of movement by consumers of all ages and demographics towards buying fewer but higher-quality basics that can be mixed, matched and re-worn, even with the addition of some great vintage accessories. Significant changes are underway—away from what’s trending and toward what’s stylish.
Thanks to the tariff privileges received from the US under its Generalised System of Preferences (GSP), Cambodia's footwear and travel goods exports increased dramatically in the first nine months of this year. The items, which were previously taxed between 4.5 and 20 per cent, can now enter the US duty-free under the expanded program.
Approximately 5,000 products from 122 beneficiary developing countries and territories – including 43 least-developed countries – are eligible for duty-free export to the US. The US’ and the EU’s preferential trade schemes have been very beneficial to the Kingdom’s footwear and travel goods exports which reached some 4.723 billion units – worth $385 million – in the first nine months of this year, increasing by 88 per cent compared to the same period last year
The Kingdom remained among the top 10 footwear exporters, with exports valued at over $1 billion last year, a 19 per cent increase from 2017, data from the International Labour Organisation released in August revealed. It’s main export markets included EU (46 per cent), the US (17 per cent), Japan (12 per cent) and Canada (5 per cent)
The clothing industry is facing a long-term structural decline. Consumers are cutting back on the number of new outfits they buy. They were buying clothes in bigger quantities over the past 20 years as fast fashion retailers such as H&M and Zara and budget retailers including Primark and Walmart cut prices after shifting production to Asia.
But now, apparel markets in many developed countries may be entering a lengthy period of structural decline. Increasing consumer awareness about the negative impact of the clothing and textile industry on the environment is only one of the reasons volumes have started to decline. Consumers are buying so many pieces of clothing they are gaining little marginal utility or pleasure from buying more. Consumers would rather spend their money on going out for a meal than on buying a 60th item of clothing in a year.
If clothing volumes are plateauing in developed countries, the only way the apparel markets there can grow is if prices go up. But prices are falling. US clothing prices have fallen by 0.8 per cent a year since 2001, while UK prices fell for 13 consecutive years until 2010. And prices are expected to continue falling as production continues to shift from China to lower-cost countries in the region such as Vietnam and Bangladesh.
Investors don’t get expected dividends from Bangladesh’s textile and garment companies. The share price of many companies is trading below their face value. Among the reasons are: high costs of production, over capacity, competition, an unfavorable exchange rate and lower prices from international buyers. Public shareholders account for over 60 per cent of the stakes in a company while sponsor shareholders have a less than 14 per cent share.
Many companies expanded their business seeing lucrative growth in the sector and their sales volume soared and so did their revenue. However, with higher costs to meet compliance after Rana Plaza, the price per unit dropped in the international market. Overall, the sector is suffering from lower profits. The cost of production of apparel items increased 30 per cent between 2014 and 2018. Further, the minimum wage of garment workers has increased 51 per cent since December last year. Between 2015-16 and 2018-19, the industry’s value addition has gone down 1.61 per cent though apparel exports have increased during the period.
At present, some 15 textile companies are ranked as junk stock due to their failure to provide dividends or hold an annual general meeting or shuttering of their factory.
Poor credit availability is posing serious problems for Tirupur garment manufacturers. One problem is that exports from Tirupur have been stagnant. Banks are becoming averse to risk. There has been a rise in non-performing assets (NPAs) in the country. Bank officials fear their decisions will be questioned if the loan turns into a non performing asset.
Tirupur has predominantly small and medium enterprises whose working capital requirements are huge. They are seeking an expansion in credit limits. Many apparel manufacturers feel the need for a concept change in NPA norms. Their opinion is that NPA in the present context is a wrong connotation under Basel norms, which is a banking supervision accord. They want India to take up the issue to either modify the Basel norms to suit the Indian industrial climate or shift small and medium units from Basel norms regulations.
The Index of Industrial Production contracted 4.3 per cent in September, the worst fall in eight years. The share of Tirupur knitwear exports in India’s total garment exports is 20 per cent. Exporters want a one-time long term initiative to be undertaken to uplift the skill proficiency of existing laborers in order to increase productivity at par with competing countries and at the same time reduce waste.
A loan which Prada has taken from a bank carries with it stringent provisions relating to sustainability which the luxury brand has to implement. One condition relates to the brand’s physical stores. There must be a certain amount of stores that are certified either gold or platinum by the green- building rating system Leadership in Energy and Environmental Design, which takes into account the construction of a building, its management, and the number of resources it consumes or waste it produces. Secondly, Prada will have to increase its training hours for its employees.
Also the brand has to reduce and phase out the use of virgin nylon by 2021 and instead move to Econyl, a recyclable yarn made from upcycled plastic waste. Phasing out nylon in any case is of paramount importance for the Italian fashion house, given the long-standing success of its cult Tessuto bags, which have traditionally been made with non-biodegradable nylon. Prada currently uses around 7,00,000 meters of the material annually. Prada has been making ongoing efforts for engaging in and cultivating virtuous behavior that contributes to its sustainable growth.
Brands are clambering to hop onboard the sustainability train as people are increasingly demanding that their clothes are made in an ethical manner.
Textile industry’s initiative Samarth has the broad objective of skilling youth for gainful and sustainable employment in the textile sector.
It aims at training 10 lakh people, of which nine lakh will be from the organised sector and one lakh will be from the traditional sector. The scheme covers the entire value chain of textiles (except spinning and weaving in the organised sector). The focus will lie on apparel and garmenting, knitting, metal handicrafts, textiles and handlooms, handicrafts and carpets, among others. District-wise tailoring opportunities for women will be identified as part of the outreach for skilling across states. A few courses and modules have been developed under Samarth in the area of garment manufacturing. Women form 75 per cent of the work force in the textile sector. Another objective is to promote skilling and skill upgradation in the traditional sectors of handlooms, handicrafts, sericulture, and jute. It also seeks to enable provision of sustainable livelihood either by wage or self-employment to all sections across the country.
India’s textile and apparel industry is one of the oldest such industries in the world. The country is the world’s second largest exporter of textiles and apparels. The industry is a significant contributor to the economy and one of the largest sources of job creation in the country, employing about 45 million people directly.
With the easing of trade tensions between the US and China, textile-related exports are likely to register a positive growth by the end of this fiscal. Besides handicraft and jute products, exports of all the other textile-related products declined in October. The exports of cotton yarn, made-ups and handloom products declined by 6 per cent while the exports of man-made yarn, fabrics and made-ups declined by 5.69 per cent during the seven-month period from April to October.
Textiles and apparels declined by 3.21 per cent. Of this, textile exports slid 4.15 per cent. For the seven-month period, these exports declined by 8.84 per cent. Though apparel exports also declined in October, they moderately rose during the seven-month period over last year.
Production of textiles and clothing in September was down by 2.6 per cent and almost flat for the 6-month period. Carpets witnessed the steepest decline in percentage terms — 16.87 percent. A saving grace was handicraft exports, which grew by 7.66 per cent. Jute product exports also went up by 9.75 per cent.
