FW
Amid the protracted and unpredictable trade war between the US and China, a Hong Kong -based garment maker is looking to spread out its supply chain risks rather than simply move its production base out of China.
Lever Style will continue to hedge its bets and is looking at a lot more countries to spread its geopolitical risks and also cost inflation. It is constantly evaluating and seeing what’s the best combination that gives it cost effectiveness as well as agility.
Lever Style used to manufacture all its products in China a decade ago but has since moved much of its production out of the country due to rising costs. Now, the company produces in countries such as Vietnam, Cambodia and Indonesia. Lever Style is also trying to change the way it’s managed as a factory, such as by working with production partners around the region instead of going it alone. The company’s clients include fashion labels such as Coach and Paul Smith. However, garment manufacturing is labor intensive — one factor that could limit the business’ flexibility. The more labor intensive things are, the harder it is to just spread things around too much.
The US and China have imposed new tariffs on each other’s goods, intensifying a long-drawn trade dispute between the world’s two largest economies.
The Central Agency for Public Mobilisation and Statistics (CAPMAS) says, Egyptian cotton exports increased by 218.8 per cent to 510,200 metric quintals during the third quarter of the agricultural season 2018-2019 from the corresponding period of the previous season.
In the quarterly bulletin of cotton for the third quarter of the agricultural season 2018/19, the consumption of local cotton reached 38,000 metric quintals compared to 39,200 metric quintals during the same period of the preceding year registering a decrease of 3 percent, because some spinning mills ceased production.
The total quantity of cotton ginned equaled 382,600 metric quintals during the above-mentioned period, compared to 47,700 metric quintals during the previous period, an increase of 701.8 percent thanks to the cotton production increase.
Egyptian cotton production is on course to rebound with help from a devalued currency and bigger cultivation area, recovering from a slide in exports of the world-famous crop since 2011 that was caused by a drop in quality.
The Minister of MSME, Nitin Gadkari has announced that the share of MSME exports in the country will be raised to 50 per cent and sector’s gross domestic product (GDP) also to 50 per cent in the next five years. The ministry will also create 5 crore jobs in the next five years.
The minister was addressing a business summit titled ‘Globalising the Brand Khadi: The Pride of India’, organised by the Confederation of Indian Industry (CII) in Mumbai.
Calling upon enterprising people in the private sector to come forward to promote khadi, the ministry stated that the khadi sector needs to be strengthened and its turnover needs to be raised further. He also launched Tech Saksham, a CII Tech Project, aimed at accelerating MSME growth through technology enablement. CII Tech-Saksham for MSMEs, a MSME ministry-CII project, brings together technology majors Dell Technologies India, HP India, Intel India, Vodafone Idea, WhatsApp India and Yes Bank to address technological gaps faced by MSMEs in their growth.
India’s exports of cotton textiles fell 24 per cent during April to July, 2019. This has led to a crisis-like situation in spinning industry. In fact, monthly exports of cotton yarn are at a five-year-low. Exports to major markets such as China have halved, and exports to Bangladesh and Korea have fallen 38 per cent and 45 per cent.
Competing countries are gaining access to various markets such as China, South Korea and Turkey, mainly on account of the preferential access given to them by the importing countries, leading to a further erosion of India’s market share. While Vietnam has increased cotton yarn exports to China by 17 per cent during the last four months, India’s share declined 16 per cent in the same period. In view of the sharp decline, many production units are shutting down and need urgent policy support. The industry wants the three per cent interest equalisation to be extended to cotton yarn since this is expected to help the cotton yarn sector and the spinning industry to minimise their losses and regain their competitiveness.
However, made-ups and garment exports are recording a positive growth mainly on account of the Rebate of State and Central Taxes and Levies scheme.
Thousands of Indian cotton spinning mills have shut shop in the past three months. The average realization from cotton yarn has fallen six per cent in the quarter between April 2019 and June 2019. The decline in average realisation has put a question mark on the survival of cotton spinning mills, with increasing fixed costs such as labor, interest on working capital, land, plant and machinery adding to their woes. Recovery in overall sentiment is not in sight resulting in closure of many small and medium size mills and rendering thousands of workers jobless.
One reason is the decline in exports following a weak global demand. A sharp and precipitous decline, especially in cotton yarn during the last four months, by about 35 per cent, has led to a crisis situation in the spinning industry. Cotton yarn exports to China declined by 50 per cent and Bangladesh by 38 per cent and Korea by 45 per cent.
In view of the sharp decline in exports, the spinning sector is in a very critical situation. Exports of cotton textiles continued their downward spiral, declining by 24.5 per cent during April to July. During the first three weeks of August, overall cotton textile exports declined by a staggering 25 per cent.
Bangladesh’s garment and textile machinery imports fell 11.04 per cent in the last fiscal year. Overall imports of capital machinery fell by 9.43 per cent. Imports of textile machinery fell 18.40 per cent while garment machinery imports plunged 3.52 per cent.
The absence of new investment and a downtrend in private credit growth caused by a crisis in the banking sector dragged down imports of capital machinery. Since no significant change took place in innovation, there was no capacity expansion in the apparel industry. In addition, the production cost rose significantly, especially after the increase in minimum wages in 2018. This rise in the production cost has impelled apparel makers to instead import yarn and fabrics. Also, the crisis in the banking sector created a cash crunch, hindering new investments. Deepening problems in the country’s financial sector hindered private investment for new projects or expansion. Businesses are wary about expansion as they already have unused capacity. A huge amount of fabrics and yarn has remained piled up at warehouses in the country’s primary textile sector. Election uncertainty was another reason for the slower private investment. Investors were cautious about opening new letters of credit to import machinery for new investment fearing it would delay the implementation of projects.
Private investment to GDP has been hovering between 22 per cent and 23.4 per cent for the last decade.
"The invasion of technology is reinventing the fashion world with customers moving away from brick and mortar stores to online shopping. However, the luxury fashion sector has, until now, remained immune to this change as here the experience of shopping in opulent boutiques is almost as important for customers as the clothes themselves. Therefore, for most luxury brands, going digital is just an effective way to add value to their business and communicate with their global market."
The invasion of technology is reinventing the fashion world with customers moving away from brick and mortar stores to online shopping. However, the luxury fashion sector has, until now, remained immune to this change as here the experience of shopping in opulent boutiques is almost as important for customers as the clothes themselves. Therefore, for most luxury brands, going digital is just an effective way to add value to their business and communicate with their global market.
A case in point is the Thailand-based firm Club21, a distributor of luxury fashion brands such as Alexander Wang, AX Armani Exchange, Bao Bao Issey Miyake, Comme des Garcons, DKNY, Diesel, Emporio Armani, Marni, Mulberry, Pleats Please Issey Miyake, Paul Smith and Stella McCartney. The company, which has been successfully operating for four decades under the banner Club21 Asia, has always emphasised building long-term relationships with its clients through its brand trust and services.
Applying the 3C’s to attract more customers
For projecting a consistent positive image, the company applies the principle of 3Cs. Of these, the first ‘C’ stands
for communication. The company ensures effective communications with its clients through its online operations. It also has a presence on other social media tools such as Facebook, Instagram, YouTube, etc.
The second ‘C’ stands for Commerce. The company enables its customers to solve their queries regarding the nature of its products and their prices. For this it has started @line where the customers can leave messages even when the shops are closed. The customer service team forwards this message to the listed brands who send the pictures of their products with prices to the service teams. This service team then passes on the information to the customer.
Once a customer decides to purchase the product, the company organises for its free delivery, thus applying the third principle of offering convenience to its customers. This is the main reason the overall return rates for online purchases from the company are considerably lower than the standard 30 per cent.
Personalised attention ensures brand loyalty
Like Club21, Pacifica Group provides its customers human interaction or personalised services that make them feel comfortable when they shop. The company ensures delivery of its products to its customers irrespective of their locations. For this, the company uses its e-commerce operations. For instance, if a customer who visits the company’s store at CentralWorld but doesn’t find a particular garment in her size, the company finds and delivers it to her. It is also uses courier mode of delivery as it ensures that the delivery reaches its customers safely besides providing them a personalized experience.
Liva, a new age fabric by Aditya Birla Group, received an overwhelming response at Yarn, Fabric and Accessories Trade Show 2019, held in Ludhiana. Visitors appreciated the quality and trendy garments crafted by Liva’s partners Prisma Leggings, Monica Collection, Aswira Premium Fabrics, Vandan Silk Mills and Swami Textiles.
Unlike other fabrics, that are boxy or synthetic, Liva is a soft, fluid fabric which falls and drapes well. The new-age naturally sourced fibre made into fabric in pure or blended form transforms not just the garment but also the person wearing it. It is comfortable, soft, natural, and eco-friendly. The brand recently launched its eco-enhanced version of the fabric, called Livaeco, which is made of wood pulp sourced from FSC certified forestry.
Chinese and Vietnamese companies sought large-scale business partners at the 2019 China (Guangdong)-Vietnam Import and Export Fair, held from August 28-30, 2019 in Hanoi. The three-day fair was attended by 260 Chinese and Vietnamese enterprises whose products center on five groups, namely machinery and consumer electronics; LED and lighting technology; hardware, construction materials and furniture; garment, consumer goods and food; and tech products and gadgets.
At the fair's business matching programs, Vietnamese enterprises, mostly producers and exporters of rice, coffee, rubber, timber, handicraft, garment accessories, cotton and electrical equipment, are seeking partners from China's Guangdong, Hong Kong Special Administrative Region and Macao Special Administrative Region.
Nigerian investor Verod Capital Management and energy drink company Red Bull have invested in West African clothing company DTRT Apparel. DTRT – ‘Do The Right Thing’ has targeted the global clothing manufacturing market, aiming to attract work that previously went to Asia, particularly China, while making a positive impact on communities in West Africa. Headquartered in the United States, the company is a joint venture between US investors and Ghanaian fashion industry veteran Salma Salifu and supplies clients in the US and Europe. It has more than 2,000 employees in West Africa, with more than 1,500 based in Ghana.
As a part of the deal, DTRT will supply “anchor customer” Red Bull with clothing. The Austrian energy drink company has turned itself into an expansive lifestyle brand, while Lagos-headquartered Verod invests in a range of sectors including manufacturing, consumer goods, business, agriculture, education, healthcare and financial services.
The investment was predicated on the very rapid growth of the Ghanaian economy, due largely to its political stability, and Ghana’s unique advantages for cost-competitive production.
