FW
In the first eight months of the year, Vietnam’s export value of textiles, fiber, and cloth was up 8.6 per cent.Textile production and exports have grown over the same period last year.
However, domestic textile enterprises face many challenges in production and business activities. The US-China trade war has affected exchange rates, leading to higher prices of processed goods in Vietnam compared to regional competitors such as South Korea and China. That has also affected the number of export orders for local enterprises. Export orders have fallen. Some businesses have only received 70 per cent of new orders against the same period in 2018. Vietnam's major export market –China – has cut import volumes. Garment enterprises have also seen a drop in orders.
In 2018, many large enterprises in the industry had export orders throughout the year, while this year, they could only sign monthly export contracts with small volumes. Orders are broken up instead of bulk. As the third quarter comes to an end, it is unlikely that Vietnamese textile enterprises will increase exports due to the on-going US-China trade war. Enterprises from South Korea and Taiwan in Vietnam have gained advantages from the trade war because they own production factories under the value chain. Korean textile and apparel companies in Vietnam have been the biggest beneficiaries of the trade war.
Tariffs on goods imported from China have been devastating to small fashion brands in the US.They have added to the cost of production, which can be factored into prices very gradually, if at all. The initial tariffs only affected specific sectors like footwear so companies could adjust their assortment to minimize their impact on retail partners and customers. But the recent tariff raises which saw a ten percent increase in tax on certain imports from China, including apparel and footwear, have been a shock because of their scope and suddenness. All the goods that companies import from China will be subject to heavy tariffs. The impact will also hit women’s brands more than men’s since nearly twice the amount of women’s clothing comes from China than men’s.
Larger brands and retailers may be able absorb in the costs of increased tariffs without the consumer even noticing but smaller brands may have no choice but to pass at least some of the costs on to the consumer, which can hurt their relationship with customers.
China has become a major market for fashion. Many fashion brands either do business there — by operating their own stores locally or through Chinese retailers — or manufacture there.
Re.VerSo is a new textile platform that works with textile partners to produce a fully integrated, totally Italy-made textile collection. It presents refined and innovative materials that inspire creativity and infuse technology. Re.VerSo works with its Italian partners, such as Green Line and NuovaFratelliBoretti for the raw material, Mapel for textile fashion, Filpucci for the high-end knitting threads, and Filatura C4 for design contract textiles and for woven fabrics in general. Through these partnerships, Re.VerSo offers smart yarns and fabrics solutions with high aesthetics and quality, collecting, selecting, transforming pre-consumer wool and cashmere.
Re.VerSo represents a system of circular economy, with the addition of a new generation of values and quality. It saves heavily on water use and energy consumption and drastically cut down on carbon dioxide emissions, an artisanal approach that distinguishes the industrial supply chain. Re.VerSo is known for responsible innovation, represents excellence combined with a new vision of smart innovation.
Leftovers can be sourced directly by the Re.VerSo supply chain. Its advanced technology process invites retailers and brands to hand in their pre-consumer wool and cashmere woven and knitted off cuts, transforming them into high-quality yarns and fabrics integrated for a circular economy.
The textile processing sector in Surat has ramped up production following a rise in the demand for manmade fabric across the country. From the last one-and-a-half-years, the textile processing sector was reeling under a recession due to dwindling demand for polyester fabrics, labor issues and factors like GST and demonetization. Production of finished fabrics came down from 4.5 crore meters a day to two crore meters. Some textile processing units kept their units shut for three days a week to cut down on the production of finished polyester fabrics. A few small units shut down altogether.
However the fast approaching festive season has given a sense of hope. Orders have started flowing in. Manufacture of processed fabrics has increased by almost three crore meters a day. Textile mills running at 40 per cent capacity have ramped up production considerably. They are hopeful the ITC refund issue for the textile sector will be resolved since this will pave way for new investments and allow for the infusion of funds.
There are about 350 textile processing units in Sachin, Palsana, Kadodara and Sachin employing over 2.5 lakh textile workers. The grey or unfinished fabric manufactured by powerloom weavers is sent to the textile dyeing and printing mills for the final finishing.
Yarn production in India is likely to decline this fiscal owing to lower demand from China and volatility in cotton prices.Cotton contributes about 50 per cent of the total raw material in the Indian textile industry. With muted demand for yarn from China, and Pakistan enjoying duty-free exports to China, Indian yarn manufacturers are suffering idle capacities and production losses. Prices of cotton have seen a declining trend due to higher production in some countries.
India’s cotton yarn exports between April and June was 35 per cent lower than last year. The ongoing crisis has resulted in the closure of approximately a third of the spinning capacity across India. The industry will not be able to buy the upcoming cotton crop of about 40 million bales worth around Rs 80,000 crores.
Prices of synthetic/manmade fiber have stabilized with support from almost-stable crude prices in the second quarter. Further, the improving spread with cotton has made manmade fiber a more lucrative sub-sector for the textile market. Readymade garment exports from India have started improving because of the introduction of the rebate from state and central taxes and levies scheme along with the existing Merchandise Exports from India Scheme.
The Tirupur Exporter’s Association has revealed that the exports of readymade garments from India declined by 9.18 per cent in June 2019 and 2.44 per cent in August 2019. This was the lowest growth recorded during both months in the past six years. India exported readymade garments worth $1.260 billion in August 2019 from across the country; In June, it recorded $1.357 billion worth of exports. The Tirupur apparel cluster accounted for about for 55 per cent of the total trade.
The industry is witnessing the full adverse effect of demonetisation and GST. Around 50 per cent work has come down in apparel units in recent months, as many were layingff workers.
The central government is taking steps like the restoration of Merchandise Exports for India Scheme and other incentives to put the industry on the growth track. But, it needs to establish Free Trade Agreements (FTA) with countries like the US and the European Union, without which Indian units cannot compete with companies in underdeveloped countries including Bangladesh, Vietnam and Cambodia.
India’s leather and leather products exports dipped four per cent in July 2019. Yearly decline was about 13 per cent. India is the second largest global exporter of leather garments. Being a consumer oriented sector, and predominantly concentrated in the micro, small and medium segment, the leather and footwear sector has been facing challenges on the export front due to factors like recessionary trends and fierce price competition. Major export destinations include Europe and the US. The sector employs about 42 lakh people.
Easy and timely availability of credit with affordable interest levels is extremely important for the leather and footwear sector as this alone can help in tapping the huge opportunities available in global markets. In this context, major steps are being contemplated including measures to improve trade credit flows and transmission of interest rate cuts by banks and monitoring export finance through an inter-ministerial group in the department of commerce. Priority sector lending norms for export finance are expected to galvanize the sector particularly small and medium units which have been affected by the slowdown. To help revive leather garment exports, the industry has requested for an enhancement of the duty free limit from three per cent to five per cent of freight on board value of exports.
H&M sales were up eight per cent in the third quarter from a year earlier.It was the fifth consecutive quarterly rise.
H&M, based in Sweden, is the world’s second biggest fashion retailer. The group has had well-received summer collections and an increased market share. The stock has soared 51 per cent this year on hopes that H&M is getting back on track after years of falling profits due to slowing sales at its core brand’s stores, and investments to adapt to tougher competition and changing shopping habits. Activity levels related to its transformation work remained high in the third quarter, an indication investments in physical stores and online will weigh on margins again in the quarter.
In the year-ago period, sales were disrupted in several key markets due to troubles implementing a new logistics system. Globally, H&M is also increasingly integrating online and physical stores in most markets including India where it launched its online store in March this year. The retailer stocks fast fashion items created in-house and teams up with designers for one-time collections. H&M has started to geographically diversify its collaborations, after having mostly formed partnerships with western brands in the past. For the upcoming autumn season, H&M has teamed up on capsule collections with an Italian designer and a Chinese designer.
Chic will be held in China, September 25 to 27, 2019. This is Asia’s leading trade fair for fashion and lifestyle. It will feature more than 690 exhibitors and brands from 10 nations. Sustainable development, green innovations and ecological supply chain solutions are the focus of attention at two locations at the fair. International brands will showcase in country pavilions (Italy, Korea, Hong Kong etc.). International individual exhibitors also present themselves in the different exhibition segments.
The professional visitor management and matchmaking offered by Chic enables international exhibitors to participate efficiently in the fair. Meetings and shows on recycling, climate leadership, sustainable production and green innovation will take place. The Sustainable Zone, which always takes place at the autumn fair, will show the latest sustainable market developments in fashion and lifestyle, environmentally conscious innovations and ecological supply chain solutions. For many trade visitors, Chic is the only way to obtain a competent market overview. The trade fair segments include those for men’s wear, women’s wear, leather and fur, accessories, bags and shoes.
China’s strong domestic market is expected to boost retail sales this year by 3.5 per cent, despite trade conflicts with the US. With a market share of 54.7 per cent, China also remains the world’s largest e-commerce market.
T. Rajkumar is the new Chairman of the Confederation of Indian Textile Industry. He heads Sri Mahasakthi Mills, Sri Arumuga Enterprise and Foundation One Infrastructures. He is also the Chairman of the Textile Sector Skill council and past chairman of Southern India Mills’ Association apart from being actively involved in various industrial bodies and educational institutions.
DL Sharma is the new Deputy Chairman of CITI. He is the director of Vardhman Textiles and managing director of Vardhman Yarns and Threads. He was president of the Ludhiana Management Association.
SK Khandelia is new Vice Chairman. He is the president and CEO of Sutlej Textiles and Industries. He is a chartered accountant. Through a steady application of forward thinking and a resilient strategy, he has been able to optimize Sutlej’s performance in terms of volume and profitability, which rose sharply after his takeover. Khandelia is actively involved in many industry associations and has been instrumental in initiating and implementing various philanthropic and welfare activities in his personal capacity as well as under the Corporate Social Responsibility.
Confederation of Indian Textile Industry is one of the leading industry chambers of the textile and clothing industry, representing the entire textile value chain through its leading regional and industry associations and 18 major corporate members.
