FW
Nepal’s garment entrepreneurs, who were trying to boost their business with the recent enactment of Trade Facilitation and Trade Enforcement Act by the US Congress, are disappointed now. During a recent interaction with Garment Association Nepal (GAN), the visiting Deputy Assistant US Trade Representative Dawn Shackleford made it clear that the law does not encompass major garment items produced in the country.
The Congress, through the law, has authorised the US government to extend duty-free facility to Nepal for 66 items that include pashmina products, headgear, shawls, leather products, scarves, and travel goods (bags, suitcases), among others, one of the representatives of GAN quoted Shackleford as saying during the interaction. The facility also includes carpet items manufactured in Nepal, which had been excluded by the US government’s Generalised System of Preferences (GSP) facility.
The major garment items produced in Nepal are shirts, trousers, jackets, suits, among others. However, these items have not made the cut. Shackleford visited Nepal recently to hold discussions on the Trade and Investment Framework Agreement (TIFA) council meeting with the government. The TIFA council meeting was expected to be held once a year when the framework agreement was signed in 2011, but has only met once in the US after the agreement was signed.
Bangladesh’s exporters say they don’t get the benefits of 100 per cent duty-free access to Indian markets due to tariff and non-tariff barriers. India has awarded Bangladesh duty- and quota-free access of all products except alcohol and tobacco to its market.
Bangladesh is entirely dependent on the import of cotton from India to meet its demand. And cotton imports from India are on the rise. There are 400 cotton mills in Bangladesh, which consumed 6.1 million cotton bales worth about $2.2 billion in 2015. These mills produce 2,250 million kg of yarn over 11 million spindles.
India is the largest supplier of cotton and cotton yarn to Bangladesh. Cotton, cotton yarn and cotton fabric are the single largest commodity export from India, which accounted for about 22.5 per cent of India’s total exports to Bangladesh. The general opinion is that the trade volume between India and Bangladesh is in India’s favor. Bangladesh imported products worth $5.82 billion from India in the last fiscal year while its export was worth only $527 million.
Moreover frequent visits by business people from both countries have created a friendly atmosphere. One challenge Bangladesh faces is the procurement of cotton at a competitive price.
Lack of supply orders has forced many medium and small factories in Bangladesh to shut down in the last 34 months. These factories are facing acute hardships with western buyers refusing to buy from them due to safety concerns. Another problem is the failure of several factory owners to pay workers’ wages on time. This has caused periodic unrests at small and medium factories.
Since the collapse of Rana Plaza in 2013, over 300 apparel factories housed in shared buildings were closed due to buyers’ refusal to place supply orders. Owners of over 400 factories are keen to relocate from shared and converted buildings but they are unable to do so due to scarcity of land and moratoriums on extending power and gas connections and non-availability of money.
Business uncertainties facing apparel factories housed in shared buildings could cost the jobs of 1.2 million workers as it would be difficult to provide them alternative employments. Some factory owners say they have no interest in fixing safety issues as they do not get orders from signatory buyers and factory remediation requires huge expenditures. The net result is that jobs of about a million apparel workers have become uncertain.
Foreign retailers are choosing Bangladesh to source trendy denim wear at low prices as 37 foreign companies from 12 countries are scheduled to participate in the denim exposition to be held in Dhaka on April 25-26. The Denim Expo, 2016 will be organized at the Basundhara International Convention Center at Basundhara city in Dhaka.
As Denim Expert Managing Director Mostafiz Uddin, the organiser of the fair says they have received remarkable response from international retailers to attend the expo as they think Bangladesh is a good place to source denim from - at reasonable prices. Organisers initially planned to install 50 stalls for the fair. Of those, 12 stalls have been given for Bangladeshi denim factories while 37 companies of 12 countries will get 37. Another stall will be used as expo office. The companies from Germany, China, Italy, Singapore, Turkey, Japan, India, Pakistan, Vietnam, Spain, Brazil and Thailand are participating this time, according to the organisers.
Bangladeshi entrepreneurs supply denim to major retailers and brands, including H&M, Uniqlo, Levis, Nike, Tesco, Wrangler, s.Oliver, Hugo Boss, Puma, Primark, JC Penney, C&A, Tommy Hilfiger, Inditex, Walmart, M&S, Calvin Klein, Diesel, Gap, Channel and Dior and G-Star. Bangladesh has 26 denim factories that produce around 360 million yards of denim fabric every year. Total investment in the sub-sector stands at more than Tk 7,000 crore. Bangladeshi firms meet 40 per cent of demand for fabric by the local denim makers and exporters; imports account for the rest.
Known for cheap and basic garment production, Bangladesh is now drawing the attention of global buyers for high end items, especially in the denim segment. Global brands have started exploring the sourcing potential of handloom denim fabrics dyed with natural indigo from Bangladesh. In recent years, a few companies have started cultivating natural indigo and this indigo is mainly used in dyeing high quality, handmade products for high end and luxury markets.
Denim made on handlooms is softer than mill made denim, has a unique texture and breathes well and helps feel cool in summer and retain body warmth in winter. After cutting and collection of indigo leaves, they are soaked in a tank to produce an oxidised slurry, which is later boiled, sun-dried and made into vats. Organic cotton and natural indigo dye are being used for producing the handloom denim fabric.
Sustainable fashion companies in Germany are among the buyers that are currently working with a local company to produce hand-woven indigo denim fabric. Natural indigo is growing better in Bangladesh compared with other countries.
Production of ecological jeans has begun in Bangladesh. One instance is handloom selvedge denim fabric. Denim fabric with self-binding edges on both ends, running along the complete length of the fabric, is known as selvedge denim. Though the sampling development part is done outside Bangladesh, there is a possibility of stitching the finished products locally.
With a broad coalition of industry organizations, trade unions, civil society organizations, the Dutch government have tabled an agreement to achieve practical improvements in and ensure the sustainability of the international garment and textile supply chain. In fact, they want to address problems such as dangerous working conditions and environmental pollution.
The next steps in this process will be to secure funding of the agreement and have it signed in June by at least 35 companies in the sector, who together represent at least 30 per cent of sales in the Netherlands. The parties to the agreement will then also sign it. The agreement has been drafted under the guidance of the Social and Economic Council of the Netherlands (SER).
According to Lilianne Ploumen, Dutch Minister of Foreign Trade and Development Cooperation, this widely supported agreement, enterprises and civil-society organizations are taking a great step forward in combating malpractices in the garment and textile industry in developing countries.
They will, together endeavour to improve working conditions in these countries and make the manufacturing process more environmentally friendly. This is very good news for all those people who are still working excessively long days in dangerous conditions for very low pay. It’s also good news for the industry as a whole and for the consumer: everyone will be better off as a result.
Garmex Saigon went to the US recently to sign a franchise contract to exprt Gramicci, a brand of outdoor clothing and sportswear with a distribution network in seven states in the US and on Amazon. According to Le Quang Hung, chair of Garmex Saigon the company finds it necessary to follow a new development way in the context of deeper global integration, especially as the Trans Pacific Partnership Agreement (TPP) has been signed.
Hung says the franchise deal will take full advantage of both Gramicci and Garmex Saigon. Gramicci has advantages in distribution network, but it is weak in production. Meanwhile, this is the strong point of Garmex Saigon. What Garmex Saigon can expect from the contract is that it would be able to take the initiative in programming its production and looking for materials, minimizing risks and making fatter profit.
As per the contract, Garmex Saigon will exclusively exploit Gramicci brand for five years, for which it will pay 3 per cent of total annual revenue to the US brand. In the immediate time, Garmex Saigon will use Gramicci’s designers in the US, who understand the culture and taste of local consumers. Products will be made in Vietnam and then exported to the US to be distributed via Gramicci’s network.
Meanwhile, Garmex Saigon hopes it can earn $18 million in revenue from brand exploitation by 2018, which accounts for 10 per cent of the company’s total revenue. The move taken by Garmex Saigon is described as a ‘daring move’ in the current conditions of the Vietnam’s garment industry, where 85 per cent of companies just do outsourcing for foreign partners and pocket only 25 per cent of the product value.
"The opening session of the 11th Prime Source Forum 2016, Hong Kong that started today and is on till March 15, focused on sustainability as a practical and realistic approach going beyond just a cosmetic or marketing activity. Prime Source Forum, the two day event in its current edition, has been addressing sustainability concerns all these years. However, this edition deeply stresses on practical approach and solutions."
The opening session of the 11th Prime Source Forum 2016, Hong Kong that started today and is on till March 15, focused on sustainability as a practical and realistic approach going beyond just a cosmetic or marketing activity. Prime Source Forum, the two day event in its current edition, has been addressing sustainability concerns all these years. However, this edition deeply stresses on practical approach and solutions.
In the keynote address ‘Implications for a sustainable development of the fashion world following the G7 and COP21,’ Tino Zeiske, SVP, Corporate Responsibility, Metro AG said post G7 summit last year in Germany, where global leaders came together as a community of social responsibility and resolved to the statement that ‘we are here to shape future together’, later in September 2015 in the US the forum came with 17 sustainable development goals and in December at Paris COP21, a 190 member committed a target of lowering of 20 of temperature.
The outcome of these forums indicated, though there’s a higher aspiration on all such concerns but action is lagging. He added business must act as new activists and find business opportunities in these. Talking about carbon emissions, Zeiske said, “Yes we are all committed on ‘S’ word as an agenda but still global carbon emission levels are going up, from a 4,500 per capita level earlier, emission level today is at 5,000.”
Zeiske emphasised, “Global inequality is another concern, in spite of progress in developing world the gap between rich economies and poor countries is only widening further. Two hundred years ago, it was three times that of poorer countries, increased to 35 times fifty years ago and today the rich countries are 80 times richer than the poor countries. This imbalance is creating tensions that businesses cannot afford to face.”
He indicated that there are five significant implications to the scenario. The first one is low carbon approach, where dramatic regulatory changes in key markets are going to be there. Most governments will have to come with regulations like Germany already has regulations in textiles. “17 Sustainable Development Regulations by 2030 may sound like a threat, but it is also a business opportunity. Companies need to make it as a strategic move. Targets have to be set, soft policies and goals don’t hold true,” he emphasised.
According to him, the second implication is to understand that it is critical to do the calculations, because of the climate catastrophe, because of terrorism etc.; there can be a lot of disruptions in supply chain that needs to be accounted for. Consumer engagement in their hearts and minds is the third important implication of sustainable developments, as there cannot be any progress unless we engage consumer. It is the industry’s job to make it look more glamorous and making sustainability as the marketing case.
Innovation in digital technology is the fourth important implication. Technology so far is proactively being applied at the front. The need is to take it to the back end level, engaging right at farmer level and that could be a great game changer. For example, Metro in India has gone to the farmers and is creating collection centers to minimise waste, the farmers are asked to drop their waste at these centers. The innovation that has been applied is what we have given them. Through the electronic payment cards the farmers get their money the very next day that was not happening earlier.
The fifth and final implication according to Zeiske is “Collaboration across the industry,’ which is the key amplifier. It would be important to see how industry especially the smaller companies can leverage this and make this as an opportunity,” he concluded.
This year, Ethiopian Minister and Special Advisor to the Prime Minister Arkebe Oqubay and Tino Zeiske, Senior Vice President for Corporate Responsibility at Metro Group are the is the keynote speakers at PSF. The two day event as is the annual meeting place for senior executives to discuss challenges and opportunities that stakeholders across the global fashion supply chain are facing in the industry.
The United States has been working with Kyrgyz apparel manufacturers since 2014 to optimise production and marketing in order to tap into multi-billion dollar export markets by targeting major retail chains and branded stores in Europe and CIS.
The initiative, called USAID, hosted a business-to-business presentation of the production capabilities of the Kyrgyz apparel industry for foreign retailers. The retail buyers were highly impressed by the magnitude of apparel manufacturing in the Kyrgyz Republic, and by the advantages in flexible product development, lower logistics costs, and dramatically shorter lead times that Kyrgyz manufacturers have compared to many international competitors.
As a result of this meeting, Kyrgyz producers immediately signed and fulfilled contracts to export more than a million dollars in clothing, primarily men’s suits. With USAID support, 22 leading manufacturers in the Kyrgyz Republic that employ over 1,700 workers have joined the initiative to share best practices and improve their operations and marketing efforts. After expanding sales to current markets, the project will focus on exports to the European Union and the United States.
USAID is a four-year project that works with individual firms and stakeholders in the garment, tourism, and construction industries to improve productivity, access to markets, and management capacity to boost competitiveness in both domestic and international markets.
Haryana will set up a textile park at a cost of Rs 181 crores. Haryana is one of the largest producers of cotton in North India. Haryana produces 20 lakh bales of cotton every year but is not able to sell more than three lakh bales within the state. The trade has to bear the expenses on transport of goods to Punjab, Gujarat and other states.
The textile park would solve these problems and help growers find a market for their produce. The park would be set up in either Sirsa or Fatehabad. Out of six lakh hectares of land where cotton is produced in Haryana, nearly three lakh hectares are located in Sirsa and Fatehabad alone.
The industry hopes the textile park will have a flatted factory concept, a plug and play model, and a synchronised value chain with a processing industry and weaving industry to keep the state intact as a preferable investment destination for an export and textile hub.
A Rs 14 crores incubation center would also be set up in Haryana for skill development of youth associated with the textile sector. The readymade garment sector in Haryana is growing at a rate of 25 per cent.
