FW
Gas and electricity tariffs have been rationalised for the export-focused industry in an attempt to cut cost of production and boost competitiveness. These incentives have brought down the cost of production for the textile value chain.
Pakistan has been a net importer of cotton for nearly two decades. Its cotton production hit the highest in the last ten years in 2014-15 and that year too the country imported about a million bales.
In 2018-19 season, Pakistan is expected to face a shortfall of three to four million bales. High duties and taxes of up to ten per cent, including three per cent customs duty, two per cent additional duty and five per cent sales tax, were imposed on cotton imports in July 2018, leading to a sharp decline in imports. Now the plan is to rationalise subsidies for agricultural crops in order to encourage the cultivation of cotton. The cotton ginning industry os being encouraged to reduce contamination, improve productivity and upgrade the machinery.
Owing to trade tensions between the US and China, Pakistan’s textile industry is receiving a large number of import queries from the US. Simultaneously Pakistan is working on expanding its market share in China, Japan, the European Union and the US.
The Spanish club La Liga Powerhouse Barcelona has filed a trademark lawsuit against Istanbul-based Barca Textile for infringement of trademark rights. Barca (or Barça) is the colloquial name of the La Liga champion and a petition to a Turkish court by the club's Turkish lawyer Nazlı Deniz Kol says this is how the club is known across the world. The club has countless trademarks in nearly 100 countries and a large fan base in Turkey as well.
The lawsuit comes after the club, which plans investments in Turkey, failed to register its trademark when it turned out that Barca had already secured the name officially after applying to the state-run patent authority in Turkey. The lawyer, however, says Barca has been in use as the name of the football club since 1899.
However, Barca Textile's owner Ali Öziçer reveals that company, founded in 1997, is named after "boat" in Italian, as a logo of a boat next to the company's name indicates. It has been exporting clothes to many European countries under the name and that it is a registered trademark in those countries. It recently applied for a trademark in Spain, but was turned down. The company found out that the Barcelona club was planning to open a restaurant in Turkey under this name and had applied for trademark rights. It filed an objection to their application, and they filed a lawsuit in return.
The Ministry of Trade and Industry in Egypt recently announced plans to establish the largest textile and garments city in the country. The city in Sadat City, includes 592 factories. The new city is one of the major projects to be organised in Egypt, according to the latest technologies in the spinning and textile industry, operated by the Chinese company, Ningxia Mankai Investment Company.
Furthermore, the Armed Forces Engineering Authority has completed about 50 per cent of the construction work in the first phase of the city over 600,000 sq m. This includes 150 factories at a total cost of construction work estimated at EGP 2.1bn. The ministry plans to start experimental operation of some factories in the first phase in May, with the completion of all operating work by the end of this year. The project includes three phases and will be developed over four years. The Chinese company has signed initial sales contracts for 48 factories in the first phase for Chinese companies, and is negotiating with more than 60 Chinese investors to sell other factories in the second phase.
Garment accessories and packaging manufacturers in Bangladesh have sought policy support including low cost funds and incentives. As a backward linkage industry, this sector contributes $7.10 billion to the garment export earnings of the country.
The sector helps exporters reduce their lead time by providing accessories and packaging products in a short time. In addition to supplying packaging products to local exporters, the sector is also exporting products directly and has become self reliant.
Makers of garment accessories in Bangladesh are gearing up to meet the demand of the growing apparel sector. They are emphasising more on producing high-quality accessory items to establish this sector as an individual industry rather than a backward integration of the readymade garment industry.
About 100 new factories started operations last year in Bangladesh. Currently, around 1,700 factories are producing accessory items in the country. Bangladesh produces and exports accessories like woven labels, leather badges, stone and metal motifs, rubber patches, gum tapes, satin and cotton ribbon hangers, price tags, and buttons and zippers. In all, accessory makers and packagers supply 34 types of products. The sector contributes 15 to 20 per cent to net export earnings of the readymade garment sector.
Volcom is working with Cotton Connect on a program to increase the supply of organic cotton. The program forecasts by improving wages and living standards of farmers growing organic cotton, it will increase organic cotton harvests and safeguard the world’s environment. Action-sports brand Volcom, based in the US, is a part of Kering, a France-based luxury conglomerate. Kering is also the parent company of Gucci, Yves Saint Laurent and Alexander McQueen.
Cotton Connect, based in the UK, works on building sustainable supply chains, teaching sustainable agriculture practices and developing skills of women in countries where organic supply chains start. The program will also guarantee that yarn labeled and sold as organic cotton is indeed organic cotton. Certifying cotton as organic can occasionally be a murky process. This project makes it possible for a company to seek traceability in a supply chain, which was said to be impossible.
The program also offers a year long organic-farming-skills program for farmers that includes working to develop natural pest controls and organic fertilizers. The program also offers sessions on women’s rights and life skills. It embodies both environmental and social benefits. The program opened in 2017 in Madhya Pradesh and produced nearly 27 metric tons of organic cotton.
Textile major Arvind is keen on introducing DyeCoo’s CO2-dyeing technology at its manufacturing plants across India. This eliminates the need for water and chemical dyes and is environmental free. DyeCoo, a Dutch company, is looking to partner leading textile firms in India.
If all goes well, Arvind will be the first company in India to introduce sustainable technology in the manufacturing of textiles in India. Arvind is in the process of ramping up textile production across its manufacturing units as it plans to double its textile business in the next five years. The company has earmarked an investment of Rs 500 crores every year for the next five years to expand its textile business.
Arvind has an annual production capacity of more than 100 million meters in denim, 132 million meters in woven fabric, 10,000 tons of knit fabric and 48,000 meters of voile. The group has built a strong portfolio of brands that straddles consumer segments across the income pyramid.
The company is also looking at developing garment clusters in Jharkhand, Andhra Pradesh and Gujarat. Each of these clusters will employ 4000 to 8000 workers. These clusters will be like a global supply chain. Arvind already has a cluster operational in Ethiopia.
"Among the markets outside Hong Kong, this edition of the Fashion Week saw the highest buyer attendance from Mainland China, Indonesia and the US, showing that the sourcing sentiment in both mature and emerging markets has remained unaffected. Among emerging markets, buyer attendance from Russia recorded an increase. The results also highlight that despite economic uncertainties, global buyers still value Hong Kong's position as an unrivalled sourcing hub for global fashion traders and retailers."
Organised by the Hong Kong Trade Development Council (HKTDC), the 50th edition of HKTDC Hong Kong Fashion Week for Fall/Winter wrapped up at the Hong Kong Convention and Exhibition Centre (HKCEC). The four-day fair was held from January 14 to 17, 2019 and attracted nearly 13,000 buyers from 78 countries and regions.
Among the markets outside Hong Kong, this edition of the Fashion Week saw the highest buyer attendance from Mainland China, Indonesia and the US, showing that the sourcing sentiment in both mature and emerging markets has remained unaffected. Among emerging markets, buyer attendance from Russia recorded an increase. The results also highlight that despite economic uncertainties, global buyers still value Hong Kong's position as an unrivalled sourcing hub for global fashion traders and retailers.
Informative seminars and presentations attract new, old buyers
Information-sharing events during the Fashion Week included: "The Visionary Fashion Trends for Spring/Summer 2020" presentation by leading international fashion forecaster Fashion Snoops, as well as seminars exploring issues such as sustainable development in the fashion industry, the cotton market outlook and the latest cotton textile technologies.
Industry players from emerging markets showed enthusiasm for Fashion Week, including Urszula Tomaszewska-Kislo from Poland who visited the event for the first times. She operates 30 shops in Poland together with an online store selling clothing under her own brand. The show deepened the Polish buyer’s understanding of current fashion trends and provided it a good platform for sourcing high-quality goods. The brand not only found four potential clothing suppliers and garments but also placed an onsite order for $10,000 worth of women's sweaters offered by a supplier from Mainland China.
Cloud-based Job Order System to deal with costs, stock issues
The fashion industry needs to deal with challenges arising from rising costs and smaller orders. iGarment (Hong Kong)
addresses these issues through the development of an innovative cloud-based garment production coordination system. Participating in the Fashion Week for Fall/Winter for the first time this year, the brand showcased its iGarment cloud-based Job Order System that covers everything from sample development to production progress and shipping.
Factory visit for practical experience
During the first two days of the fair, iGarment met more than 100 buyers, exhibitors and designers from Hong Kong, Mainland China and Southeast Asia. To understand their needs, the company arranged visits to those factories that have adopted its system. Due to the overwhelming response from buyers, iGarment has already decided to return to the fair next year.
Contest for local designers invites applications
Since 1977, The HKTDC has been organising the Hong Kong Young Fashion Designers' Contest (YDC) to unearth talented local designers. This year's competition will be held during CENTRESTAGE in September, and is now open for application.
"Rising labor costs in East Asia and tax-free access to the US market is encouraging Asian textile and garment manufacturers and Western buyers to turn to Egypt. China is planning to move 20 per cent of its production to Egypt either by setting up shop, through mergers or full acquisitions of local companies. The US-China trade war is also pushing Chinese manufacturers to look for new hubs to avoid potential tariffs of 25 percent into the US."
Rising labor costs in East Asia and tax-free access to the US market is encouraging Asian textile and garment manufacturers and Western buyers to turn to Egypt. China is planning to move 20 per cent of its production to Egypt either by setting up shop, through mergers or full acquisitions of local companies. The US-China trade war is also pushing Chinese manufacturers to look for new hubs to avoid potential tariffs of 25 percent into the US.
QIZ enables duty-free export of garments to Egypt
The Qualifying Industrial Zones (QIZ) program allows Egyptian manufacturers to export garments to the US duty-free, if at least 10.5 percent of raw materials used in the garment are Israeli. As the Readymade Garment Export Council of Egypt notes, these zones, established by the US Congress in 1996, have generated over $8.6bn in exports since 2004.
The scheme has also raised concerns among Egyptians who reject normalisation of relations with Israel and specifically 
protested against QIZs during the 2011 uprisings. Last year, exports from the QIZs were worth $752.7 million while in the first half of 2018, exports to the US grew by 25 per cent, according to QIZ Egypt figures. QIZ exports account for 46.7 percent of Egypt’s total exports to the US.
Egypt wants to bolster the current garment and textile exports, roughly split between the EU and US, to $10 billion by 2025. If this figure is achieved, around $5 billion or more would be destined for the US, significantly increasing the amount Israel will net through the QIZ agreement. Chinese firms will also benefit from the QIZ agreement, and directly bolster Israeli exports. Such an uptick in exports is considered probable given the historical trajectory of other garment manufacturers to reach over $5bn in annual exports.
A major sourcing hub for Chinese companies
China has invested around $6 billion in Egypt over the past four years, while $18 billion in deals were signed with Chinese companies during President Abdel Fattah al-Sisi’s visit to Beijing in September, including railway, real estate and energy projects. Chinese businessmen see Egypt as a major sourcing hub for Chinese companies as they expect up to 50 per cent of Chinese production to relocate.
On its part, to attract foreign investment, Egypt has established a new industrial city in New Suez, slated to open at the end of the year, and allocated 1.2 million sq. mt. of land in the industrial zone of El Minya in Upper Egypt. Foreign companies can employ up to 25 per cent non-Egyptian workers.
Egyptian companies may feel the squeeze by Ethiopia
A particular growth driver of Egypt’s garment exports is the expansion of Hong Kong-based Li & Fung, the world's leading supply chain solutions partner which connects buyers, retailers and suppliers for consumer brands and retailers, in the country.
Currently, out of the $16 billion in volume and five billion pieces of clothing that Li & Fung sourced globally last year, just $30 million – or 1.62 million pieces - were from Egypt. By 2019, Li & Fung wants to double that figure, and by 2022 aims to source $90m from Egypt.
Yet while Egypt offers favorable investment terms to foreign companies - Turkish and South Korean firms are already established at QIZs– Egyptian companies may feel the squeeze in future as Ethiopia offers free land and low wages and electricity. Besides, the country also has an FTA with the USA.
The US wants its trade agreement with the EU to develop rules of origin that ensure that preferential benefits go to products genuinely made in the United States and the EU. Apart from wanting a comprehensive duty free treatment for textiles and apparel products, the US wants rules of origin to incentivize production in the US and EU and establish origin procedures that streamline the certification and verification of rules of origin and that promote strong enforcement, including with respect to textiles.
In customs and trade facilitation, the US aims at building mechanisms to ensure shipments are released quickly after determining compliance with applicable laws and regulations. In addition, objectives in this area include providing for streamlined and expedited customs treatment for express delivery shipments, simplified customs procedures for low-value goods and a more reciprocal de minimis shipment value–the minimum value for goods that can enter the country duty-free–all generally aimed at promoting cross-border e-commerce.
The US also wants to create a mechanism to take appropriate action if the EU negotiates a free trade agreement with a non-market country, such as China. Additionally, the US wants to strengthen existing procedures and create new ones to address antidumping and countervailing duty evasion.
Fashion festival Pure London, Pure Origin will launch its own forward trends catwalk showcasing key looks, innovations and materials for AW21/SS22. Pure Origin will be held from February 10 to 12, 2019. This is a manufacturing and supply chain expo. Major players in the industry will showcase new technologies and emerging trends that will shape the future of fashion and help businesses to stay ahead of the curve in today’s fast-changing retail landscape. Offering a visual platform, the catwalk will showcase the latest trends for sourcing, sustainability and manufacturing including fabric, raw materials, apparel, footwear and accessories.
As a convenient and cost-effective way for buyers to meet with UK and international manufacturers, Pure Origin brings together over 200 exhibitors from 13 countries to create a wide range of business and networking opportunities, new thinking and innovation. Garment and fabric suppliers, denim and textile designers and technology brands attract buyers, sourcing, and technical personnel. With its own seminar stage, Pure Origin features speakers and leading change-makers debating the future and how to make it sustainable and circular. The biggest challenges in garment sourcing, from the integration between sustainability and speed-to-market, supply chain transparency, fabric and technological innovation, will be addressed.
