The new wave of FDI is a chance for Vietnam to deepen its industrialisation by encouraging the development of supporting industries.

The government should introduce new FDI projects on a selective basis, improve infrastructure and offer incentives to induce import substitution for high-tech components, parts and other intermediate industrial products. A list of the products that are particularly encouraged should be announced to stimulate the development of these industries.

Most FDI in Vietnam to date have been by wholly foreign-owned firms, with weak linkages to the local sector.

The new FDI policy should aim to correct this division. Local firms should be encouraged to create vertical linkages between FDI assemblers and local suppliers of intermediate goods. Joint ventures between foreign and local firms should also be encouraged. The government should not, of course, force foreign firms to set up joint ventures. Rather, local firms should be nourished and strengthened so that they are selected by foreign firms to be partners.

Chin, the remote state in northwest Myanmar bordering Bangladesh and India was closed to foreigners until 2015. But now, as the government seeks to attract investment, several high-end companies have started working with Chin weavers to create unique fabrics for sale overseas.

In early 2017, British homeware company Kalinko began working with a group of Chin weavers to create high-quality products that appeal to international consumers.

This has involved very simple changes, such as having the weavers work side-by-side in order to achieve consistency in the patterns, weaving in a clean environment and combining traditional patterns with color combinations chosen by Kalinko.

UK-based non-government organisation Turquoise Mountain has also started working with weavers in Chin State. It recently held a workshop in Hakha, the state capital, on colour and raw materials, which the organisation believes are critical to opening up higher value markets.

Turquoise Mountain has also established a central ‘cut and sew’ workshop in Yangon that keeps a crucial part of the value chain within Myanmar and focuses on product development and quality control.

The organisation’s work with textiles in Chin State and in other parts of the country is partly funded by the UK’s Department for International Development (DFID) through its DaNa Facility, which has been instrumental in launching an investment drive in Chin State.

China is exporting textiles to India through Bangladesh to evade import tax, undermining New Delhi’s efforts to support local manufacturers. Earlier this week, India doubled the import tax on more than 300 textile products to 20 per cent, marking the second tax jolt on textiles in as many months.

This is aimed at providing relief to the country’s domestic textile industry, which has been hit by cheaper imports. Total Indian textile imports increased by 16 per cent to touch a record value of $7 billion in the fiscal year ending March 2018. Of this, about $3 billion were from China alone.

Textiles are India’s second largest job provider directly employing nearly 51 million people and accounting for 5 per cent of India’s gross domestic product and 13 per cent of its export earnings.

Imports of clothing accessories and apparel from Bangladesh – the world’s second largest exporter of ready-made garments -rose over 43 per cent to $200.9 million during the year ended March 2018, according to Indian government data.

India, Bangladesh and Sri Lanka are among the signatories of the South Asian Free Trade Agreement (SAFTA) that created a in the South Asian region.

Pegasus is known for high quality sewing machines as well as extra-high speed sewing machines, recently showcased complete solutions for lingerie in Dhaka

The company has complete solutions for lingerie or undergarment projects and has been making chain-stitch machines since 1914 for all kinds of knit items and some special machines for woven garments as well. The machines are equipped with automatic labor saving devices, which can increase productivity, enhance product quality and minimize the labor from production lines.

The company has an outstanding capacity for technological development and responds quickly to the market. Research and development is one of the most common strategies adopted by the market players and it helps companies stay afloat in the market by addressing the increasing competition.

The global sewing machine market is expected to grow at a CAGR of 4.6 per cent from 2018 to 2026. Asia Pacific is the largest market for sewing machines. The presence of a large number of sewing machine manufacturers headquartered in the region is an important factor propelling market growth in the region.

In recent years, sewing machines have witnessed significant technological advancements. Apparel manufacturers are transitioning from manual sewing machines to digital sewing machines. Moreover, sewing machines have been bestowed with a plethora of new features and functionalities.

China’s cotton output increased 7.8 per cent this year.
The total area of cotton fields expanded 4.9 per cent and the yield per hectare edged up 2.8 per cent.

Northwest China’s Xinjiang Uygur Autonomous Region, the country's largest cotton growing area, saw an 11.9 per cent jump in cotton output and accounted for 83.8 per cent of the national total output this year, up three percentage points from 2017.

World cotton production for 2019 is forecast to be down, led by Pakistan, China, and India more than offsetting higher production in Brazil.

Trade is projected up with higher Brazil exports and rising Pakistan demand.

Global use is down sharply mainly because of China’s lower-than-expected annual growth amid uncertain economic prospects and textile exports.

China’s cotton stocks have drastically fallen, from 60 million bales in 2014 to just under 13 million bales.

This dramatic reduction has been due to three years of aggressive selling with 11.5 million bales sold in the latest annual round of selling which ended in September.

China was able to increase reserves dramatically as additional imports were allowed to offset purchases from the domestic crop.

In 2015-16, China’s shift away from a price support program for cotton caused internal prices to fall, which helped to boost consumption but also helped to lower production.

An export promotion cell has been created to create a sustainable ecosystem for micro, small and medium enterprises. The cell will evaluate the readiness of these enterprises to export their products and services, identify areas where improvements are required in order to be able to export effectively and efficiently and attempt at integrating the enterprises into the global value chain.

In addition all companies with a turnover of more than Rs 500 crores (US$ 71 million) have to join the Trade Receivables e-Discounting System so that MSMEs don’t face troubles in cash flow.

GST-registered enterprises will get a two per cent rebate on an incremental loan of up to a crore. The interest subvention on pre and post shipment credit for exports by micro, small and medium enterprises has been increased from three per cent to five per cent.

A Rs 6000 crore(US$ 852 million) package has been announced for technological upgradation of these enterprises. About 20,000 hubs and 100 tool rooms will be developed around the country for this.

Mandatory sourcing by PSUs from small enterprises has been increased to 25 per cent from the previous limit of 20 per cent.

The share of micro, small and medium enterprises’ exports in India’s total exports was 48.56 per cent in 2018.

China has sought talks with India to allay concerns on the Regional Comprehensive Economic Agreement (RCEA) that it is spearheading as Beijing seeks newer markets amid the ongoing trade war with the US.

The 16-country RCEA has been in negotiations for some time now and China is keen to conclude it by end of 2019. India’s wariness about a possible flood of Chinese goods, and its demand for looser immigration rules for its tech professionals remain sticking points.

China’s inability to close the trade deal highlights the continuing suspicion among its Asian trading partners over Beijing’s effort to increase its influence in the region. RCEP, along with the Belt and Road Initiative to build investment and trade links with countries along the old Silk Road to Europe, is a key element in China’s efforts to seize the geopolitical advantage following what many in the region see as a US retreat under President Donald Trump.

The meeting is likely to take place before the end of this month, and New Delhi has drawn up a list of issues it will take up with Asia’s largest economy. That includes providing zero-duty access to fewer Chinese goods as opposed to those offered to other members of RCEP. It also will seek a longer period to phase out levies on Chinese goods compared to 20 years offered to the others.

According to Mastercard, denim’s rising popularity has fuelled an 8 percent increase in apparel sales this holiday season — the biggest jump since 2010. Some of the hottest athleisure brands, including Lululemon Athletica and Gap’s Athleta brand, are diversifying into the denim business, as athleisure seems to be losing market to jeanswear.

Lululemon has added more five-pocket jeans to its offerings for men, including the $128 ABC and Commission pants, which are made from stretchy material but shown with leather dress shoes.

Athleta is offering more dresses that can be worn to work, including the $108 Wilder long-sleeve or the $89 Santorini high-neck dress.

American Eagle recently witnessed a record-setting season for its jeans business. It was the best quarter for denim sales in the history of the 41-year-old company with the trend continuing into the fourth quarter.

According to the data by NPD, the sale of sneakers, sporty and fashion-focused alike, increased by 12 percent year to date through November, to $9.4 billion, but that was a third less than their growth rate over the same period last year.

Meanwhile, sales of fashion boots increased by 9 percent from September to November this year compared with a 7 percent decline over the same period last year, according to NPD. Customers also are buying shorter sweaters to pair with their jeans and boots instead of the longer tops that typically go with leggings.

In the absence of a deep sea port, exporters in Bangladesh cannot send goods directly to final destinations in Europe and the US.
Vessels take goods to Singapore, from where they are taken to their final destinations. But the port at Singapore is running past its capacity, so goods are stuck there for long.

So garment exporters are keen on using the sea port in Colombo as it would save them time and money. In the era of fast fashion a shorter lead time gives them a competitive edge.

If goods bound for Europe can be shipped via Sri Lanka instead of Singapore, exporters will be able to cut the lead time by 15 to 20 days. The cost of shipping would halve too. Up to 30 days can be shaved from the lead time as well.

As Colombo port is running at only 30 per cent of its capacity, using this port instead of the port at Singapore is very much a practical choice for exporters now.

Bangladesh and Sri Lanka plan to collaborate in boosting apparel exports to Europe. One possible area for cooperation is export of some products to the EU through Sri Lanka for getting better prices. Another is value addition in export products.

"A survey by Bain & Company reveals, millennials, who make up one-third of China’s total consumers, were responsible for a growth in the Chinese market to 142 billion yuan in sales in 2017, about 20 per cent higher than the year before. Millennials are the generation born between in the early 1980s and early 2000s. In China, millennials comprise two distinct groups: those born after 1980 and those born after 1990. These millennials are referred to as the single most important demographic on the planet today by Goldman Sachs. Some luxe brands have caught the attention of millennial customers."

A survey by Bain & Company reveals, millennials, who make up one-third of China’s total consumers, were responsible for a growth in the Chinese market to 142 billion yuan in sales in 2017, about 20 per cent higher than the year before. Millennials are the generation born between in the early 1980s and early 2000s. In China, millennials comprise two distinct groups: those born after 1980 and those born after 1990. These millennials are referred to as the single most important demographic on the planet today by Goldman Sachs. Some luxe brands have caught the attention of millennial customers.

An amalgamation of manufacturing expertise with business acumen

Alexandre Arnault , the youngest CEO in luxury fashion, has re-launched collaborations with artist Olafur Eliasson, Fendi, M/M and cult streetwear brands Supreme and Off-White, to make the century-old suitcase brand one of the most sought-after names among his peers.

In June, Arnault released a couple of transparent polycarbonate suitcases costing $1,000 in partnership with the streetwear sensation Off-White by Virgil Abloh.

In 2016, Bernard Arnault’s LVMH bought an 80 per cent stake in Rimowa for US$716 million and immediately appointed Arnault as co-CEO, alongside Dieter Morszeck, the grandson of the suitcase’s founder. Today, it’s extending its reach to become more than a travel companion by marrying the “made in Germany” concept with LVMH’s business acumen.

Men’s fashion drives Balenciaga’s growth

Balenciaga is another brand that has caught the eye of millennials. In the Lyst Index, Balenciaga raced ahead of Gucci for three quarters in a row to become the most popular fashion brand. According to Cédric Charbit, the brand’s CEO, Balenciaga is also the fastest-growing brand at its parent company, Kering. Last year, Balenciaga saw a growth of over 100 per cent in several categories, thanks to the millennials who account for 60 per cent of the consumer base of the iconic label.

Men’s fashion is also becoming a strength for the couture-turned-edgy brand. In 2016, Gvasalia brought the men’s line back to the house after 17 years. The brand is no longer the couture house that Cristóbal Balenciaga founded in 1919, nor the elegant brand imagined by former creative director Alexander Wang. They now offer flea-market vintage, cool hoodies, big logo prints and off-the-shoulder parkas.

Balenciaga products that have made the biggest impression are sneakers. Its sock-sneakers infiltrated the wardrobes of celebrities and fashionistas, especially the limited-edition, bright-red pair reinvented by Parisian retailer Colette. The stacked-sole Triple S, which costs US$850, is a global bestseller online and offline.

Millennials to continue dominating luxe market

Nowhere is Balenciaga’s influence more noticeable than among China’s millennials. In late April, an incident involving Chinese customers being mistreated as they were queuing for the new Balenciaga sneakers in a Paris department store went viral on Weibo. It led to a short boycott of Balenciaga, and prompted an apology from the brand.

Right now, the luxury industry is being universally disrupted by the young game changers, from the sellers to the shoppers. The young, affluent, savvy yet ephemeral millennials have taken the industry off guard. The Chinese cohort will continue to dominate the market as the nation’s economy booms and the balinghou and jiulinghou take over as the consuming class. Capturing the coterie is crucial for luxury companies. A distinctive brand identity with high-quality products is just an essential start; a cultural understanding of their needs and desires is the key for brands to win the battle in this hefty fashion reshuffle.