South Asia Textiles, a leading Sri Lankan textile manufacturer specialised in producing exceptional quality weft knitted fabric, recently announced that the company was the recipient of the Silver award in manufacturing apparel, textile and leather products sector at the prestigious National Business Excellence Awards (NBEA) 2017.

South Asia Textiles Managing Director/Chief Executive Officer Prithiv Dorai says that having been highlighted for being a positive role model for local manufacturing, generally, and helping elevate the profile of the local apparel, textile and leather products sectors.

South Asia Textiles maintains its manufacturing dominance through its ultra-modern manufacturing plant that produces exceptional quality weft knitted fabric. The company also specialises in knitting, dyeing, finishing, printing, brushing and preshrunk fabric for leading global brands. South Asia Textile’s strategic location, attention to detail, superior levels of client servicing and modern technology continues to assure these global giants of a being a credible Sri Lankan source for quality textiles which is in par with international standards and supplied with faster lead times.

Meeting the challenges and demands of the global fashion industry, the company continues to attract new customers, maintaining quality and service parameters and focusing on growth through operational and cost efficiencies which will result in sustainable benefits in years to come. South Asia Textiles continues to the company continues to bring new innovations, fabric solutions, value added products and finishes to the designers and brands of leading global giants.

Wool has a reputation as a product with poor environmental credentials. Significant land use is required to farm sheep.

But the IWTO (International Wool Textile Organisation) disputes this view. It intends to combat the perceived negative qualities of its product versus other fibers.

Industry LCAs (Life Cycle Assessments) have frequently ranked wool as lagging behind its competitors. But those in the wool business believe this is wholly inaccurate as the assessments don’t take into account a range of factors or the longevity of the product once it leaves the farm.

IWTO feels wool is often unfairly classified by powerful organisations promoting petroleum based fibers that do not measure performance on a cradle to grave basis. According to the IWTO, around 80 per cent of wool’s environmental impacts occur up to the farm gate and so LCAs which disregard a textile’s longevity after that point provide a skewed rating.

It has also been highlighted by the IWTO that microplastic pollution – one of the largest environmental issues faced by the textile industry – is not included in the calculations, and even ignoring the shedding of micro plastics, woolen garments tend to be domestically laundered far less than other materials.

Wool producers say many areas of land where sheep are farmed are often unsuitable for any other kind of agriculture or lucrative crop cultivation and that there are several bi-products from sheep farming which are not taken into account when calculating a fiber’s score.

Pakistan’s knitwear exports have gone up by 21 per cent year on year. Bedwear exports have risen by seven per cent. Readymade garment exports have risen by nine per cent.

These three segments outperformed all other products of the textile sector.

Textile exports have risen by seven per cent year on year. This growth was primarily led by the value added segment, which rose 12 per cent year on year.

The expansion in value added segment exports is because of the appreciation of the euro by nine per cent and improved competitiveness post implementation of the textile package.

On the other hand, cotton yarn exports fell by 11 per cent year on year driven by a 13 per cent year on year volumetric downturn. One possible reason is soaring raw material costs for the spinning segment as domestic cotton prices have shot up following a lower than targeted domestic crop.

On a cumulative basis, textile exports were up eight per cent year on year, primarily driven by a 11 per cent year on year hike in the value added segment. Basic textile exports followed with a meager one per cent year on year increment.

Pakistan is the fourth largest cotton producing country in the world.

With GST Bangladesh has started making inroads into India's readymade garment market.

This tax has given Bangladeshi garment manufacturers a ten to 15 per cent cost advantage over production in India. The over-arching tax was implemented in India from July 1. Imports of garments from Bangladesh jumped 56 per cent from then to November over the corresponding period last year. Of this, imports of knitted apparel surged 69 per cent. Knitwear from Bangladesh is popular in India because of low prices and good quality.

Bangladesh procures fabrics from China duty-free while Indian garment makers have to pay 20 per cent import duty for the same fabrics from China. Their power and personnel costs are also higher. Bangladesh’s two other basic advantages over Indian manufacturers are cheaper electricity and cheaper labor.

In the pre-GST regime, garment manufacturers in India were protected through the levy of a countervailing duty on imports, equivalent to the excise duty on domestically manufactured garments, in addition to education cess. This protection has gone away after GST implementation.

Garment exports from Bangladesh to India rose 30.86 per cent year-on-year in fiscal 2015-16. Foreign retailers buy a lot of garment items from Bangladesh for Indian customers, especially for the rising middle class.

Many brands have links to a scheme that allows Egyptian manufacturers to export garments to the US tax-free so long as Israeli materials are used.

The program, known as Qualifying Industrial Zones (QIZ), was enacted by the US in 1996 in an effort to normalise relations between Israel, Egypt and Jordan through economic cooperation.

Through QIZs, Israeli manufacturers supply at least 10.5 per cent of the products used in a garment. Then Egyptian factory workers sew the final product which is exported to the US and exempted from taxes of between five per cent and 40 per cent, but typically at a 15 per cent average.

When a consumer buys garments from brands that include Gap, Levi’s and Ralph Lauren, there is no mention of the Israeli component on clothes’ labels. They only say Made in Egypt.

Since its launch in Egypt, the program has more than doubled garment exports to the US.

Products enter the US as Egyptian, but if a product is 100 per cent Egyptian, so not part of QIZ, it is not exempt from tax.

However QIZ is hated in Egypt for linking Egypt to the Israelis.

Egypt is highly attractive as a sourcing hub for garment and textile companies as a result of its low wages and duty-free access to the US market, the largest clothes buyer on the planet.

In 2018, more than half of the revenues for the global fashion industry will come from new markets in the east than long established markets in Western Europe and North America.

Emerging markets in Asia (India, Vietnam, China etc.) will achieve revenue growth of 6.5 per cent to 7.5 per cent in 2018 with their European counterparts (Romania, Russia, Turkey etc.) slightly behind at between 5.5 per cent and 6.5 per cent. By way of contrast, mature markets in North America and Europe will grow only one per cent to three per cent.

Average revenues for the global fashion industry are expected to rise between 3.5 per cent and 4.5 per cent in the coming year. That is more than the 2.5 per cent to 3.5 per cent growth projected for 2017 and more than triples the growth in 2016 but still below the long-term average of 5.5 per cent. The industry’s profit margin (before taxes) is projected to hold steady at ten per cent.

New technologies, new consumers and an unpredictable macroeconomic environment continue to challenge leaders to rapidly shift their strategies and operating models.

Value creation at companies in this rapidly shifting market varies dramatically. The top 20 per cent of fashion providers earn a total 144 per cent of the industry’s value increase.

China needs an annualized growth of 6.3 per cent in 2018-2020 to realize the target of doubling Gross Domestic Product (GDP) by 2020. GDP expanded 6.9 per cent year on year in the first three quarters of 2017, above the target of around 6.5 per cent for the whole year.

Five years ago, China decided to double GDP and per capita income by 2020 as an important component of becoming a moderately prosperous society in all respects.

Judging from current economic performance, no huge barriers in meeting the goal are expected.

However China's emphasis is on development quality rather than fast expansion. High quality development is the fundamental requirement for determining the development path, making economic policies and conducting macroeconomic regulation.

Realizing high quality development is a must for sustaining healthy economic development and adapting to the country's new principal contradiction between unbalanced and inadequate development and the people's ever growing needs for a better life.

The potential growth rate has changed due to upgraded consumption, financial risk and environmental constraints.

The country is building and improving mechanisms for pushing forward high quality development, including indicators, policies, standards, statistical and performance assessment systems.

China’s economy held steady in the first eleven months of 2017.

China’s economy held steady in the first eleven months of 2017. Fixed asset investment (FAI) climbed 7.2 per cent for the January-November period, down from 7.3 per cent in the first ten months.

Investment in property development rose 7.5 per cent from a year earlier, edging down from 7.8 per cent in the first ten months.

Infrastructure investment, which accounts for more than 20 per cent of the total FAI, surged 20.1 per cent for the January-November period year on year, the pace of growth accelerating from 19.6 per cent for January-October.

Online shopping promotion, retail sales grew 10.2 per cent in November, up from ten per cent the previous month. Sales at Alibaba, China’s largest e-commerce platform, hit a record high on November 11.

Consumption will stay robust on the back of higher incomes and is expected to stay a pillar for economic growth next year.

The country’s GDP grew 6.9 per cent in the first nine months, above the target of around 6.5 per cent for the year. GDP growth is expected to be 6.8 per cent this year.

The steady economic growth will give policy makers more leeway to control risks, reduce poverty and tackle pollution.

More of the impact from the ongoing clean air campaign will come in December and the first quarter of 2018.

In the first eleven months of 2017, Bangladesh’s garment exports were up 1.38 per cent year-on-year.  One reason is the favorable exchange rate. Exporters want further devaluation of the local currency against the dollar to compensate for the rising cost of production such that exporters can continue to be competitive on the global stage. They expect at least a ten per cent devaluation of the currency as they have faced a low exchange rate over the last five years. They say the exchange rate is still not up to the mark when compared with competing countries like India and Turkey.

Apart from the favorable exchange rate, the rising shipment of value added items, a brighter image of Bangladesh’s garment sector after remediation work, the relative political calm and automation of production also helped prop up garment exports in 2017. The absence of any major untoward incident like labor or political unrest was a boon for apparel exporters.

Garment exporters are cautiously optimistic about the new year as the country’s apparel sector is on a strong footing. Export receipts are expected to be about ten per cent higher next year. A good number of new factories will come into operation next year.

"Dawn of fast fashion and the convenience of buying trendy clothes at an affordable cost be it offline or online have truly been the trends for some time now. While on one hand, conventional mall retailers have been getting tough competition from the global giants such as Zara, H&M, Mango, on the other hand, the high-end fashion brands are also not exempt from sharing high-meets-low wardrobe-wielding consumers with these mass market giants. Let’s check out some of the trends worth mentioning…"

Dawn of fast fashion and the convenience of buying trendy clothes at an affordable cost be it offline or online have truly been the trends for some time now. While on one hand, conventional mall retailers have been getting tough competition from the global giants such as Zara, H&M, Mango, on the other hand, the high-end fashion brands are also not exempt from sharing high-meets-low wardrobe-wielding consumers with these mass market giants. Let’s check out some of the trends worth mentioning…

Down side of fast fashion In garment factories, women have to choose an option between safety and employment as it lacks well- established legal protections and standards that weigh in favour of fairness and transparency. The existence of such informal labour sectors, coupled with the gender-specific susceptibilities that garment factory owners and operators prey upon, make it quite a challenging affair for women employees. For instance, female workers in Cambodia have suffered mass fainting due to excessive hours worked in stifling conditions in factories that supply garments and accessories to sportswear brands including Nike, Puma, VF Corporation, and Asics.

In another turn of events, H&M has been accused of destroying 60 tons of recyclable garments. Kara/Noveren, a waste disposal company in Denmark, has incinerated over 60 tons of new, unworn apparel from H&M since 2013. These hundreds of thousands of garments consist of reusable/recyclable materials. Challenging the working conditions of fast fashion companies, analysts feel by failing to respond swiftly to factory workers who haven’t been compensated, Zara is doing serious damage to its brand. Fast fashion retailers these days are imitating the global runway showcases and mass producing them quickly to gain consumers. Additionally, most fashion brands – in attempts to offer affordable prices – look abroad for cotton, and the conditions in many of the far-flung locations where cotton is harvested are anything but pretty. Even after widespread campaigns done by NGOs to educate consumers about the harms associated with the practice of fast fashion, both in terms of sustainability and human rights, the intense demand for trendy, cheap clothing is not fading.

In Bangladesh the Awami League (one of the two major political parties of Bangladesh), along with garment industry employers, intensified their crackdown on apparel workers following mass walkouts over wages and working conditions in December.

Fast fashion is here to stay

A product of its times, fast fashion taps into its millennial core audience’s two favourite things: frequent novelty and affordability, which will outweigh traditional model of mass market retailing for some more years. After having gained traction and sustained long-term consumers, it’s going to be challenging for such brands to offer them the value in the price they desire. It remains to be seen if it’s going to be consumers at the helm or fast fashion brands would yet again make way for their increased price-points fashion trends.