US apparel executives in Los Angeles believe China will still be the first choice sourcing destination over the next two years, but they expect the country’s lead to narrow. Among the countries apparel and textile producers will source from in 2016 and 2017, China leads the field (37 per cent), followed by Vietnam (15 per cent) and India. Beyond 2017, executives see China’s lead shrinking but remaining dominant.
A study ‘Los Angeles Fashion Industry Profile’ by the CIT Group, which surveyed more than 50 LA apparel executives from a mix of manufacturers and licensors asked what they see as the most innovative technology for the future of the apparel industry, 54 per cent of the executives say social media, nearly one in four (24 per cent) say integrated systems between manufacturers and retailers, and 13 per cent say either 3D fitting or 3D printing. And more than half say the internet represents the biggest growth opportunity for Los Angeles apparel companies.
When asked which factors would negatively impact their businesses in 2016 and 2017, 47 per cent of executives say the cost of doing business and 43 per cent say retail consolidation. It’s savvy use of social media and state-of-the-art manufacturing platform have positioned the Los Angeles region as a leading global fashion epicenter. Los Angeles companies are capturing around 18 billion dollars in revenues through its fashion industry.
2016 will be another challenging year for the US cotton industry
As per National Cotton Council economists, 2016 will be another challenging year for the US cotton industry – with low cotton prices, ample global stocks and uncertainties regarding global mill cotton use. Addressing NCC’s 78th Annual Meeting in Dallas, Texas, Jody Campiche, the NCC’s vice president, Economics & Policy Analysis said that, while world mill use is expected to exceed world production in 2016, global cotton stocks remain at high levels.
Regarding domestic cotton mill use, USDA estimates US mill use at 3.6 million bales, up 25,000 bales from 2014 and marking the fourth consecutive year of increased consumption. The Economic Adjustment Assistance Program (EAAP) continues to be an important source of stability allowing mills to invest in new facilities and equipment, but the strength of the U.S. dollar is creating challenges for yarn exports.
Export markets continue to be the primary outlet for U.S. raw fiber. In recent years, US export customers have changed, she observed. China is importing less raw cotton fiber, leading to a reduction in world trade. Campiche said that considering the massive stockpiles of cotton and expectations for limited quota, China’s imports are expected to fall further in 2016 to 4.75 million bales, down from 5.5 million in 2015.
Meanwhile, India is projected to continue as the world’s largest cotton producer and the second largest exporter in 2016. Indian cotton producers continue to receive support through fertilizer subsidies and the Minimum Support Price (MSP) program. In addition, India will begin a pilot program in 2016 that could eventually replace the current MSP with a direct farmer subsidy programme.
US President signed a legislation authorizing special trade preferences for Nepal
US President Barack Obama has signed a legislation authorizing special trade preferences for Nepal, which will grant duty-free tariff benefits for up to 66 types of items, including certain carpets, headgear, shawls, scarves, and travel goods, the American Embassy in Kathmandu has said.
The legislation is seen as a boost to the Nepalese garment industry which has been on the verge of collapse since the expiry of Multi Fibre Agreement, popularly known as quota phase out, in January 2005. After the expiry of MFA, the US government has been imposing around 17 per cent tariff on import of cotton apparels.
The Nepal programme is authorized for ten years and is designed to help Nepal’s economic recovery from the earthquakes that struck the country last year. The programme will grant duty-free tariff benefits for Nepali exports not currently eligible for benefits under the General System of Preferences (GSP). The Nepal Trade Preferences Legislation also authorizes a trade capacity building program, focused on helping Nepal implement the World Trade Organization’s Trade Facilitation Agreement (TFA).
Nigeria has set up a garment design center
Nigeria has set up a garment design center to create a pool of skilled personnel for employment in garment manufacturing; inculcate international best practices in apparel production; build capacity for entrepreneurs in apparel production thereby making the sector more competitive; and strengthen the existing sector for domestic production and export purposes. Nigeria is awash with creative talents in the fashion industry, whose designs can compete anywhere globally. However, there is a wide gap in production and finishing, which affects the marketability of garments made in Nigeria at the international market. The center is equipped with machines and facilities to enhance learning for skill development in the sector.
Nigeria has consistently participated in Magic Las Vegas, the world’s largest sourcing show for apparels and footwear. The event exposes the country’s designers to other international designers and helps them learn about international trade, the dynamics of the trade and the intricacies of exporting to America. The Nigerian fashion industry will use the center to brainstorm truly innovative concepts and execute them professionally and so participate more in the global market for garments, which is expected to reach a trillion dollars by 2020.
Taiwan’s sportswear and functional textile exports will get a boost
Taiwan’s sportswear and functional textile exports will get a boost with the Olympic Games in Rio de Janeiro, Brazil, in August this year. Nike is going to source water-free dyeing fabric for the Olympic games in Taiwan. Taiwanese textile mills might also get busy supplying Adidas before the Olympics, as during the 2014 FIFA World Cup in Brazil, all Adidas-sponsored teams wore sportswear made in Taiwan from recycled polyester.
The bulk of polyester orders would go the New Wide Group, a Taiwan manufacturer of knitted fabrics, who was awarded last year for supplying fabrics and garment to Adidas. There are between 20 and 25 Taiwanese textile mills capable of turning recycled PET bottles into fiber acceptable for high-quality filament. Demand for sportswear and functional textiles remains strong, even while orders for other textile categories are cut.
Formosa Taffeta is supplying water-free dyed fabrics to Nike for the Olympics. For this, Formosa Taffeta will be using Aquaoff supercritical Co2 technology, which can dissolve dyes, taking them to the surface of the fabric for dyeing, so that water and dyeing auxiliaries are not required.
Another company is supplying water-free dyed lightweight fabrics with stretch quality for shorts and windbreakers to Nike for the Olympics.
Sri Lanka’s garment workers get debit card
Sri Lanka’s apparel sector associates are to be supported by the country’s largest private bank with an exclusive debit card that confers special benefits, under a partnership between the Commercial Bank of Ceylon, the Joint Apparel Association Forum (JAAF) and Channel 17, the company tasked with managing an employee loyalty program for the sector. The aim is to retain and reward workers of the apparel industry which is a vital constituent of Sri Lanka’s export economy. The debit card will enable them to manage their finances better and at the same time receive a host of other benefits.
The card will also serve as identification for them to claim benefits from the Ransalu loyalty program, which targets a membership of over 3,50,000. The Ransalu privilege loyalty program already offers its members discounts on essential consumer items, hospitalisation, pharmaceutical products and clothing.
Indonesian textile and garment makers want greater economic partnership with European and Pacific Rim countries
Indonesian textile and garment makers want greater economic partnership with European and Pacific Rim countries in order to boost the country’s exports. Indonesian companies hope to have a boost in demand from the partnerships’ participating countries.
Garment makers basically welcome any partnership with other countries as long as they help reduce both tariff and non-tariff barriers for Indonesian textile products. Indonesia’s textile exports increased from $11.2 billion in 2010 to an estimated $22.65 billion last year, with import value always below export value.
Indonesia is a member of the Association of Southeast Asian Nations (ASEAN). Indonesia is one country that has been quite active in concluding free trade agreements. Indonesia has FTAs with trading partners that account for 67 percent of its total trade. For context, Chile, Peru, and Mexico have FTA coverage ratios of more than 80 per cent, while Canada, Singapore and New Zealand are at more than 50 per cent.
Indian denim industry is looking to gradually increase
The Indian denim industry is looking to gradually increase its share of exports from its current 35 per cent. For this to happen the industry has to increase its capacity by another 300 million meters. Historically, denim has been one of the fastest growing apparel fabric segments, having grown from 700 million meters in 2010 to 1.2 billion in 2015. Yet, there is a gap of another 300 million meters in India if the denim industry needs to tap its full export potential. Whereas, exports of textiles have not done well in the last few years and denim as one of the major textile product groups could push textile exports. The Denim industry’s domestic and export ratio even though is set to change from 65:35 to 55:45. It is expected to touch 1.5 billion meters capacity by 2020.
In this backdrop, Diagonal Consulting (India) jointly with the Confederation of Indian Textile Industry (CITI) is organizing an International Denim Conference in Ahmedabad February 19a nd 20, 2016.
India’s textile exports are likely to decline marginally to $40 billion
India’s textile exports are likely to decline marginally to $40 billion this year as against $41.4 billion last year. However, prices of raw materials in India are higher than prices in international markets. Because of this, the country’s exports are becoming uncompetitive. India is the largest producer of cotton in the world. The industry wants a quick implementation of the Goods and Services Tax (GST) and a rethink on free trade agreements with major consuming countries like Canada.
Textile mills want cotton available at prices cheaper than prevailing prices in international markets. The Cotton Textiles Export Promotion Council (Texprocil), has been the international face of cotton textiles from India facilitating exports worldwide. Texprocil has a membership of around 3,000 companies spread across major textile clusters in India. Its members are well established manufacturers and exporters of cotton textile products like cotton, yarns, fabrics and home textiles.
Japan’s economy shrank more than expected
Japan’s economy shrank more than expected in the final quarter of last year. Consumer spending and exports slumped, adding to headaches for policymakers already wary of damage the financial market rout could inflict on a fragile recovery.
Gross domestic product contracted by an annualised 1.4 per cent in October-December. Exports to emerging markets are failing to gain enough momentum to make up for soft domestic demand.
Japan is the world’s third largest economy. Private consumption is especially weak. The economy is at a standstill. Private consumption, which makes up 60 per cent of GDP, fell 0.8 per cent.
Pakistan replaced Bangladesh to emerge as the largest buyer of Indian cotton
Pakistan replaced Bangladesh to emerge as the largest buyer of Indian cotton in the October-December quarter. Pakistan suffered crop damage due to the white fly virus. India’s cotton exports to other countries are also likely to remain significantly up this year. Around a third of the crop in Pakistan was damaged. So textile mills there imported cotton from India to meet their requirements.
India transports cotton to Pakistan primarily through the Wagah border. Meanwhile, the global scenario is also changing due to a slowdown in demand from China, which contributed to 24 per cent of India’s overall cotton exports in 2014-15. This year, however, China’s share is likely to decline.
China’s cotton imports may fall by 40 per cent this year due to a fall in consumption and lower domestic cotton prices. If the pace of its imports remains steady, Vietnam may overtake China as the largest importer of cotton in the world in 2015-16. Cotton imports by Vietnam are estimated to rise by 17 per cent. Imports by Bangladesh are forecast to increase by 12 per cent.
EU envoy urges Pakistan to take advantage of GSP plus scheme
Jean Francois Cautain, European Union (EU) Ambassador to Pakistan has emphasized that the business community should explore opportunities in other sectors besides textile and leather, in a bid to take advantage of the GSP Plus scheme. A European Union (EU) delegation attended an international symposium, held in connection with Pakistan Mega Leather Show 2016. It was arranged by the EU funded ‘Pakistan Leather Competitiveness Improvement Programme (PLCIP)’ under European Union’s Trade Related Technical Assistance Programme. PLCIP is working to improve the overall value chain in the leather sector of Pakistan.
According to Cautain, the European Union recently supported Pakistan Mega Leather Show and sent a delegation of Pakistan’s leather sector to India to observe best practices and strengthen relationship between the business communities of both countries.
Meanwhile, PMLS Convener Muhammad Musaddiq appreciated the support and assistance of European Union through PLCIP and said that the PMLS-2016 portrayed the positive image of Pakistan to the world. The PMLS-2016 provided a unique platform for the Pakistani leather industry, including tanners, footwear manufacturers, leather garments and gloves manufacturers, chemical companies, and other vendors supplying equipment, machinery and components to the leather industry to display their products, and provide a single platform for the Pakistani leather industry.
Ethiopia has failed to meet textile export target
According to the Ethiopian Development Institute of Textile Industry (EDITI) exports for the first six months of Ethiopian fiscal year 2015-16 are lagging behind target. EDITI said that the target was to obtain $60.07 million from textile exports, while only $41.1 million was achieved, meeting 70 per cent of the plan.
The government revealed ambitious plans to stimulate the sector by offering attractive incentives to investors in mid last year. Incentives include duty free import of spare parts of 15 per cent of capital goods for the first five years of operation, the possibility to hire expatriates free from income tax provided they stay for no more than two years.
If declared within six months, the government also offers reconciliation of VAT for materials purchased locally during the project period. More than 152 new investments were expected and least $1 billion was anticipated from the sector’s export. The GTP II is also expected to create more than 170,000 job opportunities.
5.8% up in Vietnam’s Textile and Garment export
Most garment companies in Vietnam have orders until the end of the second quarter. Some companies have enough jobs for the entire year. The target to export $30 billion worth of textiles and garments in 2016 appears to be within reach. Orders from importers have come in abundance. The production index of the textile industry grew by 12 per cent in January compared with the same period last year, while the figure was 11.2 per cent in the clothing industry.
The output of fabric made of natural fiber in January reached 30 million square meters, a 10 per cent increase compared with the same period last year, while the output of fabric made of synthetic and artificial fibers rose by 6.5 per cent, to 63.3 million square meters.
In January alone, textile and garment exports brought two billion dollars, up by 5.8 per cent over January 2015. While the number of foreign invested enterprises accounts for 30 per cent of total enterprises in the industry, they make up 70 per cent of the total turnover. Vietnamese enterprises put out the remaining 30 per cent. Textile and garment companies also look forward to the Trans Pacific Partnership agreement which they feel will bring great opportunities to the industry.
Cotton crop fails in Pakistan
Pakistan’s low cotton output may hurt millions of families in the farming communities, which would ultimately affect exports and the gross domestic product. The country would miss the target of cotton production by 4.6 million bales, necessitating imports worth four billion dollars to keep the textile industry running which would hit the balance of payment situation and forex reserves.
Cotton is the backbone of Pakistan’s economy. It holds a 8.5 per cent share in the GDP, fetched 12 billion dollars through exports and provides jobs to 40 per cent of the labor. The reasons behind the low cotton output include sudden and unpredictable rains, drought in some areas, low cotton prices and a hike in prices of inputs by 15 to 20 per cent and the use of substandard seed and fake pesticides, which discouraged farmers.
The sowing target of cotton was also missed, with potentially disastrous consequences. Genetically modified seeds were introduced in the hope they would be pest resistant. But the imported seeds failed to withstand pink bollworm and whitefly attacks while sprays and medicine to tackle the pests were not available in the market. So the pests played havoc with the crop.
BTT International Desk