The Sri Lanka Apparel Association hopes to secure $3.7 billion revenue from apparel exports in 2021. In 2019, Sri Lanka exported apparels worth $5.6 billion. And in 2020 the figure was around $750 million mainly earned from Personal Protection Equipment (PPE). However the association believes this segment is drying up since Chinese products are now available in the global market.

During the first COVID wave the industry recovered faster than the present second wave, said the association. Currently there are around 365,000 factories involved in the large and SME garment sector and around 28,000 in BOI zones, but there were no significant salary and job cuts. There are around 21 factories currently closed temporarily with 20,000 in them being unemployed.

The Minuwangoda Brandix Factory which first reported COVID clusters in the apparel sector is now operational with around 20 per cent staff back at work. Brandix group took and are still taking all precautionary measures and to protect employees and there are no job or pay cuts.

Many companies are planning to relocate out of the BOI and restart operations in outstations due to logistic reasons. And companies are looking at investing in own hostels to accommodate employees. In 2019, Sri Lanka imported 255,437 MT of fabric for both export-oriented apparel manufacturers and for consumption in the local market. The net export value against import value was over 52 per cent of the apparel’s $5.6 billion in exports.

Offering zero tariffs on over 90 per cent goods, the Regional Comprehensive Economic Partnership (RCEP) agreement promises to reduce trade tax within the in the region in the next 10 years. As per a CCF Group report, the agreement was signed by China and 14 other countries on November 15. As mandated by this agreement, all RCEP members except Japan have signed free trade agreements with China, with limited marginal improvement.

However, for the first time, China and Japan have reached a bilateral tariff reduction arrangement. This entail, Japan to reduce import tariffs on Chinese textiles and apparels to zero. This will encourage local Chinese mills to export textiles and apparels to Japan. In addition, it will also reduce its textile and apparel export limit to South Korea, Australia, New Zealand and other countries.

Encourages investments in the ASEAN region

Besides promoting export of high-value added Chinese products, RCEP also encourages textile and apparel export mills to increase investments in ASEAN countries. With this agreement, China can export 20 per cent of functional fabrics produced in Jiangsu Suzhou mill to Southeast Asia. The main products exported by this mill to Vietnam market include functional down jacket fabrics whose exports may increase by 40 per cent after the signing of RCEP. In addition, the agreement will also lead to a drop in prices of high-end looms imported from Japan.

Unifies trade rules in ASEAN

Earlier, one of the biggest hurdles in export of textiles and apparels overseas in terms of non-tariff measures was the varying nature of international trade standards of different countries. These trade agreements were changeable, such as the original rules of origin and investment policies. However, signing of RCEP will unify these rules in the region and improve the level of trade facilitation.

The agreement will also facilitate the clearance of suppliers, logistics and customs in China's textile and apparel export mills. To determine rules of origin, RCEP uses the principle of regional accumulation to accumulate the value components of products of origin in the region composed of 15 members, and the value components from any party of the RCEP.

The rules of origin of previous bilateral free trade agreements recognized a product whose origin country could not be recognized as the regional origin of RCEP after its regional value was accumulated. This enabled the product to enjoy RCEP’s preferential tariff, reduce production cost of the final product, and effectively avoid trade barriers of European and American countries. Now, companies aim to retain part of the labor-intensive section in Vietnam for processing, and transfer the latter process to China for further processing, so as to maximize the benefits through regional coordination and cooperation.

Enriches certificate of origin

The RCEP also enriches the types of certificate of origin. It allows the declaration system for country of origin to be changed from the official authorized visa agency's issuing mode to the enterprise's credit guarantee independent declaration mode. This allows the government to save administrative management and enterprise's operating cost to further improve the clearance time of goods.

Another benefit of RCEP is that it stimulates the flow and complementarity of goods, technology, services, personnel and capital among members. In the long run, the agreement will help to enhance the ability to resist global systemic economic risks.

RCEP is beneficial for not only China's textile and apparel exports, but also for Vietnam and other ASEAN countries. The agreement helps these countries increase their market share in RCEP region. It also helps China's textiles and apparel to compete with Japan, South Korea and Australia. Hence, the strategic significance of RCEP is greater than the promotion of exports.

Relying on growing slow consumption trend, luxury brands and retailers are selling collections only on pre-orders, says a Women’s Wear Daily report. As Lisa Aiken, Fashion Director, Moda Operandi points out, pre-orders help emerging designers maintain zero inventory levels; and change the attitude of designers towards delivery speedy as clients are willing to wait for months if they receive a quality piece, she adds. In fact, now traditional wholesale retailers such as Net-a-Porter are also jumping on the pre-order bandwagon by extending services to wider public. The company’s website offers key runway pieces from designers like Chloé, Dries Van Noten, Carolina Herrera, Gabriela Hearst and Etro

Retailers make informed investments

As per analysts, pre-orders give retailers access to valuable data to make more informed investments in seasonal products. They analyze pre-order data to inform the seasonal buys. For instance, Rosie Assoulin’s ‘Thousand-In-One-Ways’ sweater from her pre-fall trunk show allowed the brand to make deep investments with high confidence. Pre-orders also help retailers engage with their customers directly and tackle cash flow issues. They know the exact quantity of goods orders which does not leave them with unsold stock. Similarly, customers do not have to deal with sold out issues on a chosen product.

Eradicates wastes and supports cashflow

Buzzy British label The Vampire’s Wife has always offered pre-order for special, high-demand styles, like the emerald green Falconetti dress worn by the Duchess of Cambridge. The brand believes pre-orders allow independent brands to try out new styles without a huge financial commitment. It helps them understand their customers’ desires. The efficient model eradicates overproduction and waste and supports cashflow and planning, especially during the pandemic, says Leonardo Lawson, President of the label.

During the pandemic, the brand extended its pre-order strategy to a new line of masks. It helped the brand to sell around 1,000 masks in less than 15 minutes. Though it used the same couture finishes from its dresses on the masks, its customers pre-ordered and waited up to one month for new styles, Lawson added. While the customers believed they were receiving something special, the brand’s direct-to-consumer business was supported by this model.

Financing factory expenses

Footwear designer Havva Mustafa has also been adopting the pre-order system to help gauge which pieces customers are connecting with the most. The system enables the designer to finance factory expenses, explains Mustafa, who aims to achieve a balance between pre-orders and instantly shoppable online drops. Hence, pre-orders allow designers to optimize creativity and give consumers more choice options.

The manufacturer and retailer, parent to the DKNY and Donna Karan brands, GII Apparel Group fell short on both top and bottom lines in its third quarter results, but still managed to log a $63 million profit.

The company — which also includes Vilebrequin, Eliza J, Jessica Howard, Andrew Marc and Marc New York in the greater portfolio, in addition to fashion licenses under the Calvin Klein, Tommy Hilfiger, Karl Lagerfeld Paris, Kenneth Cole, Cole Haan, Guess, Vince Camuto, Levi’s and Dockers brands — reported total revenues of $826 million for the three-month period ending October 31. Its quarterly profits were more than $63 million, compared with $95 million a year ago — and a $15 million loss in the second quarter.

A part of the loss in revenues was from recent or planned store closures. In September, the company closed all 110 Wilsons Leather and 89 G.H. Bass stores by the end of fiscal year 2021. Net sales in the retail operations segment for the two brands in the most recent quarter were $38 million, compared with nearly $60 million from a year ago, as a result.

G-lll Apparel ended the quarter with more than $149 million in cash and cash equivalents and $508 million in long-term debt. The company is expecting net sales to decline by about 30 percent in the current quarter, compared with last year’s results. Goldfarb added on the call that the company is also on track to save roughly $28 million annually thanks to a headcount reduction of more than 500 employees globally.

FESPA has postponed its 2021 Global Print Expo and the co-located European Sign Expo from March to October 2021, at the RAI exhibition Centre in Amsterdam, The Netherlands.

The FESPA events will now take place from October 12-15, 2021, enabling FESPA to transition the current floor plan to the later date. The delay to October has strong support from the exhibitor base, who understand the clear rationale of addressing the risk that exhibitor personnel and visitors may still be unable to travel freely into Amsterdam in early March 2021.

The move follows confirmation that all international exhibitions in the RAI calendar have been moved out of Q1 and re-scheduled into Q2 or later. This reflects ongoing uncertainty over COVID-related travel restrictions and visitor quarantine arrangements in The Netherlands, and the risk that these could continue to affect exhibitors and visitors through early 2021.

The majority of Global Print Expo and European Sign Expo exhibitors will simply transfer their contracts to the alternative dates, and several suppliers whose company policies precluded them from participating in March 2021 have indicated that they would be keen to exhibit at an Autumn event.

Pakistan’s textile sector is on track towards swift recovery following the devastation caused by COVID-19 as the country has witnessed a sharp surge in its cotton imports. Textile exports from Pakistan grew 16 per cent and 9 per cent in September and October 2020 on a monthly basis compared to a massive decline in August 2020 owing to torrential rains, explains Muhammad Saad Ziker, Analyst, Insight Securities.

In his research report, the analyst pointed out the much-needed growth was being achieved through import of cotton and man-made yarn. The government is also pushing hard for exports growth as it aims to lift them to $50 billion by 2030, according to the textile policy 2020-25. The 5 per cent regulatory duty on the import of cotton has been eliminated; subsidized energy to industries is ongoing and loans under the Long-Term Financing Facility (LTFF) have been facilitated. The value added segment is expected to grow on the back of huge export orders, which will be delivered by May 2021.

Mahmood Nawaz Shah, Senior Vice President, Sindh Abadgar Board emphasized that Pakistan’s weather and environment suited cotton production the best. Apart from growers, ginning and allied businesses would also bear the brunt of imports as their cost would soar, said Shah.

Pakistan’s textile sector is on track towards swift recovery following the devastation caused by COVID-19 as the country has witnessed a sharp surge in its cotton imports. Textile exports from Pakistan grew 16 per cent and 9 per cent in September and October 2020 on a monthly basis compared to a massive decline in August 2020 owing to torrential rains, explains Muhammad Saad Ziker, Analyst, Insight Securities.

In his research report, the analyst pointed out the much-needed growth was being achieved through import of cotton and man-made yarn. The government is also pushing hard for exports growth as it aims to lift them to $50 billion by 2030, according to the textile policy 2020-25. The 5 per cent regulatory duty on the import of cotton has been eliminated; subsidized energy to industries is ongoing and loans under the Long-Term Financing Facility (LTFF) have been facilitated. The value added segment is expected to grow on the back of huge export orders, which will be delivered by May 2021.

Mahmood Nawaz Shah, Senior Vice President, Sindh Abadgar Board emphasized that Pakistan’s weather and environment suited cotton production the best. Apart from growers, ginning and allied businesses would also bear the brunt of imports as their cost would soar, said Shah.

The news of promising vaccine tests has improved sentiments of ready-made garment exporters with western retailers placing bulk garment orders for the upcoming Spring/Summer season. The decline in orders is narrowing in H2, says Gautam Nair, Managing Director, Matrix Clothing. However, the real impact of the news around vaccines would be felt in coming month as buyers finalize their orders for summer collections.

The country exported ready-made garments worth $15.4 billion (Rs 1.1 lakh crore) in the previous fiscal year, according to data from the Directorate General of Commercial Intelligence and Statistics (DGCIS). The October to March period is relatively busier for apparel exporters as they ship the Spring/Summer collections to the US and Europe. India’s garment trade is skewed towards cotton-based fabrics, the demand for which peaks during this time of the year. It accounts for over 55 per cent of total exports, according to DGCIS data.

High sales during this period could help companies offset some of the losses incurred during the first half of this financial year. However, leftover inventory from last year could play spoilsport, exporters cautioned. Many retailers had stored excess inventory in warehouses to be sold in 2021, which could impact the business of Indian exporters this season.

Vietnam’s textile and garment exports are poised for 15 percent decline to $34 billion this year due to the COVID-19 impact. However, this decrease is lower than the 20-25 per cent plunge in global demand this year, says Vietnam Plus. Domestic companies have been making efforts to pump up revenue by producing lower-added value products to ensure cash flow.

The recently-signed Regional Comprehensive Economic Partnership (RCEP) is likely to boost China’s demand for garments made in Vietnam, say experts. The country is also likely to benefit from increasing demand from Japan. It requires Vietnamese companies to prove their products are sourced from other ASEAN countries or from Japan to enjoy incentive tariffs while most of Vietnamese products are made from materials imported from China.

Besides, the scrapping of tariffs on many textile and garment exports to the EU thanks to the EU-Vietnam Free Trade Agreement will push the sector’s growth.

The Cotton Association of India (CAI) expects India’s cotton exports to decline by around 10 per cent to 54 lakh bales from an earlier projection of 60 lakh bales. CAI had earlier projected cotton exports to rise by 20 per cent this year from 50 lakh bales exported last year. The price of Indian cotton has increased from Rs 38,000 per candy of 356 kg each to Rs 41,500, while the international prices have declined by about 4 per cent.

The CAI retained its import projections at 14 lakh bales for the year. The cotton stock held by mills in their godowns, as on November 30, 2020, is estimated at 40 lakh bales, which is equivalent to an average 43-day cotton stock. Various agencies like CCI, Maharashtra Federation, MNCs, Ginners and MCX are estimated to have stock of about 91.57 lakh bales as on 30 November. Thus, total stock held by spinning mills and stockists as on November 30 is estimated at 131.57 lakh bales.

The CAI has retained the overall crop size at 356 lakh bales for the year 2020-21. The overall cotton consumption is estimated at 330 lakh bales for the year of which about 57.5 lakh bales has been consumed during the first 2 months of the year.