Chinese companies are proactively moving toward automation and smart production through technological innovation. They are nurturing indigenous brands to move up the value chain. They are expanding their global footprint, working on their design abilities and strengthening their quick response capabilities. Apart from China, they have production bases in places like Vietnam, Bangladesh, Myanmar and Cambodia.

The US tariff action against China has increased American companies’ sourcing cost. But despite lingering tariff issues, China will remain a dominant textile and apparel supplier for the US market in the foreseeable future, because China does not have a strong competitor in the variety of products it can make. Although facing uncertainties over US-China trade tensions, most US companies are still looking for cooperation opportunities with Chinese businesses. As companies are moving sourcing orders to Bangladesh, Vietnam and India, the average price of US apparel imports from these main alternatives to China have all gone up by more than 20 per cent in the first five months of 2019 year on year.

In 2018 China processed 54.6 million tons of fibers, accounting for half of the world’s total, and its exports of textile and apparel were 36 per cent of the world’s total.

Some 20 textile dyeing and processing mills in Surat have shut shop. One reason is falling demand for polyester. Those that are still functioning are working at reduced capacity. Daily production has gone down to three crore meters a day from 4.5 crore meters a day. Production costs have also increased by 15 per cent to 25 per cent due to a rise in labor and raw material charges. Surat has some 325 mills.

On the other hand, lower production results in lower efficiency, higher fuel consumption and a higher cost per unit. Customers who once purchased 30,000 meters of a quality have now reduced the offtake to 10,000 meters to 15,000 meters.

Export of synthetic fabrics from the Surat textile industry is around Rs 20,000 crores. The textile industry in Surat is mainly engaged in yarn production, weaving, processing as well as embroidery. Nearly 30 million meters of raw fabric and 25 million meters of processed fabric are produced in Surat daily. Surat wants to expand through forward integration. As of now, yarns and fabrics comprise the major production. Now units want to move ahead into garment manufacturing and move ahead from manufacturing just synthetic fabrics to producing cotton fabrics too.

By signing a free trade deal with the European Union, Vietnam has become the first developing country in Asia which has received tariff reductions on 99 per cent of goods between the 28-member bloc and the Southeast Asian country.

Almost 11 per cent of Vietnamese apparel exports to the EU will get complete duty waiver at the time of enforcement of this agreement. The European Union is Vietnam’s second largest export market after the United States, with the main exports being garment and footwear products. Vietnam is the sixth largest readymade garment exporting nation to EU, having four per cent of the total market. After the ratification of the agreement, Vietnam won’t have to pay the 12 per cent duty anymore on garment exports to the EU.

Vietnam also has free trade agreements with Asean, China, Japan, South Korea, India, Australia, New Zealand, Chile, Japan, South Korea and the Eurasia Economic Union. All these facilities make Vietnam one of the largest attractions for readymade garment buyers.

Vietnam has been making huge progress in the textile sector due to a sustainably developed industry and strong labor codes. The country is an emerging giant in the global textile and apparel industry.

Casual fashion is driving demand for denim products across the globe. The market can be segregated into apparel, handbags, footwear, and others such as caps and wallets. The apparel segment can be sub-divided into top wear (shirts and T-shirts, jackets and coats, and kurtas), bottom wear (jeans, jeggings, skirts, trousers, and others such as shots and track pants), and one piece (dresses, jumpsuits, and dungarees). Based on category, the global denim market can be segregated into mass market and premium market. In terms of end-user, the denim market can be divided into men, women, and children. In terms of distribution channel, the denim market can be segmented into offline distribution channel and online distribution channel. Online distribution channels include e-retailer websites and company websites. Offline distribution channels include retail stores, specialty stores, supermarkets, and direct selling.

The market in Asia Pacific is projected to expand at a rapid CAGR from 2019 to 2027. This is attributable to an expanding base of working-class population, rising disposable income of people, availability of cost-friendly labor resources, and abundance of raw materials in the region.

Countries like Russia, China, India, Brazil, and South Africa are witnessing a surge in demand for knitwear through the online retail channel. Clothes manufactured through knitting wool or other fabrics are commonly known as knitwear. The women’s segment dominates the global knitwear market. Knitwear for women is available in a wide variety of designs and patterns. Women have a higher awareness regarding changing fashion trends and they are willing to buy new apparels.

Knitwear is segmented into natural, synthetic, and blended. The natural segment has the highest market share owing to the versatile, cozy, anti-wrinkle, high absorption capacity, and the warm nature of natural fabrics such as cotton, silk, and wool. However, the blended segment has a higher growth rate. The rate of wear and tear of knitted outerwear is high as compared to knitted innerwear, which in turn is helping the sales of the outerwear segment.

North America and Europe have the highest share in the global knitwear market owing to the presence of several prominent market players. Moreover, customers in these regions have a higher purchasing ability to buy premium knitwear products. But there is also a surging demand for textile products in countries such as India, China, Taiwan, and Indonesia. Market players are outsourcing their production operations from Asia Pacific, which in turn is catalyzing the region’s market growth.

VF Corp’s first quarter revenues rose six per cent. Excluding acquisitions and divestitures, adjusted revenue increased nine per cent. Active segment revenue increased eight per cent including a 20 per cent increase in Vans’ brand revenues. Outdoor segment revenue increased seven per cent including a nine per cent increase in The North Face brand revenue and a two-percentage point revenue growth contribution from acquisitions.

International revenue increased two per cent during the first quarter. Excluding acquisitions and divestitures, and on an adjusted basis, international revenue increased four per cent. China revenue increased 21 per cent. The company’s direct-to-consumer revenue increased 14 per cent while digital revenue increased 24 per cent.

VF Corp is one of the world’s largest apparel, footwear and accessories companies. Q1 results demonstrate the power of VF’s evolved portfolio and its progress to becoming a purpose-led, performance-driven, value-creating enterprise, with a commitment to be more consumer-minded and retail-centric. With positive results, VF is raising its fiscal 2020 outlook, including additional investments aimed at accelerating growth and value creation in fiscal year 2020 and beyond. VF Crop now expects its full year fiscal 2020 adjusted revenue from continuing operations to grow approximately six per cent.

For the second quarter LVMH’s sales rose 15 per cent. For the six months to ending June, LVMH’s earnings before interest and tax rose 14 per cent. Operating margins were 21.1 per cent. In the current climate of geopolitical and economic instability, creativity and quality, the group’s founding values have become benchmarks. The increasing digitalization of its activities reinforces the quality of the experience it brings to customers. Its largest division is of fashion and leather goods.

LVMH also attributed growth to strong Chinese demand and investments in marketing and new designs. With Chinese customers, there was a noticeable improvement between the first quarter and the second quarter. LVMH, based in France, is a luxury goods group that houses Louis Vuitton and Christian Dior and champagne maker Moet & Chandon. It boasts the largest market capitalization of any company in France. Louis Vuitton is betting on temporary pop-up stores to spike consumer interest and has turned to DJ-turned-designer Virgil Abloh to grow its menswear lines. Christian Dior brand, while still estimated to be less than a third of Vuitton’s size, was also one of the standouts of the second quarter, with sales growth exceeding 20 per cent of the broader fashion and leather goods unit.

"The expectation was that post Rana Plaza tragedy, that killed at least 1,132 people and injured over 2,500 in Bangladesh, the global garment manufacturing industry had woken up to the social and environmental hazards of fast fashion. However, six years later, little seems to have changed as many workers are still being subjected to dehumanising treatment, poverty wages, and gender-based violence at work."

The expectation was that post Rana Plaza tragedy, that killed at least 1,132 people and injured over 2,500 in Bangladesh, the global garment manufacturing industry had woken up to the social and environmental hazards of fast fashion. However, six years later, little seems to have changed as many workers are still being subjected to dehumanising treatment, poverty wages, and gender-based violence at work.

Legal agreement to fix workplace hazards

One of the important outcomes of the Rana Plaza tragedy was the establishment of legal the framework Accord on Fire and Building Safety in Bangladesh. A groundbreaking agreement, Accord codified a legally binding and comprehensive set of standards for fire and building safeguards, and mandated measures for inspection, remediation, and ongoing monitoring of the workplaces that make up the base of multinational supply chains. The agreement held over 200 multinational signatory labels like H&M, Esprit, and American Eagle accountable for the safety conditions of their supplier factories. It has till now renovated hundreds of factories and fixed innumerable workplace hazards ranging from faulty wiring to inadequate emergency exits.

As the International Labor Rights Forum (ILRF) notes, Accord staff has till date conducted 5,274 training sessions, covering 408 factories, and resolved about 330 complaints through the Accord’s complaint mechanism. It has also created the AFL-CIO Solidarity Center which trains its staff with the aim of encouraging grassroots organising, using safety advocacy as a channel toward worker empowerment.

Transfer of control to highlight limitations

However, now the international body that administered it for the past several years is transferring control of its implementation to a public agency in Bangladesh. In May 2019, international labor groups inked a deal with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), granting it the entire control of Accord.

As per the agreement signed between the two parties, BGMEA will co-manage the remediation process through the Accord. However, this new development might underscore the limitations inherent in the joint management structure of Accord as the agreement has failed to create a business-friendly political class in Bangladesh. Though the Accord provides workers an opportunity to organise unions, it does not promote unionisation or collective bargaining. The 2018 extension of the Accord has stronger labor-focused provisions, such as protecting the right to refuse dangerous work.

Contrary to the Bangladesh Accord, which focuses on creating safer workplaces, the Indonesian garment industry endeavors to secure its union rights in its factories. Over the past decade, unions and local NGOs in Indonesia have worked with several large footwear brands to implement the Freedom of Association Protocol guaranteeing the right to organise. Covering an industry of about 1.4 million workers, the agreement was launched in 2011, sparked by a fair-labor protest campaign that coincided with the 2008 Beijing Olympics, and like the Bangladesh Accord, it operates as a binding contract for multinational brands like Puma and Nike.

A call to treat laborers with dignity

However, Indonesian employers are reluctant to comply with this agreement as many of them are subcontractors of the main factories that are official suppliers of the signatory brands. Even their influence in the collective-bargaining process is limited as the factory is dominated by a management-friendly union.

These struggles of Indonesian and Bangladeshi workers reveal the limitations of the supply chain in enforcing global labor standards through private agreements. Though for laborers, any legally binding agreement can help, it cannot fully overturn a regime built on global inequality. To ensure fair global labors standards, fashion industry across the world needs to treat its laborers with equality and dignity.

Australia has partnered the International Labor Organization to improve working conditions, empower women and boost the competitiveness of Bangladesh’s readymade garment industry.

The partnership has been strengthened by the re-commitment of funds for Better Work Bangladesh as part of Australia’s ongoing partnership with ILO. Australia has been supporting BWB since 2016 and today the program reaches 4,85,708 workers in 210 factories who work with 22 international brands.

Australia is committed to fund this program until June 2020 as a demonstration of support for industrial safety, labor law governance and women’s economic empowerment in Bangladesh. Australia’s ongoing support for the Better Work Bangladesh program drives important changes in workplace safety in the garment industry. Better Work has made measurable impacts on the lives of millions of workers and their families. It aims at uniting multiple stakeholders, promoting decent work for all and helping the garment industry in Bangladesh thrive. Australia is an important trading partner of Bangladesh. Bangladesh’s products enjoy duty-free market access to Australia. Two-way export and import linkages are the key elements in the bilateral relationship between Bangladesh and Australia. Garments are the main export items while other products that are performing strong in Australian markets include ceramics, pharmaceuticals and leather goods.

Amina Razvi is executive director of the Sustainable Apparel Coalition (SAC). She has assumed day-to-day leadership of the coalition and has responsibility for its global operations. Razvi has worked at the SAC since 2015. Prior to her new role, she served as vice president of membership and then as interim executive director. Under Razvi’s previous position, the SAC strategically expanded its global presence and impact, increasing membership from 135 to more than 250, and expanding the Higg index customer base from approximately 1,800 to more than 13,000 global users. Amina’s vision, exceptional accomplishments and leadership capabilities are expected to drive SAC into the future and drive measurable impact reductions. An experienced industry professional, Amina possesses a unique combination of knowledge and vision to scale the work of the SAC and engage with members and stakeholders globally as SAC transforms the apparel, footwear and textile industry through the development and use of the Higg index.

SAC is an association representing the apparel, footwear and textile industry in sustainability. SAC members collaborate to develop the Higg index, a standardized suite of tools to assess environmental and social value chain impacts for the purpose of driving performance improvements and addressing the industry’s greatest sustainability challenges.