"The axes of global trade are shifting, amid a surge in commerce between emerging economies in the global South. The dynamics may lead to a rethinking of sourcing and pricing strategies in the year ahead. That’s why “Trade 2.0” is one of the 10 big trends to watch out for in 2019 reveals the McKinsey’s latest ‘State of Fashion’ report, written in partnership with the Business of Fashion (BoF). As 2019 begins, fashion companies find themselves in a crosscurrent of trade-related news flow."

Recent talk of trade shifts between the United States and some of its key trading partners has brought forth the inherent sensitivity of fashion to policies and politics that shape cross-border trade.

Trade tensions to lead to disruption

The axes of global trade are shifting, amid a surge in commerce between emerging economies in the global South. The dynamics may lead to a rethinking of sourcing and pricing strategies in the year ahead. That’s why “Trade 2.0” is one of the 10 big trends to watch out for in 2019 reveals the McKinsey’s latest ‘State of Fashion’ report, written in partnership with the Business of Fashion (BoF). As 2019 begins, fashion companies find themselves in a crosscurrent of trade-related news flow. A sharp rise in trade tensions between the United States and other large economies seems set to increase costs for some players and increase the risk of disruption.

While China and the United States are raising tariffs against each other, China is trying to make some imports cheaper. A Chinese government decision to cut import duties led LVMH to reduce prices by 3 to 5 per cent in July 2018 on some items sold in China. In September 2018, China reduced tariffs for textiles and construction materials to 8.4 per cent, from 11.5 per cent. Any reduction of tariffs usually must be offered to all countries equally under World Trade Organization rules, but according to China, these US goods are subject to retaliatory tariffs.

Brexit to impact fashion companies across the world

A report by the UK Trade Policy Observatory suggests due to high level of exports, reliance on international talent, and dependence on raw materials from abroad, the UK textiles, apparel, and footwear industry will be one of the hardest hit by the country’s exit from the European Union in March 2019. Brexit will also affect fashion companies in other countries, particularly those being paid in sterling.

The US fashion sector is also facing trade-related risks. According to the United States Fashion Industry Association’s 2018 Fashion Industry Benchmarking Study, “protectionist trade policy agenda” in the United States is the number one business challenge. Before 2017, it never ranked higher than eight. The United States has announced tariff hikes on $200 billion worth of goods from China, including clothing.

Companies plan shift from China

Some fashion companies have begun to reconsider their presence in, and exposure to, countries where tariff barriers could further increase the cost of doing business. Puma, Steve Madden, and Wolverine World Wide are among companies that stated they would consider moving production out of China. Many companies had begun this process before the trade tensions mounted, but they cite the recent developments as a tipping point.

New trade routes being developed

While concern over trade tensions is rising, new agreements are being signed and new trade routes being developed. The EU has recently entered into new agreements including clothing and apparel with Canada, Mexico, Japan, Singapore, Vietnam, and several countries from Eastern Europe.

Finally, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and Regional Comprehensive Economic Partnership (RCEP) will enable more free trade between Asia and South America and within Asia.

Overall, trade-related forces will drive two key dynamics in 2019. Escalating trade tensions will see international brands rethink their sourcing strategies, perhaps to the benefit of countries involved in newly negotiated trade agreements. A further increase in South–South trade, especially between emerging countries in the Asia–Pacific region, is likely. Fast fashion, which depends on short lead times, will need to find new strategies to maintain delivery speed and production quality.

India was the partner country at Ambiente, Germany, February 8 to 12, 2019. The show offered Indian exporters a great opportunity to display a whole gamut of home, lifestyle and fashion products. A series of events took place at Ambiente, which included a brand image promotion seminar on India as a profitable destination for sourcing handicrafts, cultural performances, theme setting by designers, a live demonstration by master craftpersons and a GI craft display.

The brand image promotion seminar drew huge crowds as it projected India’s strength as a profitable sourcing destination for handicrafts to buyers who attended the seminar. The cultural performances were one of the main attractions for the august gathering who were mesmerized by the enchanting, lively and colorful performances especially the fusion performances.

The event showcased India as one of the best home, lifestyle and fashion supplying nations in the world. Designers Ayush Kasliwal and Sandeep Sangaru curated these special spaces and set up restaurants using cane and bamboo products of the northeast region. One section celebrated products with everyday designs and another focused on both established and emerging craft entrepreneurs.

India has a huge potential for exports of home décor and life style products and through this fair was able to attract the attention of the world.

Aarvee Denims and Exports’ net sales were Rs 176.94 crores for the December quarter as compared to Rs 178.59 crores during the September quarter. Net profit was Rs 0.32 crores for the December quarter as against a net loss of Rs 0.20 crores for the September quarter. Aarvee Denims is a global player in textile industry.

Net sales for the year were Rs 176.94 crores as compared to Rs 194 crores the previous year. Net profit for the year was Rs 0.32 crores as against Rs 1.76 crores for the previous year. EPS for the year was Rs 0.14 as compared to Rs 0.75 for the previous year.

Net sales for the nine month period were Rs 573.37 crores as compared to Rs 603.04 crores during the nine month period the previous year. Net profit for the nine month period was Rs 0.69 crores as against Rs 4.78 crores for the nine month period last year.

Workers at the West German textile and clothing industry will get 4.9 per cent in wages and salaries and a one-off payment of €340 over the next two years. This is what employers and IG Metall have agreed after a 14-hour negotiation. The company is planning security in a highly unstable economic situation. This difficult situation has determined the negotiations until the last minute.”

Under the agreement, workers will first get a one-time payment of €340. From August 1, 2019, the wages and salaries increase by 2.6 per cent; from September 1, 2020 by 2.3 per cent. There will also be improvements in semi-retirement; the trainees' and the holiday pay. The conclusion has a term of 24 months.

Digital textile printing saved over 40 billion liters of water worldwide in 2018. It offered g an efficient solution compared to traditional water usage for rotary screen printing which is in the region of 50-60 liters of water per meter. Digital textile printing uses smaller quantities of color, typically 10 per cent of the volume used when compared to screen printing. Using pigment inks as an example, and its requirement for fixation only finishing (no washing) uses less than 10 liters of water per meter.

Digitally printed cotton virtually eliminates the consumption of water and the discharge of noxious effluents. It uses low volumes of liquid dispersions of pigment colors, therefore offering a positive environmental impact. Digital Textile Printing using Pigments also removes the need for water and energy greedy post processing, since color fastness is achieved by heat fixation alone as opposed to lengthy steam fixation and washing off procedures.

Poor waste management of viscose factories not only pollutes nearby waters and air but causes widespread illnesses. Viscose is found in a huge variety of clothes and used by almost every major fashion brand today.

Although not inherently unsustainable, it is the production process of viscose that presents a problematic story. Wood pulp is extracted, then turned into viscose staple fiber and filament yarn through a highly chemical process using carbon disulphide. With demand for dissolving pulp projected to increase 122 per cent in the next 40 years, the viscose industry is a growing threat to vulnerable habitats around the world.

With growing use of textile blends among fashion retailers, viscose is now the third most commonly used fiber in the world. As a biodegradable fiber, it has the potential to be a sustainable alternative to oil-derived synthetic fabrics and water-hungry cotton.

Many of the world’s largest viscose manufacturers have not yet adopted responsible production methods and sustainable wood sourcing practices. China accounts for 63 per cent of global viscose production. Several large Chinese viscose producers dump toxic wastewater into waterways and fisheries, or allow it to seep onto nearby agricultural land.

For 2018 Kering’s consolidated revenue was up 29.4 per cent on a comparable basis. All regions reported strong growth, with comparable revenue up 37.8 per cent in North America, 33.8 per cent in Asia-Pacific, 23.9 per cent in Japan, and 23.7 per cent in Western Europe.

Gross margin was up 28.8 per cent on the previous year. Recurring operating income was up a record 46.6 per cent year on year. Consolidated recurring operating margin advanced 400 basis points year on year to 28.9 per cent. Consolidated ebitda climbed 42 per cent while the ebitda margin widened by 360 basis points to 32.5 per cent. Net income group share rose 108.1 per cent.

Recurring operating income was up 46.6 per cent year on year. Consolidated recurring operating margin was 28.9 per cent. Kering’s houses delivered exceptional 29.1 per cent comparable revenue growth in 2018. This brisk growth was fueled by a 31 per cent increase in sales through directly operated stores, which account for over 77 per cent of revenue. Online sales surged by 71.3 per cent. Wholesale revenue from the group’s houses rose 24.1 per cent on a comparable basis.

All regions contributed to the strong revenue growth momentum, with Asia-Pacific up 34.1 per cent, North America up 37.3 per cent, Japan up 23.7 per cent and Western Europe up 23 per cent.

Latest data from the US Commerce Department’s Office of Textiles & Apparel (OTEXA), reveals Asian sourcing powerhouses Bangladesh, Vietnam, Cambodia and India posted double-digit percentage gains for import of blue denim apparel to US in uptill November 2018.

The report revealed imports in the category– 95 per cent of which are jeans–from China increased 1.4 per cent in value to $871.97 million in the first 11 months of 2018. This keeps China in the top supplier slot, but leaves many countries quickly gaining ground.

In the same period, denim apparel imports from Vietnam jumped 44.53 per cent to $277.37 million, while Bangladesh’s shipments rose 12.34 per cent to $536.54 million. Imports from Pakistan gained 12.18 per cent to $227.6 million, Cambodia’s shipments increased by 23.65 per cent and imports from India rose by 45.58 per cent to $34.01 million. Imports from high-end supplier Japan were up 13.16 per cent for a value of $18.66 million.

While the mill’s European customers are still buying textiles from China, prices for packaging and manufacturing in China are getting too high for most, so House of Gold is looking outside of China for large-scale production in countries like Pakistan, Bangladesh, Vietnam and Mauritius.

Ralph Lauren’s net revenues have grown five per cent. The American fashion retail giant also saw a respectable growth in underlying comparable sales. Bottom line of the brand boosted its operating income by 12.9 per cent over last year. A lot of this is attributed to lower discount rates offered by the company mainly in wholesale channel.

A more focused and disciplined approach in producing new collections over the last few months has helped in not only enhancing its sales but also in building connectivity with consumers. The last few years have been about cutting costs. Ralph Lauren is on the right track. What it needs now is a focused business strategy.

Ralph Lauren has ambitious plans to increase sales by a billion dollars by 2023. Marketing spend will go up by a $100 million over the next five years. The goal is to woo the next generation of consumers and increase gross margins by improving the core product (which makes up 60 per cent of overall revenue), amplifying under-penetrated categories (including women’s, outerwear and denim) and operating with discipline, which constitutes being more careful about discounts and promotions, more strategic when it comes to price, and cutting costs in creative-but-impactful ways.

Huntsman has invested in equipment to boost the research and development services it offers to footwear producers and their manufacturing partners. To enrich its work across the entire footwear value chain and create fully equipped testing and prototyping environments, Huntsman recently purchased machines that give it extra technical support capabilities in the field of polyurethane casting; direct-on production; multi-section injection molding; and TPU injection molding.

Global chemical company Huntsman is a leading developer of innovative polyurethane and thermoplastic polyurethane materials for the footwear industry. Throughout Asia, the Americas and Europe, the business has a number of technical centers that provide specialist support to the footwear industry. Part of a much larger global network of Huntsman innovation and customer care centers, these footwear hubs offer design, prototyping, testing and technical support services to some of the world’s most well-known footwear brands.

Many of the footwear companies Huntsman works with are big global brands. These companies want their material suppliers to have a similar geographic footprint – not just in terms of people, production and supply, but also for the delivery of innovation services and technical support. The recent investments have been made with the needs of these customers in mind.