Falling share prices of iconic luxury groups riding on the back of the US debt crisis has been making headlines. While the world of premium luxury brands may have taken a scratch here or a dent there in the two years of lockdown, they were always in the reckoning, albeit a little edgy over the behemoth market called the Chinese middle class. 

However, the US debt crisis seems to have created a deeper fear which could be smelled in the corridors of luxury. What stirred up news was: Hermes International shares falling almost 5.5 per cent, LVMH Moet Hennessy Louis Vuitton (LVMH) shares losing 4 per cent, and Kering SA, owner of Gucci, seeing a 2 per cent drop in share prices. This huge drop saw the world’s richest man, Bernard Arnault, founder of LVMH losing a whopping $11 billion of his personal fortune in a matter of hours on that fateful day. 

But so what? Tuesday May 23 may have been a huge dent but it wasn’t a crash by any means. Despite the day’s debacle, Bloomberg says, luxury stocks have been outperforming by a large margin this year. LVMH's stock has jumped 25 per cent, while shares of Hermes have risen 34 per cent in 2023, despite a general economic downturn across the world.

The US might still rule the roost

The US and Asia represent significant markets for the European luxury brands. Hermes' quarterly revenues increased 23 per cent in the first quarter of 2023 (January to March), thanks in large part to the demand from Chinese shoppers for the luxury brand's scarves and kelly bags. LVMH's stock price touched a record last month when the company reported a boost in sales. The stock rally also helped the world's biggest luxury brand to enter the most-valuable company list earlier this year. 

LVMH's annual report for 2022 states, the US accounted for 27 per cent of the company's sales, while Asia, excluding Japan, accounted for 30 per cent. But early warning signs have appeared, with LVMH reporting a slowdown in US growth and Burberry Group reporting a decline in demand for trainers and entry-level items among younger Americans. Sidney Toledano, Charman and CEO of the LVMH Group has an interesting spin on this, he opposes the pessimism running through a bearish stock market as he feels come hell or high water, established luxury icons such as Louis Vuitton and Dior are way to embedded through finest of creativity, the most genuine customer service, expertise in marketing and the expansive global outreach. As per him, the world of luxury was no longer shared by the US and China but the emergence of a dynamic market like India, the economic-crisis resistant Gulf region and Africa as a continent with potential means luxury now has a much broader canvas to work with. 

Gulf most promising market

The Gulf region is expected to become one of the fastest growing markets for luxury in 2023,say Barclays Plc analysts, with owners of Louis Vuitton and Cartier best placed to benefit. Analysts indicate high oil prices are the main reason for a buoyant economy and demographic trends another for this region being the most dynamic luxury market. Dubai’s continued focus on attracting tourists and foreign expatriates, as well as its diversification away from oil are also factors that will boost luxury spending. Barclay’s Plc analysts say, LVMH, the owner of Louis Vuitton and Christian Dior, and Richemont, which makes Cartier jewellery and watches, will be beneficiaries of the Gulf’s luxury growth. 

Yarn Expo Shenzhen 2023, scheduled for 6th to 8th November at Shenzhen World Exhibition & Convention Center, marks the return of in-person business in China's leading exporter and fastest-growing city. The fair aims to help yarn and fibre suppliers recover from pandemic losses by providing a platform to explore trends and opportunities in South China.

Strategically located, the event connects industry players with local and global trading partners. China's imports and exports to ASEAN countries have surged since the effective implementation of the Regional Comprehensive Economic Partnership (RCEP) in 2022. Yarn Expo Shenzhen plays a vital role in China's foreign trade and gains further international appeal with the reopening of China's borders.

Exhibitors at the fair will showcase high-quality yarns and fibres, including synthetics, natural products, and sustainable options. Market insights and innovative ideas will be shared through forums, seminars, and product presentations. Concurrently held with Intertextile Shenzhen Apparel Fabrics and PH Value, the fair creates a comprehensive trading platform for the textile value chain.

Messe Frankfurt (HK) Ltd organizes the fair, receiving support from industry associations such as the Sub-Council of Textile Industry, CCPIT; China Cotton Textile Association; and China Chemical Fibers Association.

After a notable decline in April, India's ready-made garment (RMG) exports are rebounding in May. Exporters in Tiruppur are witnessing an increase in export values, although full-volume recovery may take time. Key global players like Walmart, H&M, Tommy Hilfiger, and Target are placing orders in this textile hub. 

Export values rise, volumes lag 

Exports Recover in May; While export values are rising, volumes remain subdued by 5-10%, as reported by the Tirupur Exporters Association (TEA). However, sales are anticipated to bounce back by June. Remarkably, despite reduced demand, Tiruppur's capacity has expanded by 20% due to government policies. 

Walmart's sourcing commitment boosts optimism

The region is optimistic about Walmart's commitment to source $10 billion worth of goods from India annually by 2027. With declining US inflation and fuel prices, an improvement in order flow is expected. The demand downturn was primarily influenced by the Russia-Ukraine war and inflation in Europe. 

Notably, the US holds the largest share of India's knitwear exports (32%), followed by EU nations (30%), the UK (9%), and others (30%). 

Government schemes have contributed to a 20% capacity increase, and the industry eagerly awaits potential benefits from a PLI-2 scheme.  

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) expressed disappointment, stating that the proposed budget for the fiscal year 2023-24 lacks specific directives for the country's textile and clothing industry. 

BGMEA highlighted the budget's failure to address important proposals, including reducing source tax and allocating incentives. Hassan emphasized the challenges faced by the sector due to the Covid-19 aftermath and the decline in global apparel demand caused by the Russia-Ukraine war. BGMEA called for a fixed source tax of 0.50% and a 10% cash incentive on non-cotton apparel exports to attract investments, boost exports, and create jobs. 

BGMEA urged the government to reconsider the corporate tax rate, reduce the source tax on the Exporter Retention Quota Fund, and withdraw the 10% tax on cash incentives. 

They also requested tax and VAT exemptions for recycling processes and products in the local industry. 

While acknowledging some positive measures, such as tax reduction on container imports, BGMEA urged the government to provide clearer guidance to support the industry in the upcoming fiscal year.

Bangladesh abolishes fumigation requirements for U.S. cotton, unlocking trade potential. With the mandate lifted, the U.S. cotton market, worth $475 million last year, gains new growth opportunities. Under the updated regulations, U.S. baled cotton can now enter Bangladesh with a phytosanitary certificate and declaration of boll weevil freedom. 

As the second-largest exporter of ready-made garments, Bangladesh heavily relies on imported, sustainable U.S. cotton. 

Previously, importers spent over $1 million annually on fumigation. The removal of the rule highlights progress in pest control by the USDA and the U.S. cotton industry, notably eradicating boll weevils from over 98% of U.S. cotton acreage. 

Since 2017, the USDA advocated for change, sharing research and demonstrating the absence of boll weevil risk. Bangladesh's Ministry of Agriculture swiftly implemented the modification, signaling positive trade shifts between the nations.

PVH Corp., the owner of Calvin Klein and Tommy Hilfiger, reported a 2% rise in Q1 revenue to $2.158 billion, prompting the company to reconfirm its full-year guidance. International business, especially in Asia-Pacific, drove the growth, with a strong performance in China and continued expansion in Europe. PVH's North America direct-to-consumer sector also experienced robust growth.

Direct-to-consumer revenue increased by 8% compared to the previous year, fueled by owned stores and digital commerce. However, wholesale revenue declined by 2%.

Tommy Hilfiger saw a 5% revenue increase, driven by a 3% rise in international revenue and a remarkable 11% surge in North America. Calvin Klein's revenue remained steady, with a 7% increase internationally offset by a 12% decline in North America. Heritage Brands revenue dropped by 12%.

PVH posted a net income of $136 million, up from $133 million, with earnings per share of $2.14, marking a 10% growth

Dileep Baid has assumed the role of Chairman of the Export Promotion Council for Handicrafts (EPCH), succeeding Raj Kumar Malhotra during the 183rd Committee of Administration (CoA) meeting in Jaipur. 

EPCH acts as the central agency for promoting handicraft exports from India, which amounted to Rs. 29,426.38 crores and US $ 3583.52 million in the 2022-23 fiscal year.

As the head of Dileep Trading Corporation, a leading handicrafts exporter in northern India for over three decades, Dileep brings his expertise as a first-generation entrepreneur to the position. Expressing gratitude for the trust placed in him, he emphasizes the importance of embracing emerging trends and incorporating innovative designs in the handicraft sector. This encompasses various aspects such as product development, creative packaging, brand establishment, increased productivity, elevated quality standards, sustainable practices, and compliance. These efforts are all geared towards enhancing the competitiveness of Indian handicrafts in the global market.

Dileep has set an ambitious target to achieve a 30-fold increase in handicraft exports by 2030, known as the "Teen Guna Tees Tak" goal. In line with this vision, EPCH has organized a symposium on 'Handicrafts Vision-2030', providing a platform for member exporters to engage in constructive dialogue, address challenges, identify growth opportunities, explore emerging trends and technologies, improve market competitiveness, promote sustainable practices, and foster collaborative networking partnerships.

For the last few years, the global textile industry has faced many challenges – dip in consumer demand, labour migration back to their homes, major supply-chain disruptions, high operating costs due to energy crises, lockdowns and the never-ending Russo-Ukrainian conflict. And of course green legislations that upset the manufacturing process. The recently published Global Textile Analysis 2023, Grand View Research values the global textile market size at $1,695.13 billion in 2022 that is anticipated to grow at a CAGR of 7.6 per cent in terms of revenue from 2023 to 2030.

Apparel demand to drive industry

Ever-increasing demand for apparels from the fashion industry, coupled with the meteoric growth of e-commerce platforms, is expected to drive market growth over the forecast period. The textile industry works on three major principles: design, production, and distribution of different flexible materials such as yarn and clothing. A wide array of processes such as knitting, crocheting, weaving, and others are largely used to manufacture a wide range of finished and semi-finished goods in bedding, clothing, apparel, medical, and other accessories.

The key players in this are: China, the EU, the US and India. China has retained its enviable position as the world’s number one producer and exporter of not only raw textile but also readymade garments. The US plays a key role as one of the world’s largest producer and importer of raw cotton and leading importer of raw textiles and readymade garments.

The textile industry in European Union comprises Germany, Spain, France, Italy, and Portugal at the forefront with a value of more than 1/5th of the global textile industry. It is currently valued at over $160 billion. India is the third-largest textile manufacturing industry and holds an export value of more than $30 billion. India is responsible for more than 6 per cent of the total textile production, globally, and it is valued at approximately $150 billion.

There are many developing countries ready to crack or climb this list in the near future as their investment into the textile or garment industry increases. Countries such as Pakistan, Sri Lanka, Samoa, and a number of South American countries have seen considerable growth in their textile markets in recent years. India for example attracted $1522 million in FDIs in this sector alone. In another report by Morder Intelligence Research, two key trends are gaining popularity and these are: natural and non-woven fibers.

Natural fibers tick all the boxes

These are fibers that are more environmentally friendly and ethical than synthetic fabrics. Common examples of plant-based natural fibers include: cotton, silk, linen, hemp, rayon (modal), and lyocell. Animal-based natural fibers for clothes include wool (cashmere), alpaca fleece, camel hair, and spider silk. They are low-cost, lightweight, are renewable, biodegradable with high specific properties that make them versatile.

There is a lot of research and development going on to source from non-traditional natural elements and turn them into comfortable, long-lasting and low environmental impact. Hemp is a popular choice as are fibers extracted from nettle-weed, lotus fibers, banana fibers, coffee ground fibers and the amazing Pintatex a leather like fiber extracted from the skin and leaves of the pineapple plant. World production of natural fibers is estimated at 33.7 million tons in 2022, compared with a preliminary 33.3 million tons in 2021 and 31.6 million in 2020

Non-woven textiles are exceedingly in demand

The many advantages of non-woven textiles include resiliency, enhanced absorbency, improved washability and bacterial protection. Non-woven fabrics can also be tailored to enhance certain features such as liquid repellency, impact resistance, flame retardancy, electrical insulation, and thermal insulation. Their usage is versatile and non-wovens are high in demand in the healthcare sector, industrial safety sector amongst others. The global nonwoven fabrics market size is projected to grow from $ 40.5 billion in 2020 to $ 53.5 billion by 2025.

Huge mountains of discarded apparels are ending up in global landfills and the rest is shipped in the name of worthless donations to poorer countries in the global south. This is causing an environmental, economic, and social catastrophic situation. In fact, Africa has emerged the favorite dump yard of the world, and governments around the world including countries at fault are addressing waste colonialism from the Global North. 

Regulators in the US and Europe are waking up to the mounting clothing waste problem that is clogging local landfills and introducing a new legislation called Producer Responsibility (EPR).  This legislation requires brands to be responsible for environmental pollution and pay fees based on their product manufacturing output or set up their recycling programs which are applicable  for other hard-to-recycle goods such as batteries, mattresses, and medical sharps.

Fashion brands to be accountable for over-production

The EPR legislations are based on the principle that manufacturers are the ones with the most control over product design and marketing and thus have a firm hold on controlling toxicity and waste and need to be held responsible instead of simply passing the buck on. The EPR legislation may take the form of a reuse, buyback, or recycling program. 

The days of the use-and-throw policy seem on the way out as EPR regulations are forcing garment manufacturers to take responsibility for the impact of their product in the final stage of its life cycle and after consumption so that they design products that minimize environmental pollution. 

The new legislation would be binding on many fashion companies to fund their respective textile recycling programs while paying for the volume of clothing they produce under rules separately proposed in California, New York, Sweden, the Netherlands and Italy and is under discussion in the UK and EU. Having remained relatively unchecked for decades, textile waste totals about 4 million tons each year in the EU while in the US, it is around 17 million tons in 2018, up 80 per cent from 2000.

France, Netherland and Sweden lead EPR campaign

In many countries such as France, this EPR program has now been passed into law to cover end-of-use clothing, linen, and shoes from January 2020. Last year, France targeted collecting 50 per cent of all the textiles put on the market, and from this collection, it aimed to reach 95 per cent reuse or recycling of textiles, and a maximum of 2 per cent waste. Several other European countries including the Netherlands and Sweden are also currently planning to strictly impose the EPR legislation.

Netherlands in fact has targeted by 2025 50 per cent textile products should be recycled or reused and are making it necessary for producers to report their figures annually so that by 2030, this target will increase to 75 per cent. In Sweden, EPR for textiles started in 2022 and is expected in 2028, at least 90 per cent of textile waste collected by the new system will be reused or sent for material recovery. Sweden’s target by 2028 is to reduce the average amount of textiles sent to landfill by 70 per cent. Many fashion brands such as H&M have already endorsed the bill and want to use 100 per cent recycled or sustainably sourced materials by 2030 although a lot of this high-tech material is currently not even commercially available. 

Lululemon Athletica recently partnered Sydney-based Samsara Eco to turn apparel waste into recycled nylon and polyester. US-based Evrnu, is also working on converting clothing waste into yarns for new fabrics, and its first-ever product called Nucycl, made from discarded textiles with 98 per cent cotton content is already used by Zara and Pangaia. Premium footwear brands such as Adidas has launched their Ultra Boost ‘Made to be Remade’ trainers which are totally recyclable while outdoor brand Decathlon uses 39 million discarded plastic bottles each year to create hiking fleeces made of recycled polyester.

Resale, rental and repair will also help ensure garments are worn more times before entering waste streams and the new EPR legislations  is expected to ensure that  ensure that these stream outlets get narrower over the next decade.

In a powerful act of solidarity, five UTGLAWU members were arrested in Kampala while protesting wage theft and worker exploitation by Adidas, a multinational apparel corporation. The police response, arrests, and detentions exposed the oppressive environment faced by union leaders in Uganda's garment industry.

UTGLAWU, established in the 1950s, has grown into a registered union with 7,000 members, striving to represent workers in textile factories, SMEs, and home-based workers. Structural Adjustment Programs have devastated the sector, leading to job losses, factory closures, and increased informality, worsened by the COVID-19 pandemic. 

Garment workers endure horrendous conditions, including abuse, delayed wages, and lack of insurance. Employers mishandle social security contributions, while salaries remain below a dollar a day.

Organizing workers in heavily guarded factories poses challenges, impeding unionization efforts. The influx of cheap secondhand clothing from the West undermines Uganda's textile industry. Promised employment opportunities through trade agreements like AGOA have failed to materialize. Workers turn to small businesses, but exorbitant taxes and rents hinder their survival.

Inflation, transportation costs, and delayed salaries exacerbate workers' struggles. The government's focus on job creation neglects labor conditions, perpetuating human rights violations. Urgent labor policy reform and government action are crucial to address these issues.