Since 2016, China has been seeing a slow but steady downgrading of its status as the world’s number one exporter of consumer goods as its share declines. One reason could be increasing labour costs are pushing Western importers to look at more lucrative manufacturing hubs, particularly in textiles and apparel. For decades, China has been the world's factory, churning out cheap products for the masses. However, the tide is turning, as many companies are looking to shift their manufacturing operations away from China. 

China has already lost ground in key consumer categories, including clothing and accessories, footwear, furniture, and travel goods, while also seeing a decline in its share of exports from minerals, hardware to office technology. However, in reality the geo-political tensions that have driven a growing wedge between the US and its Western allies against China is the main reason. Coupled with this the disruptive supply chain experience buyers faced when the Chinese government imposed a severe pandemic lockdown. 

The painful breaking away journey

While the breakaway from China was on a big high from 2020 as the Chinese forced a nation-wide pandemic lockdown and the Biden administration kept issuing warnings about sourcing from the country, the reality is it has been an arduous journey for many brands. Brands are questioning their decision to have left and many are hoping to renegotiate and return their manufacturing to China. Speaking to a reputable online business platform, Laura Magill, Global Head of sustainability at footwear brand Bata Group, explained she couldn’t think of another place that can do the quality, quantity and price as well as China. The mature Chinese ecosystem, established over decades of hard work, not only ensures competitive price points but also delivers stable quality at mass production that’s hard to copy. 

So where does that leave the likes of Adidas AG and Nike Inc. as garment and footwear manufacturers have been relocating their supply chains away from China, driven by geopolitical concerns and drawn by reduced production costs? Will they find their new hub up to their satisfaction? 

New Asian manufacturing hubs continue to rely on China

Vietnam is a classic case in point. While it has gained considerable ground in terms of upping its garment export game at the expense of China, it is still not entirely independent of Asia’s biggest economy. Vietnam’s clothing industry still relies mostly on Chinese materials such as buttons, thread, labels and packaging with only about 30 to 40 per cent of the materials made locally, points out Duong Thi Ngoc Dung, Vice Chairwoman, Vietnam’s Textile & Apparel Association. Dung however explains, Vietnam is still targeting apparel exports worth $40 billion this year, as some Western clients are emphasizing their decoupling with China under political pressure from the US. This has led to a significant gain for the Vietnamese apparel exports that touched $18.6 billion in the first half of 2023, contributing about 11 per cent to Vietnam’s overall exports. 

However, Vietnam still finds itself in a bind – it has tried investing in and creating textiles that meet the sustainability benchmarks for the EU but the same EU customers are demanding the products be priced as cheap as the Chinese variant which is not possible due to economies of scale the bigger manufacturing hub enjoys. A Vietnamese mill-owner in Laskau put it succinctly that Western brands not only have a much higher comfort level working with Chinese manufacturers but also don’t have the intent of investing in developing alternative manufacturing hubs. 

Recent research reveals a potential shift in consumer behaviour, with sustainability poised to influence over 50 per cent of purchasing decisions, marking a significant increase from the current 15 per cent. Where sustainability is taking centre stage, it has emerged as a pivotal metric for evaluating corporate conduct, shaping governance and policy frameworks, and even informing financial strategies. There’s no doubt that companies that embrace sustainability as an integral part of their business model are winning the public sentiment.

One part of the industry that is a particular focus for transformation is the use of materials sourced from forests through the manufacturing process. Forest-based products include: natural rubber for shoe soles, paper and packaging, garment tags, retail paper bags, and even the fibre used to make clothes -- Man-Made Cellulosic Fibres (MMCF) in particular. With consumers increasingly shying away from synthetic blends, MMCFs have the third largest share in global fibre production after polyester and cotton. In 2021, MMCFs accounted for 6.4 per cent of the total fibre market, produced primarily from wood transformed into dissolving wood pulp (DWP) before being processed into various types of MMCF, such as viscose, modal, lyocell, or acetate. 

Since sustainable production of MMCFs begins in the forest, it is crucial for brands to understand the potential risks to forests and take proactive measures to manage and mitigate these risks. However, mapping and monitoring the sourcing choices of suppliers can be a complex and resource-intensive task leading to a fundamental question for retailers: How to guarantee their raw materials are procured in an environmentally responsible manner?

At the forefront of forest materials certification, PEFC (Programme for the Endorsement of Forest Certification) offers industry-leading insights and guidance for retailers. Grounded in the mission to guarantee that products entering the marketplace have been sourced from sustainably managed forests, PEFC provides a strategic and actionable roadmap covering seven essential steps:

⦁ Commit to Sourcing Certification: Embed MMCF sourcing certification into corporate policies to signal taking sustainability seriously to inspire suppliers to prevent greenwashing.

⦁ Require Certified MMCF: Uphold your dedication to sustainable sourcing by requesting certified MMCF materials, particularly from Tier I suppliers providing solid evidence to substantiate product claims.

⦁ Prioritise Traceability: Consider the chain of custody certification bolstering transparency and accountability across the supply chain.

⦁ Transparent Communication: Clearly communicate sustainability objectives and timelines to create alignment between your suppliers and sustainability goals, resulting in shared expectations.

⦁ Support Suppliers to Transition: Provide their suppliers with resources, insights and guidance throughout the certification process.

⦁ Leverage API Technology: Streamline the certification process by implementing an API for real-time updates and database integration, enhancing efficiency and accuracy.

⦁ Go Public with Commitments: Openly showcase the work you’re doing demonstrating an authentic commitment that will resonate with customers and stakeholders alike.

Spotlight on sustainable fashion 

“The connection between our clothes and our impact on the environment doesn’t immediately come to mind. If a jacket or a skirt or a dress looks good, and we can afford it, we buy it. But the environment pays the price.”

Michelle Yeoh, Actor and UNDP Goodwill Ambassador highlighted the role that clothing manufacture and consumer fashion can have for a better planet in a video called ‘Made in Forest” presented at the High-level Political Forum in New York (2018).

 (https://www.youtube.com/watch?v=SPEjQUAw0ic)

In a sign of progress, Mango, one of Europe’s leading fashion groups, has launched a new road map called ‘Sustainable Vision 2030’, to reduce environmental and social impact. 

Currently, 75 per cent of Mango garments have sustainable properties and the brand has made progress by incorporating of alternative fibres with a lower environmental impact within its collection. At present 90 per cent of the cotton is more sustainable, 29 per cent of the polyester used is now recycled and 63 per cent of the cellulose fibres are of controlled origin. 

Spanish fashion designer María Lafuente has developed a capsule collection of six dresses made entirely from PEFC-certified Tencel fabrics, supplied by Textil, the first producer of cellulose fabrics worldwide to obtain PEFC chain of custody certification. 

Credit Marie Lafuente

​​“It is our responsibility to promote fashion that respects life so we can contribute to a harmonious and sustainable society,” explains María Lafuente. “We create, work and produce ethically and sustainably, always selecting environmentally friendly materials,” she says. 

Entering into the sustainable fashion foray, Salvatore Ferragamo, the Italian luxury goods company, has developed the ‘Earth Top Handle Bag’, a re-interpretation of the iconic Top Handle bag that obtained the ISO 14067 - Product Carbon Footprint certification. To ensure carbon neutrality of the project, Ferragamo has committed to protecting 1,200 ha of PEFC-certified cork forest in Tuscany. Managed by Rete Clima, the absorption of CO2 produced by this local action is equivalent to the amount of greenhouse gas emissions generated from the production of 500 pieces of the Earth Top Handle bag.

An opportunity for fashion brands

There is an incredible opportunity for fashion brands to shape both the way the industry functions and how consumers make value-based purchases. Though the task may seem complex, the PEFC sustainable policy guide can aid brands and retailers in easing into this process. 

The PEFC also offers a line-up of events where brands can witness first-hand the forests of Europe and Asia. Initial signups are now open for 2023 and 2024 forest field trips offering an incredible opportunity to connect with nature and witness sustainable forest management in action.

The tide is turning. By prioritising sustainability and instilling responsible practices at the source, fashion brands can not only achieve their sustainability goals but also contribute to a brighter future for our planet. In doing so, they set a powerful example, reinforcing the idea that doing what's right is not just a choice; it's the epitome of style and responsibility.

Images credit; María Lafuente

The Partnership for Cleaner Textile (PaCT) program, launched in 2013 by the International Finance Corporation (IFC) and various partners, aims to improve resource efficiency, reduce environmental impact, and promote sustainable practices in the textile industry. 

Focusing on water, energy, and chemicals, the program has helped more than 338 factories reduce freshwater consumption by 25 million m3/year, wastewater discharge by 21.08 million m3/year, energy consumption by 2.5 million MWh/year, and greenhouse gas emissions by up to 489,796 tons/year of CO2.

BGMEA, as an implementing partner, has played a crucial role in steering and implementing the PaCT program, providing technical assistance and promoting cleaner production practices. The program's success is evident in its significant contribution to improving the environmental performance of the Bangladesh textile industry.

ITMF Start-up Awards Granted at Annual Conference 2023

At the ITMF Annual Conference 2023, which concluded today in Keqiao, China, and was co-hosted by the China National Textile and Apparel Council (CNTAC) and Shaoxing Municipal People's Government, the ITMF Start-up Awards were granted for the second time.

The objective of the ITMF Start-up Awards is to bring together start-ups with innovative product and/or service innovations with well-established companies from the textile value chain.

In 2023, the ITMF Start-up Awards were granted to six start-ups, based on the following criteria:

Innovative business idea

Business proposition

Sustainability, recyclability, or digitalization

Qualitative efficiency

The winners presented their business ideas in a special "Start-up Session" during the ITMF Annual Conference 2023.

The largest sourcing event on the East Coast is headed for the City of Angels!

Show Dates: August 13, 2024-August 14, 2024

Location:

California Market Center 

This event is a great opportunity for apparel brands and retailers to source the latest trends and fabrics from a variety of suppliers.

The event will feature a wide range of exhibitors, including textile manufacturers, garment manufacturers, and trim and accessories suppliers. Attendees will have the opportunity to network with suppliers, learn about the latest trends, and place orders for their upcoming collections.

As per latest Cotton Market Bulletin

US cotton futures ended lower on Friday, with the front-month contract falling to its lowest level since June. The December '24 contract recovered slightly from the bottom, but still lost 208 points for the week. The spot December contract lost 476 points for the week. 

Managed money traders cut their net long positions by 2,667 contracts, while commercial traders reduced their net short positions by 3,199 contracts.

In Pakistan, the cotton rate remained stable during the past week, but the spot rate increased by Rs 500 per maund. Cotton production is expected to increase by 30 lac bales, reaching a total of about 90 lac bales. 

However, the textile sector is facing a crisis due to a sharp increase in gas tariffs, and there is no indication of cotton purchases by the Trading Corporation of Pakistan (TCP). The domestic market is also affected by the global cotton situation.

The Indian Apparel Export Promotion Council (AEPC) has set a vision of reaching USD 40 billion in apparel exports by the year 2030. The council plans to achieve this goal by taking various steps, such as exploring new markets and forming strategic alliances. AEPC Chairman Naren Goenka said that the council will focus on innovation, market expansion, product diversification, and ethical and sustainable business practices.

“We have a dream of making USD 40 billion in apparel exports by 2030. This dream, called ‘40 by 30,’ shows our strong determination to challenge ourselves and reach new heights,” he said.

The AEPC will also work on improving the competitiveness of the Indian apparel industry by addressing challenges such as high costs of raw materials and logistics. The council will also focus on promoting sustainable and ethical practices in the industry.

The AEPC’s ambitious target is a reflection of the growing potential of the Indian apparel industry. India is already one of the world’s largest apparel exporters, and the industry is expected to grow further in the coming years. The AEPC’s initiatives are likely to help India achieve its target of becoming a global leader in apparel exports.

The textile and apparel (T&A) sector Sri Lanka continues to be the biggest foreign exchange earner in its economy. For a country that was leveraging the success story of Asia’s T&A exports sector, troubles began in the form of an ongoing economic crisis since 2019, changing the entire manufacturing, trade and socio-economic dynamics. Some reports suggest, Sri Lankan apparel exports shrank $900 million, as slowing global demand for readymade garments stung the already beleaguered economy hard. 

As per Sri Lanka’s Export Development Board the exports fell 11.9 per cent, compared to a year ago to $951.5 million in September 2023. The T&A sector saw a drop of 24 per cent to $361.8 million in the same period. Total exports from January to September 2023 were down 10.3 per cent to $ 8,961.6 million. Exports to US, Sri Lanka’s single largest export destination, fell 26.28 per cent to $202.1 million in September 2023. Exports to the European Union, which is Sri Lanka’s second largest market, have dropped 27 per cent to $1 billion and to Britain by 23 per cent to $480 million.

The worst is behind says, JAAF

Yohan Lawrence, Secretary General of Joint Apparel Association Forum (JAAF) believes losses have bottomed out and it won’t get any worse. JAAF is expecting a small turnaround but nothing substantial in 2024. Lawrence is optimistic as he feels Sri Lanka’s readymade garment exporters will hopefully start seeing some signs of recovery at the beginning of next year as excess stock gets used. 

Despite temporary closures of a handful of factories, the industry is soldiering on. Lawrence says significant job losses were not expected. As Sri Lanka’s apparel sector employs about 300,000 people, most of them women, the past few years has seen it affect the social fabric amongst the lesser economically privileged classes. Sri Lanka is still hoping to earn about $4.5 billion from garment exports by year-end, a foreign exchange amount it desperately needs. 

One positive is that exports to India are up 11.3 percent to $79.9 million. JAAF, the most influential body in Sri Lanka’s T&A sector has been constantly pushing for the amendment of India-Sri Lanka readymade garment quota for exports to gain significant benefits. JAAF has also been lobbying with the Sri Lankan minister for power and energy, Kanchana Wijesekera to reduce electricity tariff affecting production competitiveness - a steep 66 per cent power tariff hike in February 2023 has not been kind to the sector.

Daunting figures belie optimism

In May 2023, JAAF had it expected Sri Lanka to lose around $1 billion in apparel export earnings this year but the losses up to September indicate the total for the year might surpass that projection. Apparel is Sri Lanka’s largest export that earned $5.95 billion in 2022, helping it weather the worst financial crisis since independence in 1948. But this year, the industry has struggled with exports up to September dropping 39 per cent to $3.4 billion year-on-year, as per latest JAAF stats. 

Reasons for the drop are many, global demand for readymade garments is dwindling and this has affected Sri Lanka’s forex earning capacity. This in turn is affecting the tiny nation as it grapples with a multitude of problems that affect manufacturing – importing the most efficient and contemporary machinery, raw material which it does not produce as well as other ingredients such eco-friendly fibre and dyes. This mix may lead to a long struggle for Sri Lanka’s T&A sector to find its bearings. 

What:Americans for Free Trade, a broad coalition of American businesses, trade organizations, and workers united against tariffs, will host a virtual discussion on Thursday, November 9, at 2 p.m. ET on the ongoing negative impacts of the China 301 tariffs on American businesses.

Who: The discussion will be moderated by Jonathan Gold, Vice President of Supply Chain and Customs Policy at the National Retail Federation, and will feature the following panelists:

Mike Mohler, EVP and Chief Purchasing Officer, Automotive Parts Services Group

Alec Pacini, Director of Operations, JSS Almonds...and others

Topics: The discussion will cover a range of topics related to the negative impacts of the China 301 tariffs, including:

The uncertainty tied to the tariffs and the need for a transparent exclusion process

The impact of retaliatory tariffs on exports

Expectations with the Office of the United States Trade Representative's four-year statutory review

Avery Dennison, a global leader in material science and digital solutions, has launched its Digital Product Passport as a Service (DPPaaS) to help brands comply with the upcoming EU regulations on Digital Product Passports (DPPs). Burton Snowboards is the first customer to use Avery Dennison's new end-to-end service, which provides brands with the consultation, hardware, software, digital ID technology, physical labels, and support services they need to meet the future DPP requirements.

DPPaaS is part of Avery Dennison's broader digital solutions portfolio, which connects the physical and digital worlds through its intelligent labeling and atma.io connected product cloud platform. DPP is a key component of the European Commission's Circular Economy Action Plan (CEAP), which will be phased in starting in 2027 across key sectors such as apparel, textiles, batteries, and electronics.

As an associate member of the CIRPASS consortium, which advises the EU on the implementation of the DPP scheme, Avery Dennison has unique insights into the digital solutions that brands need. Additionally, through atma.io, Avery Dennison tracks 30 billion items across global supply chains, collecting vital data for DPP, such as carbon footprint information, material origins, and reusability guidelines.

Avery Dennison's DPPaaS is a timely and innovative solution that helps brands prepare for the upcoming EU Digital Product Passport regulations. By providing brands with the tools and resources they need to comply with the new requirements, DPPaaS enables brands to continue to meet the needs of their customers and contribute to the circular economy.

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