FW
In the first eight months of 2017, Vietnam’s exports of textile fibers increased 15 per cent in volume and 24 per cent in value over the same period last year. Fiber and yarn exports to Taiwan surged sharply, up 70 per cent in volume terms and 58 per cent in value terms. In addition, exports to Hong Kong, India, Egypt also reached over 30 per cent growth. Exports to Japan were up 35 per cent in volume and 40 per cent in value terms.
The quality of Vietnam’s cotton fiber is good and meets importers requirements. Vietnam’s yarn industry is well positioned on the world’s fiber map and is able to compete well with major countries such as India, China, Turkey and some Middle East countries.
Besides the satisfactory export results, Vietnamese yarn industry is now actively involved in the development of yarn industry for the domestic textile and dyeing. In addition, Vietnam has also been active in high-end cotton yarn products for high quality of textiles. In addition to domestic production, Vietnam's yarn industry is also exporting large volumes annually.
Currently almost the entire cotton needed for production in Vietnam is imported. In the first eight months of 2017, Vietnam’s imports of cotton were up 25 per cent in volume and 47 per cent in value terms.
In 2001, China paid the lowest real wages in the textile industry among all Asian countries. Salaries however began to grow, eventually rising by 124 per cent in 10 years. This wage rise brought about an increase in the levels of quality in Chinese apparel manufacturing, to allow the industry to compensate for its cost increases.
China’s neighbors have largely benefited from this: they took over as suppliers for entry-level products, while they also had to deal with growing wage demands from their workers. These demands generated robust salary increases in Vietnam and in Indonesia in the same decade. Due to its economic situation and proximity to the US, Haiti too seems to have benefited from this phenomenon.
However, these positive trends hide a rather different reality. Once adjusted for exchange rates and purchasing power parity, textile industry real wages in most countries analysed have declined in the decade in question. Real wages in Mexico posted a record 29 per cent decrease, while in Cambodia they decreased by 22 per cent, starting from a very low salary base.
For some markets, it is hard to calculate the value of paid overtime, which makes up a large part of textile workers’ income in the countries in question. All the more so since such overtime often exceeds the ceilings locally set by law.
Cotton prices are likely to witness a depressing trend. There is going to be a lot of cotton the world over. In spite of losses due to the recent hurricanes in the US cotton belt, the size of the US crop is expected to be larger. Indian acreage for the current season is expected to jump about 12 per cent compared to last year. Expecting yield to increase by about the same percentage points, India will have a bumper crop. If this scenario turns out to be correct, it may create a situation that will warrant India to support farmers by minimum support price operations. In the country, 350 lakh bales were produced last season and the number is expected to reach 385 lakh bales.
Among the many factors that have led to an increase in Indian acreage, an important aspect has been the shift from oil seeds and pulses to cotton due to lack of remunerative prices. There has been a stagnancy in prices of these commodities, and MSP has had to be applied for these products. Cotton prices are under pressure as mill demand is not high. To exacerbate this situation, confusion is prevailing with regard to the implementation of GST.
The European Union will modify its sales taxes rules. The aim is to close tax loopholes and eliminate fraud. The new measures on value-added tax would mostly tackle frauds in which companies pocket VAT revenues from cross-border sales instead of paying them to the local government.
The move would also end the practice of companies avoiding VAT by basing themselves in countries with low VAT rates. They will now, as a general rule, have to pay the VAT charged by the country where their products are sold.
The proposed changes are expected to permanently end tax advantages for supplier companies that serve the EU market from a low-tax country, like Amazon, which is based in Luxembourg. The changes would reduce the need for a harmonised VAT rate policy. By November, it will make new proposals to reform VAT rates, giving states more power to set them. The move is also aimed at reducing scams that deprive EU states of large amounts of VAT revenues. Often such fraud involves companies collecting tax when a product is sold but not paying it to the government of its home country. Collecting the tax in the country where a product is sold would eliminate that fraud.
Amazon has acquired 3D body modeling startup Body Labs that. Body Labs creates 3D human forms for B2B purposes that can be used, among other things, for virtually trying on clothing. Its technology can be used to accurately predict and measure the 3D shape of customers using just a single image.
Amazon is using its resources to drive e-commerce ahead for a new digital fashion experience for mass consumers. Amazon Prime members currently have access to a wardrobe service, offering customers free returns for product that does not fit. Improving fit with Body Labs technology could boost the e-commerce giant's fashion business by reducing the amount of returns, for example.
Body Labs was founded in New York in 2013. Its CEO and co-founder Bill O'Farrell has a track record of developing technology that has been bought out by major companies. His resume includes Adobe and Netsuite buyouts. Amazon has also recently introduced a fashion specific Echo device called Look, to take fashion selfies. Body Labs has a number of similar features that can add filters much like those of a Snapchat lens. Integrating the two platforms could create a consumer experience where customers could try on a dress, send the photo to someone for a second opinion and then circle back and purchase it immediately.
Vietnam’s textile and garment industry will use technologies such as AI and robots for work replacing humans. In 10 years, 86 per cent of workers will become redundant. A Hanoi-based company has dismissed 80 per cent workers as robots now undertake the work. The revolution is expected to have a big impact not only on labor intensive industries, but in all socio-economic fields.
Vietnam’s industrial production is mostly primary production which does not create high added value, with exports mostly raw materials. The production cost in Vietnam is much higher than that in other regional countries but China can make products at low cost because it has modern technology and large-scale production.
The biggest obstacle for Vietnamese enterprises is the outdated technology. It will take time and great effort but if Vietnam cannot catch up with the development pace in the world and the region, the country will have to face many risks including production decline. There might be a wave of outdated technologies from developed to developing countries including Vietnam.
The impact of the industrial revolution, both positive and negative, is unavoidable. The only thing Vietnamese enterprises can do is take full advantage of the opportunities and confront challenges.
A conference on achieving sustainable growth in the textile and apparel industry through manufacturing excellence will be held in Mumbai, October 6, 2017.
It will be hosted by the Confederation of Indian Industry (CII).
One session will be dedicated to deliberating upon the need for implementing standardized manufacturing systems and processes in order to attain manufacturing excellence. In many companies, the systems and processes are established, or rather discovered, by a trial and error method, while this need not be the case.
In today’s globalized world, the learning curve for organizations can be accelerated by use of benchmark operating procedures which once adopted can improve the system efficiency and output quality tremendously.
Another session will focus on the influence that innovation and new technologies have on manufacturing in terms of quality and cost. This session will include discussions on the use of the latest technology for producing better quality products more competitively; IT as a tool for effective planning and monitoring; development of smarter designs, better performance, efficiency, ergonomics and aesthetics; product lifecycle management – material savings/efficiency, resource efficiency etc; and use of integrated monitoring systems.
A third session will focus on ways to achieve high productivity and quality from the manpower employed in the industry. There will be discussions on current issues with the productivity and efficiency levels of the workforce in the textile industry; comparative assessment of the skill levels of Indian workers with top manufacturing nations such as China, Bangladesh, and Vietnam; skill gap present in the textile and apparel industry; and steps taken by the industry and government for reducing this gap and upgradation of skills.
"C&A, the global Dutch chain of retail clothing stores, recently launched a line of T-shirts certified by the Cradle to Cradle standard. This essentially implies they are designed and manufactured in an eco-friendly way and whose materials can be recirculated safely back into industrial materials or composted into the soil. For the company, it was no cake walk. It required a board-level commitment, close partnerships with contract manufacturers, an arduous search for replacements for problematic materials and some new messaging to customers."
C&A, the global Dutch chain of retail clothing stores, recently launched a line of T-shirts certified by the Cradle to Cradle standard. This essentially implies they are designed and manufactured in an eco-friendly way and whose materials can be recirculated safely back into industrial materials or composted into the soil. For the company, it was no cake walk. It required a board-level commitment, close partnerships with contract manufacturers, an arduous search for replacements for problematic materials and some new messaging to customers.
Transitionary phase
C&A backed up the aspiration with a range of sustainability initiatives, particularly related to its materials selection and supply chain. The company is the world’s largest buyer in volume terms of organic cotton, as per 2016 Textile Exchange's Organic Cotton Market Report. The circular economy initiative began at C&A from 2015 when the Brenninkmeijer family invited designer William McDonough to speak at its annual seminar. McDonough and the family discussed the idea of creating a ‘factory of the future’. Jeffrey Hogue, Chief Sustainability Officer, C&A, explained it was all about a world-class factory that would have all of the circular economy elements in it, where the water’s cleaner going out than coming in, 100 per cent renewable energy, great building, great livelihoods for the workers, high social and environmental standards and also a living wage. A three-person task force, from both the company and its foundation, set out to study how such a factory could be built, most likely in Bangladesh, China or India. But along the way, the group realised the factory of the future is a metaphor for something bigger, something that could be transformational in the apparel industry: to shift from a linear model to a circular model.
This realisation resulted in a partnership between C&A and the C&A Foundation to create ‘Fashion for Good’ in a renovated building in Amsterdam. The facility, which opened in March, houses programs for both early- and late-stage innovators, along with interactive exhibits and other initiatives that center around five aspects of ‘good’: good materials, good economy, good energy, good water and good lives.
Getting companies onboard
While taking the step was just the beginning. The greater task was in finalising suppliers who could live upto the desired expectation. C&A turned to Indore-based Pratibha Syntex, for help. Pratibha is a longtime C&A supplier, and a pioneer in many sustainability initiatives. For instance, almost 30 per cent of Pratibha’s factory power comes from the 5-megawatt solar panels it installed, and the company recycles more than 90 per cent of its wastewater.
It took seven or eight months to find dyes that would meet the C2C standard for the wide range of colours demanded by C&A. Organic sewing thread had to be imported from Switzerland, at 10 times the price of conventional thread. It took nearly a year to get the printing right for the t-shirt’s cotton care labels. Donald Brenninkmeijer estimated that the cost of making a C2C T-shirt is 5 to 10 per cent higher than a conventional one.
It was important that the product be launched much like any other, and not treated as a sideshow. Said van der Zee, chief merchandiser, C&A, if you truly believe that this is a game-changer in the industry and you really want to set this up for success — going not just for one-off but for continuous improvement and continuous increase — then you have to start with some scale because otherwise it never will be scalable.
Poised for success
Going by the initial response, C&A has charted a roadmap for more, and more complicated, C2C items to roll out in 2018 and 2019. First and foremost is to develop patterned t-shirts, adding stripes, embroidery and other design elements. A search is on for a C2C substitute for elastane — an elastic polyurethane material commonly found in hosiery, underwear and other clothing, which would allow for more stylish, form-fitting tops. Finding an elastane substitute also would open up new categories such as underwear. Nightwear is also on the agenda. Donald Brenninkmeijer hopes that half of C&A product introductions will be C2C-certified within a decade. This journey can be travelled alone. The company aims to encourage others to participate in this game changing movement. This is how the industry together can learn and develop a sustainable ecosystem.
The Hong Kong Research Institute of Textiles and Apparel (HKRITA) has found new technology to extract and reuse polyester fibers infinitely into new clothes. Each year only a fraction is recycled of the 80 billion pieces of clothing produced. The polyester fibers can be made into new garments straightaway with no loss in quality, which is why this new technology is being dubbed fiber-to-fiber recycling.
Compared to the production of virgin polyester, this method consumes 70 per cent less energy. HKRITA’s new methodology requires limited manpower, simple equipment that textile recycling companies may already own, and the water used in the process can be recycled. A HKRITA-patented chemical solution is used to break down cotton into cellulose particles in a process that combines heat and water and is separated from the fabric.
The goal is to have the technology ready for the market by 2020. Once ready, the technology will be made available to companies through licensing, the terms of which have yet to be decided by HKRITA, which will own the license.
HKRITA’s fiber-to-fiber method currently only works to repurpose polyester—a petroleum-based fiber found in most apparel—and further work is needed before it can recover other materials.
Indian spinners continue to face challenges. Exports are falling due to weak demand from China. Domestic demand has also slowed down amid inventory clearance prior to implementation of GST. However, a surplus cotton supply may offer Indian spinners respite during the second half of this fiscal. Global cotton production during this cotton year is estimated to exceed consumption after two consecutive years of shortfall. The resulting cotton surplus will create a downward bias in prices, which augurs well for the domestic cotton spinning industry.
The cotton crop output in the country is expected to grow by five per cent in cotton year 2018. There has been a 12 per cent rise in sown area, driven by firm cotton prices, which has made it remunerative for farmers to choose cotton against competing crops. While cotton yarn prices were holding firm till August 2017, despite demand side pressures, those have been corrected by five per cent in September 2017 due to sustained demand side pressures and in anticipation of softening cotton prices.
However, with further correction in cotton prices expected with the commencement of the harvest season in October 2017, spinners’ profitability is expected to improve during the second half of the current financial year.
