FW
In the first quarter of this year, Shishi’s exports of textiles and garments were up 36.6 per cent year-on-year.
Shishi is a textile industrial cluster in southeast China. In the first quarter of this year, industrial value added of enterprises above a designated size was up 7.2 per cent year-on-year, one percentage point higher than the level in January to February; sales revenue was up 8.4 per cent with the production to marketing ratio up to 99 per cent. The textile and garment industry’s sales revenue was up 9.6 per cent year-on-year, accounting for 50 per cent of total industrial sales revenue.
To satisfy the needs of the EU and US markets, local textile enterprises have developed a number of new products such as corn fiber fabric, carbon fiber fabric and Taiji stone fiber fabric. In the past, locally-made textiles and garments were mainly low-end products. Now the situation has significantly improved thanks to the increasing share of medium- and high-end products in total production.
In the first quarter of this year, Shishi's exports of textiles and garments to markets along the Belt and Road accounted for 45.8 per cent of the total, rising from 38.6 per cent of last year.
In the first three months of the year, Japan recorded a surge in volume of apparel imports by 0.30 per cent. However, values fell by 2.66 per cent during the period on a year-on-year basis.
Sri Lanka and Vietnam emerged as the biggest positive apparel exporters to Japan in the first quarter. Sri Lanka noted a 6.74 per cent rise in value and a 133.46 per cent rise in volume. Vietnam too saw a 7.83 per cent rise in value and a 9.19 per cent rise in volume. Other major Asian apparel giants such as China, India, Bangladesh and Pakistan registered negative growth in their apparel exports to Japan during the quarter.
Japan is the world’s third largest economy. Apparel retailers in Japan have no interest in online retailing despite the fact that e-commerce is one of the biggest emerging revenue generating platforms in the country. Retailers avoid this channel due to profitability concerns. Instead they are seeking to keep prices low in stores. According to them, this practice might boost consumer spending, especially tourist spending, in apparel resulting in more imports by Japan in the year ahead.
The Japanese apparel market and fashion industry witnessed a minor downfall after the earthquake of 2011, but soon bounced back overcoming the economic concerns. The categories trending in the Japanese apparel markets are women's outerwear, sportswear, and children’s wear. Recent innovations in functional garments have increased the sales and increased the unit price of such clothing.
In the first three months of this year, China's chemical fiber production was up 6.87 per cent year-on-year. Imports of chemical fibers were up 11.44 per cent year-on-year and exports were up 2.96 per cent.
Earnings of the chemical fiber industry were up 84.68 per cent, the fastest growth among all sectors of the textile industry. In this period, the profit rate of prime business revenue stood at 5.22 per cent, improving 1.97 percentage points over the same period of last year.
In the first quarter of this year, China’s chemical fiber industry saw improved operating quality and profitability while investment rebounded. Influenced by fluctuation of oil price, the prices of main chemical fibers first rose, then declined, with the average price higher than that in the same period of last year, but still in a downward trend.
China’s chemical fiber industry accounts for 70 per cent of global production. The industry covers a range of products from conventional chemical fiber to high-performance chemical fiber to bio-based chemical fiber. Chemical fiber is an important basic raw material industry, involving aerospace, defense, automobile, health and other industries.
Turkey, the United States and Pakistan are the main buyers of China’s chemical fiber.
During the first quarter of 2017 the European Union’s apparel imports rose 0.33 per cent in value year-on-year. Particularly in March, it registered a strong growth in value of apparel imports by 2.56 per cent when compared with the growth a month earlier in February.
Knit imports were down 0.83 per cent in volume but up 1.91 per cent in value. On the other hand, imports of the woven category fell both in value (1.07 per cent) and volume (2.82 per cent) during the review period.
China and Bangladesh remained the top two apparel exporters in the first quarter of 2017 to EU. China’s exports of apparel to the EU were down 4.95 per cent in volume from the previous year and down 3.90 per cent in value from the previous year. Bangladesh’s exports were up 1.11 per cent in volume from the previous year and up 5.24 per cent in value from the previous year.
India’s value-wise apparel exports to the EU fell by 1.28 per cent on a year-on-year basis but volumes rose 1.43 per cent from a year earlier.
Pakistan’s total exports to the European Union increased by 38 per cent from 2013 to 2016, while textile exports increased by 55 per cent in value and 33 per cent in terms of quantity during the period under review.
Bangladesh’s exports rose nearly 1.4 per cent in May from a year earlier. For July to May, the first 11 months of the country’s 2016-17 financial year, exports rose 3.7 per cent from a year earlier.
Multifarious adverse conditions in international markets have created a slight pressure on readymade garment exports. The readymade garment sector accounts for 80 per cent of Bangladesh’s shipments.
Shipments of readymade garments, comprising knitwear and woven items, were up 2.2 per cent in July to May. Exports in the financial year that ended in June 2016 were up 9.7 per cent from the previous year, on the back of stronger garment sales. The country’s exports to the European Union have improved significantly and the hope is that exports to the US market will also increase considerably with accelerated economic recovery.
The World Bank is helping Bangladesh diversify exports beyond the garment sector. The project will improve the competitiveness of existing and potential export-oriented industries such as leather, footwear, plastics and light engineering, where Bangladesh has demonstrated a competitive edge.
The project will help create more than 90,000 jobs in sectors other than readymade garments. It will help the economy to integrate further into the world trading system, and provide better jobs to Bangladeshi youth entering the labor market in the next decade, with a particular focus on improving female labor participation.
A recent research by Changjiang Securities reveals that with China's high-tech exports significantly improving, the internal structure of the computer and communication technology is relatively maturing forward along the areas of material and life technology products such as tilt, overall level of technology content of export products. High-tech products are the direct embodiment of China's technology intensive products, accounting for the proportion of China's exports rose rapidly from 17 per cent in 2001 to 31 per cent in 2009, since then remained relatively stable.
A recent research by Changjiang Securities reveals that with China's high-tech exports significantly improving, the internal structure of the computer and communication technology is relatively maturing forward along the areas of material and life technology products such as tilt, overall level of technology content of export products. High-tech products are the direct embodiment of China's technology intensive products, accounting for the proportion of China's exports rose rapidly from 17 per cent in 2001 to 31 per cent in 2009, since then remained relatively stable. From the point of view of high-tech product structure, computer and communication technology account for 69 per cent of high-tech exports, and are in absolute dominant position. Since 2004, the export growth of computer and communications technology products has continued to decline, which has been a drag on high-tech exports. Without regard to computer and communication technology, other high-tech products (electronic technology, life science and technology, computer integrated technology and materials technology and other cutting-edge technology products) export share is still rapidly rising.
Disappearing working age population
In recent years, the population structure changes, the labour age (15-59 years) population accounted for the trend of decline, labour intensive products exports rely on demographic dividend is gradually disappearing. At the beginning of the reform and opening up, China has achieved rapid economic growth in the past 30 years with a high population volume and population bonus, and a low labour cost advantage into the global division of labour system. In 2010, China's 15-59 year old working age population accounted for the highest value of 70.1 per cent, since then began to fall, while the proportion of elderly people aged over 60 has continued to rise. In stark contrast to China, the demographic dividend in India and Brazil is still strong. Compared with China, the age structure of the population in India is still ‘Pyramid’ shape, which means that the proportion of working age population will continue to rise.
Rising labour cost
With the change of population structure, the labour cost of our country is rising rapidly, and the rate of increase is much higher than that of other major manufacturing countries. The export comparative advantage of labour-intensive products is gradually weakened. In recent years, China's labour costs continue to rise, 2000-2015 years, the average annual per capita wage growth rate of 15.5 per cent, while the same period in Japan and South Korea labour costs increased by an average annual growth rate of -1.5 per cent and 1.2 per cent respectively. From the manufacturing labour cost point of view, in 1995-2015 years, China's manufacturing industry hourly labour costs rose 10 times, the same period India labour costs per hour rose only 1.4 times.
Growing emphasis on R&D
With the accumulation of knowledge and technological progress, China's labour productivity has improved rapidly, trade competitiveness has also been significantly improved, further driving the export structure upgrading. Through the above research, it was found that the structure of China's export products has been continuously upgraded, and the focus has shifted from labour intensive to capital and technology intensive products. Over the past ten years, the proportion of export of labour-intensive products has declined markedly, and the proportion of capital and technology intensive products has risen rapidly. The proportion of labour intensive exports has dropped, which is closely related to the gradual change in population structure and the end of the ‘demographic dividend’ sweet period. With the change of population structure, the cost of labour force (especially the low-end labour force) increases rapidly, which further weakens the export advantage of labour-intensive products.
What lies ahead?
The export of China's capital and competitive advantage of technology continues to improve, such as ship and railway vehicle competitive advantages remain stable, basic metal miscellaneous products, chemical fiber, iron and steel products, aluminum products, machinery and other competitive advantages growing. While the labour advantage has been weakened, the competitive advantage of capital and technology intensive products has been improved as a whole. Sub-industry, ship and railway vehicle competitive advantages remain solid, chemical fibre, chemical fibre filament, iron and steel products, aluminum products, mechanical and electrical trade and strengthen its competitive advantage, competitive advantage is to accelerate development of optical equipment. With the recent gradual warming of foreign demand, exports of ships, basic metals, miscellaneous products, railway vehicles and other industries with strong trade competitive advantages have been significantly restored, and the approximate rate will continue.
After a review in August, to bring the necessary amendment of the ILO Bangladesh, soon the draft law of the proposed Export-Processing Zones (EPZ) Labour Act, 2016, will be before the parliament. Bangladesh submitted this commitment to the conference committee at the annual conference of the International Labour Organisation (ILO), now in progress in Geneva. Over the last few years the EU and the US, have been putting pressure on Bangladesh’s government to bring the necessary amendment to the EPZ laws for allowing full freedom of association.
EU has threatened the suspension of the GSP, if the EPZ law is not amended .Bangladesh in the Geneva meeting further stated that it had already held its first meeting, demonstrating that work was being done to conform to the standards of the ILO. Bangladesh confirmed to a better and safer workplace for workers and to uphold their rights to collective bargaining, freedom of association and their right to strike for realising their legal demands. Besides, a transparent remediation strategy needs to be created and shared with the committee by the end of August 2017.
The government further reiterated its achieving full and productive employment and decent work for all by 2030, in line with the 2030 agenda for Sustainable Development. In order to achieve the goal there was a continuous cooperation, support and understanding that Bangladesh sought. .
According to the workers, the government had not kept any promise and had made no progress which made the situation worsened every year. This government’s failures had anyways no effect of any kind, the worker members state.
Textile colourant market is projected to increase to 6,248 thousand tonnes in 2017. Demand for textile colourants is anticipated to remain steady on account of growing applications in apparel and automotive industries. Owing to low labour costs and infrastructure developmentthe demand is anticipated to remain higher in developing countries among which Asia Pacific accounted 53 per cent revenue share of the global textiles market in 2014.
By fibre type, cotton remains the largest segment, followed by nylon and polyester. Demand for cotton textile colourants has expected to reach 561.6 thousand tonnes in 2017 as compared to 2016. As well as acrylic is projected to grow at the fastest CAGR.
The market has been segmented the dye type, into Reactive dye, Acid dye, direct dye, Disperse dye and Basic dye. Among these, reactive dye accounts for the highest volume share of the market and has projected to increase to over 636 thousand tonnes in 2017. Demand for acid dye, the second largest dye type, is expected to reach 586 thousand tonnes in 2017.The global textile colourant market has been segmented into powder, granules, paste, and liquid. Among these, demand for textile colourants in powder form is accounting for 663 thousand tonnes in demand.
By application, the market has been segmented into apparels, household, technical textiles, automotive, and accessories. Demand for textile colourants in apparels is projected to surpass 1065 thousand tonnes in 2017. Excluding Japan Asia Pacific remains the largest market for textile colourants globally it is expected to grow to 925.5 thousand tonnes in 2017.China colourants market is anticipated to grow at 5.2 per cent in terms of value during the forecast period.
The GST council’s decision of considering any rate revision only after three months has come as a severe blow for the garmenting, made-ups and synthetic spinning sectors. The industry was hoping job work relating to garmenting/made-ups would be included under the service tax list of five per cent GST rate, according to Southern India Mills Association (SIMA)
More than 80 per cent of the garment/ made-ups manufacturing units are in the decentralized sector and undertake job work. The industry fears these units would become unviable with a 18 per cent service tax on job work when compared to vertically integrated manufacturing units.
The apprehension is that the decision to consider GST revision after three months would paralyze the decentralized garment/ made- up segments that predominantly function with job work. Thousands of units in the synthetic spinning sector would be closed and throw several lakhs of people out of jobs.
The Southern India Mills Association wants job work in the garment and made- up segments to be included under the five per cent service tax. It also wants the GST rate on manmade fiber and blended yarn to be reduced from 18 per cent to 12 per cent.
The garment / made-up sector is thought to be the largest employment provider in the entire textile value chain creating 100 to 150 jobs per a crore rupees of investment.
More than 50 global retailers are planning to enter India within the next six months. Brands such as Korres, Migato, Evisu, Wallstreet English, Pasta Mania, Lush Addiction, Melting Pot and Monnalisa, many from the US and Singapore, are expected to open a total of 3000 stores.
These small and mid-sized brands are looking to cash in on the open retail policy and the huge gap in the market for branded products. Of the incoming brands, 18 are in the food and beverage space followed by 13 each in apparel and lifestyle products and education products. They have their eye mostly on smaller, untapped markets within the country.
As retailers struggle in their home markets, India could be the next bright spot for the industry, as it has allowed 100 per cent foreign ownership in business-to-business e-commerce businesses and for retailers that sell food products manufactured in India. The efforts to boost cashless payments and reform indirect taxation with a nationwide goods and services tax are also expected to accelerate adoption of modern retail.
The first retail wave happened a decade ago when bigger retailers and brands entered India. Earlier this month, India replaced China as the most promising retail market in the world.
