FW
Discussing issues such as ‘youth, technology & growth’, the World Economic Forum ASEAN forum, attracted global leaders. At the WEF ASEAN forum held in the Cambodian capital of Phnom Penh from May 10-12, discussions focused on obstacles that will have to be overcome should the region see true, equitable growth. Infrastructure, governance and open dialogue were key components of the talks but with a widening wealth gap, and a burgeoning Fourth Industrial Revolution that threatens to leave even more of the region’s vulnerable population behind, ASEAN has its work cut out.
China has long been, in the words of Cambodian Prime Minister Hun Sen, ‘strategic partner’ of ASEAN. ASEAN benefits a lot from this relationship. For years, the US pivot to Asia helped shape geopolitics, investment and development in Southeast Asia. But with anticipated disengagement and mounting protectionism from President Donald Trump’s administration, a lot of discussion centered around what impact that shift may have on China’s role in the region. At a panel titled ‘Southeast Asia and the Big Picture’, speakers grappled with the question of what that shift may mean.
China’s reigning stronghold
Will there be ‘a pivot to China’, asked Jamaludin Ibrahim, head of Axiata Group in Malaysia. With the ‘US disengaging from the region does China fill the void?’ Every country in Southeast Asia welcomes Chinese investment, wants to be part of One Belt One Road, George Yeo, visiting scholar at the Lee Kuan Yew School of Public Policy, told the audience at the panel. There is no question of the economic potential China allows for in the region. Yeo stressed most ASEAN countries prefer to remain promiscuous and did not want China to be their exclusive partner.
ASEAN and the Fourth Industrial Revolution
Singapore is ranked 9th out of 187 countries for education, Myanmar is ranked 150th. In a region with vast wealth, development and educational disparities, many at WEF ASEAN asked what impact the Fourth Industrial Revolution of rapid digital and technological change will have. Participants agreed now is a make or break time if Southeast Asia is to prosper from the Fourth Industrial Revolution. The Fourth Industrial Revolution truly will bring benefits for people in all countries. But one should not forget that technologies will also create risks for jobs, said Prime Minister Hun Sen. ASEAN must adopt appropriate measures to ensure sustainability of labour market — quality education aiming at increasing labour skills, said Laos Prime Minister Thongloun Sisoulith.
A question frequently raised was whether ASEAN countries needed to replicate an EU-style policy of unification. At a panel discussing the connectivity conundrum for the region, connecting the ASEAN countries through transportation, telecommunications and critical infrastructure networks, political unification was considered a necessity. Across the region, it could facilitate trade, enable sharing of resources, and develop consistent policies for environmental protection to continue the economic, political and social development of the region. It’s right to make the case for connectivity as a way to reduce inefficiencies, Anna Marrs, CEO for the Standard Chartered Bank, told the audience.
An important first step in making this happen was for governments to come together to create consistent policy and processes, including trade policies and cross-border employment, ensuring the private sector is encouraged to invest and do business in the region. Sun Chanthol, the Cambodian minister of public works and transport, explained that for Cambodia in particular this was an important step in the process to continue the expansion of infrastructure investment and open his country to the region and the world.
A sudden spurt in cotton futures in international market over the last three days has left cotton traders perplexed in India. While the fundamentals support a possible bearish trend owing to wider sowing of the fibre crop, the recent rally in international markets is encouraging farmers towards further cotton cultivation.
On the Intercontinental Exchange (ICE) in the US, the cotton futures for July 2017 contract rallied by about 12 per cent in just three sessions to hit a high of 85.32 cents per pound on Monday a level not seen in more than two years. This prompted ICE to increase the margin requirements thereby indicating speculators’ play behind the sudden spurt.
On ICE the cotton July futures cooled off a bit to 83.99 cents on Tuesday. This sent out a bullish sentiment in the global cotton markets including India, a key global cotton player. The spot rates on Indian markets rebounded by nearly 1,000 per candy (each of 356 kg) to trade at 42,700 on Tuesday. On the MCX, cotton futures for the immediate month contract quoted at 21,170 per bale after hitting a high of 21,260. In March, cotton futures had quoted at 21,060.
Experts say the rally is artificial and will be short-lived. The intergovernmental group, International Cotton Advisory Committee (ICAC), had projected an increase of about 1 per cent in cotton production globally to 23.1 million tonnes in 2017-18. As per the initial estimates, cotton sowing in India has been estimated to increase by 10-12 per cent, while in some pockets, the cotton area may go up by as much as 20 per cent over last year. The trigger for the sharp surge in cotton area is the higher prices as compared to the other alternate kharif crops, such as paddy and pulses.
International buyers, who were to settle their positions, continued making further positions in cotton futures for some reasons. This led to the spurt in prices. In the Indian context, due to such higher international prices, our imports will shrink more than the estimated. So, the country may feel the shortage of cotton around July and those holding cotton stocks may get 46,000-47,000 per bale. But that would be a very short-term as we expect more acreage this year.
India's next generation FTA - the Economic and Technical Cooperation Agreement - with Sri Lanka seems to be running into rough weather. Sri Lanka's trade and industry has not been happy with the earlier FTA that was signed in 2000 with India. Sri Lanka’s exports to India have grown 275 per cent since 2005-06. And India's exports to Sri Lanka have grown 96.48 per cent during the same period.
Negotiations on both sides are on to iron out differences on the upgraded Free Trade Agreement of 2000 to include services, investment and technological trade. There are reasons for India to guard its flanks while negotiating a second generation free-trade agreement with Sri Lanka.
China has evinced interest in an FTA with Sri Lanka as well. This has given India pause, as it wants to see the details of that deal. This could include Chinese companies setting up manufacturing bases in Sri Lanka and using the India-Lanka FTA to push Chinese goods into India. In many segments, Chinese products have already flooded Indian markets.
Tariff and non-tariff barriers to protect local industries, visa regulations, entry barriers to investment are some of the important reasons South Asian regional trade has remained fragmented.
French companies continue to dominate the luxury market in sales, while Italian companies were the most numerous, also posting the strongest growth over last year. The global luxury industry is relatively resilient, with an average sales growth of 6.8 per cent compared to 2014. This increase in turnover marks a noticeable improvement in growth, too, up 3.7 per cent over the year prior, mainly due to favorable exchange rates.
LVMH is the world’s leading luxury company. The French conglomerate’s portfolio includes Louis Vuitton, Fendi and Céline. The LVMH group alone accounts for more than ten per cent of the total sales of all the top 100 companies.
LVMH is followed by the Swiss group Richemont and the American Estée Lauder. Ralph Lauren is 8th and PVH at the number 10 spot. Other US companies include familiar names like Michael Kors, at position 14 and Coach at 15. Fossil Group is at position 20.
French luxury companies experienced the strongest growth in 2016 at an average rate of 14.9 per cent. They also lead the country ranking in terms of sales with a total turnover of more than five billion dollars, achieved by just ten companies. Moreover, three of the ten largest luxury groups in the world are French (LVMH, Kering, L'Oréal Luxe) and account for more than 75 per cent of the sales of luxury products by companies based in France.
Italy is the leader in terms of the number of companies overall, with 26 Italian firms qualifying. However, their total turnover is only 16 per cent of the sales of all 100 companies. Leading the Italian contingent is Luxottica, followed by Prada and Giorgio Armani. Other new brands, some of which do not have typical luxury profiles, are brands like British labels Barbour, Ted Baker and Charles Tyrwhitt, German brands Marc O'Polo and Marc Cain, and French label SMCP (Sandro, Maje, Claudie Pierlot).
The Circular Fibres Initiative, launched at the Copenhagen Fashion Summit, aims at bringing together leading businesses, NGOs, philanthropic organisations and public bodies to create a vision for a new global textiles system that will replace the linear, take-make-dispose model dominating the industry, starting with clothing companies. Nike and H&M are the first corporate partners to support the initiative, led by circular economy think tank Ellen MacArthur Foundation, with participation from the C&A Foundation, the Danish Fashion Institute, Fashion for Good, Cradle to Cradle and Mistra Future Fashion.
The effort has been taken on the aegis of the New Plastics Economy (NPEC) Initiative, launched in 2016, which brought together nearly 40 companies, including Coca-Cola, Danone and P&G, to increase plastics recycling to 70 per cent per year. The NPEC has raised $10 million, points out Ellen MacArthur Foundation spokesperson. MacArther says from this experience, they identified that a key success factor has been a precompetitive, collaborative mindset amongst participants.
What the initiative is slated to do?
The total annual global consumption of clothing amounted to $1.4 trillion per year, or about 91 billion garments sold, in 2013. Across Europe and North America, 15 million tonne annually of clothing is discarded and ends up in landfills. The initiative will map how textiles flow around the global economy and its externalities. The report is due to be published in autumn. Raising end-of-use textile collection rates in North America and Europe to about 65 per cent would save the industry about $71 billion.
The Global Fashion Agenda and the Boston Consulting Group (BCG) recently published a report that scored the fashion industry a low 32 out of 100 points for sustainability. As apparel consumption is projected to rise by 63 per cent in 2030, the need to address its footprint is all the more critical. The report addressed fashion's systemic issues, including the volume of water consumed by the industry, which today is nearly 79 billion metres (enough to fill nearly 32 million Olympic-sized swimming pools) and will double by 2030. Its carbon dioxide emissions are projected to increase to nearly 2.8 billion ton per year by 2030 — the year that fashion waste will top off at 148 million ton.
Circular economy for textile
Clothing can be repurposed in several ways: It can be collected for reuse domestically or abroad; reused for cleaning rags (wipers); shredded for new yarn; or turned into stuffing for furniture and insulation for cars and homes. By raising end-of-use textile collection rates in North America and Europe to about 65 per cent, the industry would save about $71 billion, according to the Ellen MacArthur Foundation report.
A circular economy for textiles would be good for the environment. The EPA estimates recycling the clothes Americans currently toss would be equivalent to taking the emissions 1.2 million cars off the road (which will inflate to 230 million cars by 2030, according to the Global Fashion Agenda and BCG). The Ellen MacArthur Foundation suggested that nutrients embodied in biological materials can be returned to the food and farming systems to regenerate soil. And recovering nutrients in cotton lint from textile wastewater or end-of-use fabrics uses just 0.5 per cent of current chemical fertiliser consumption (cotton currently accounts for 24 per cent and 11 per cent of global sales of insecticides, respectively).
Dame Ellen MacArthur says the initiative is bringing various stakeholders in the textile industry together to catalyse change by creating an ambitious, fact-based vision for a new global textiles system, underpinned by circular economy principles, that has economic, environmental and social benefits.
BGMEA first vice president Moinuddin Ahmed Minto at a seminar has alleged that evil forces are conspiring against the ready-made garment (RMG) sector. He said the activities of these evil forces spell imminent trouble for the industry and urged all concerned to play a positive role in protecting the RMG export sector from 'imminent disaster'.
The Centre for Policy Dialogue (CPD) in association with Bangladesh Garment Manufacturers and Exporters Association (BGMEA) organised the seminar. Chaired by CPD distinguished fellow Mustafizur Rahman, the seminar was addressed by BGMEA incumbent and former leaders and attended by owners of garment factories in Chittagong. CPD research director Khondaker Golam Moazzem presented the keynote paper. Minto said the government and the RMG industries have urged banks to sanction loans at single-digit interest rates, but they are still charging double-digit rates. He further said China dominates the global RMG export market with 39 per cent while Bangladesh exports only 6 per cent. But research shows China will be contributing 20 per cent to the global RMG export market losing the rest 19 per cent by 2021 due to hike of the workers' wages.
This may give Bangladesh an opportunity by capturing the world RMG market. They will have to diversify and upgrade value addition to the products in design and fashion, he added. The BGMEA leader says the target of $50 billion in RMG export earnings by 2021 on the 50th year of independence of Bangladesh could be achieved only if they prepare themselves for wholesome restricting against the backdrop of ever-changing global market.
Lenzing’s revenues for the first quarter of 2017 have risen 14.3 per cent compared to the first quarter of 2016.
EBITDA was up 46.6 per cent corresponding to an EBITDA margin of 23 per cent in comparison to 18 per cent in the prior year period. EBIT increased by 72.1 per cent as against 11.6 per cent in the first quarter of 2016.
Profits for the first quarter of 2017 improved by 69.6 per cent and earnings per share rose 67.9 per cent.
Lenzing is a supplier of high-quality, botanic cellulose fibers, ranging from dissolving pulp to standard and specialty cellulose fibers to the textile and nonwovens industry.
Assuming fiber market conditions remain at current levels, Lenzing expects a substantial earnings improvement this year compared to 2016. As of mid-2018, customers will have an additional 25,000 tons of lyocell specialty fibers at their disposal. Lenzing is currently examining several potential sites in Asia for a further lyocell plant.
Production capacities are being expanded for specialty fibers. New sales offices will be opened in Turkey and Korea.
Lenzing, based in Austria, produces premium sustainable cellulosic fibers including tencel, viscose and modal in production sites around the world, including the United States, Europe and Asia.
Four US textile trade associations – the National Council of Textile Organizations (NCTO), American Fiber Manufacturers Association (AFMA), Narrow Fabrics Institute (NFI), and United States Industrial Fabrics Institute (USIFI) – have outlined the causes of the $95 billion US trade deficit in textiles and apparel and have suggested remedial steps for boosting US production and jobs. In addition, NCTO’s Upholstery Fabrics Committee submitted a statement detailing the reasons for the US trade deficit in upholstery fabrics, focusing on the imbalance with China in particular.
The associations feel if America were to reverse its trade-related red ink and create more jobs, policymakers must have a better understanding of market and economic factors responsible for driving production offshore. They also have urged the United States to continue to treat the People’s Republic of China as a nonmarket economy country under US antidumping and countervailing duty law, adding that China’s widespread use of nonmarket economic activities is one of the biggest drivers of America’s trade deficit.
NCTO is a Washington-based trade association that represents domestic textile manufacturers. The value of shipments for US textiles and apparel last year rose by nearly 11 per cent since 2009. US exports of fiber, textiles and apparel were 26.3 billion dollars in 2016.
The United States is currently the largest raw cotton exporting country in the world, accounting for 36 per cent of the total cotton export value in the world. The biggest market for US cotton is Honduras followed by Mexico. The Dominican Republic is the third leading importer of US cotton and China is the fourth leading cotton export market for the US.
World production of cotton is about 25 million tons annually. China is the world’s leading cotton producer but most of the cotton produced is consumed by the domestic market. India ranks second in cotton production but a large proportion of the cotton produced is also consumed by the Indian textile industry. The United States ranks third in cotton production in the world.
India is the second leading exporter of raw cotton in the world. Exports of raw cotton from India account for 15 per cent of the total global export value of this product. Cotton plays a vital role in the economy of the country and cotton exports contribute significantly to the country’s GDP. Gujarat, Maharashtra, and Telangana are the three leading cotton producing states in the country.
Africa’s share in the cotton trade has doubled since 1980. Although Africa does not have a significant domestic textile industry, cotton is grown by small holders in some countries of Africa.
The International Apparel Federation hosted the first session of Texprocess Forum on May 9, Texprocess/Techtextil, Germany. The subject of the session was ‘Industry 4.0’. The first sub session featured Karsten Newbury of Gerber Technology, Philippe Ribera of Lectra and Dave Gardner of Spesa. Industry 4.0 and the digitization of the apparel industry in particular is a powerful way to enable new and better business models. A company’s strategies must include digitization, the speakers said, since it is not small firms but slow firms that get eaten.
The second sub session featured Ger Brinks of Saxion University, André Wissenberg of Oerlikon and Fernando Pimentel of Abit of Brazil. They made clear that the introduction of virtual reality, the use of robots and artificial intelligence is happening in the industry, but it is a complex process. Inevitably fully automated garment production will be possible on a profitable basis.
The third sub session presented the audience with Rosanne van der Meer of the Girl and the Machine, Dieter Stellmach of the Denkendorf Institute and Tansy Fall of IoTex Magazine/WTiN. They showed how start-up businesses are using industry 4.0 technology to offer consumers new experiences, for instance, by selling a product before it is made, involving the customer fully into the design. So service becomes a major part of the value proposition.
