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Indonesia is hosting ITPT show from April 19 to 21, 2017. This is a textile and clothing exhibition which aims to increase the sector’s domestic share and promote exports to Asean countries as well as to the Americas, Europe and Africa. The exhibition’s theme is ‘Productivity for Sustainability’. Around 450 participants from 24 countries are attending. Participants are displaying latest machines, some of which are Juki, Brothers, and Fongs.
The show aims to demonstrate technology and the concept of one stop shopping. Buyers and sellers can maximize the opportunity to establish networking. The country targets increasing the value of textile and garment exports to $75 billion by 2030, implying the industry would contribute five per cent to global exports.
However, Indonesia is facing several challenges: upstream sector is largely inadequate, causing a reliance on imports of raw materials and requires an injection of investment, technology and expertise, while competition from other textile producing nations in southeast Asia like Cambodia, Vietnam as well as Myanmar is rising.
Yarn, cotton, dyes and fabrics, both natural and manmade, are mostly imported in US dollars. A depreciating rupiah against the US dollar makes imports expensive and therefore, causes financial turmoil for local textile companies, particularly the smaller ones that have fewer cash reserves to rely on.
China has agreed to give into the demands of Pakistani exporters in amended FTA which is expected to be signed next month. The issues of local exporters were debated during the 9th round of two-day negotiations on China-Pakistan FTA. The Pakistani delegation was led by secretary of commerce Mohammad Younus Dagha and the Chinese side was led by vice minister for commerce Wang Shouwen. The requirements include: provision for tariff concessions equivalent to Asean countries.
Dagha suggested incorporating clauses for safeguarding Pakistani industries and the economy from any undue pressure on the balance of payments position, the release added. Various domestic business organisations have complained that products where Pakistan enjoys a competitive advantage are not covered by Chinese officials, which has wider access to Pakistan’s markets. China is now the largest source of Pakistan’s imports, which stand at 29 per cent of total imports.
A recent paper by the State Bank of Pakistan reports over half of the country’s imports of electrical equipment and machinery come from China. An SBP study notes that under the 2006 FTA, China granted concessions on 7,550 tariff lines to Pakistan of which 35pc of the products covered by those lines were zero rated, however, 15pc of the products were given no concession, which include fish, cotton, paper, plastic and textile items.
The report noted Pakistan gave concessions on 6,803 tariff lines to China in that same agreement, where electric and electronic products, machinery and chemicals and other raw materials were zero rated. “Pakistan excluded a list of products (92 tariff lines), which mainly include alcohol, drugs, arms and ammunitions.” It reports the surge in imports from China were mainly due to growing imports of machinery and the diversion of imports from other trading partners.
Global market for functional textile finishing agents is seeing steady growth. It’s anticipated to grow at a CAGR of five per cent till 2025. Increasing purchasing power and disposable income in emerging economies including China, Russia, Brazil, and India are projected to increase the demand for functional textile finishing agents in the next nine years.
Another factor is rising consumer demand for protective fabrics due to growing health awareness and hygiene concerns. Flame retardant chemicals accounted for over 22 per cent of global consumption in 2015. Increasing use of performance finishing agents to discover innovative value-added fabrics so as to strengthen existing product lines and diversify into new horizons is expected to further boost the industry growth over the forecast period.
The Asia Pacific market is expected to grow at an estimated CAGR of 5.5 per cent from 2016 to 2025. Asian manufacturers are launching innovative performance finishing products to increase their customer base. Expansion of multinational players in the region, along with growing local consumption and stable economic conditions, is projected to support regional growth in the coming years.
Repellent and release agents dominated the textile furnishing finishing agents market in 2015 and are projected to grow at an estimated CAGR of 4.8 per cent from 2016 to 2025.
Decks have been cleared for the launch of long-pending textile park, slated to be the biggest ‘fibre to fabric’ (end-to-end) facility in the country, in Warangal with the authorities completing land acquisition, one of a key challenge that every government has been confronting, these days.
For over six years, the project has been in the pipeline, in 2014 it was ultimately given a push by the Telangana government. It might be noted here that although the state produces 60 lakh bales of cotton per annum, consumption by the local mills is just around 10 lakh bales. The surplus is being exported to neighboring states Tamil Nadu and Maharashtra.
At the beginning under the Dharmasagar mandal, the authorities identified land for the proposed park in Devunuru and Mupparam villages. Of which, a part of land belonged to forest department. The government cancelled it knowing the problems in getting clearances from the forest wing. Also Warangal rural district land acquisition process hit a roadblock with farmers not willing to concede their fertile lands.
The administration has acquired 1,120 acres against the required 1,050 acres. A detailed project report (DPR), prepared by the infrastructure leasing and financial services will be submitted to the government soon. On the other hand, speculation has been rife that chief minister who is scheduled to address a public meeting in Hanamkonda on April 27 is expected to lay the foundation stone for the mega textile park.
Karl Mayer completes 80 years of innovation. On this occasion, the company is holding an in-house show at its headquarters in Obertshausen in July. The world market leader in textile machinery building will be demonstrating its progress-orientation by a series of events, at the company’s headquarters. The first event will be held in July 1 -- an open day for the public. An in-house show for customers and business partners will follow on July 6 and 7. The manufacturer offers solutions for warp knitting, technical textiles and warp preparation for weaving. The company has subsidiaries in the US, India, Italy, Hong Kong, Japan, China and Switzerland as well as agencies all over the world.
The Weftronic II HKS is a high-performance warp knitting machine with weft insertion to match the courses. It enables the efficient production of extremely lightweight fabrics which are suitable to be used as interlining.
Karl Mayer is also a partner of composite sector. When it comes to manufacture of composite materials made from glass fibers, for example, the multi axial warp knitting machine Cop Max 4, 100 and the fiber spreading unit UD 700 are technical solutions of the highest perfection.
Other offerings are the Prosize sizing machine and the Multi-Matic. Prosize offers the highest efficiency in weaving and the smallest possible sizing liquor volume. In this way, it makes a significant contribution to the concept of sustainability. Outstanding features of the Multi-Matic are its high flexibility during sampling and short-warp production. Moreover, this innovative warp preparation unit offers an exceptionally high productivity, so that it can be used both as sampling machine and as production machine.
The Arab Brazilian Chamber of Commerce (ABCC) says Brazilian exports of textiles and clothing to the Arab region surged during the first two months of 2017, increasing 87.5 per cent compared the same period in 2016. The huge demand for synthetic fabric and sisal rope used in ships and rigs led to an increase in total sales which touched $3 million up from $1.6 million in January and February 2016,.
The Brazilian Textile and Apparel Industry Association (ABIT) reported sales from rope exports accounted to $1 million, on the other hand beachwear, textile yarns and inner garments also rose during the two months. Middle East continue to be one of Brazil’s largest market for clothing, particularly for segments such as party wear, children’s and beach wear. As per ABIT’s latest data, the UAE has the highest imports of Brazilian textiles and clothing during this period, followed by Algeria, Egypt, Morocco, and Lebanon.
Statistics reveals companies which participated in the program expanded their exports to Arab countries by 40 per cent in 2016, valued at $2.9 million in 2015 to $4.1 million in 2016. Michel Alaby, Secretary General and CEO, ABCC points out that Brazil’s textile exports performance during the first two months of the year reveals the steady growth of the country’s market share as the Arab world continues to look for quality materials, not only in raw materials but also with finished goods.
He points out Arab consumer have a discerning taste for luxury and exclusivity in clothing and apparel and this segment remains promising for the Brazilian export sector.
Asia Pacific is home to more than 40 million fashion industry workers, yet for the vast majority, wages remain at levels well below what is needed to lift themselves out of poverty. The proportion of companies looking to improve wages continued to rise from 11 per cent in 2013 to 42 per cent this year. However, in most cases, wages were still below a living wage level and only applied to a portion of workers.
Since 2013, there has been a 30 per cent improvement in companies tracing second tier suppliers, while two and a half times more companies trace raw materials suppliers. These are some of the findings released by Baptist World Aid Australia.
Just seven per cent companies know where their cotton is coming from. Baptist World Aid urges brands to share this information because if they don’t disclose these list, or policies to mitigate worker exploitation, consumers won’t know their suppliers. More than 300 fashion brands have failed to lower the risk of worker exploitation in their global supply chains. The number of companies publishing full supplier lists has risen from 16 per cent to 26 per cent since last year. This year, Baptist World Aid created an online grading tool so consumers can easily search for their favorite brands and their related grades.
"If export promotion councils start promoting Indian artisans on the global map with a strong push, then their growth can get a big boost. Delhi, Jaipur, or Lucknow’s local cloth and garment markets are always teeming with Europeans in search of unique Indian designs. Many are entrepreneurs bulk-buying cloth and dress materials, fashion accessories, and furnishings for resale in Europe, at a substantial profit."
If export promotion councils start promoting Indian artisans on the global map with a strong push, then their growth can get a big boost. Delhi, Jaipur, or Lucknow’s local cloth and garment markets are always teeming with Europeans in search of unique Indian designs. Many are entrepreneurs bulk-buying cloth and dress materials, fashion accessories, and furnishings for resale in Europe, at a substantial profit. The high costs of doing organised business and that too abroad has challenged the possibilities of artisans and clearly an opportunity is missed to create thousands of sustainable livelihoods that could go a long way in reducing poverty.
A big market waiting to be tapped
Statistics show that the rough size of this market is between $600 to $800 billion. If India’s artisans could capture even a tenth of this market and extract a fair value from it say 50 per cent of the final price of the product as opposed to the current 5-10 per cent, it would result in $30 billion of new exports and around six million sustainable livelihoods. In fact, many ‘global’ lifestyle brands from Switzerland or Scandinavia started out as small enterprises which creatively used product differentiation to climb the value chain.
Empowering the inherent creativity of artisanal genius would be a real example of grassroots ‘startup’ India. Indian foreign trade policy needs to work its way to promote such talent globally. We do not have any comprehensive scheme that actually helps the unorganised and small producers to export. Since the focus of foreign trade policy is to give small fiscal ‘incentives’ to different categories of exported products, it just equalises differences in cost and productivity vis-à-vis India’s competition.
A ‘startup’ exporter needs an all-encompassing support. They need to be made aware about consumer trends and product differentiation. For instance, using filigree silver to make high-end mobile-phone covers. They need access to low-cost production centres that help with standardisation and packaging. Support on omni-channel marketing to final consumers using social media and e-commerce market places and logistics would be another key area of intervention. Access to credit and formal banking channels is also the need of the hour. These are all pre-export requirements. How does a post-export incentive actually help competitiveness or bring those who are not competent and require hand-holding into play?
Learning from the best in class
A new foreign trade policy could target artisanal entrepreneurship as the first step in developing a new structure for incentivising exports from India, one that helps startups and innovation, and extracts maximum value from global value chains, taking cue from global best practices. Sweden’s export credit guarantee institution provides support with market intelligence and product placement to SMEs. A new MoU between DHL and International Trade Centre helps African SME exporters with e-commerce product placement and logistics.
A more radical model is HAX, a support and consultancy service for hardware startups that leverages the low-cost manufacturing cluster of Shenzhen to help develop and place products for global entrepreneurs. The pay-off for HAX depends on the success of the entrepreneurs they support, and thus they have a full stake in ensuring the success of the end product. HAX project teams handhold the startup right from the product conceptualisation stage to the final product placement. HAX represents a disruptive change in how a small manufacturer with the right product idea can crack the global market with very little financial resources.
So is it possible to replicate such model for Indian artisans? The pay-offs to the council would be tied to the export success of startup clients, and the councils would be expected to hire private sector expertise in areas ranging from product conceptualisation and design, to placement and logistics. The board of the council would have representation from both artisans and the venture capital industry. Salaries would be incentive-based, and the direct result of the export success of startups that the particular set of employees helped incubate.
This could start it as a pilot project. Assume the ministry of commerce working actively to create an artisanal ‘startup’ hub in Jaipur with significant seed funding, reaching out to India’s artisan groups and connecting them with a well-developed, expert venture capital community. An active participation from global logistics companies and e-commerce marketplaces through strategic tie-ups such as the one between DHL and International Trade Centre would add to the growth. In five years, we could create six million good jobs and our cities can truly become the luxury capital of the world.
Workers in Bangladesh’s garment industry will be imparted fashion and design skills to suit the choice and taste of foreign buyers. The percentage of skilled workforce in the country is 26 at the moment and by 2020, this figure is expected to grow to 65 per cent. The country hopes to eventually export quality technicians and skilled manpower in different fields to other countries instead of importing them.
Bangladesh began giving cash incentives on garment exports to emerging markets to offset the fallout from the financial meltdown the world faced in 2007. These incentives on export to non-traditional markets drove growth over the years. Subsequently, exports to India, China, Russia, Japan, South Africa, Turkey, Brazil, Chile, Mexico, South Korea, Malaysia, Australia and New Zealand started to rise.
Cash incentive for apparel exporters was five per cent in 2009-10, four per cent in 2010-11 and two per cent in 2011-12. They still receive a two per cent incentive for exports to new destinations. One of the factors driving Bangladesh’s textile and garment industry over recent years is the growing foreign direct investment in the industry. The country’s cheap labor, preferential location in the heart of Asia-Pacific and government support are some of the reasons.
"For long, ‘Asian Tigers’ typically referred to Hong Kong, Singapore, South Korea and Taiwan. The four countries experienced rapid growth between the 1960s and 1990s. But now Bangladesh is emerging strong, as the World Economic Forum pointed out. The Bangladesh economy has been one of the top performers in Asia over the past decade, averaging annual growth of more than 6 per cent.
For long, ‘Asian Tigers’ typically referred to Hong Kong, Singapore, South Korea and Taiwan. The four countries experienced rapid growth between the 1960s and 1990s. But now Bangladesh is emerging strong, as the World Economic Forum pointed out. The Bangladesh economy has been one of the top performers in Asia over the past decade, averaging annual growth of more than 6 per cent. Much like Hong Kong, Singapore, South Korea and Taiwan during the industrialisation of their economies, most of the growth that Bangladesh has experienced has come from garment exports, which the CIA World Factbook says accounts for more than 80 per cent of its exports.
Gareth Leather and Krystal Tan, Asia economists, Capital Economics, wrote Bangladesh has picked up about two - thirds of China's low-end manufacturing market share in Europe. But if Bangladesh is to reach the government's ambitious growth target of 8 per cent a year by 2020, it is essential that it starts to diversify out of the garment trade into other sectors, such as electronics and other consumer durables, where there is more scope to add value.
Bangladesh reigning high
Hasnain Malik, Head – Frontier Markets Equity Strategy, MENA and South Asia Research, Exotix Partners, says the market is being powered higher by earnings growth, local interest in equities, and increasing foreign investor interest. Malik believes there is a lot to like about the market's fundamentals: Domestic political stability; geopolitical support from regional powers China and India; macroeconomic growth and currency stability; fast-paced urban growth and extreme population density; and almost all of the 20 biggest publicly traded companies offer direct exposure to Bangladesh's domestic economy.
Where the country is lagging
In order to diversify out of the garment trade, Bangladesh must do two things, say experts. Poor infrastructure makes it difficult to transport goods across the country. Additionally, more than 20 per cent of the population of more than 156 million (about 31 million) aren't connected to the power grid, and companies often have to use their own back-up power generators because of the high susceptibility to blackouts. Those factors, combined with high levels of corruption, make Bangladesh one of the hardest places in the world to conduct business. According to Capital Economics, a lot needs to be done on reducing corruption, simplifying customs procedures, making land acquisition easier, improving private sector companies’ access to credit and making the security situation more stable.
Among the measures the government is planning to introduce include removing red-tape to expedite the process of starting a business (to seven days instead of 19.5 days), issuing construction permits within 60 days (instead of the current 278 days) and reducing the time it takes for a company to be connected to the national grid to 28 days (compared with 404 days at present). There are also plans to simplify property registration, enhance contract enforcement, streamline cross- border trade procedures under a World Bank- sponsored agenda, and digitise tax payments to improve collection. Progress on these fronts would increase Bangladesh’s appeal as an investment destination.
