FW
"Foreign direct investment (FDI) in Bangladesh’s textile sector at the end of September 2016 stood at $2,438.21 million. Struggling with labour issues and energy shortages, the industry is ready to adopt advanced technology and skill training to get out of the turmoil. While the country is a favoured investment destination owing to its inherent properties such as abundant cheap labour, strategic location as a gateway to Asia-Pacific region, and a legislative framework conducive to doing apparel business."
Foreign direct investment (FDI) in Bangladesh’s textile sector at the end of September 2016 stood at $2,438.21 million. Struggling with labour issues and energy shortages, the industry is ready to adopt advanced technology and skill training to get out of the turmoil. While the country is a favoured investment destination owing to its inherent properties such as abundant cheap labour, strategic location as a gateway to Asia-Pacific region, and a legislative framework conducive to doing apparel business. It is also marred by weak infrastructure, inconsistent energy supply, lack of land, weak financial sector, corruption and red tape in the bureaucracy.
FDI inflows
Statistics from Bangladesh Bank reveals, South Korea has invested $758.08 million from September 2015 to 2016. The corresponding figures for Hong Kong are $421.7 million; British Virgin Islands invested $214.02 million and garnered the third spot among the highest FDI figures for Bangladesh for the period ending September 2016. The other countries that made a significant contribution to Bangladesh textile FDI during the same period are: Taiwan with $155.24 million, China $93.71 million, Singapore $67.4 million and India $66.71 million.
It’s the smaller nations in the neighborhood of Southeast Asia and Eastern Asia that have contributed in terms of FDI as compared to the combined FDI corpus of neighbouring giants China and India. FDI from the United States stood at a modest $33.02 million. Bangladesh government will have to facilitate ease of business in a big way to attract major investors from the West like France, Germany and US. This includes the setting up of adequate infrastructure whereby the textile industry can locate itself in clusters in a special economic zone with adequate facilities for both workers and the visiting industry honchos. China has already provided some assistance in this direction for Bangladesh to set up a special textile park. According to the Bangladesh government, negotiations are on and it won’t be long before this is realised.
Government initiatives
The government is proactively seeking FDI not only in textiles but also in the allied energy and infrastructure sectors that will help boost volumes in textile trade. Some of the measures already undertaken include favourable industrial policy, export growth incentives and Public-Private partnership launched in 2009 and ratified for further enhancement ever since. If policy indications are anything to go by then western world wants Bangladesh to further reform its labour laws and provide enhanced package of minimum wages to its workers. In addition, they have expressed concern about safety norms adopted by the industry. However, of late, Bangladesh has monitored the upgrade of safety norms and has made a marked improvement.
The big cache lies in resolving minimum wages. This may not get ratified soon as it’s bound to impact the cost competitiveness of Bangladeshi garments. The alternative available for Bangladesh is to boost FDI inflow from India. On a promising note, Bangladesh has signed 30 bilateral trade agreements and the current Trump administration has scraped the TPP that made Vietnam a favourable destination for textiles which goes in favor of bilateral trade pacts.
From the holistic perspective, major contributing countries to Bangladesh’s export earnings are China, South Korea, India, Egypt, UK, UAE and Malaysia. With bright prospects ahead, the textile sector is headed for an exciting period in the near future given the inclination of stakeholders, government and foreign players.
A cotton conference is scheduled to take place in Germany from May 16 to 18, 2017. The Global Cotton Conference will bring the entire sector together to shape a more sustainable future for the cotton industry. The conference will offer the opportunity to explore themes at the field level, in the value chain and in consumer facing businesses. Industry experts, business leaders and other key stakeholders will participate in the event to share perspectives on the keys to unlocking a better future for cotton.
Cotton is one of the world’s most important natural fibers. It’s used by nearly everyone and supports 250 million people’s livelihoods. The conference is being organized by Better Cotton Initiative. BCI is a not-for-profit organisation stewarding global standards for better cotton, and bringing together cotton’s complex supply chain, from farmers to retailers.
Better Cotton Initiative exists to make global cotton production better for the people who produce it, better for the environment it grows in and better for the sector’s future. BCI aims to transform cotton production worldwide by developing better cotton as a sustainable mainstream commodity.
BCI works with a diverse range of stakeholders across the cotton supply chain to promote measurable and continuing improvements for the environment, farming communities and the economies of cotton-producing areas.
Turkey’s export-oriented textile and apparel industry relies heavily on cotton imports. Turkey is the world’s second largest consumer of cotton. As the industry has been booming over recent years, Turkey’s cotton demand is also soaring and is expected to reach a 19-year high in 2017.
Rising cotton demand is due to Turkey’s increasing focus on in the European market. Cotton mills in Turkey had to lower margins to keep their market share in the European market to continue operating. Meanwhile Turkish mills have also been investing in new machinery and technology to increase quality and lower costs in order to get ahead in the very competitive international textile trade.
Turkish domestic cotton production is also forecast to surge by 21 per cent year on year in 2016-17. In fact Turkey is the fifth biggest cotton yarn producer in the world, having a five per cent share in global cotton yarn production. The recovery in Turkey’s cotton production is mainly driven by higher local cotton prices and more local farmers switching from planting low return crops such as corn to cotton.
However, lack of irrigation water and high production costs such as seed, fertilizer, fuel and electricity remain as main obstacles for the industry to grow.
UK’s fashion technology firm Metail has announced a partnership with Benit an arm of South Korean conglomerate Kolon. The deal will expand the reach of Metail’s game-changing technology in Asia, which allows consumers to discover, shop, share and try on clothes online in a unique and engaging fashion.
Metail’s aim is to digitise all of the world’s garments and people. It sees South Korea as the most mobile-focused, tech-savvy and fashion-conscious market in the world and feels Kolon, with its scale, stable of brands and market-leading fashion-focused IT services arm, is the right strategic partner.
Kolon is the fourth largest conglomerate in South Korea, with interests spanning manufacturing to construction, trade, life sciences research, environment, retail and fashion. Building on its leadership across multiple sectors, Kolon is now setting its sights on the fast growing South-Korean fashion e-commerce market through its technology branch Benit.
Kolon was looking for innovative and useful solutions for the development of the fashion market in the region and felt Metail's solutions were the most valuable. Consumers can’t try on clothes when buying clothes online. Kolon feels Metail can help overcome the difficulties in sizing and styling.
Through this agreement, Kolon hopes, fashion and distribution companies in the Korean market will be able to provide a useful and wonderful experience to customers.
Turkey’s textile exports to the EU increased 8.6 per cent year-on-year in 2016 while exports of apparel fell 2.3 per cent. The EU remains the largest exporting destination for Turkey’s textile and apparel products and the textile and apparel trade with the EU is expected to increase over the next few years. In 2016, over 64 per cent of total Turkish textile and apparel exports were destined for the EU.
Russian buyers are returning to Turkey after the political tension in November 2015 when Turkey downed a Russian jet. Textile and apparel exports from Turkey are also increasing to other markets like Iran, the US, Algeria, Israel, Poland and Bulgaria. Meanwhile, the depreciation of the Turkish lira is making exports easier.
Moreover, domestic market is also developing well and attracting more foreign investment. The domestic market is expected to grow by eight to ten per cent in 2017. An industrial rebound is expected in the country’s cotton production. The Turkish textile and apparel industry has a goal of doing exports worth 72 billion dollars in 2023. In order to achieve that target, Turkey has put increasing efforts to ensure national and regional stability and harmonious international trade relations.
India’s textile exports fell five per cent in 2016 compared to 2015. Demand remained sluggish and India has been losing out to China. That country’s cost of production remained almost flat and there has been currency depreciation. The Chinese currency has weakened nine per cent over the dollar. In contrast, the cost of production has increased sharply in India and the rupee has appreciated around five per cent. So India's receivable export proceeds have declined proportionately.
The past year has seen a 25 to 30 per cent jump in labor cost. Since labor is a major component of the overall cost, the cost of apparel production has risen proportionately. Overall, therefore, India's textile and apparel exports are estimated to remain flat in calendar 2017 as the benefits offered to the industry are negated by a sharp increase in the cost of production and appreciation in the rupee.
Demand for fabric from apparel makers has been subdued. The country's fabric production was tepid in April-September 2016, with a modest growth of two per cent. Demonetisation added to the challenges being faced by this fragmented and unorganised segment, seen in a six per cent fall in fabric production during the December quarter.
A denim seminar was held by Isko I-skool in Italy from March 13 to 15. This was part of Isko I-skool’s educational activities, where students learnt about the supply chain. Participants got an up-close look at many aspects of the denim industry. Students learnt and experienced all the steps of denim production, from cotton bolls to the latest washing technologies and forecasting trends.
Isko I-skool is the global fashion talent by Isko, a world leader in denim production and textile innovation. The seminar was held thanks to the invaluable contribution of some of the project’s prestigious partners: Lenzing, Archroma, Itema, Reca Group, Tonello, Swarovski and Betabrand.
Isko opened in 1904 and is the world’s largest denim manufacturer under one roof. With 1,500 high-tech automated looms, global distribution of employees and a production capacity of 250 million meters of fabric per year, the portfolio includes more than 25,000 products.
Isko has a presence in 30 countries and an international network of textile technologists, design experts and retail specialists. Use of its revolutionary stretch textile technology in jeggings gave women a sculpting, slim-line elegance. Its concepts can be tailored for any requirement including haute couture, street wear, jeans wear, sports wear and boutique collections.
VF Corporation has been named the world’s most ethical company by the Ethisphere Institute. This assessment is based on a framework which offers a quantitative way to assess a company’s performance in an objective, consistent and standardized way. The information provides a comprehensive sampling of definitive criteria of core competencies in the areas of corporate governance, risk, sustainability, compliance and ethics.
Scores are generated in five key categories: ethics and compliance program (35 per cent), corporate citizenship and responsibility (20 per cent), culture of ethics (20 per cent), governance (15 per cent) and leadership, innovation and reputation (10 per cent).
VF is a global leader in branded lifestyle apparel, footwear and accessories. Ethisphere defines and advances the standards of ethical business practices. It is one of only three apparel companies to figure in the list, underscoring the company’s commitment to leading its industry through ethical business standards and practices.
Since 2006, Ethisphere has honored companies that recognize their role in society to influence and drive positive change, consider the impact of their actions on their employees, investors, customers and other key stakeholders, and use their values and culture as an underpinning to the decisions they make every day.
Cambodia’s exports grew 18 per cent in 2016 while imports went up 16 per cent. The European Union is Cambodia’s biggest market. Exports to Japan rose 45 per cent and exports to China by 50 per cent. By contrast, exports to the United States, traditionally a key market for Cambodian garment exporters – remained flat.
The country’s garment and footwear sector accounts for over two-thirds of the country’s exports by value. About 90 per cent of all exports were shipped under GSP and MFN schemes, which allow many Cambodian products to enter markets with reduced tariffs or duty-free. Imports from China – the largest supplier of goods to Cambodia – rose 16 per cent last year. Imports from Thailand and Vietnam increased by 22 per cent and 53 per cent.
Faster export growth helped trim Cambodia’s trade deficit from 11 per cent in 2015 to 10.2 per cent in 2016. But even with preferential trade privileges that have helped swell rice exports to the European market, Cambodian producers must improve quality and slash production costs to remain competitive.
The country still needs to import a lot of machinery and construction materials, which are required for the construction of manufacturing facilities and other business operations.
Brands are publicly disclosing their supplier lists. Popular online fashion retailer ASOS is set to publish a list of the factories where it produces its own-brand products. Uniqlo has revealed the names and addresses of 146 of its core factory partners.
Earlier Adidas, Converse, H&M, Levi Strauss and H&M have published a list of their manufacturers. Adidas and H&M have published the names and addresses of sub-contractors or fabric/yarn suppliers. Publishing supplier lists is important because it helps NGOs, unions, local communities and even workers themselves to alert brands of any potential human rights and environmental issues in their supply chains. This sort of transparency makes it easier for the relevant parties to understand what went wrong, who is responsible and how to fix it.
Marks & Spencer published an interactive map of its suppliers in both food and clothing, which spans 53 countries and covers 1,229 factories employing 787,331 workers. Gap, C&A, VF (which owns more than 20 brands including The North Face, Timberland, Vans and Wrangler) have revealed the names and addresses of the factories that manufacture their clothing around the world.
The information brands provide varies widely. Some publish every factory where their clothes are manufactured. Others may only reveal a selected portion of their manufacturers, such as their core high-volume suppliers, factories located just in one country or only the factories the company owns.
