Many western brands are continuing to do business in Russia. But the widespread outrage over the war in Ukraine means these companies have to resort to sly methods. For instance, they are reopening businesses under new names. Many foreign brands are importing goods for the Russian market through other countries like the UAE and Singapore.

Russian chain stores that shut down due to the war are reopening under different brand names. There has been limited retreat of EU and G7 firms from Russia. So the impression that there has been a vast exodus of western firms is a mistake. Less than 10 per cent of EU and G7 companies with Russian subsidiaries have divested. When Russia invaded, there were 1,404 EU and G7-based companies and a total of 2,405 subsidiaries active in Russia. But only about 120 of these companies have divested at least one subsidiary in Russia.

There were more confirmed exits by US-based companies than those based in Europe and Japan. But even among the US companies fewer than 18 per cent subsidiaries operating in Russia have been completely divested since the invasion began. By contrast, 15 per cent of Japanese firms and only 8.3 per cent of EU firms have divested from Russia. Of those who have left their Russian subsidiaries in place, 19.5 per cent are German and 12.4 per cent are US-owned.

Exiting western firms account for only 6.5 per cent of the total profit before tax of EU and G7 firms with active commercial operations in Russia.They, meanwhile, accounted for 15.3 per cent of the total number of employees working for such firms in Russia.This indicates that, on an average, the exiting firms tended to have lower profitability and larger workforce than the firms that remain in Russia. These findings call into question the willingness of western firms to decouple from economies their governments now deem to be geopolitical rivals. Opportunities for Bangladesh

However western brands reopening businesses under new names in Russian markets have spelled optimism and opportunities for Bangladesh apparel exporters. H&M and Inditex have launched business offices in Dubai under new names to circumvent the political pressure and these new companies are doing business with Bangladesh.

They source fabrics from and import goods made in Bangladesh through third countries like Turkey. Bangladesh’s apparel exports to Turkey and the United Arab Emirates increased 83 per cent and 22 per cent respectively between July to December in fiscal year 2023 over the same period last year. But despite buyer’s interest of doing business through an alternative route, it is risky as Bangladesh’s exporters receive delayed payments.

There was much concern in Vietnam about textile and apparel exports during the pandemic as the country’s textile and garment products account for a global market share of 5.2 per cent, making Vietnam the world’s third largest textile exporter. As per Vietnamese General Department of Custom stats, the sector recovered with a 14.7 per cent increase in 2022 compared to 2021. The sector closed November 2022 at $37.57 billion.

Textiles and garments are the Southeast Asian country's second-largest export earner, after smartphones. The country is among the world's largest manufacturers for brands like Nike, Calvin Klein, Mango, Zara and H&M. The overall performance in 2022 has enabled the sector to recover from the gloom of 2020 and 2021. As per the Vietnamese Textile and Apparel Association, the export target for textile, apparel and yarn was set at $43 billion and due to decrease in yarn export by 13.6 per cent the target was under question.

In terms of Vietnam’s traditional export markets, US remains its biggest importer of textiles and apparel, up 7.9 per cent in 2022 and valued at $17.36 billion. The European Union and Japan registered a significant growth with an increase of 34.7 per cent and 25.8 per cent in imports from Vietnam respectively, valued at $4.46 billion and $4.07 billion. Neighboring South Korea’s textile and apparel import in 2022 from Vietnam was valued at $3.05 billion.

Mixed bag of results in 2022

Despite the 14.7 per cent growth, some of the big names in the sector posted large losses and recovery seems a bit way off for them. CAFEF, Vietnam’s leading financial-trading-securities information center compiled data from 15 leading listed textile and apparel companies to show that the total consolidated tax in the fourth quarter of 2022 was $18.7 million, down a whopping 63 per cent from the fourth quarter of 2021.

One of the main reasons was of course the dramatic drop of the Vietnamese Dong against the US dollar in 2022, combined with declining demand as most global markets stepped cautiously into 2023, bracing themselves against economic crises, inflation and recession. Local newspaper Quan doi nhan dan reported local businesses executives indicate that up until mid-2023, the main factors affecting the garment and textile sector would be high interest rates and inflationary pressure.

Leading company Vinatex created a record of sorts for itself by registering its first quarterly loss of VND 5 billion. Last year its profit after tax was VND 450 billion. However, for the whole of 2022, Vinatex still made a profit of more than VND1 trillion, down 20 per cent year-on-year thanks to the large profit in the year's first half. Vinatex was particularly let down by the near-zero market liquidity in yarns and its subsidiary fiber units also performed poorly.

Garmex Saigon Corporation also suffered a loss of approximately VND59 billion in the fourth quarter, while it posted a profit of nearly VND35 billion in 2021.Garmex was particularly unfortunate due to quality-related issues that led to shutting down and renovating its production process in August 2022, leading to a large pile up of inventory that had been tagged for their quality issues. Other reputable manufacturers such as Song Hong Garment, Century Synthetic Fiber Corporation, and Everpia experienced profit decrease of about 40 to 50 per cent over 2021.

On the other hand, the Phong Phu Corporation turned out to have the most profitable 2022 with VND 99 billion profit after tax. This was a 42 per cent increase from 2021. The Thanh Cong Textile Garment Investment Trading also experienced phenomenal profit after tax in 2022 which valued at VND 60 billion was a 140 per cent increase.

2023 will be a year of challenges

As the jubilation of 2022 settles down, Vietnamese textile and apparel sector look at a year filled with challenges. Input costs, labour costs and a looming economic recession could stretch up until at least the middle of the year and many fear that it will go beyond that. With domestic demand in high-value markets like the US, the EU, Japan and South Korea shrinking in fear of impending recessions, Vietnamese manufacturers may have to cut down on production lines and labour.

Indian businesses that export manmade fiber and spun-cotton yarns to Turkey fear the devastating earthquake there will impact supply chains and their businesses.

The disaster is going to impact Indian businesses and many will see their turnover hit.India exports synthetic and other yarns to textile manufacturing centers in Turkey, including Gaziantep and Kahramanmaras, where they get turned into carpets, formal wear and fast fashion and exported to Europe and elsewhere.

Gaziantep province was the epicenter of the first major earthquake and Kahramanmaras province was where the second struck. How many of these factories are still standing is unknown. Some textile factories are known to have been wiped out. Those that have survived are using the open end yarn to make hospital bandages and mattresses.

So the sentiment in Turkey for exports from India has clearly gone down.No one has gone back to work in the factories as there is no power.A lot of owners have left the earthquake areas and gone to stay elsewhere, so no one knows how the factories will function now.

Indian yarn exporters are slowing down production until the situation improves. As of now the situation has definitely brought pressure on yarn prices.

Pure London is on in the UK, February 12 to 14, 2023. This is a showcase for women’swear, accessories, shoes, and jewellery brands.

Visitors can discover an enticing collection of British and global fashion designers and brands, inspirational trend presentations and show-stopping catwalk shows.

Pure London is showcasing a carefully curated selection of conscious exhibitors leading the way in addressing their environmental and social impact that will raise the profile of ethical and sustainable fashion across the entire event.

To cater to independent fashion retailers in the UK, a toolkit has been created which provides a step-by-step guide on everything from reducing carbon footprint and energy consumption to sustainable packaging. Retailers can have a free consultancy session with a sustainability expert. A panel is discussing the future of sustainable fashion.

Pure London is championing brands that prioritise sustainable production and ethical standards and supports retailers on their journey to become more sustainable. Pure London has a reputation for attracting some of the industry’s most compelling business personalities and change makers and this season is no exception. In today’s challenging retail environment, it wants to encourage conversations about building business, utilising modern technology and producing ethically. The event has had a great response from buyers and the industry.