Textination Newsline

• Production stabilizes at lower level
• Import of textile machines increased

Jerusalem (GTAI) - The Israeli textile and clothing industry has largely stabilized after years of decline. This applies both to the added value of the sector and to exports. Thanks to new capacities, the textile sector was able in 2106 to record a significant increase in production. In the import of textile machinery Germany plays the leading role. On the other hand, the German import market share of imports of textile and clothing products is low..

For a long time, Israel's textile and clothing industry was a serious problem sector of the manufacturing industry. But now it seems to catch up itself again. This is confirmed by the production statistics. In a crisis phase between 2007 and 2013, the added value by the textile and clothing industry had declined by a total of 25.7%. While the shrinking of the clothing sector was 21.4%, the textile industry fell by 31.2%. The reasons for this development were the increasing competition from low-cost imports on the domestic market and declining exports. Since 2013, however, the figures have stabilized and are pointing upwards.

Development of the Israeli textile and clothing industry 2006 to 2016 (selected years)

Year	Index of added value textile and clothing (2011 = 100,0)	Index of added value textile	Index of added value clothing	Exports of textiles and clothing*), Mio. US$	Imports of textile and clothing*), Mio. US$
2006	128.8	130.8	128.2	1,243	1,561
2011	100.0	100.0	100.0	1,011	2,256
2012	956	918	986	952	2,241
2013	910	840	964	920	2,365
2014	932	845	999	966	2,558
2015	928	849	987	930	2,420
2016	970	983	959	914	2,480

*) HS-section XI (spun textile fabrics and articles thereof)
Source: Monthly paper on foreign trade statistics, various editions, Central Statistical Office

Product range cleared up

The stabilization was achieved through a comprehensive clearing up process in the textile and clothing industry, in the course of which products and production processes, in which Israel was no longer internationally competitive, were discontinued or outsourced to cheaper locations. Thru rationalization processes the productivity was increased.  The added value of the textile and clothing industry in 2016 per employee reached 4.8% above the level of 2011. The cumulative increase in productivity in the textile sector was 3.5 and in the clothing sector 5.6%.
The adjustment of the product range led to a drop in exports and simultaneously to an increase in imports. The Israeli manufacturers are increasingly looking to raise their turnover in high-quality and less labor-intensive products, which also have opportunities on the world market.

According to the most recent available data, the export rate of the textile and clothing industry in 2014 was 50.1%. There was an extreme division in the clothing sector: while the manufacturers of clothing products other than underwear only accounted for 3.9% of their sales in the international business, almost the entire production of underwear was exported.
The main export position of the Israeli textile industry is covered by HS heading 56 (cotton, felt and nonwovens, special yarns, twine, cordage, ropes and cables). In 2016 these products accounted for 28.7% of the textile and clothing exports, followed by synthetic or artificial filaments with 14.3%, knitted products with 13.0% of the exports.

Production structure oft he textile and clothing industry 2014

Sector	Turnover in Mio. US$ *)	Export rate in %
Total (1+2)	1,834	50.1
1. Textile industry	1,014	52.7
Spinning, weaving, and finishing of textiles	557	57.0
Other textiles	457	47.5
Clothing industry	820	46.8
Clothing but underwear	425	3.9
Underwear	320	96.3

*) Conversion of official internal price data according to the yearly average exchange rate
Source: Central Office of Statistics

Following the successful stabilization, the Israeli industry is also daring to create new production capacities. In 2015 and 2016 two new factories were set up for the production of nonwovens and have started to operate. On the one hand, this became reflected in increased machinery investments by the textile sector, and secondly in the strong increase in the production of the textile industry in 2016 by 15.8%.

Germany leading supplier of textile machines

Parallel to the increase in production the import of textile machinery is increasing since 2014. In 2016, it reached USD 62.2 million, more than twice the low level of 2013. German textile machinery manufacturers were able to participate in this growth in a leading position..

Import of textile machinery 2010 to 2016 (million USD)

Year	Import	thereof: from Germany	German import market share in %
2010	21.1	4.8	22.7
2011	35.3	13.3	37.7
2012	41.5	16.3	39.3
2013	29.2	7.4	25.3
2014	34.4	10.5	30.5
2015	58.4	31.5	53.9
2016	62.2	37.5	60.2

Source: UN Comtade Database

In 2016 the German import market share of textile machinery reached a hight of 60.2%, so the Federal Republic was by far the most important delivery country, followed by Italy and France.

Leading suppliers for textile machines 2016

Country	Import, Mio. US$	Import market share in %
Germany	39.5	60.2
Italy	6.3	10.1
France	4.1	6.6
Switzerland	2.6	4.2
Belgium	2.3	3.7
China	2.2	3.6
USA	1.3	2.1
Spain	1.1	1.8

Source: UN Comtrade Database

The leading supplier in the import market for garments and textile products is P.R.China. In 2016 39.3% of the imports of the HS section XI (textile materials and articles thereof) accounted for China. Germany played with 1.6% (USD 39.1 mio) only a subordinate role. The main German delivery positions were clothing and clothing accessories (HS chapters 61 and 62) with 43.7%, followed by synthetic or artificial spun fibers (14.3%).

Contact addresses
Manufacturers Association of Israel Textile and Fashion Industries Association Ansprechpartnerin: Ms. Maya Herscovitz, Director of Association
Hamered St. 29, Tel Aviv 68125 Tel.: 00972 3/519 88 55, Fax- 519 87 05 E-Mail: maya@industry.org.il,, Internet:  http://www.industry.org.il.

• Chinese fashion companies are becoming more creative and work on their branding
• German fashion has a hard time with it

Beijing (GTAI) Chinese fashion has the reputation for being less creative and of poor quality. Well established brands are rare. But this is now changing. More and more local designers succeed in making a name for themselves on a national and an international level. This is why it will be harder for imported clothing to establish itself on the Chinese market in the future. Chinese designers meet the local taste with a mixture of Western and Chinese elements.

When it came to buying clothes, Chinese customers had for several decades only two choices - either settle for cheap domestic bulk goods or spend a lot of money on an imported product. First came the luxurious brands, especially from Italy and France, which China's new millionaires adorned themselves with, then more and more shops opened, targeting the ongrowing middle class and in which also German business clothing sold well.

But the local competition does not sleep. The Chinese textile and clothing industry faces a massive financial pressure; therefore many companies have to take a decision; either they become better or they have to go. Anyone who remains has to change his production and his products in such a way that they can meet the more and more demanding customers, especially within the domestic market.

This includes the positioning of own brands. The Dongrong Group from Inner Mongolia is currently following this path. It has become well known for manufacturing cashmere products for famous British and Italian fashion labels, and now sells its own design under its own label ("Dongli") in its own shops.

Owning a store – or even better several stores - is the dream of most young Chinese fashion designers, who are increasingly making a name for themselves on the Chinese market. This is also due to the retail structure in the People’s Republic of China, which is unusual for Germans. The typical German clothing retailers with several brands in the assortment do not exist. Instead, mono-brand stores dominate - either as single stores or in the large malls as sublet retail space.

Nevertheless, Chinese companies have a lot to catch up on branding and quality. Even the familiarity of important Chinese suppliers is usually limited to local buyers. For the majority of European customers, however, they are not even a concept. But according to industry insiders, this is also changing. The number of successful Chinese fashion designers and companies is growing even internationally.

Despite deficits in areas like creativity and branding, the scene is growing and finds an ongrowing customer base. Accordingly, things will become even more difficult for German fashion, which usually cannot compete with the glamour of the Italian or French competition. Although there are more Chinese people who are able to spend a lot for good fashion, but there is also a larger local offer, which is price oriented to foreign markets and meets the Chinese taste with a skillful mix of Western and Chinese traits.    

Chinese Importes of Apparel*)
(in Mio. US$, change in comparison to the previous month in %)

	2014	2015	2016	1st quarter 2017	Change
Clothing and accessories	5,626.1	6,018.0	5,947.5	1,490.8	8.6
from Germany	5.8	6.7	6.2	1.2	-9.8

*) HSPos. 61+62
Source: China Customs; calculation by Germany Trade & Invest

China's fashion designers are becoming more successful internationally

Many of the new Chinese fashion designers have studied abroad, worked and / or cooperated with foreign designers, and now combine typical Chinese with modern Western clothing and cuts. With their designs, they do not only create interest in the relevant fashion weeks abroad, but are also increasingly bought in China. Pioneers are fashion designers like Ma Ke ("Wuyong", "Mixmind"), who designed the clothes for China's elegant First Lady Peng Li-yun, or Paris-based Guo Pei, who was named by the Time Magazine 2016 as one of the 100 most influential people in the world. In the meantime, a large number of fashion designers and designers have made themselves a more or less wellknown name.

Among the new labels are for example the Eve Group from Beijing or ANNDERSTAND (founded by Yu Ge, who gained experience already at Louis Vuitton and Gucci) from Shanghai. With tailor-made models from Yu Ge, the underwear brand AtoG Lingerie (founder: Zhou Yingying) even made it to the fashion weeks in London, New York, Milan and Paris. They are particularly popular among the middle and upper classes. These population groups are often looking for a modern, national identity and would like to dress up individually and elegantly - apart from the unattainable big brands from France or Italy, which nevertheless are already in the Chinese metropolises almost "at every corner”.

Return to old traditions 

For example, exquisite new editions of Chinese sheath dresses (Qipao) aree in demand - such as by HanartQipao from Shanghai. Founder Zhou Zhuguang is convinced: "Qipao is the future and perhaps also the beginning of a Chinese haute-couture." The costs of a Hanart dress range from 3,800 to 60,000 yuan (RMB, circa 570 to 9,030 US $, 1 US $ = circa 6,642 RMB, yearly average 2016). Buyers have often embraced a refined Chinese lifestyle - including tea drinking, reciting poems, and collecting Chinese antiques.

Recalling some decor patterns of national minorities, such as the elaborate embroidery art of the Dong or Miao nationality from southern China, is also popular. In particular, Vimemo (founded in 2009 by Yu Ying) from Guizhou has earned a reputation. Vimemo employs about 3,000 female embroiderers and batik dyeing worker in homework and ensures that techniques, which only a few grandmothers are still proficient in, do not die out. In this sense, a research and development center with a school is to be built in 2017. The very high-priced pieces of silk or cotton are sold in own shops (at the Beijing International Airport, for example) or via the Internet.

The Chinese designer, Su Renli, uses the old techniques of handicrafts (for example, the dyeing of fabrics in yamswurze extract) combined with sustainably produced materials and modern cuts. Other promising brands with an individual style are, for example, Zuczug or Icecle based in Shanghai, some of them partly coming into the market with serious eco-friendly products.

Despite the growing health awareness and promising approaches - such as the recently founded "Uncover" project - sustainable fashion in China has so far only been a niche. Against this background, the company Jiaxing Jiecco ("LangerChen") in Zhejiang, founded by Miranda Chen and Philipp Langer, is producing their fabrics that are mainly certified according to the strict Global Organic Textile Standard (GOTS) primarily for foreign customers. Genuine eco-fashion or fair produced clothing has so far been a concept for the fewest Chinese. "After discussing food safety, the discussion about healthy clothing will follow," Miranda Chen is convinced. But time has not yet come.

• Korean sportswear market with above-average growth
• International companies expand / Brand awareness boosts consumption

Seoul (GTAI) - While consumption in Korea (Rep.) is generally weak, some segments show relatively high growth rates. Sales of sportswear have risen steadily over the past few years and are likely to rise in the future. Great sport events and the enthusiasm of the Koreans for prestige items are driving the segment, of which international companies benefit also. The market for outdoor clothing, on the other hand, has already reached its peak.

The sportswear market in Korea (Rep.) is developing dynamically. According to estimates by the market research institute Samsung Design Net, the segment premium sportswear reached a growth of Won 4.8% to 6.6 billion in 2016, (circa EUR 5.1 billion, 1 EURO = roughly 1.284 Won, - in the yearly average of 2016). As a result of this positive development, more and more international companies are pushing on the Korean market, thereby expanding the range of goods available for local customers. So far, a large proportion of orders has been sold via large international shopping portals. In the future, the local presence will gain in importance.

International companies are pushing on the market

The American manufacturer Under Armour started direct sales in 2017 with its first own store in Korea (Rep.). In January, after Dependance in Shanghai the company opened its worldwide second largest store in the nobel part Gangnam in Seoul. So far Under Armor had operated its sales mainly through smaller stores in partnership with a Korean retailer. For this reason four additional flagship stores as well as numerous shop-in-shops are to be implemented in during the year of 2017.

But other sector companies are also attracted by the Korean market, such as Lululemon Athletica, a Canadian company specializing in apparel for yoga. Lululemon has opened its first Asian branch in Seoul in 2016. Meanwhile a second store has been opened in Seoul, a third store is to follow later in the year 2017.    

German companies are well positioned

The German company Adidas also was able to generate very good results in the past on the Korean market. Despite a sluggish economy and weak consumption, the company turnover in Korea (Rep.) rose by around 15% in 2016. According to media reports, Adidas predicts a sales upturn of around 10% for 2017.

According to Eddie Nixon, CEO of Adidas Korea in the daily newspaper "Korea Times", the growth in 2016 was reached due to a high demand among young consumers, children and streetwear. The turnover of Adidas in 2016 reached around Won 1 billion in nearly 800 shops around the country. Most of them are managed on a franchise basis. For the Korean market therefore can be said, the population is more active and fitnessoriented than in other Asian countries.

Puma, on the other side, concentrates in Korea (Rep.) in addition to football articles mainly on its female clientele, which accounts for about 55% of its sales. According to Puma CEO Rasmus Holm in the "Korea Herald", this percentage is expected to rise even further as the market for sportswear is increasingly fashion-conscious. Also the influence of the entertainment sector on the segment is becoming increasingly apparent, which is why Puma is cooperating with K-Pop stars in the marketing sector.

According to Holm, the sportswear market in Korea (Rep.) is in a good growth phase. In the short run Puma will primarily focus on optimizing its existing shops. In future, an expansion of the business will be envisaged also, although no figures or timetables have been mentioned. However, the Korean market is not easy. The environment and competition are highly competitive. In addition to numerous international sector companies, local competitors are also well positioned.

"Korean Wave" as a location factor

Representatives of companies also refer to the appeal effect of Korea (Rep.) itself on other Asian countries in a consequence of the so-called "Hallyhu" - the "Korean Wave" of TV series, music and fashion. Numerous consumers in the region orientate themselves on developments in Korea (Rep.); the country is regarded as an international trendsetter in the cultural segment. Fashion and brands that are successful here often spread with a short time delay throughout Asia.

A very positive effect on the local sporting goods and clothing market, Korea (Rep.) will get through the two major sports events of global importance which will happen within ten months. In May and June 2017, the FIFA U20 World Cup will take place in six cities in the country, including a participation of the German team. Manufacturers can present their products to a global audience as well as at the Olympic
winter games, which will be held in Pyeongchang from February 9th to 25th 2018.

Boom at outdoor clothing fizzles

The KOFOTI (Korea Federation of Textile Industries) is more critical about the sector's prospects and forecasts a declining sales trend for 2017. However, this is partly due to the fact that the Korean market for outdoor clothing has shown a declining rate following a boom in the beginning of the decade. Until 2014 the sales of outdoor clothing reached double-digit growth rates partly of more than 30%.

The market was driven by a growing sense of leisure and a great passion of the Korean people for hiking. Between 2005 and 2012, the number of sector enterprises jumped from 30 brands to around 170. However the growth rates have declined gradually since 2012 and the market is estimated to have stagnated at a volume of Won 7.4 billion in 2015, some sector companies have already suffered high sales losses in a double-digit range.

For 2016, there are still no concrete figures for the overall market, but different indicators point to declining sales. So the import of footwear fell by 41.5% in 2016, imports of clothing made out of felt, fleece and PVC went down by 21.7%, anoraks and wind jackets for men declined by 5.4%. According to media reports a number of companies are already withdrawing from this segment due to market saturation. Others are orienting towards expanding areas such as fitness, running sports accessories as well as for yoga and golf wear.

 

• Projects planned for USD 2.3 billion by 2020
• Doubling of exports of finished products strived

Tashkent (GTAI) - The textiles and clothing industry of Uzbekistan remains one of the most important investment and cooperation sectors for foreign companies. A new expansion program for the period 2017 to 2020 provides for the implementation of 140 projects. The expected inflow of capital to the industry in a value of up to USD 2.3 billion is planned to account for about half of the foreign investment.

The textile and clothing industry should be expanded more than ever into an important export part of the central Asian republic. The specific activities for the targeted doubling of exports by 2020 versus 2016 are listed in the presidential regulation "On the program of measures for the further development of the textile, clothing and tricot industry 2017 to 2020" of December 21st 2016.

Full domestic processing of cotton fibers strived

With an annual output of 3.4 million tons of raw cotton and 1.1 million tons of cotton fibers, Uzbekistan is one of the world's six largest cotton producers. The production of 25,800 tons of cocoons is also considerable high (an average figure for 2012 to 2015). In the first half of 2016 55% of the produced cotton fibers were further locally processed. According to the program this rate should rise to 100% by 2020. It is also planned to reduce the amount of cotton yarn in textile exports in favor of more refined cotton products. Yarn now stands for 53% of the value of exported finished textile products.

The plan is to expand the production of finished textile products until 2020 by 120%, including 170% of yarn, 200% of finished tricot fabrics, 240% of finished yarn and clothing and 270% of hosiery. The share of finished goods in the textile and clothing industry is expected to increase from 47.0 to 65.5% and in export from 42.0 to 70.0%. The program also includes measures to adapt the Uzbek sector norms and standards   to the common international standard rules.

Supply and cooperation opportunities for 140 individually planned projects

Up to USD 2.3 billion shall be invested in 140 expansion and renewal projects by 2020, including complexes with a full value chain. Commercial banks or their investment companies which are providing loans for the co-financing of the projects may, depending on the project, acquire up to 100% of the capital stock of the new or modernized enterprises.

The main contact partner for the projects is the public shareholder company O'zbekyengilsanoat.  It owns 380 textile, clothing and tricot companies, as well as some silk processors, among of them many joint ventures. The company is comparable to a branch of the Ministry of Industry. It stands for a large part of the output and export of the Uzbek textile and clothing industry (estimation for 2016: about USD 1 billion).

Its tasks include the coordination and participation in investment projects. For example, all projects involving O'zbekyengilsanoat companies are subject to a technical review by the scientific and technical advice of the shareholder company. Import contracts for the needs of the projects are also subject to a review.   

Wide preferences for investors

Projects are flanked by several stimuli up to 1st January 2020. The state grants tariff preferences for the import of equipment, complements and spare parts, an exemption from the profit and wealth tax as well as from the duty to the central road fund. Export-oriented manufacturers of finished cotton-, blended-  and silk-fabrics-, finished clothing and tricots, head coverings, stockings and textile gallantry goods will be freed from the mandatory exchange of the foreign exchange in Uzbekistan Sum. Imports of raw materials, auxiliaries and materials can be promoted with customs clearance extension of up to 60 days.

The new central foreign trade company Ustextilexport has been founded to act as a service provider for the needs of all country-based industry players, including small businesses. This applies both to the exploitation of foreign markets, the supply of already established trading houses for textiles and clothing abroad with Uzbek products as well as to the participation in the procurement of technologies and materials for the domestic textile and clothing industry.

The current goals for the expansion of the textile and clothing industry are all rather too ambitious. Medium-term industry programs have already been launched in previous years. Despite some reached progress, the results have been rather sparse. The output and the effectiveness of the production remained far behind the targets. Already in 2012, 407,000 tons of cotton yarn, 350 million square meters of cotton fabrics and 273 million pieces of clothing should have been produced. The for 2012 targeted exports of USD 1.5 billion were also missed in 2016 (a good USD 1.0 billion).

The reasons for this are complex. Too little has been invested so far in the modernization of the existing enterprises. The companies complain about bottlenecks in the provisioning of working capital, in the supply of energy and, above all, in the exchange of foreign exchange for the procurement of imports (spare parts, auxiliary materials, etc.). Another obstacle is the over-regulation of import and export transactions.

Nevertheless, the industry remains a profitable business field for foreign companies. In addition, the signs are good for improving the business environment in the country. After the new President Shawkat Mirsijojew took office in December 2016, a positive mood goes through the country. First regulations for more entrepreneurial freedoms have already been adopted. A whole bunch of further measures is in sight.

Selected characteristics of the Light Industry of Uzbekistan ¹)

Refenrence number	2011	2012	2013	2014	2015
Total output (in EUR mio) 2)	2,408.3	2,506.0	2,793.4	3,538.0	5,133.7
Share of industrial production as a whole (in %)	13.4	12.9	11.9	15.4	15.7
Real share versus last year on the basis of Usbekistan-SUM (in %)	4.0	12.9	11.9	15.4	15.7
Gross fixed capital formation (in EUR mio)	272.2	255.8	255.7	304.4	248.6
Degree of wear of the base fond (as of Dec 31st (in %)	28.0	31,1	30.6	32.6	21.2
Number of employees (in 1,000 persons)	143.4	142.0	145.9	140.4	140.0
Textile industry	113.2	111.1	113.1	106.2	105.0
Clothing industry	24.1	24.6	26.0	28.5	29.0
Production of selected textiles and clothing products
Cotton yarn (in 1,000 t)	171.8	199.3	238.9	277.2	326.1
Raw silk yarn (in t)	1,465.8	1,119.1	1,875.9	854.3	1,349.8
Fabrics (in Mio. sqm)	187.3	204.9	257.1	236.8	227.1
Cotton fabrics	130.0	138.9	167,2	169.4	157.8
Silk fabrics	3.3	2.9	1.5	1.4	1.7
Woolen fabrics	0.2	0.2	0.04	0.04	0.3
.other fabrics	53.8	62.9	88.4	66.0	67.6
Knitted fabrics (1,000 t)	20.8	26.2	36.0	32.8	41.2
Tricot products (in pieces mio)	112.3	132.6	135.0	131.3	161.6
Hosiery (in pairs mio)	24.1	34.4	34.3	31.2	31.8
Clothing (in EUR Mio.)	83.4	93.6	115.0	292.7	559.0

1) In addition to the textile and clothing industry, the light industry comprises the sectors of cotton ginning and production of leather goods / shoes;
2) About two-thirds of the output is attributable to the textile and clothing sector;
3) Investments in the sectors cotton ginning, carpets and leather / leather products are less than 10% of the annually in the light industry invested capital.

Source: State Statistics Committee, Tashkent

Contacts
GAK O´zbekyengilsanoat (Staatliche Aktionärsgesellschaft O´zbekyengilsanoat)
ul. Bobura 45, 100100 Taschkent/Republik Usbekistan
Contact personIlchom Haydarov, Vorsitzender der GAK O´zbekengilsanoat; Schochruch Rachimow, manager investment department
Tel.: 00998 71/239 17 11, -253 93 54, -239 17 11, -253 93 58 (administration for investment projects), Fax: -253 93 58, -56 04 (department fir investment)
E-Mail: info@engilsanoat.uz, info@legprom.uz, Internet: http://www.engilsanoat.uz, http://www.legprom.uz

Destination Mauritius - rebuiding former relationsships

Island of dreams in the middle of the Indian ocean for some travellers neighbouring the last European outpost, French overseas department La Réunion, a destination for reliable production of textiles and apparel for the European, notably German fashion market, this is the spectrum
of associations that Mauritius evokes in the heads of people. Mauritius looks back on a long time experience in producing textiles and apparel since its independence from Britain in 1968. Republic since 1992 the group of islands is one of the very few stable democracies in Africa.

Arvind Radhakrishna, CEO of Enterprise Mauritius, the organiser of the Mauritius day, April 5, 2017 at Düsseldorf Fashion House II, gives it a strong regret that the relation between Mauritius and Germany, mainly based on knitwear, dating back in the early 70ies nearly came to an end. The amount of textile exports into Germany in 2015 was just about 30 million Euros and counting. Anyhow this does not represent the strength of the Mauritian apparel industry which is a hub in the region with own inland production completed by production plants on the neighbour island Madagascar, in South Africa and some even in Bangladesh to serve a lower price level, which cannot be achieved with Mauritian production itself. In 2015, domestic exports to Europe accounted for 40 %, USA: 24% and South Africa: 21%. Charming is the fact that the delivery of Mauritian goods is duty free.

Strong support by the government

Interested buyers are heartily invited to come and see with their own eyes what the Mauritian textile and apparel industry can offer. This industry is one of the strong pillars of the gross domestic output. Others are tourism and - up and coming - the lapidary and jewellery industry. Traditional fields of production are spices, sugarcane products including rum or cosmetics.

To foster textiles and apparel exports the government sponsors airfreight costs by 40%, part of a holistic program in the speed to market scheme. To compare the benefits of Mauritius as a sourcing destination compared for example with China, besides the shorter distance, is that the minimum order quantities per style are much smaller than in China, the quality standard is high, the social compliance is given. Mauritian companies must spend 1% of their gains for Corporate Social Responsibility – CSR projects. Certificates such as BSCI, SA8000 or WRAP are common. Free entry to the EU market is guaranteed by the EU partnership agreement. And - a point that should not be neglected - most of the companies offer creative services executed by their inhouse design departments or people. This makes it clearer why the textile and apparel industry had been a strong engine for economic growth in Mauritius.

Main products are: T-Shirts, Polo Shirts, Shirts, Trousers & Denim, Pullovers & Cardigans, Formal Suits, Beachwear & Underwear, and Childrenswear etc. Main material used: cotton and its blends. There is a strong focus on knitted fabrics and jerseys of all kind paired with woven denims. The price segment of Mauritian clothing mainly ranges in the lower middle range. There is a high awareness for sustainability. The exporting companies aim to use eco-friendly substances in resources saving production processes. Laser technology for effects on denim is widely in use.

A look to the companies presenting

• FINE TEXTILES LTD
  Contact: Mamade Nohur 
  Tel.: +230 2661092/57321079
  E-mail: finetextileltd@gmail.com
  Type: Final Product
  Products: Polo shirts/T-shirts/Sweat shirts
  Minimum order: 600 pcs. per colour
  Fine Textiles mostly produce menswear. They distribute their garments under own label M*RIYANO and private label for their customers. The own label is calculated to compete with the Chinese market. Time from sample to delivery takes about 5 to 6 weeks.

 

• FIREMOUNT TEXTILES LTD / FM DENIM LTD
  Contact: Sangeeta Gobin
  Tel.: +230 2075836
  Email: sangeeta@firemount.mu
  Website: www.firemount.mu
  Type: Final Product
  Products: Denim fabrics & Denim and Twill Jeans pants/Jackets/shirts/Shorts/Dresses
  Minimum order: 6000-7000 yd. fabric or 2500-3000 pcs. of jeans per order
  Certifications: WRAP
  The company is fully vertical and the biggest supplier of apparel in Mauritius, still growing, looking for direct relations to retailers. Due to the latest technologies available, the company aims to fulfil the needs for sustainable production. Stretch, even power stretch is used in nearly every jeans style.

 

• TEX KNITS LTD
  Contact: Suresh Radha
  Tel.: +230 2865577
  Email: info@texinternational.com
  Type: Final Product
  Products: Denim trousers, jackets, shirts etc. /Knitted garments for ladies, men and children
  Minimum order: 800 pcs. per style/colour
  Certifications: Sedex Members Ethical Trade Audit (SMETA)
  The knits company is part of a group offering garments in a broad range. To serve the UK market they run an office in London. The company puts a strong focus on design input for the international clients. Production plants in Madagascar and Bangladesh serves different price ranges.

 

• PALMAR LTEE
  Contacts: Yannick Capiron (Knits), Genevieve Marie Figaro (Denim)
  Tel.: +230 401 7000
  Email: y.capiron@palmar.intnet.mu; gfigaro@palmar.intnet.mu
  Type: CMT & Final Product
  Products: Jeans, Chinos, Shorts, Dresses, Skirts for kids, Women & Men
  Minimum order: 600 pcs. for jerseys; 800 pcs. for jeans
  Over two thirds of the production is for menswear. The company is a family business which takes special interest in sustainable and resources saving production. The knitting department is fully
  vertically integrated. A fair trade line is being offered, pure organic is in development.Contact: Ranil Gunasekara
  Tel.: +230 4130034
  Email: camdenimltd@gmail.com
  Type: Final Product
  Products: Denim jeans for men, women, children and toddlers
  Minimum order: 1200 per style
  The company solely works for private labels. The main market until now is South Africa. The production is going to be shifted to a higher percentage of eco-friendly production, representing 17% for the time being. Prices range in the upper middle segment.

 

• TARA KNITWEAR LTD
  Contact: Fabiola Law
  Tel.: +230 2123715/52553621
  Email: fabiolalaw@taragroup.intnet.mu
  Type: Final Product
  Products: T-shirt, polo shirt, sweat shirt, hoody, short, pant, skirt, dress, baby grow, baby/kid swear accessories (beanie, bootie, blanket, sleeping bag, headband), sleepwear, loungewear
  Minimum order: Basic styles: 4000 units. Fancy styles: 1000-2000 units
  Certifications: BSCI
  Tara is very design oriented with a big in house design department open for design services to customers too. The company's organisation is vertically integrated. Modern equipment such as the
  Eton Mover system enables the company to react fast and operate Fast Track orders too.

 

• BEACHWEAR EXPORTS
  Contact: Mr. G.M Toolsee
  Tel.: +230 4545600
  Email: girdhar@beachwear.intnet.mu/beachwear@intnet.mu
  Type: Final Product
  Products: Swimwear and related products
  Minimum order: 300-500 units per style
  Certification: BSCI, SMETA, SEDEX
  All production is for private label. The company features as the leading supplier of swim and beach wear in Mauritius. Well known international brands are customers from US to Europe, mainly in Italy, France and UK as well as South Africa and Zimbabwe.

 

With over 113,000 visitors and 2,368 exhibitors the largest EuroShop in its 50-year history

• Great international attendance confirms its special global position
• In focus: digitalisation, omnichannel and emotionalisation of the shopping experience 
• Accompanying forums very highly attended

After five days, on 9 March 2017 saw the world’s largest trade fair for retail investment requirements, EuroShop 2017, draw to a close in Düsseldorf with the best result in its 50-year history: the 2,368 exhibitors from 61 nations report unanimously on very good to excellent contacts and business deals. Furthermore, very lively post-fair business is anticipated. Over 113,000 visitors (round about 4% over the last event) came to the Rhine to gather information on the range of products, trends and concepts for retailers and their partners on display here in the 18 exhibition halls extending over 127,000 m² of net exhibition space.

Hans Werner Reinhard, Managing Director at Messe Düsseldorf, is delighted: “EuroShop 2017 has further exceeded all the top scores achieved at EuroShop 2014. At its anniversary event it was able to once again show how young and creative the sector and its trade fair are.”

The exhibitors across all exhibition areas spent months preparing for EuroShop 2017 so as to be able to meet the competition with convincing innovations. And they encountered an outstanding response: trade visitors were delighted with product variety and the level of innovation at the stands as well as with the excellent quality and great creativity of the stand presentations.

A total of 138 countries were represented on the visitor side. Commenting on this Reinhard said: “We could not be happier with the trade visitor breakdown. We are recording a constantly high level of demand from Germany and a significant rise in interest from abroad. Throughout the world it is known that EuroShop in Düsseldorf is the global No.1 trade show in the sector demonstrating what the future of retail looks like.”

Held every three years, EuroShop 2017 kicked off with a completely new concept. Its refined profile with seven clearly defined dimensions (POP Marketing, Expo & Event Marketing, Retail Technology, Lighting, Visual Merchandising, Shop Fitting & Store Design and Food Tech & Energy Management) went down well with exhibitors and visitors alike – because this meant exhibitors could be positioned in their optimum segment while visitors conveniently found the suppliers they needed according to area of interest.

The dominant themes at EuroShop 2017 were the continuing digitalisation in retail, tailor-made omnichannel solutions and emotionalisation of the shopping experience in the store.

Online retail is currently fuelling investment in physical stores in the sector. This is because competition from suppliers online means retailers have to make their stores ever more attractive. At the same time, the dovetailing of physical and online stores is generating new retail and interior design concepts. Modern information technology is becoming ever more important here.

“Customers expect both – on the one hand the shopping experience on site in the store and, on the other, delivery to their own front door. Conventional physical retail is now increasingly developing it online activities and large online retailers are looking more and more to opening their own stores. EuroShop has managed to bring both worlds together,” explained Michael Gerling, Managing Director of the EHI Retail Institute, adding: “Physical stores and online retail are growing ever closer together, which is why at EuroShop the exhibition segments of shop fitting and technology are increasingly merging.”

EuroShop 2017 also highlighted that the top priority for stores themselves was unadulterated emotionalisation! Storytelling was at the forefront of many concepts, solutions and products at EuroShop 2017. Whether it was architecture, design, lighting or the embedding of state-of-the-art media in the shop fitting, everything has to follow a joint dramaturgy to give customers that certain kick. So it comes as no surprise that visual merchandising is continuing to gain great significance in the custom design of retail spaces. Here retailers’ willingness to invest in Germany has virtually doubled, according to an EHI study presented at EuroShop.

However, retail is also investing heavily in LED technology and refrigeration technology. This was not just another result from the EHI study, it was also visible in the halls of the exhibition centre. Here energy saving and sustainability are top priorities for retailers – which is why EuroShop Special Ecopark with its accompanying forum met with such a great response.

Overall, the accompanying lecture forums on the different EuroShop dimensions were avidly attended and many EuroShop visitors took valuable ideas home with them from the international line-up of practicefocused lectures, be this from the Architecture & Design Forum, the EuroCIS Forum, the Omnichannel Forum, the POPAI Forum or the Expo & Event Forum.

The next EuroShop will be held in Düsseldorf from 16 to 20 February 2020 and the next EuroCIS, as an annual event focusing on retail technology themes, will already run from 27 February to 1 March 2018.

 

• Matchmaking at the trade fair: exhibitors and visitors highlight the quality of business contacts made
• Celebrity guests and star designers go on a textile tour of discovery
   

Inspiring, touch-focused and close to the industry: Heimtextil finished last Friday after four successful trade fair days in Frankfurt am Main. In spite of the snow, ice and storms, particularly on the first and last days of the trade fair, almost 70,000 trade visitors (2016: 68,277) from across the world attended the leading trade fair for home and contract textiles and were won over by quality and variety of the exhibited products as well as the trends of the new season. Growth was driven primarily by Brazil, China, the United Kingdom, Italy, Japan, Russia, the USA and United Arab Emirates. A total of 2963 exhibitors from 67 countries (2016: 2864) presented their new textile products and designs across 20 halls and appeared to be highly satisfied by the orders they received and business contacts they made. Detlef Braun, CEO of Messe Frankfurt, highlighted the positives following the end of the trade fair: “The figures speak for themselves: Heimtextil grew

once again in 2017 in terms of its visitor and exhibitor numbers. But it’s no longer about quantity and hasn’t been for a long time. I am especially pleased about the high quality of the products exhibited as well as the intensity of discussions between purchasers and exhibitors. Frankfurt is the international meeting place and beating textile heart of the interiors industry.”
Also positive: overall, visitors consider the sector’s economy to be in a better place even than last year. Visitors from Germany in particular consider the situation to be good (40 per cent).
“We returned to Heimtextil at the right time: over the past few days, we have been successful in positioning our new profile and new product orientation”, says Andreas Klenk, CEO Saum & Viebahn. “The feedback from our visitors was thoroughly positive and we were able to acquire both export and domestic contacts. We will be leaving this Heimtextil with a good feeling and look forward to returning next year.”

Textile design: the eye feels too

It is not just the feel of a material that determines its appeal – something that was also obvious at Heimtextil with the great interest shown in textile design. The colourful fabrics and varied designs by well-known designers and young talent were very popular and attracted a lot of attention: “For me as a designer, Heimtextil is extremely interesting, in particular because I can see myself designing bed linen, pillows and other home textiles in future in addition to wallpaper”, says star designer Michael Michalsky, who presented his new wallpaper collection at the trade fair.
“At the world’s leading trade fair, competitors are present in great numbers. Here, I can experience marketing of products at close quarters and get direct feedback on my own new products.” And it was not just designers that showed great interest in the globally unique design offer at Heimtextil. Exhibiting companies also used the creative hotspot to acquire new designs for their upcoming collections.

Eva Padberg, Harald Glööckler and Michael Michalsky

The enthusiasm for beautiful and high-quality textiles not only brings trade visitors together, but also numerous celebrity guests. At the opening of Heimtextil, top model Eva Padberg talked with Detlef Braun about the trends of the coming season, the interest of end consumers in sustainability and

the common ground between fashion and interior design. She then used the opportunity to take a tour of the Theme Park trend area and the trade fair.
A meeting point for stars continued to be the Marburger Tapetenfabrik on the first day of the trade fair: Harald Glööckler presented his new collection “Glööckler Imperial” which bore the unmistakeable signature of the designer with its usual luxurious style. Musical accompaniment and a good atmosphere was provided by singer

Dynelle Rhodes from the Weather Girls as well as Frankfurt radio presenter and DJ Felix Moese. Designer Michael Michalsky also presented his new collection of wallpapers in person in cooperation with A.S. Création.

Trend towards more materiality

An end to bare walls and cold floors: home textiles are celebrating their comeback in private homes. Curtains, carpets and decorative cushions are decorating people’s own four walls and lending them a personal note. “We can also confirm the trend towards more materiality. In addition to our new wallpaper products, we have seen an increased interest from visitors in our new fabric collections”, says Andreas Zimmermann, CEO Zimmer + Rohde. This trend is boosting orders at Heimtextil: “The quality of visitors was very high: we met very high-quality, good international purchasers and excellent potential new customers. We are therefore very satisfied with our attendance at Heimtextil.”

Sleepinmg as a lifestyle

After nutrition and fitness, sleeping will be the next big lifestyle theme. This was also proven by the numerous innovations seen in the bed segment. Mediflow from Hamburg, for example, presented an improved version of its water pillow capable of full adjustments for firmness and supportive effect. Robert Kocher, European CEO of Mediflow: “This year, we had lots of new customers at our stand who had heard about us and wanted to know more about our products or even ordered them directly. Visitors primarily came from the Middle East, China, the eastern European region and Scandinavia. We also enjoyed intense discussions with American and German customers. This is also the great strength of Heimtextil. You’ve can shake hands with the world here. It is not just about sales, but also communication and establishing relationships or simply getting direct feedback on our products”. At the sleep campaign stand, visitors and exhibitors alike were able to inform themselves about

the four things that can influence sleep. Heimtextil will continue to focus on the topic of sleeping over the coming years.

The next Heimtextil, international trade fair for home and contract textiles, will take place from 9-12 January 2018 in Frankfurt am Main.

• German fashion demanded
• Shoe chain CCC is expanding

Warsaw (GTAI) - The demand for textiles, clothing and footwear is developing particularly dynamic in Poland in 2016. These items are also popular Christmas gifts. Despite strong competition, Germany remains the third-largest foreign supplier of clothing and continues to grow. The German online retailer Zalando is building its first huge logistics center in Poland. The Discounter KiK is opening further branches. The domestic shoe chain CCC is expanding.

Retail sales of textiles, clothing and footwear are the fastest growing of all product groups in Poland. According to the Statistical Office (GUS) (http://stat.gov.pl), the real growth rate reached 15.8% in the first three quarters of 2016 compared to January to September 2015. The total retail sales rose by 5.3% in the same time. The forthcoming Christmas business is expected to further stimulate the demand for fashion items. The in the current year introduced children's allowance also will heat the purchase power of the Poles.

Sales value of clothing and footwear in Poland (in Zl billion)

2012	2013	2014	2015 1)	2016 2)	2017 2)
28.7	28.9	31.8	33.4	35.3	37.1

¹⁾ Estimation, ²⁾ Forecast
Source: Market research company PMR

First and foremost, growing is the demand for common items in the lower, middle and upper segment. Clothing manufacturers however in the luxury category do not benefit from the rising demand. According to the consulting firm KPMG, the poles spent in 2015 about 14.3 billion Zloty (Zl, about EUR 3.4 billion, 1 EUR = 4.1841, average price 2015) for luxury goods, including Zl 2,065 billion for clothing and accessories. These, however, form an important product group and rank second behind passenger cars (ZI 6.974 billion).

The largest domestic clothing company LPP  also felt the fact that the demand potential in the precious segment is limited. The company is known for its brands for everyone, especially "Reserved", which generates almost half (47%) of its revenues. At the beginning of 2016 LPP launched its new premium brand "Tallinder". After the sales however remained below the expectations, LPP announced the gradual abandonment of this project in September 2016.    

Tallinder was supposed to compete with the established gents brands and suppliers of other high-quality clothing names like Vistula, Bytom and Prochnik. The market leader in men's clothing Vistula, which also includes the jewelry chain "W.Kruk" and the brand of women's wear Deni Cler, expects in 2016 (2015) an increase of ZI 590 (518)  million and of its net profit to ZI 37.0 (28.3) million. Bytom follows far behind with projected revenues of ZI 154 (131) million and a net profit of EUR 14.1 (12.4) million.
 
CCC is aiming abroad

Due to the growing demand, the number of specialist stores for clothing is growing, according to GUS us to around 37,100 until the end of 2015 (2014: 35,900) . At the same time the number of stores for shoes and leather goods, which amounted to 8,200 (8,300) in 2015, fell slightly. One reason for this is the proliferation of relevant trade chains, such as the shoe chain CCC, which contributes to a consolidation, and the increasing online trade.

In 2016 alone CCC opens around 40 new stores in Poland and increases its sales area by 20 to 30% annually. In 2016 this will increase by 105,000 sqm and 2017 by 120,000 sqm (net). The trade chain is looking for additional franchisees in other European countries, now also in Asia and the USA. In the Russian Federation CCC wants to open large salons with about 1,000 square meters. According to the chain founder Dariusz Milek in an announcement of the daily paper Rzeczpospolita the presence in Ukraine, Belarus, Kazakhstan and Central European neighbors should be increased too.

The branch networks in Germany and Austria should not be increased further in the near future; In Austria there are already almost all of the targeted total 70 CCC stores.  Due to the lack of profit in these two countries, their share of the group’s total income, which is expected to reach some ZI 3.2 billion in 2016, should not exceed 10%. CCC also relies on e-commerce. After the trade chain had already acquired the online shop for shoes eobuwie.pl, it wants to start in spring 2017 with its own e-shop.

Polish imports of clothing exceed exports. The two main suppliers of textiles, China and Bangladesh, were able to further increase their deliveries to Poland in 2015. Germany also achieved growth and finished third. Slovakia has multiplied its exports. Among the customer countries Germany was by far the most important player with a further significant increase in its demand. The other ranks were followed by the Netherlands, Czech Republic, Austria, Sweden and other mostly European countries.

Polish foreign trade with clothing made out of woven fabrics (Zl million)

Customs tariff 6201 to 6209	2013	2014	2015
Import, thereof from:	5,392.4	6,910.0	8,589.6
.PR China	2,115.3	2,532.3	2,915.8
.Bangladesh	758.4	1,019.2	1,243.5
.Germany	522.1	607.7	745.4
.Turkey	290.6	404.3	570.9
.Slovakia	25.0	82.6	396.9
.India	258.8	329.9	366.7
Export, thereof to:	5,895.4	6,830.1	7.894.9
.Germany	2,997.3	3,677.7	4.388.0

Source: Central Statistical Office CIS

Germany is not only characterized by high-quality clothing and well-known brands in Poland. The in Europe leading chain KIK is spreading further in the neighboring country. By the end of 2017 the number of stores should increase to 200. Its first store in Poland KIK opened in March 2012.

E-commerce is likely to give further impetus to the German supply of clothing. The large online retailer Zalando is setting up its first logistics center in Poland in Gryfino in the area of the special economic zone Kostrzyn-Slubice (Küstrin-Frankfurt / O.) for an amount of EUR 150 million. According to the property developer Goodman, it will be the largest logistics area occupied by a single company in Poland. At the same time, it is one of the most extensive BTS (built-to-suit) projects in the country, in which an object is fully built according to the requirements of the future user. Its opening is scheduled for the second half of 2017. Zalando wants to supply from there Poland, the Nordic countries and a part of Germany.

Polish foreign trade with knitted clothing (in Mio. Zl)

Customs tariff  6101 to 6114	2013	2014	2015
Import, thereof from:	5,191.6	6,748.2	8,404.7
.PR China	1,574.1	1,970.7	2,378.5
.Bangladesh	903.2	1,258.8	1,583.4
.Germany	538.1	723.8	927.5
.Turkey	512.9	628.7	796.5
.Cambodia	235.4	464.3	586.7
Export, thereof to:	4,521.4	5,108.9	6,299.0
Germany	1,888.0	2,343.8	2,996.3

Source: Central Statistical Office CIS

 

Large Companies focus on abroad and the Digitization 

Tokyo (GTAI) - Japan's machinery and facility manufacturers expect increasing orders again. An increase is expected, especially for the international business. They saw the slight financial doldrums of 2015 before. However, there were exceptions - for example at the robot technology. The big companies have a strong interest in the subject of Industry 4.0. Here are cooperation opportunities for German companies, also on third markets.

The Asian region remains high on the Agenda

Japan's economy is not yet in full swing. A new in August released stimulus package of the government is to ensure the recovery. In total Yen 28.1 billion (EUR 246.49 billion, in early September 2016: 1 Euro = Yen 114) amounts to the "package” which is funded to about 25% directly from the state treasury. The investment plans of the manufacturing industry are looking promising in the fiscal year 2016 (4.1 to 3.31.). They could rise by 14.5% over the previous year, according to the result of a survey of the Development Bank of Japan (DBJ) in July 2016.

This is confirmed by a survey of the business newspaper Nikkei with 1,140 participating companies. In the fiscal year 2016 they want to investment a volume of Yen 25.28 billion. This would be an increase over the investments made in the fiscal year of 2015 of 8.3%. If the expansion plans will actually be implemented, it would be the seventh consecutive increase year. Manufacturers of electronic machines have the most ambitious investment plans: Yen 3,64 billion, they have scheduled approximately 9.4% more than in the previous year.

Meanwhile lean foreign Business

According to the sector association JSIM (Japan Society of Industrial Machinery Manufacturers) in the fiscal year 2015 the incoming orders for industrial machinery remained below the expectations. Incoming orders came nearly to Yen 5.50 billion.  These were almost 10% less than the year before. Industry experts had already expected in advance that particularly the foreign business would suffer after the exceptionally successful year 2014. For the fiscal year 2016 the JSIM experts expect an increase of 4.6% to Yen 5.73 billion.

Not as positive as in the preceding years the situation looks in the machine tool segment. According to the industry association JMTBA (Japan Machine Tool Builders' Association) the orders declined in 2015 over the previous year by 11.4% and reached around Yen 1.40 billion. - This is justified by an overcapacity abroad. In fact it was the overseas business which fell by 22.1% to just under Yen 820 billion, while there was still an increase of 9.9% to Yen 579 billion yen domestically. With a view on the 1st quarter of 2016 the association has to state that the foreign business has not yet recovered. With more than one-quarter the orders declined compared to the same period last year.

The domestic market thus wins in importance for Japan's machinery builders. Generally, there is a need of modernization of the partly obsolete equipment at the local businesses. In addition, the reconstruction of the earthquake regions is required too. In addition, the hosting of the 2020 Olympic Games in Tokyo is considered quasi as a guarantor of business orders from the construction sector.

Orders by machine type, fiscal years 2014 to 2016 (in billion Yen), change in %)

	2014, total 1)	2015, total 2)	2016, total 3)	2016, domestic	2016, abroad	Change 2016/15, total
Boilers, Turbines	1,809	1,796	1,896	1,390	506	5.6
Mining	23	29	31	28	3	6.9
Chemistry 4)	2,097	1,405	1,455	828	628	3.6
Tanks	30	47	56	26	30	18.7
Plastic processing	194	211	216	87	129	2.5
Pumps	336	358	373	270	103	4.3
Compressors	267	267	274	136	138	2.5
Ventilators	28	28	30	25	5	8.6
Boost material	355	400	433	282	150	8.3
Drive technology	50	53	54	45	8	2.5
Metalworking	162	182	186	79	107	2.5
Others 5)	725	703	725	535	189	3.1
Total	6,075	5,477	5,729	3,732	1,997	4.6

 
 ¹⁾ actual results; ²⁾ preliminary; ³) forecast; ⁴) also included in category: pulp- and paper machines, chillers, equipment for air- and water cleaning; ⁵⁾ among others: equipment for waste treatment, industrial washing machines
Source: Japan Society of Industrial Machinery Manufacturers, February 2016

A high importance is given to the field of environmental and energy technology for the machinery industry in Japan. Although reactors, that meet stringent safety regulations, are expected to enter the net again in the next few years, renewable energy will be pushed up. In addition, there are intelligent power networks (smart grids) in the focus. Especially in areas with high priority, such as the energy and environmental technology, German suppliers with innovative technologies and customized solutions can win the points.

Connection links by Industry 4.00

Digitalization and with it topics related to Industry 4.0 keep the Japanese machinery and factory builders now very much interested. In June 2015, the "Industrial Value Chain Initiative (IVI)" was launched. About 40 Japanese companies belong to this interest group – like as the branches of the German Bosch and Beckhoff Automation GmbH. End April 2016 the German Federal Ministry of Economics (BMWi) signed with the Japanese Ministry of Economy (Meti) a Memorandum of Understanding (MoU) for joint cooperation in the region.
Equipment manufacturers from abroad should observe under cooperation aspects with big business interests the international activities of the Japanese mechanical and plant engineering. The Japanese abroad generated production shares are not far from the 40% mark the Japan Bank for International Cooperation (JBIC) determined the end of 2015. This creates opportunities for third-market operations, which are often controlled by the parent companies in Japan.

In foreign projects the PRC stands not as strong in the foreground as it used to be. The focus is increasingly directed on the ASEAN countries („Association of Southeast Asian Nations"), while currently the general economic activities in the emerging markets are critically observed. In the longer term India has been planned as a manufacturing location. Single, large companies dominate.

According to preliminary data from the industry association JMF (Japan Machinery Federation) Japanese engineering companies manufactured machines worth of about Yen 13.55 billion in the fiscal year 2015. This was 2% less than last year. Important were cooling machines, (Yen 1.98 billion, 4.8%) as well as equipments for manufacturing of semiconductors and flat panel monitors -Yen 1.61billion, 2,8%. The manufacturer of metalworking machines had a production decline over the previous year by 5.9% to Yen 1.18 billion. Growth rates of just over 10% are registered in the robotics segment since several years.

In general the concentration in the individual equipment segments is high. According to the Yano Economic Research Institute in the fiscal year 2015, slightly more than two thirds of the NC milling machine production came from three companies: Makino Milling, Okuma and OKK. In general metalworking machines Amada, Kobe Steel and Kawasaki Hydromechanics (subsidiary of Kawasaki Steel) came on a market share of about three-quarters. Other important tool machine vendors are Yamazaki Mazak and Mori Seiki. Also in construction, textile, packaging and food processing equipment the three leading manufacturers account for at least 60% of domestic production for themselves.

Production by selected machines, Fiscal years 2014-2016
(in billion Yen, change in %)

	2014 1)	2015 2)	2016 3)	Change 2016/15
Boilers, Turbines	1,433	1,193	1,127	1,9
Pumps, Ventilators	440	486	498	2.5
Compressors	677	666	669	0.4
Boost Equipment	533	533	595	7.5
Robotics	594	681	750	10.2
Drive – technology	419	413	418	1.2
Agricultural machinery	456	444	422	-5.0
Metalworking	1,257	1,183	1,120	-5.4
Food processing machines	448	518	520	0.5
Chillers	1,894	1,984	1,958	-1.3
Machines for the production of semiconductors and flat Monitors	1,564	1,608	1,772	10.2
Total machinery	13,838	13,554	13,784	1.7

¹⁾ actual results; ²⁾ preliminary; ³⁾ forecast
Source: Japan Machinery Federation (JMF), July 2016

Japan imports partly from our own production abroad

The Japanese imports of machinery and equipment continue to increase. It should be noted, that some of the imports are based on the foreign production of local companies. The largest share of supplies from abroad accounts for the category pumps and compressors. According to the United Nations Comtrade database this category reached on the basis of USD around USD 3.57 billion in 2015. This was 6.5% less than in the last year.

Just over 30% of the supplies came from the PRC; probably to a not inconsiderable proportion from Japanese production. The latter is also the case with electrical machines. According to Comtrade these reached in 2015 an import value of slightly more than USD 55 billion (-8%). More than a third of this was accounted for the PRC; about one-fifth to Asian emerging markets. In the import statistics Germany is especially noted in machine tools and food and packaging machines.

Despite displacements to abroad Japanese exports continue to play a role. In 2016 they are likely to suffer from the resurgent Yen. Moreover, the economic slowdown in the Asian emerging markets is becoming more noticeable.

Import of machinery to Japan (in million Yen)

HS	Description of goods	2014	2015	From Germany(2015)
8429 bis 30, 8474, 8479.10	Construction- and Constructionmaterial machines, Mining machinery	41,275.5	48,946.3	4,699.8
8444 bis 49, 8451 bis 53	Textile- and Leathermachines	65,712.2	64,431.0	4,934.5
8439 bis 42, 8443.11 bis 19	Printing and Papermachines	43,089.1	43,239.5	15,835.5
8422.30 bis 40, 8437, 8438, 8479.20	Food- and Packaging machines	38,155.9	49,887.9	11,197.5
8465, 8479.30	Woodworking machinery	8,466.0	8,099.7	2,215.3
8477	Plastic- and Rubber machines	67,477.2	64,335.5	6,783.4
8413, 8414	Pumps and Compressors	403,986.5	432,352.1	26,565.7
8425 bis 28	Boost Technology	61,233.1	65,326.0	13,124.7
8456 bis 63	Machine tools for metalworking	93,513.9	111,394.1	26,701.5

Source: Japanese custom statistics

 
Commercial practice

Relevant provisions for machine and plant engineering in Japan will be supplied by the following institutions: Japan Customs, the Ministry of Economy, Trade and Industry (METI), the Center for Information on Security Trade Control Japanese Standards Association (http://www.jsa.or.jp), the Japanese Industrial Standards Committee , the Japan Accreditation Board for Conformity Assessment  and the Japan External Trade Organization (JETRO ). JETRO published in February 2010 the still actual report "Handbook for Industrial Products Import Regulations 2009", which contains the specific import requirements for some types of machines, especially for machine tools, food processing and packaging machines.

Detailed information on commercial and tax laws are available at http://www.gtai.de/recht and for import arrangements, tariffs and NTB under http://www.gtai.de/zoll

Internetadresses

Name	Internet addresses	Comments
Germany Trade & Invest	http://www.gtai.de/japan	Foreign Trade Information for German Export
AHK Japan	http://japan.ahk.de	Information place for German companies
Minstry of Economy, Trade and Industry	http://www.meti.go.jp	Responsible for strategy and planning for industrial machinery engineering and related sectors
Japan Machinery Federation	http://www.jmf.or.jp	Association of Machinery Engineering
Japan Society of Industrial Machinery Manufacturers	http://www.jsim.or.jp	Association of Industrial Machinery Manufacturers
Japan Machine Tool Builders' Association	http://www.jmtba.or.jp	Association of Machine Tool BuildersHerstellerverband für Werkzeugmaschinen
JIMTOF/Japan International Machine Tool Fair Tokyo Big Sight	http://www.jimtof.org	Largest and most important machine tool exhibition (every two years, next date November 17th – 22nd 2016)

The series “Sector compact” provides analysis on important key sectors of German export economy.
Other country reports for machinery and plant engineering and other industries can be found at http://www.gtai.de/branche-kompakt .
Contact for engineering: Roland Lorenz; E-Mail: roland.lorenz@gtai.de

 

• Low interest rates and government subsidies should drive consumption and Investments
• Less start-ups and fewer direct foreign investment

Istanbul (GTAI) - After the failed coup attempt of July 15th 2016 the Turkish government wants to support the economy. Financial relief, government subsidies and a low interest rate policy should aim strengthening of consumption and investment and eliminate the arisen uncertainty in the business world. At the same time the overall savings ratio should be increased and the basis for financing of major infrastructure projects be improved.

The target of the government for an economic growth of 4.5% in 2016 appears now as no longer realistic. After the impressive increase of 4.8% in Q1 2016 government representatives expect for the rest of the year lower numbers, so that for the full year 2016 a growth of around 3.0 to 3.5% could be achieved.

But not only the failed coup attempt and subsequent the internal political turmoil are affecting the economic development. Also the in the recent months clearly increased geopolitical risks, the armed conflicts along the southeastern border with Syria and Iraq, and the threat of terrorist attacks are pressing on the business climate.

The number of start-ups is declining since April 2016th. According to the Turkish Chamber Union TOBB (Türkiye Odalar ve Borsalar Birligi) in July a provisional low point with a decline of about 34% over the same month of last year has been reached.

Establishment of new companies

Month	2015	2016	Change (%)
January	6,471	6,894	6,5
February	5,509	6,363	15,5
March	6,092	7,117	16,8
April	6,022	5,860	-2,7
May	5,635	5,422	-3,8
June	5,896	5,571	-5,5
July	4,760	4,760	-34,1
January til July	40,385	40,363	-0,1

Source: Turkish Union of Chambers of Commerce TOBB (http://www.tobb.org.tr)

"Tailored" state support for Investors

Despite a rising inflation (annual increase of consumer prices in late July 2016: 8.8%) since several months the Turkish Central Bank is lowering the interest rates in small steps and ensures an increasing liquidity. For investors the government is planning generous subsidies. In the words of economy minister Nihat Zeybekci the government investment promotion is standing before fundamental changes. The plan includes "unlimited, customized and project-based" facilitations for specific sectors, which will go far beyond current incentives.

In this context Zeybekci named metallurgy, petrochemical, pharmaceutical and medical technology, in addition the renewable energy and modern agricultural technologies. In addition to extensive tax breaks the planned state aids will also include subsidizing the salaries of highly skilled employees, a free allocation of land, subsidies of taxes and energy subsidies. With this especially international investors should be won and high technology projects should become supported.

Foreign direct investments slumped in the first half year of 2016

According to the Turkish Ministry of Economy foreign direct investment declined in the 1st half of 2016 compared with the same period of last year by 55%. In 2015 a net amount of USD 16.9 billion flowed into Turkey, and in 2014 approximately USD 12.5 billion. Of these USD 5.3 billion or resp. USD 4.2 billion were invested in real estate.

Foreign direct investment in Turkey without real estate (in USD million)

Sector	1.Halfyear 2015	1.Halfyear 2016	Change (in %)
Agriculture	5	24	380
Industry	2,710	866	-68
Mining	185	17	-91
Manufacturing	1,445	607	-58
Food, Beverages, Tobacco products	257	171	-33
Textile and Clothing	399	21	-95
Leather and leather goods	2	8	300
Wood and wooden products	0	1	-
Paper and paperproducts	4	20	400
Coke and refined petroleum products	500	11	-98
Chemical and pharmaceutical    products	69	136	97
Coutchouk and plastic products	21	54	157
Non metal  mineral products	-	23	-
Metal and metal products	36	24	-33
Machines and machinery equipment	5	20	300
Electronic and optical products	46	98	113
Automotives	90	8	-91
Furniture	16	12	-25
Electricity, Gas	1,078	242	-78
Water, wastewater, waste-disposal	2	0	-100
Services	2,066	1,274	-38
Total	4,781	2,164	-55

Source: Turkish Ministry of Economy (Ekonomi Bakanligi, http://www.ekonomi.gov.tr)

State fund to finance infrastructure projects established

Of particular importance for the future financing of large infrastructure projects, especially in the transportation sector, is the law No. 6741 of  08  /19th / 2016, establishing the Turkey-Property Fund (Türkiye Varlik fonu - Sovereign Wealth Fund). The law, which was announced in the government Gazette No. 29813 on 08 / 26th /2016 regulates the structure and operational rules of the new fund, which originally was to be filled from the state budget and privatization proceeds and should have started with an initial capital of TL 50 million. The law provides the establishment of a stock corporation that will be responsible for investments, stakes and other commitments of the fund. The financial market operations of the fund are according to paragraph 8 of the law 6741largely exempt from taxes and fees.

From the new Turkey-Fund the government expects major funding contributions for ongoing and upcoming major projects. These include the third international airport in Istanbul and the planned "Canal Istanbul", which will run parallel to the Bosporus. Expected to the ideas of the government the fund should bring an annual contribution of 1.5 percentage points to the real GDP growth over the next ten years. Economy Minister Zeybekci expects through the fund in the long term an asset control of about USD 200 billion.

Debts to the State can be paid by installments

Companies that are under financial pressure should be relieved by the law no. 6736 for the restructuring of public demands from March 8th 2016. This came in force after the publication in the government Gazette no. 29806 of August 19th 2016. With this law firms and persons, which have debts at the tax office or at social security institutions, can get the possibility to settle their outstanding claims, including failure surcharges by installments within 18 months. On claims up to TL 50 (1 Euro = 3.31 TL) the state will entirely dispense. The redemption of debt from tourism enterprises, which are due in2016, will in accordance to the law shifted by one year.

The private retirement provision for all workers should increase the savings rate 

In order to increase the country's low savings rate, the Turkish government has adopted the law no. 6740 on August 10th 201616, which gets into force on January 1st 2017 (promulgated in the government Gazette No. 29812 on August 25th 2016). With this law, changing the law no. 4632 of March 28th 2001 about the voluntary private retirement provision all workers aged less than 45 years and of Turkish nationality will in the future "automatically" be included in the system of the private pensions system. Affected employees however have the right, within two months from the inclusion date to declare their abandonment and leave the system.