Textination Newsline

• Functional travel wear for travelling, outdoor adventures and everyday use -meeting the new demanding requirements of travelers in the digital age

The tourist industry is suffering in many traditional destination countries. Yet outdoor companies say that sales of luggage, accessories and travel wear remains unaffected. Independent tourism is thriving. Good news for outdoor manufacturers - as functional clothing offers more crossover potential than any other sector. OutDoor 2016 in Friedrichshafen - the leading international trade show - will be providing an overview of the latest trends and innovations for the travellers of tomorrow from July 13 to 16, 2016.

The German Travel Association (DRV) has reported the impact of geopolitical factors on the tourism industry. For example, summer bookings are down by 40 per cent in Turkey compared to the previous year. Other European travel associations are reporting similar lower-than-usual booking levels for Egypt and Tunisia. However, the outdoor industry appears unaffected. "We‘ve not seen any impact on our market,? says Columbia (Portland, US). "People continue to travel lots, although given the current political situation they are choosing different destinations.? Lonely Planet, the independent traveller’s bible, currently recommends visiting the following countries: Botswana, Japan, Poland, Palau, Latvia, Australia, Uruguay, US, Greenland and Fiji. Not exactly classical, low-cost family destinations, but still potential paradises for outdoor and adventure travel.

Thomas Groeger, country manager Fjällräven Germany is also confident, "More and more people are looking for alternatives to the conventional beach holiday. Outdoor- and sport-related travel is particularly popular.? Gerold Ringsdorf, product trainer Jack Wolfskin sees "interrail travellers and globetrotters? as "important founders of the outdoor movement.” Travel garment manufacturer ExOfficio (Seattle, US) agrees, pointing to a survey where 42 per cent of Europeans describe themselves as adventure travellers. Package tourism might still dominate the market, but it continues to be frowned upon. In contrast, independent travel is seen as an attractive, if complicated option for the masses.

The Future institute “Zukunftsinstitut” (Frankfurt/ Vienna) observes a new phenomenon which it calls the "normtrotter”: vacationer looking for a personalized experience and personalized service, but who still want their bookings arranged in advance. And from America, there’s a newly-coined expression to describe more affluent backpacking for normal travellers: flashpacking. The term refers to traditional backpacking only with flash, or style, i.e. adventure travellers who desire style and comfort. Travelers in this growing segment prefer to sleep in their own hotel room, hire a car instead of using overcrowded coaches and plan ahead using modern communication devices rather than going with the flow and improvising.

"Backpacking used to be the exception, something for adventurers only. Nowadays, it‘s a common way of travelling,“ comments Thomas Groeger. Young people in particular prefer to travel in a simpler manner. "The gap year - young people wanting to work and travel abroad - is a definite trend,“ adds Gerold Ringsdorf.

Modern travel equipment is designed to meet people’s requirements regarding performance and security. Backpacks and bags have anti-theft slashproof straps to stop bag slashers and RFID-blocking pockets to keep personal information and data safe. Travel apparel is often made of insect-repelling fabrics or has UV protection suitable for tropical sun, plus moisture management and odour control. In addition, today‘s travel wear is lightweight, easy-care and takes up little space in your backpack.

Modern travel wear also offers significant crossover potential for outdoor and everyday use. UV protection and protection against mosquitoes or ticks is also useful in central and northern Europe. "Of course urban outdoor, outdoor lifestyle and travel wear styles often look pretty similar,? says Wolfgang Jahn, sales manager Europe Royal Robbins, while Oliver Robens, sales director Europe Craghoppers adds, "it’s possible to look good both in the jungle and about town.? However, real travel apparel sets itself apart through its functional characteristics and extra details. And this is exactly why specialist providers have been so successful over the years.

To find out which new trends and products innovations will be shaping the industry in 2017, visit the international OutDoor trade show in Friedrichshafen. OutDoor 2016 is open to industry visitors only from Wednesday, July 13 to Saturday, July 16 (Wednesday to Friday from 9 a.m. to 6 p.m. and Saturday from 9 a.m. to 5 p.m.). For more information, please visit: www.outdoor-show.com.

• Trade visitors very pleased with the bigger and more extensive range of products at the world’s leading trade fair for the sector
• Exhibitors and visitors rate the economic situation in the sector as very good

• INTERNATIONAL COMPETITION INCREASES
• COMPANIES HAVE TO MODERNIZE PRODUCTION AND INCREASE DEPTH OF PROCESSING

Dubai / Islamabad (GTAI) - Pakistan's textile and clothing industry has urgently to invest. The international competition has intensified. The companies need to modernize their technology and increase their processing depth. The country wants to get away from the production of simple fabrics and yarns. The GSP Plus agreement with the EU and an improvement in the security situation have improved the investment climate. In high-end machines Pakistan is dependent on imports. 

Pakistan's textile and clothing industry expects better sales opportunities abroad in the next few years, particularly with the European Union. Early 2014 Pakistan has received from the EU the GSP Plus status (Generalized System of Preferences) that allows the country to supply goods at a lower rate of duty or even with a completely duty exempt in the EU. Particularly the textile and clothing industry benefits from the agreement, as the sector provides almost 80% of Pakistan's exports to the EU. The government even hopes on additional exports for the sector worth USD 1 billion per year.

Following the latest available trade figures, Pakistan increased in 2014, the year in which the GSP Plus agreement came into force, its total exports of clothing by almost 10% to around USD 5 billion. Official figures of exports to the EU are not available. According to the foreign trade statistics, in any case exports to Germany have increased in clothing by 13% to almost USD 500 million, in textiles by 18% to USD 434 million and in footwear by 27% to USD 34 million.

Source: UN Comtrade

Demand for textile machinery rises
Market observers anticipate increased investments in machinery. A particular dynamic effort is expected in the demand for textile printing machines, dyeing machines, tenter frames and other finishing techniques. Positive for the investment climate will be the effect of the expected increase in textile exports to the EU and the improvement of the security situation. In recent years power shortages and a precarious security situation have inhibited the production and investment activity.

The market for textile machinery (SITC 724) grew significantly since 2014. In the country itself only relatively simple machines are being manufactured. High-end equipment is mostly imported. The import of textile machinery rose to USD 585 million in 2014, an increase of 17% compared to 2013.

*) SITC 724, including pieces
Source: UN Comtrade

*) SITC 724, including pieces

Investments urgently needed
Competition from PR China, Bangladesh, India and Sri Lanka has intensified. Pakistan's textile industry needs to modernize and upgrade, to increase its productivity and the added value. Pakistan covers the entire value chain from fiber preparation from to the end product. Despite this well-position predominantly simple products are being produced. Only an estimated 40 companies are vertically integrated and cover the entire textile processing.
With an annual harvest of about 13 million bales Pakistan is the world's fourth largest cotton producer. In addition about 600.000 tons of synthetic fibers are being manufactured in the country. According to reports there are 21 manufacturers of filament yarn with a capacity of 100.000 t; the production is supported by a PTA plant with a capacity of 500.000 t.

Sources: Pakistan Bureau of Statistics; TMA - Towel Manufacturers Association

Yarn production has lost competitiveness
According to sector experts In the past decade yarn manufacturers made no larger investments to upgrade their production, although money would have been available for such investments.  The reason for that should have been the heavy competition from China, India and Bangladesch.  Ten years ago Pakistan used to be one of the most efficient yarn manufacturers worldwide. Because modernization investments failed to materialize, this technique applies as outdated in Pakistan today.

The companies complain about high production costs and are demanding more favorable electricity tariffs and protectionist measures against import competition. A negative effect on the production and the investment climate in the country also have the electricity shortages and the tense security Situation.

The textile sector in Pakistan is characterized by numerous large textile companies with quite a large number of small businesses opposite which mostly belong to the so-called informal sector. The informal sector, for example, includes small family companies or small productions, which are not taxable. The informal sector produces mainly simple products for the domestic market. It works with discarded equipment of the larger companies, imported used machinery or cheap equipment from China. The official statistics do not take the informal sector into account.

• Sales decreases
• Middle Price Segments affected most
• Online Sale of Clothing growing

Moscow (GTAI) - Sales of apparel and home furnishings will continue to decline in 2016. Lower real income leads to falling demand. Russian customers buy fewer clothes and are increasingly watching the price. Most sales shrink in the medium price segment. Fashion chains react on the declining market volume by closing stores and focus on profitable locations. In contrast, the online trade is growing. In comparison to the year before Russia's clothing market shrank in 2015 year by 9% to a volume of Rubles 1.4 billion. Converted into USD the decline was even 43%. The discrepancy between the value in Rubles and in USD is due to the drastically fallen value of the Russian currency. For the textile and clothing industry, the Ruble devaluation means a fundamental change in the general framework: more expensive imports, lower personnel costs in Russia and rising export opportunities.
 
Customers change from the middle to the lower price segment
In addition, the real income of the Russian population declines and thus the purchasing power. Russian customers buy less clothing and watch more and more the price. Sales shrink at the most in the medium price segment. Many customers orientate themselves on low-price segments (mass market), which will increase in 2016 by 5 to10% to a share of 65 to 70%, the Fashion Consulting Group predicts. The proportion of the premium and luxury segment remains unchanged.
An average Russian household has cut its spending on clothing and home textiles by 30 to 50%, experts estimate. Especially the suppliers of imported textiles and clothing got to feel this, their prices had to be increased most, what damaged the business of foreign brand suppliers. In 2015 the Russian imports of textiles and clothing fell by 25%. This tendency continues in 2016.
    
Distribution networks in the stationary trade become thinned 
Because of the price pressure manufacturers and retailers in the fashion market shorten their staff, negotiate discounts for the shop rental, reduce the collections, simplify cuts and save on quality. While many Russian brands used to buy their materials in the EU and in Turkey, designers and producers now can only afford cheap synthetic fabrics from China. The advertising budgets were slashed in 2015 by 40 to 45%. Moreover clothing suppliers react by closing stores and concentrate on most profitable locations. Since 2014 more than eleven international brands have left the Russian market. These include Gerry Weber from the middle price segment, Laura Ashley, Chevignon and Seppälä; from the mass market segment Esprit, New Look, OVS, River Iceland and Wendys.  
 
Marks & Spencer closed 3% of its stores, Mango 7%, Gloria Jeans 12%. The largest drop in the number of stores are reported from the brands Vis-a-Vis (-65%), Motivi (-40%), Savage (-29%) and Incity (-17%). Maratex closed its franchise stores for clothing brands like Esprit, New Look, OVS and River Iceland 2015 in Russia. The Finnish Stockmann sold its seven department stores in Russia for EUR 5 million to Reviva Holdings Ltd. (owner of the franchise store chain Debenhams) and gave up the business of its brands Lindex and Seppälä.
 
Adidas has closed 2015 167 of its 1,100 shops in Russia, planned are 200. The German sportswear manufacturer acquired 2015 the central warehouse Chekhov-2 with an area of 120,000 square meters in the Moscow region. The purchase price is supposed at a total between USD 70 and 100 million. The Finnish Kesko informed in February 2016 that it wants to sell the Russian Intersport chain because of poor financial results.

The retail chain Modny continent (brands: Incity, Deseo) reduced the number of its stores by 35. At the end of the first quarter of 2016 they still owned 301 stores. The Melon Fashion Group disposed in 2015 27 unprofitable stores, for this they opened 37 new ones. Melon owned December 31st 604 stores throughout Russia (befree 234, Zarina 203, Love Republic 167), of which 134 are franchise stores (befree 56, Zarina 44, Love Republic 34). A new concept of the stores - larger retail space and more modern design – should help against the crisis.
The Spanish designer brand Desigual closed its Russian stores end of September 2015, but they remain on the market in multibrand stores. A similar course is followed by other brands. 

Eleven fashion brands enter the Russian market in the first half year of  2016
A small gleam of hope: Eleven fashion brands announced to enter the Russian market in the first half year of 2016. This happened already at the end of 2015 with budget brands like Cortefiel, Superdry and Violetta by Mango. H & M, Monki, Uniqlo and Forever 21 want to continue to expand in Russia.
Already in 2015 the number of H & M stores grew in Russia by 35% to 96 stores. On April 28th 2016 the menswear house Henderson opened a new salon in the shopping center "Zelenopark" in Zelenograd near Moscow. With this Henderson (brands: Henderson, Hayas) is now represented in 164 major shopping centers in 56 Russian cities. Hugo Boss inaugurated on April 8th 2016 a new shop in the Outlet Village Pulkovo.

The vertically integrated chain Gloria Jeans has changed it’s headquarter at the beginning of 2016 from Rostov-on-Don to Moscow and rented there 3,500 square meters in the Arma plant. Until the end of 2016 Gloria Jeans plans to extend on 5,000 square meters and further to 10,000 square meters until 2017. The capital should serve as a gateway to the world market: Gloria Jeans plans to open an office in Hong Kong. The company has eight regional offices and two large logistics complexes in Novosibirsk and Novoshakhtinsk.

Source: Retail.ru

Online sale with clothing is growing – Chinese suppliers are expanding
In contrast to the declining sales in the stationary apparel trade, the demand in outlets and on the Internet is rising. The number of visits and the average amount of receipts at the Fashion House Outlet Centre Moscow has risen by two times since July 2013, director Brendon O'Reily reports. The Fashion House Group offers online shopping since 2016.

The association of Internet trading companies (http://www.akit.ru) estimates that sales on the Internet in 2015 were Rubles 760 billion (+ 7%). The share of clothing and footwear was 35 %. Already in 2014 the online trade had grown by a third. Online stores are operated by KupiVIP, Lamoda and Finn Flare. Alone at KupiVIP the number of orders increased by 45% to a volume of Rubles 16.5 billion in 2015.

Manufacturers and distributors therefor boost the online trade. The government wants to promote the export of Russian goods and is planning a large Internet trading platform. Models are Alibaba (China) and JD.com. However Russian customers are buying increasingly from Asian webshops. Only in 2014 the popularity of online orders in China increased threefold.

Contac addresses
Fashion Consulting Group
(Consulting, Marketing, PR)
125009 Moskau, Maly Gnezdnikowskij pereulok 4
Tel.: 007 495/629 74 25, -629 76 23
E-Mail: info@fashionconsulting.ru, Internet: http://www.fashionconsulting.ru

Russian Buyers Union
119034 Moskau, ul. Prechistenka 40/2, Gebäude 3, Büro 110
Tel.: 007 499/350 51 40
E-Mail: info@buyersunion.ru, relations@buyersunion.ru
Internet: http://www.buyersunion.ru

• Import from Germany growing / Domestic Chains expanding

Warsaw (GTAI) - The outlook for sales of clothing and footwear in Poland is favorable. Domestic chains such as LPP, Bytom, Vistula and Monnari are opening additional stores. In 2016 the shoe chain CCC is investing around EUR 33 mio in new sales areas, including in Germany. The western neighboring country is by far the biggest buyer of clothing from Poland. Increasingly popular too is fashion from Germany, which occupies the third place among supplying countries.

In Poland the demand for clothing and footwear is steadily growing. The market research firm PMR (http://www.pmrpublications.com) expects in 2016 sales worth of Zloty 35.3 billion (approximately EUR 8.2 billion, 1 Euro = 4.3283 Zl, as of April 22nd  2016). The price war however is very tough due to the higher US dollar exchange rate, the dealers can hardly pass their higher costs on to the customers. This concerns mainly imported commodity goods from the Far East, while the outlook for the upscale segment outfitters is better.

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

The company for classic clothing Bytom (http://www.bytom.com.pl, from the same city (Bytom – Beuthen)) that serves the upper segment, wants to create an offer for the masses. It lowered its prices in March 2016. In order to reach more customers, it plans to increase its sales area of from 10,300 square meters in spring 2016 to 15,000 square meters by the end of 2018. The number of its stores should simultaneously rise from 97 to 120.

Bythom will avoid quality losses through savings in the purchasing of clothing. According to Michal Wojcik, chairman of the company, negotiations with representatives of procurement markets are on the way. In 2019 the retail sales of Bytom should reach around 250 million PLN, double as much as in 2015 (123 million PLN). The company will serve the middle segment between large markets with  
mass-production goods and expensive boutiques with domestic and foreign luxury brands.

The two great rivals Bytom and Vistula (http://vistula.pl) from Krakow (Krakau) are receiving increasing competition by smaller companies. Vistula was able to win in 2016 the soccer star Robert Lewandowski for promotional activities, he will appear in suits of the company.

The stockbroker office of the Bank BZ WBK believes in good opportunities of the smaller chain Monnari  (http://www.emonnari.pl), which could double its sales area until 2019. With the proliferation of the growing clothing and footwear chains a consolidation of the retail structure goes along, and the total numbers of stores will overall decrease.

The chains Vistula, Bytom and Monnari are expanding domestically only, where they expand their retail spaces annually by 10 to 25%. Since only one third of the by Vistula and Bytom sold collections are being settled on a USD basis, they are not hurt as much by the strong upvaluation of the US currency as LPP, the manufacturer of mass-products. This company buys almost its entire collection in the  
Far East in US currency. In the case of the footwear chain CCC, the proportion is 40 to 50%.

Source: Bisnode

CCC strives towards west

The retail chain CCC (http://ccc.eu), which is also represented abroad including in Germany and Austria, has acquired for more than ZL 200 million the online shop for shoes eobuwie.pl (http://www.eobuwie.pl). By 2016 a further strong expansion is planned, for which it wants to raise about PLN 140 million. The sales area should become 27% net bigger with at least 100,000 square meters. This was announced by the deputy chairman of CCC, Mr. Piotr Nowjalis.

The majority of the new area (77,000 square meters) is planned abroad, where 110 stores should be opened. In the focus here are Germany, Austria and Romania. Domestically CCC is planning a new sales area of 23000 square meters for 40 stores. These plans represent an acceleration compared to 2015, when the total sales area had increased by 66,000 square meters net (+ 22%). At the end of 2015 there were at home and abroad 773 CCC stores with a total of 372,000 square meters. 

*) Forecast of the press agency Bloomberg, February 2016
Source: Newspaper Rzeczpospolita

According to a forecast of Bloomberg, the most important apparel and footwear companies will improve their results in 2016. Leader LPP supplies with its brands Reserved, Mohito, Cropp, House and Sinsay a wide audience. To the upscale segment belongs the new brand Tallinder, which is being offered since February 2016 in a first store in Gdansk (Danzig). Beginning in 2019 there should be 30 sales stores for the brand Tallinder, which then will compete with Vistula, Bytom and Prochnik.   

Source: Newspaper Rzeczpospolita

In 2016 LPP wants to increase its retail space at home and abroad by 11 to 13%, that is about 90,000 square meters. End of the year thus 1,716 shops could belong to the company. To date, 23% of the sales area of LPP is in the Russian Federation and Ukraine. The profits there were again impacted by the devaluation of the local currencies against the Zloty.

Foreign trade increases

The Polish imports of clothing exceed the exports. Especially Asian countries could increase their deliveries in 2014, but also Germany belongs to the leading suppliers and attained growth. Among the importing countries Germany plays by far the most important role. The followers are the Netherlands, Czech Republic, Austria, Sweden and other, mostly European countries.

Source: Central Statistical Office GUS

Although Poland supplies clothing to Germany at a large extent, it is not easy for the companies to settle in the western neighboring country with own shops and their own brands. LPP opened its first store in Germany in September 2014, in spring of 2016 there were already twelve. In three years there should be 30 stores. In 2015 the German LPP stores generated approximately 94 million PLN, but probably without profit because of investment costs and advertising.

Source: Central Statistical Office GUS

In 2015 Polish exports of apparel, accessories and other textile products and footwear continued to rise.

Source: Central Statistical Office GUS

• Competition requires Modernization
• Declining Exports due to Energy Shortage and Lack of foreign Currency

Cairo (gtai) – Egypt’s vertically integrated textile and clothing industry has a strong basis. To remain competitive more modern equipment and innovative products are required. Also the cooperation with local suppliers is upgradeable. The government is planning two new textile industrial zones. The import of textile and leather machinery in the first three quarters of 2015 reached USD 135 million. Of this 17% were Ger man deliveries.

The situation of the textile and clothing industry in Egypt provides ample material for both optimists and for doomsayer. Technical modernization of the mills and a focus on products with higher added value offer opportunities. Potential also has a better link between the production stages. These would include installation for spinning, weaving and laundries for denim. As upgradeable product groups like underwear, high quality knitwear and fabrics can be seen. With such the benefits of Egypt could be better accentuated. These include the favorable geographical location, the proximity to major markets and a variety of trade agreements. According to the American Chamber of Commerce Egyptian manufacturers already provide clothing for international brands such as Calvin Klein, Disney, Gap, Timberland and Zara.

The chances however are being opposed by a number of difficulties. Also the textile and clothing sector was hit by the energy crisis and the lack of foreign exchange. Many companies have a limited level of liquidity. Research and development were neglected for years, although there are positive examples of innovative companies also. Many producers were forced to close in recent years. Due to the risks in the sector banks are very reluctant in lending money.

Especially needed would be modern technology and product innovations in the face of the strong competitive pressures from abroad. The comparatively low level of wages in Egypt is higher than at Asian competitors. This lets rise problems in terms of export opportunities, also with regard to the domestic market. Here imported goods cover ground, especially since Egyptian manufacturers have raised their prices in recent years. As intensifier act the high exchange rate of the Egyptian pound and the inflation rate of around permanently 10%.    

The cost pressure makes it difficult for the mills to attract high-skilled workers, which is also reflected in a high fluctuation. Several times since 2008 strikes have paralyzed the production. Industry experts complain about a poor education level and lack of efficiency. As a countermeasure the companies organize courses for their employees.

The local cultivation of cotton does not cover the demand of the textile manufacturers

Despite cotton is grown in Egypt on a large scale, the varieties do not fit the needs of most local spinning mills. The country is famous for its high-quality, soft and durable long-staple cotton, while the factories prefer and demand now short and medium staple cotton qualities. The exports are facing a strong competition from the US Pima cotton quality. The Egyptian textile and garment companies mostly import in contrast their material especially from Greece, the United States, Burkina Faso and Benin. As a result, the high-quality raw cotton is exported and not value adding intensively processed domestically, while scarce foreign exchange flows in the import of foreign cotton.

Unrest in the sector is provided by short-term legislative changes. Thus the import of cotton was prohibited in summer of 2015, however allowed again after one week. Domestic cotton farmers are particularly affected by the reduction of subsidies, which concerns the cultivation itself and the needed fertilizers. Many farmers change to other crops, because cotton does not pay anymore and high inventories have accrued.

Egypt has a vertically integrated textile and clothing industry. It represents about 25% of the industrial production of the country and also provides a quarter of all manufacturing jobs. The largest product group is clothing, also fabrics and filament fiber and yarn play an important role. Approximately 50 to 60% of the spinning, weaving and felt capacities are state owned, while private companies dominate for 90% the garment production. The regional main textile areas are greater Cairo, the Nile Delta and Alexandria. In February 2015 the General Authority for Investment and Free Zones counted 4,594 textile and apparel companies with total investments of nearly USD 6 billion. Of this 4,399 companies where located in normal domestic areas, 196 in special free zones.

Quellen: Invest in Egypt, Research of Germany Trade & Invest

Weaker export results for textiles and clothing in 2015

With a volume of at last nearly USD 2.7 billion in 2014, textiles and clothing were the fourth most important export goods of Egypt. Based on the first nine months of 2015 however, weaker annual results than in 2014 are expected. The by far biggest target markets are still the EU and the USA.

*) January – end of September
Sources: UN Comtrade

Against all odds, the Egyptian textile and clothing companies are about to invest in their facilities. ESW announced in September 2015 to provide eight subsidiaries with approximately USD 19 million for reactivated and new production lines. The Czech Pegas Nonwoven Co. has ordered another manufacturing facility for its Egyptian plant. The imports of textile and leather machines from Germany are more stable than the total imports. After the results of the first three quarters, it is clear that German deliveries in 2015 will be higher than in 2014.

*) January – end of September
Sources: UN Comtrade

The Egyptian government has announced to build two industrial zones for textiles in Borg El Arab and the 6th of October City near Cairo. In August 2015 the Chinese Gondong Group had first talks about a possible investment in Egypt.

Internet addresses

Cotton Research Institute
Internet: http://www.arc.sci.eg
Egyptian Textile Development Association
Internet: http://www.etda-egypt.org
Egy Stitch & Tex (internationale Ausstellung in Kairo)
Internet: http://www.egystitchandtex.com
Industrial Development Authority
Internet: http://www.ida.gov.eg
Industrial Modernisation Centre
Internet: http://www.imc-egypt.org
Industrial Union of Garments - Chamber of Textiles Industries
(im Dachverband Federation of Egyptian Industries)
Internet: http://www.fei.org.eg
Home Textile Export Council
Internet: http://www.egyptianhometextiles.org
National Research Center (mit Textile Industries Division)
Internet: http://www.nrc.sci.eg
Ready Made Garments Export Council
Internet: http://www.rmgec-egypt.com
Textile Export Council
Internet: http://www.textile-egypt.org

Observers doubt the Success of the planned Measures / Ambitions in the Automotive Industry

Nairobi (gtai) - The countries of the East African Community will prohibit the import of used clothing and used shoes in three years. Long since defunct textile and clothing industries so revived. It is also planned to impede the import of used cars, in order to promote a local car assemblers. In particular, the Ugandan President Yoweri Museveni dreams of building its own car industry.

The East African Community (EAC), who is also Kenya, Tanzania, Rwanda and Burundi belong alongside Uganda, other countries serve as role models. So to have led to building lively textile industries in Ghana, Egypt, Ethiopia, India and Vietnam, such a ban.

Used clothing is very popular East Africa. With luck, you can get hold of well-preserved Western European branded goods or shoe sizes, as they are locally not available for little money. Many teenagers from expensive villas suburbs of capitals makes a kick out, used T-shirts to buy exotic printing at prices equivalent to 0.45 euros. Thanks to the second-hand imports contribute even male slum dwellers naturally a western suit and girls or young women from a wide array chic western clothes.

1) Primarily apparently used clothing, blankets and kitchen linen of textile materials and shoes that are loose presented in bulk or bales. 2) provisionally
Source: Destatis

Politicians promise hundreds of thousands of new jobs
While East African politicians boast of being able to create in this way hundreds of thousands of jobs, incite economists from: "The reasons why people in East Africa are happy to buy used clothes easily enumerated," said Scolastica Odhiambo, an economics professor at the Kenyan Maseno University: "It is less expensive, of good quality and provides diversity." The regional textile industry have meanwhile not have the capacity to meet the demand. In addition, they do not produce quality  in the eyes of the local population. The only local manufacturer of shoes, meanwhile, the company Bata that however mainly produces shoes for students and a local SME. In the upper price segment Bata, however, is dependent on imports.

In a period of three years, it is the opinion of observers simply impossible to expand the local textile industry so that it can meet the demand both quantitatively and qualitatively. This time is also too short to find alternative employment for hundreds of thousands of second-hand clothes dealer who live with their families from the Mitumba business (Mitumba = bales).

Industrial decline since the 1980s
If the East African states really want to try willing to build a powerful textile industry, they would almost from scratch start. The East African cotton production was mid- 1980 even at the height. Tanzania had  then 700,000 bales (à 185 kg) produces cotton, reports the weekly "The East African", Uganda and Kenya 400,000 100,000. Then it was just gone downhill. Kenya had last only 25,000 bales (2014), Uganda 150,000 bales (2015) and Tanzania produced 30,000 bales (2014).

East African textile factories and Entkörnungswerke for cotton (ginneries) have shut down or run down for the most part. The main reasons included industry experts, a lack of organization of the agricultural sector, high production costs, the inadequate use of quality inputs and over-reliance on a rain irrigation. Then in 1991 came yet added the liberalization of the sector: Cheap Used clothes conquered henceforth
the market.

Uniforms instead of fashion chic?
How difficult is the situation, be seen using the example of single Rwandan textile factory L'Usine Textile du Rwanda (UTEXRWA). 1984 began its operation,the 75-million-US $ - Investment. But for an average Rwandans were and are the products simply too expensive. Finally, the utilization was only at 20%, sales fell to an estimated $ 2 million to 3 million US. Almost all substances are already imported: cotton
fabrics from the East African neighbors, polyester materials from South Africa, Taiwan, Korea and Indonesia (Rep.).

To prevent the utter collapse of the company, the Rwandan government will soon raise the import tariffs on clothing gradually from 35% to 100%. Rwandan clothing retailers see the highly critical: UTEXRWA could neither quantity nor quality and certainly not fashionable Chic deliver, not now and not in ten years. Over military and school uniforms are not there, they say.

Prohibitions instead of better frame conditions
Foreign observers speak of a typical East African policy Quick shot: Because the governments want to defuse the ticking time bomb of rapidly rising unemployment, they sat on activism without the  consequences to sufficiently discuss. If East Africa wants to strengthen its industry, it must improve the framework. Bureaucracy, corruption, nepotism and monopolies are the ones that prevent the development of competitive industries for decades.

The winner of the new policy is expected to - be the PRC, which is expected to fill along with other low-cost producers, the expected supply vacuum - again. Clothing stores in the Ethiopian capital Addis Ababa to show where we are headed: The cheapest Chinese commodity, wherever you look. The new Ethiopian textile and footwear industry is meanwhile mainly from Chinese companies which produce exclusively for export. to copy this model to other East African countries, however, is likely to fail, say industry insiders. Kenya and Tanzania are far too expensive, not to mention the landlocked countries of Uganda, Burundi and Rwanda throughout.

*) provisional; Quelle: Destatis

Protectionism to promote motor vehicle industry
Even more questionable than the East African textile policy is rekindled desire to raise its own automotive industry launched. Hopefuls nationalist politicians in Kenya is the "Mobius", an all-terrain vehicle primitive, which is equipped with a small engine from the Nissan NP200 pick-up truck. Students of Uganda Makerere University have meanwhile introduced with the help of the US Massachusetts Institute of
Technology two concept studies, the "Kiira EV Smak Car" and "Kayoola Solar Bus". While the Kenyan "development" is reminiscent of the technical status of the 2nd World War, set the Ugandan vehicles
conscious on renewable energy.

Although these backyard experiments also not likely to have the lowest commercial opportunities, they nevertheless serve currently as an excuse for protectionist import barriers, which resulted in imports are likely to be more difficult in favor of a local assembly of CKD kits.

• Vietnam is largest beneficiary
• Relocation closer to sales markets

Hong Kong (gtai) - For global consumer product manufacturers, Asia has developed an important role as a procurement region. Large parts of production have been displaced in recent decades into the region and here traditionally mainly to China. The rising costs in China however lead to a strategy adjustment. Thus the production moved on to cheaper locations and a shift back closer to the end customer began. Free trade arrangements support this trend.

Labor costs in China will not move down again. Even when the economic growth increasingly weakens, China's coastal regions are already often too expensive for wage-intensive productions. The world's largest location of the manufacturing sector will anyway leave its dependence of exports and will generate more growth through domestic consumption. The remaining companies are therefore increasingly focused on Chinese customers. Has the textile industry heard the signals already several years ago and shifted away, now the electronics companies have started to search.

But – the relocation of production is not so easy, the experts agreed upon at the discussion panel Shifting Supply Chains in Asia on the Asian Financial Forum (AFF) in Hong Kong. Because no country, except India, offers such a workforce. But neither the infrastructure and the investment climate can match, nor the country has any interest in low-production stages. Furthermore China has set up a supply industry without any comparison.

Relocation trends slow down

Even Bangladesh, established for a long time as a cheap location for clothes, is losing its attractiveness - experts say. Besides fundamentally difficult production conditions especially scandals like collapsing factories are responsible. No western clothing manufacturer likes to be associated with that repute today. While Indonesia was generally judged for being rather little investment friendly, the Philippines would provide a better reputation than years ago. So in addition to numerous Japanese producers also German companies have moved from southern China to the special areas of the Philippines.

Due to wage cost increases by an average of 15% per year, China with it’s the low-wage area has catapulted itself in a large extent out of the market. In times of rising productivity this was compensated for a while but at last the model came to its limits. The empire of the middle will therefore make the leap to a consumptionbased growth based on production of high-tech and on the provision of services. It is still
unclear whether this leap across the "middleincome trap" will succeed. Many emerging countries are caught in this trap, and the growth is flagging.

German buyers order less in China

Accordingly German retailers are increasingly reducing their imports from China and buy more and more in other countries. This is the result of a member survey of the Foreign Trade Association of German Retailers (AVE), at which for the most part textile and shoe retailers participated. 80% of the respondents have already reduced their import volume from China in 2015, 90% of the companies said they are
planning to source from other supply regions. The merchants are seeing a shift to countries like Myanmar (78%), Bangladesh (67%) and Vietnam (56%).

Vietnam, which already benefited in recent years from the relocation, was still recommended on the AFF as a top location. The country with the highest economic growth in Southeast Asia in 2015 would have risen in the 1st half of 2015 to the fourth-largest exporter of textiles, the Vietnam National Textile and Garment Group (Vinatex) analyzed. For shoes it is already the third largest supplier worldwide. Based on mega investments from Samsung, now the electronics industry came out of the starting blocks and should attract more activities. Experts cite especially the mixture of young, growing populations with low labor costs as an important locational advantage.

Vietnam benefits from Free Trade Agreements (FTA)

A thrust Vietnam's attractiveness currently receives through free trade agreements which are in a final stage. So a free trade agreement with the European Union was signed in December 2015 which was followed early February 2016 by the Trans Pacific Partnership (TPP). The latter agreement, which includes next to ten other Pacific neighbors the United States, should bring a large benefit for Vietnam. For the Vietnamese consumer goods manufacturers the US is the most important market, the large retailers in the United States can move their procurements very fast.

As an underdeveloped member Vietnam is likely to get larger portions of the value chain in the textile and electronics area at the ratification (and even before). The country is still missing a developed supplier structure. This is just happening to be built in the textile sector, there are investments in capacity for yarns, fabrics and dyeing going on. For Samsung, the largest foreign investor, all components are still coming
from China. And only when a large proportion of the added value comes from TPP member states, the low duty will become applicable.

While the purchasing power is not quite so big in Europe, costs play an important role also there. But next to it the control of the supply chain and the flexibility has developed a greater role, rapid changes of trends and collections are determined by customers and the Internet. Therefore also here a shift back, closer to the markets, has begun. Romania and Bulgaria have established themselves in the middle of
Europe as a "low-wage locations". But even there the population is characterized by aging. Accordingly labor forces will become scare and wages will rise. Ukraine is traded as a new location.

Africa still with small potential

Little potential the experts from the Supply Chain Panels evidence the location of sub-Saharan Africa. This was tested by some buyers or producers, but the results would not be convincing. The views however diverge. Some Chinese companies are already partly on site and American manufacturers are monitoring the further development. So, for example, the VF Corporation, the largest denim retailer in the world, is buying in Africa. Only Ethiopia would have potential - according to a representative. But the infrastructure, investment climate and working morale could not be comparable.

So - basically serious alternatives to the established locations are lacking. Therefore, due to the scarcity of labor, costs and thus the final prices will rise. Even in Vietnam the minimum wage increased by 15% in 2015. But when it will be hardly possible to turn at the purchase screw, the companies need to position themselves better in marketing and sales, so a large clothing buyer. Therefore social media must be used in order to come closer to the customer and, for example, to develop individualization as a selling point.

Source: McKinsey survey of chief purchasing managers

• Creating local branding
• Gradual relocation towards abroad

Beijing (gtai) - Away from cheap mass production or relocation are the alternatives for the Chinese textile and clothing industry. A domestic "Go-West" does probably not pay off in the long term, the migration however to Southeast Asia has already started. At the same time German quality suppliers expect new sales opportunities if the companies strengthen their competitive position through more quality. This became clear at the last "Intertextile" October 2015 in Shanghai.

The Chinese textile and clothing industry is under massive pressure of costs. Away from cheap mass production or relocation is the need of the hour. Until now the industry is primarily located at the Pearl River and the attached Yangtze River Delta, where wages on average are the highest nationwide. According to the China National Garment Association (CNGA) about 70% of the production volume account for the five provinces of Shandong, Jiangsu, Zhejiang, Fujian and Guangdong.

Supported by the policy is the move to the more favorable central and western provinces. This happens not least to the preservation of local jobs and the development of the far less booming regions of the country. In this sense not only the CNGA endorses the relocation of clothing manufacturers to Xinjiang. In the western province 30% of the cotton of the country is grown, which with 6.2 million tons in 2014 is the largest cotton producing area in the world. After association investments the authorities are planning investments amounting to USD 3.2 billion, amongst other things for the establishment of "Textile Industry Parks".

Another attempt to shift the Chinese textile industry from the coast to the west, represents the Ningxia Ecological Rextile Industrial Demonstration Park, which was opened in December 2014. According to China.org.cn by 2020 here about 50,000 people work should be working there in the textile industry.

"Go West" is not attractive for private textile and clothing companies

To which extent these efforts will be successful remains to be seen. However, said by a Chinese businesswoman, "Go West" at best will be a medium-term solution, because also there sooner or later the wages would rise (not to mention the already there noticeable higher logistics and other costs). If to move, then only to permanently cheaper overseas locations. A migration to Vietnam, Bangladesh or Cambodia is already going on. But the fact is that so far a large displacement wave - at home or abroad - has not yet happened.

That Vietnam and Bangladesh have climbed in a few years to the third and fourth place of the main source countries for the PRC in terms of clothing (Vietnam: USD 587.5 million, Bangladesh: USD 364,7 each in the first ten months of 2015 for HS-Pos. 61 and 62), results very predominantly on already shifted production capacities of Chinese manufacturers. They bring their products from there back to China to sell them here.

Vietnam as a manufacturing site should also gain in the course of the in October 2015 successfully completed negotiations for the Trans-Pacific Partnership (TPP) trade agreement between the US and Vietnam in importance for Chinese enterprises. After coming into effect exports from Vietnam to the United States will be duty-free. In November 2015 for example was to read in China Daily, the Huafeng Co. of Shandong would be planning to build a textile mill in the Southeast Asian neighboring country with an investment of 700 million Renminbi (RMB - approximately 110 million USD, 1 USD= 0,157 RMB, the average rate as of November 2015).

Cambodia does not play in the foremost league yet, but pushes with power forward: During the named period, imports of knitted and crocheted clothing rose by 38.1% to USD 124.8 million (HS-Pos. 61) and other clothes (HS-Pos. 62) by 18.4% to USD 32.3 million.

However, for the relocation certain limits are set as the target countries often reach their capacity limits. Considered has to be the in China existing extremely advantageous integration of the various stages from cotton growing over the wide textile processing up to the final cutting and sewing of clothing.

Superiority in quality rather than relocation

Instead on a further relocation innovative companies and designers rely on an upgrading of their products. The aim is to serve more demanding customers in the Chinese market - and to position themselves abroad. To these belongs the fashion designer Ma Ke, who designs clothes for China's First Lady Peng Liyuan, or Guo Pei, who caused stir with her creation for the singer Rihanna at the Met Gala 2015 in New York.

Apart from individual stars of the scene also increasingly large companies such as the down jacket specialist Bosideng or the men’s wear designer Mark Fairwhale and Ningbo PeaceBird move away from pure volume production towards brand building and quality. Bosideng has even opened its own flagship store in London. The awareness of important Chinese brands such Heilan Home or Metersbonwe is still limited to local customers, for the majority of European buyers they are not a concept. But according to sector insiders this is likely to change, step by step.

Source: China Daily based on Euromonitor

For German suppliers in terms of top materials (usually the most expensive materials), accessories (such as interlinings, buttons, thread, packaging) or also in cutting and sewing, China remains interesting. This was demonstrated once again at the last "Intertextile" in October 2015 Shanghai.

Two opposing trends are apparent: On the one hand exhibitors reported about a shift in demand to other countries in the wake of rising wages and ancillary wage costs. On the other hand suppliers of more expensive products can now look and hope beyond of inexpensive mass markets to the emergence of new niches, so a producer of woven-real hair fur materials. A provider of real horn buttons thinks similar.

The next "Intertextile" with a German pavilion takes place from October 11th to 13th 2016 in Shanghai ("Intertextile Shanghai Apparel Fabrics Autumn Edition"; information under www.auma.de or www.intertextile.com.cn).

Generally exhibitors recommend for risk diversification to build a second pillar next to the site in China. "The caravan moves on," is said. Currently the lowest wages for garment workers are being paid in Bangladesh, the country also benefits from duty-free agreements for imports into the EU. The latter also applies for Cambodia. Also very competitive the seamstresses are working in Vietnam and India. Moreover, Africa (specifically for example Ethiopia) will play an important future role, also a production facility in Korea (Dem.) is not outrageous for Chinese textile companies.

In general free trade agreements should get considerably more weight in future, as this is the case today.

Each year, trainees from Mehler Texnologies engage in a "Social Week". In December 2015 six trainees were released a week to assist the Tafel in Heinsberg and the SPS Foundation, a non-profit association for refugee assistance.

Support for refugees

Many refugee camps lack not only financial resources, but also volunteers who help active locally. For this reason, the trainees of Mehler Texnologies made the clear decision to support refugees. For one week,
they helped in the emergency shelter in Niederheid and in a refugee shared flat in Lindern and won herewith deeper insight into the everyday life of refugees.

Assisting the Tafel

Even before the rise in numbers of refugees there were people in need in our ranks. This often withdraw from society, so that they remain unnoticed in everyday life. To help these financially and often socially disadvantaged, the trainees supported the Tafel in Heinsberg. For this facility, they collected food in supermarkets to make it available for the Tafel.

Positive feedback

As a global employer Mehler Texnologies is aware of its responsibility towards society and proves good intention thanks to the project "Social Week" for three years. Besides social skills, the trainees benefit from the development of professional skills: the independent planning, implementation and taking charge of responsibility of the project are valuable experiences that have a positive impact on the performance of
future tasks in their work environment. In addition, the social engagement is an opportunity to develop personally in a very different work experience.

Mehler Texnologies is one of the leading international companies in coated fabrics market. More than 53 million square metres of material are produced and sold each year under the brand names VALMEX®, POLYMAR® and AIRTEX®. Over 60 years of development and production experience represents the basis for sophisticated products.

http://www.mehler-texnologies.com/