Textination Newsline

• 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

• Fiber Production for the first Time in five Years lower than Consumption

• Special Economic Zone (SEZ) Ontustik becomes important Sector Center

Almaty (GTAI) - Although the Kazakhstan textile industry is far away from the production figures in earlier Soviet times, increases have been achieved in recent years. Against the general trend, imports of textile machinery have grown strongly in 2015. The lack of skilled workers and the small domestic market has a negative effect on the development of the sector. The Special Economic Zone (SEZ) Ontustik in Shymkent could become an important center of the light industry.

The textile, clothing and leather goods industry used to be one of the most important economic sectors in Kazakhstan. After the collapse of the Soviet Union, these three sectors, identified as light industry in the country, have however lost much of its importance. In 2015 they contributed only 1.2% of the total output of the manufacturing sector. Compared to 2008 (0.9%), the proportion rose at last slightly again.

Hand in hand with the devaluation the output of the industry, measured in USD, pointed significantly down. The overall output amounted to USD 320 million in 2015. In reality in 2014 (+ 4.0%) and in 2015 (+ 3.4%) a production growth could be achieved.  

¹⁾ Change at the respective annual exchange rate; ²⁾ real change in %
Source: Agency for Statistics, Astana

Investments in the light industry rise

Gross fixed investments in the light industry show an upward trend in recent years.  According to the Kazakhstan Statistics Agency the investments grew from 2012 to 2015 from USD 18.5 million to USD 45.6 million. A role hereby played the support of modernization projects by government subsidies. 

 *) Change at the respective annual exchange rate  
Source: Agency for Statistics, Astana

The recent increase in investments is reflected in imports of machinery and equipment for the sector. Against the general trend the import of textile machinery (HS positions 8444-8453, without 8450) increased nominally by 28.3% to USD 35.2 million in 2015. However, one reason for the strong growth are the weak prior years (2013: USD 40.3 million; 2014: USD 27.5 million) also. The imports however develop well above the level of 2010 and 2011 with average imports totaling nearly USD 16 million. Most important supplier of textile machinery is the PR of China. According to the Federal Statistical Office exports from Germany numbered to EUR 4.3 million in 2015, (2014: EUR 4.4 million).

The light industry suffers less from the economic crisis than other sectors

Currently the Kazakhstan economy is suffering from the slump in commodity prices and the consumers had to endure enormous losses in their purchasing power due to the devaluation. The light industry however is less affected by the negative economic situation. An advantage is the price increase of imported textiles and a gain in competitiveness due to the lower wages. Nevertheless - the sector is highly dependent on imports of both machinery and primary products.

According to the latest available information provided by the Bureau of Statistics, the average income in the textile industry in 2014 was 52,800 Tenge (T) per month, equivalent to a value of USD 294. Converted to the current exchange rate however, the amount - excluding wage increases - has shrunk to USD 150.

Hand in hand with the increased purchasing power Kazakhstan’s import of textile products had multiplied from 2006 to 2014 from USD 332 million to just under USD 2.1 billion. In 2015 the upward trend was halted. Imports broke nominally by 38.6% to USD 1.3 billion, they came down to a level of 91% of the market volume in 2014 and 2015.

¹⁾ HS tariff positions 50 - 67; ²⁾ nominal Change %
Sources: UN Comtrade, Customs Committee of the Republic of Kazakhstan, Eurasian Economic Commission

¹⁾ HS tariff positions 50 - 67; ²⁾ nominal Change %
Sources: UN Comtrade, Customs Committee of the Republic of Kazakhstan, Eurasian Economic Commission

The light industry offers potential for development

Preconditions for a greater development of the light industry are given in Kazakhstan, but weak points remain. According to information of Lyubov Chudowa, president of the association of the light industry enterprises, these include the great shortage of skilled labor. In addition there are the small size of Kazakhstan's local market and the great distances in the country.

On the other hand the steppe republic has a great potential in the livestock farming sector, that can provide resources like leather and wool. In addition there is the cultivation of cotton in the territory of South Kazakhstan. Though - on the global scale in these areas Kazakhstan is a small player only.
The processing of crude products is still weak. According to information provided by the regional administration of South Kazakhstan, 90% of the in the country produced cotton is being exported. At the same time the sector companies need to import most of their primary products.

SEZ Ontustik in Shymkent

The in 2005 in Shymkent (South Kazakhstan region) founded Special Economic Zone (SEZ) Ontustik, could become an important center of the light industry. Key aspect of the SEZ is presently the light and paper industry.

As in the other SEZs in Kazakhstan for the settled companies a variety of reductions in custom duties and taxes and simplifications for the employment of foreign workers applies. In addition there are tariffs for electricity, water and gas, which are 35% below the local level.

In the SEZ so far eight companies have started to operate, USD 144 million were invested in the buildings. According to the company which runs UK SEZ Ontustik, until 2020 twelve more companies are expected to come. With the establishment of the Eurasian Economic Union the interest of foreign companies in manufacturing settlements has increased. The management of the park aims to expand the profile of SEZ to other areas of the manufacturing sector, such as for example the pharmaceutical industry.      

Concentration process in light industry

From 2010 to 2014 the number of sector companies has declined from 565 to 455.  An overview of the most important companies is available on the website of the association of light industry enterprises.

Internet addresses
Special Economic Zone Ontustik
Internet: http://www.sez-ontustik.kz
Association of Light Industry Enterprises of the Republic of Kazakhstan
Internet: http://www.aplp.kz

• FTA attracts Manufacturers
• Proportion of local added Value should rise

Hong Kong (gtai) - Vietnam is one of the main production sites of the clothing industry. Already in recent years the country had attracted buyers from around the world. In 2014 textiles and clothing shared 22% of the total merchandise exports. According to the state owned VINATX in 2015 Vietnam was the fourth largest apparel exporter in the world. The through the FTA with the EU and the Pacific neighbors expected growth requires investment in the supply industry.

In 2015 the Vietnamese garment exports amounted to about USD 27 billion. Estimates of the Vietnam National Textile and Garment Group (Vinatex) show they will increase by 8% in 2016. Nearly USD 30 billion of sector products would then be exported and assure Vietnam a ranking among the four largest exporting countries. The world market however is stagnating. The sector contributes nearly 10% to the industrial added value of the country, 2.5 million people are employed.

As the most important export market remains the United States. According to Vinatex the export to the US rose by 13% in 2015. The group dominates the textile production in the country, including companies like Garment 10, Phong Phu Textile and Garment Corporation, Viet Tien Garment and Hoa Tho Textile and Garment. Vinatex itself exported products worth of USD 3.5 billion, representing an increase of 10%.

TPP promises benefits

The sector has high hopes on the in February 2016 signed FTA Trans-Pacific Partnership (TPP), in which next to the USA, Japan and Vietnam and eleven Pacific Room states arranged added tariff reductions and improved market access. If the ratification process in all countries will be successful, the agreement would enter into force in February 2018. Analysts show that Vietnam would become one of the main winners, among others due to the lowest labor cost in comparison of all other involved countries. The agreement therefore is welcomed by the majority of the population.

Pre-products have to be imported

According to experts the competitiveness of Vietnam will be increased especially in the area of textiles and clothing. About 70% of the textile exports will be delivered to TPP member countries. Despite the annual growth rates of 15 to 20% the value adding in the country remained low. Imports of raw materials and accessories are high and totaled to USD 16.5 billion in 2015. 90% of the 5,028 textile factories in Vietnam (end of 2013) are apparel manufacturers, that mean sewing operations. By contrast there are just four cotton-processing and two synthetic fibers producing companies.   

Source: Vietnam Textile and Apparel Association (Vitas)

The sector is facing a challenge: TPP offers the free imports only if 55% of the value is provided in the member states. For the textile sector this is called the "Yarn Forward Rule", that means everything following the yarn. In Vietnam the proportion of the added value currently stands at 25%.

The text of the agreement is online available: (http://www.tpp.mfat.govt.nz/text). Chapter 4 deals with the textile and clothing sector and contains important annexes to the rules of origin. TPP is expected to attract investments into the country, as the value supply chain is incomplete: yarns and fabrics are mostly imported from East Asian countries.

Value adding rules require investment

Also the free trade agreement between the EU and Vietnam, agreed on August 4th 2015, should push the exchange of commodities. The share of the EU clothing imports from Vietnam is only 3%. Thus the country ranks as the sixth supplier. In the United States, Japan and South Korea Vietnam, however, is the second largest clothing supplier.

Following ratification of TPP an abolishment of 99% of all tariffs would follow.  Textiles from Vietnam would then be duty-free within a maximum period of seven years. For that TPP
defines clear rules of origin: (http://trade.ec.europa.eu/doclib/press/index.cfm?id=1437).

If investments would flow into the country and strengthen the supply chain, the value of clothing exports from Vietnam could be doubled until 2020 - so bold estimates.   Then the annual production of yarns should reach 2 million tons, the amount of fabrics 2 billion square meters and that of clothing 6 billion pieces. Following the Vietnam Textile and Apparel Association (VITAS)  the export value then should be between USD 45 to 50 billion. This requires new textile machinery. So far, mainly Chinese products were in demand, but also for German suppliers the opportunities emerge.

Source: Vitas

However, many sector representatives in Vietnam see TPP also critical, because by the agreement large new market participants could intensify competition. The small and medium companies are hardly competitive due to their outdated technology, lack of capital and low know-how. They demand government aid in the form of tax breaks and subsidies for land. The Bank for Investment and Development of Vietnam has already provided USD 2 billion for the support of the industry for the next five years.    

Investment in regional centers

Large investments are happening already now: The TAL Group from Hong Kong, one of the largest owner-managed apparel producers, has invested USD 600 million in factories in the Dai An Industry Zone in Hai Duong Province, especially for yarn dyeing and finishing. Haputex Development, which is also from Hong Kong, has built with up to USD 120 million in the province of Binh Duong on a twelve hectare site a Weaving mill which should go into operation 2016.  There also the South Korean company Kyungbang is building a spinning mill for USD 40 million. The Texhong Textile and Garment Group is building with USD 300 million a yarn factory in Quang Ninh. And in Nam Dinh the Yulun Jiangsu Textile Group, a state-owned company from China, is building with USD 68 million a factory for the manufacturing and dyeing of yarn.

Investments are mainly attracted by the regions Ninh Binh, Hue, Binh Duong and Ham Dinh, as well as the cost favorable  Mekong Delta. New target regions are at the borders with Laos and Cambodia, such as the area Tay Nguyen. As the largest Vietnamese group also Vinatex invests in new capacities and announces in convincing interviews to reach by 2020 a local added value part of 65% in final finished products.

Source: Vietnam Textile and Apparel Association (VITAS)

Contact address:
Vietnam Textile and Apparel Association (VITAS)
2nd Floor, 32 Trang Tien Str., Hoan Kiem District, Hanoi, Vietnam
Tel.: 0084 4/39 36 41 34; Fax: -39 34 98 42
Email: info@vietnamtextile.org.vn; Internet: http://www.vietnamtextile.org.vn

JEC World, the largest international composites show, opened at the new Paris Nord Villepinte venue for the first time. Its content, design and scenery were the object of much admiration. New records have been reached this year, with a total surface of 62,000 sqm, 1,300 exhibitors and 36,946 professional visits in attendance. One of the show’s new features consisted of the “Planets”, four new display areas totalling  more than 1,800 sqm.

A World of Difference
JEC Group presents composites in a completely different style
According to JEC Group President and CEO Mrs Frédérique Mutel, the unanimous reaction to the show was pride in the composites industry and delight at JEC Group’s showcasing of it. “The JEC teams have indeed done a wonderful job at presenting composites to the world in the most impressive way,” she said. “An enormous range of products and technologies were presented, shared and showcased at JEC World 2016. Composite materials continue to become more widespread. In a world where energy savings and recyclability are sought, composites seem to stand out as one of the best answers. Innovative solutions must be found for current and upcoming challenges in terms of higher performance, lower weight, reduced costs and processing time, and of course, addressing the pressing matters of environmental concerns.”

This year’s event also featured the launch of four Innovation Planets, each one addressing a specific end-user market (the Aero Planet, the Auto Planet sponsored by Hexion, the Sports Planet and the Sustainable Planet). These areas were very popular ones, where attendees could see, touch and experience Innovative composite parts, observe demos, and ask questions about the innovations.

New name, new venue for the comfort of all attendees
To truly reflect the global dimension of the exhibition, which included participants from more than 100 countries, the event has taken on a more suitable name, “JEC World”. For the convenience of exhibitors and visitors, it has also moved northward from the southern part of Paris, in order to be closer to Paris Charles de Gaulle Airport, train stations and many other connecting opportunities. The total surface has
increased to 62,000 sqm, offering visitors and exhibitors a bigger show with enhanced features to improve the visiting experience. These include a new mobile application, Internet connections on the entire floor, a concierge service open to all, and digital touch screens.

High-level content delivered by JEC Expertise
Over the three days, participants were able to gather a wealth of information from the 11 top-notch conferences, some of them organized in partnership with Inovev, Cetim, e-Xstream, Stanford University, Onera, Composites Innovation Cluster, AZL and Dassault Systemes. The 30 technical sales presentations and the 40+ presentations on the “Planets” also covered a vast range of current and future composite topics.

A large delegation of Korean visitors and exhibitors showed up to proudly represent the Republic of Korea, the event’s Country of Honour. They showcased their latest advances, particularly in carbon, proving to the world that they have become a key player in the composite industry.

Other noteworthy events included the JEC Innovation Awards with its 29 prizewinners; the Automotive Composites Circle; the Live-Demo zones; the Composites in Action areas; and the 1,950 B2B Meetings that were organized.

The popularity of the event keeps on growing, which is very encouraging for next year’s session. Many exhibitors have already confirmed their participation.

SAVE THE DATE
JEC WORLD 2017 - Paris Nord Villepinte
March 14-16, 2017
More information: www.jeccomposites.com

The Trade Development Authority of Pakistan (TDAP) organizes from April 07th - 10th a new textile exhibition, the TEXPO in Karachi. This exhibition has been conceived as a whole sector comprehensive trade fair and should help to promote the export business of Pakistani textile and clothing companies. A month before the opening Textination got the opportunity to speak with the person in charge in Germany, the trade expert Mr. Rizwan Tariq from the Pakistani Consulate General in Frankfurt.

Thank you very much for the interview, we wish the entire TEXPO team a succesful premiere.

For further information please contact:

1. Mr. Rizwan Tariq
Commercial Counsellor
Consulate General of Pakistan, Frankfurt am Main
Tel: +49 69-6976970
Mobil: +49 176-31363223
Email: pakcom.frk@tdap.gov.pk

2. Mr. Matthias Theis
Honorary Consul of Pakistan for the state of NRW, Düssseldorf
Tel.: +49 211 4407227
Email: office@pakistan-nrw.de

3. Mr. Rainer Borch
Trade Development Officer
Embassy of Pakistan Berlin
Tel.: +49 30-21244145
Mobil: +49 163-3736036
E-Mail: tdo@pakemb.de oder rainer.borch@aol.de

• 2015 Sales reached eight-year high
• Particularly manufacturers of technical textiles successful

Prague (gtai) - The Czech textile and clothing industry is still on the upswing. Particularly in niche segments and with technical textiles the manufacturers achieve rising revenues since years. The investment climate in the sector therefore has been improved, the equipment suppliers are benefitting. German manufacturers of machinery for the textile and clothing industry were able to expand their exports to the Czech Republic in 2015 by one fifth.

With Czech Crowns 52.4 billion (Kc; EUR 1.9 bn) the Czech textile industry achieved so much revenue in 2015 as not anymore in the last eight years. According to the statistics office the clothing manufacturers output rose by 11%, that of textile manufacturing by 3%. Very good filled are the order books. For companies in the clothing industry the volume of new orders rose by over 13% in 2015, in the textile factories
by 4%.

According to the announcement of the professional association ATOK, the sector would have developed even better, if the growth markets in Asia and Africa would have not weakened. But fortunately the loss became offset by the traditional markets Germany, Italy, Poland, Slovakia, Austria and France. According to ATOK the textile segment of the Czech Republic exported goods worth equivalent of almost EUR 2.5 billion in 2015, corresponding to a trade surplus of almost EUR 30 million. In clothing, the country recorded a negative balance. Here goods were imported for Euro 2 billion and exported of EUR 1.3 Billion.

Source: Association of Textile, Garment and Leather Industry (ATOK, http://www.atok.cz)

Particularly in niche segments the clothing manufacturers can maintain themselves in their position. For example Triola from the northern Bohemia Horni Jiretin specializes in lingerie and successfully with oversizes. Also manufacturers like Timo, Pleas, Upavan or Linia can exist with underwear products on the market. According to reports from the business paper Hospodarske noviny Timo sells 200.000 pc. per year. The company offers among others prosthetic lingerie against breat tumors.In the next two years the family operation will invest more than EUR 700,000 in new technologies at the production site Litomerice (North Bohemia).

Hats and hoods are demanded in 30 countries

Another family company, Kama from Prague, specializes in headwear. With hats, scarves, headbands, gloves or hoods it makes now more than EUR 1 million per year and delivers to 30 countries. In Moravia-Silesia Sky Paragliders from Frydlant nad Ostravici invests around EUR 4 million in a weaving mill including a research center to develop new materials. The company produces emergency parachutes and rescue systems and belongs with annual revenues of EUR 2.7 million (2014) to the top ten manufacturers worldwide. It processes 200 kilometers of fabrics annually.

Thanks to favorable wages and the proximity to areas with good purchasing power smaller suppliers of made to measure products developed well. The company Janek from Roznov in Zlin produces,for example, 30,000 individually tailored shirts per year. Also suits and costumes belong to the assortment. Janes buy the yarn from a German yarn manufacturer which produces in the Czech Republic.

1) Change 2014 / 113 in%; 2) Fiscal year October 2012, 2013 till September 2013, 2014; 3) December 2012, 2013 till November 2013, 2014; 4) April 2013, 2014 till March 2014, 2015
Sources: Annual company reports, Trade register, Hospodarske noviny, Magazine Ekonom, CzechInvest, Association ATOK

The most actively trading companies in the textile sector are producing mostly for industrial consumers. Largest industry representative is the automotive supplier Borgers from Bocholt, which produces textile moldings, paneling, insulation and curtains for vehicles at four locations near Plzen. The second largest textile company Juta achieves half of its revenue from construction materials such as drainage mats, erosion control fabric or roof insulation. Moreover Juta makes a good business with packaging nets for potatoes or Christmas trees. One other growth area is artificial turf. The company invests nearly EUR 20 million every year, mainly in new production equipment.

Textile Machinery ordered for 250 m Euro

Other companies are expanding too. The manufacturer of workwear Waibel has expanded its site in2015. In Zdar nad Sazavou near Jihlava own collections and custom made programs are being manufactured. Clothing manufacturer Pleas invests annually over EUR 1 million in its equipment. The company belongs to the top 10 of the sector and produces annually 15 million pieces nightwear for the brands Schiesser and Pleas. The German machinery manufacturer Mayer & Cie. builds a factory for knitting machines in Vsetin. The production is expected to comence in summer 2016. The machines are designed for large manufactures particularly in Asia.

Source: Czech Statistical Office

Paint, glitter and metallic effects should provide the highlights at the foot in the coming autumn / winter 2016/2017. In addition, deep shades of red and the trend color cognac and camel. Otherwise it is said: more volume, more profile. Androgenic shoe types conquer the shoe racks.

While the chilly autumn weather in September and in the first half of October still brought good sales for winter shoes and boots, the mild November and December thwart the retailers bill. Especially snow shoes and boots became shop keepers at many places, especially small and medium size enterprises had to record a decline in sales. Although the online trade had to fight with the same weather conditions, initial figures however indicate, that the online shoe trade was able to register last year a sales growth of around seven percent. The stationary trade is looking for new concepts, is even more intensely dealing with its assortments and suppliers and aims to react therefore with a proper weighting of new footwear trends. Many traders took advantage of the just ended GDS shoe fair in Dusseldorf in order to learn about the new trends for autumn / winter 2016/17: The hippie look with its inspirations from the 1970s finds its continuation. Folkloric elements are implemented with much attention to details: fringe, fur, embroidery and patchwork will be found not only on shoes but on boots as well. Velvets, animal prints, tapestry, floral or abstract patterns enhance the detail-note of the theme. Snake prints are found not only subtly used as an ornament, but all over the entire shoe. Pumps and ballerinas are interpreted feminine with curved heels. Hip, although probably not a bringer of numbers, the overknee, to be carried with the tunic dress.

Trendy remain androgynous types of footwear such as Budapest, Broques, Monks and Loafer, that are perfectly suited to types of trousers as the culotte and the new over long pants. Their soles are partly very distinctive but extremely light. Loving details such as perforations, tassels, straps ensure modernity. The new bootees convince thru reduced optics and different shaft heights: They range from almost ankledeep over classic variants to medium-high boots which are worn narrow to the leg. Copped and round boot strips stay, new are square forms. At heels block-heels and slightly tapered shapes are in vogue, the soles are ultra-light and come in their fashionable variants as plateau or wedge soles.

The sneaker is an indispensable part of the shoe closets and remains unbeatable in the coming autumn / winter. In the new season it will appear cleaner and with fewer details. Tone in tone leo, metallics and suede will be mixed with a little paint, which gives the new sneakers an extravagant touch. Matt-gloss and 3D effects give the sneakers a high fashion look. For the colder months the sneaker comes in a material mix with fur and a warm interior design. Neoprene, mesh and leather produce in combination with 3D printing a new trendy image. Side zipper, damping and padding ensure greater comfort. For the soles lightweight, flexible PU or mix variants remain important. Fashionably are darker soles or soles in a dirty look in addition to the white and light soils.

In the new season the classic black and will not disappear from the shoe cabinets, even though black will not be traded as the ultimate trend color in the new season. Buying impulses should be given by stone, timber and mineral tones as well as cognac and camel, rust and deep shades of red and khaki, olive and denim tones. Color gradients and strong contrasts create a new appearance. Gloss and glitter are back in the trend, through glittering colors as well as through pearls and strass.

The choice of materials by the designers for the new shoe fashion is versatile as seldom before, they like to mix in the new season: animated, soft qualities with haptic and structure, next to very clean, smooth qualities. It will be patched, stitched, printed, embossed, patterned and flocked. The trendy shoe materials include leather qualities in natural optics, often with noticeable grain pattern. Lizard embossments are back in vogue, especially crocodile and python. Soft suede and nubuck qualities are a must. Exceptional finish effects and fantasy embossments are very trendy. 3D is not just an issue for new high-tech qualities,
but can also be seen as brocade, bouclé, lace or jacquard pattern.

• 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.