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06.11.2018

CHINESE ENGAGEMENT IN EAST AFRICA UNDERGOING CHANGE

Cooperation and local production the new trend

Cooperation and local production the new trend

Nairobi (GTAI) - China dominates infrastructure projects and the construction industry in East Africa. But now the Kingdom of the Middle is also intensifying its commitment in trade and industry.

The Chinese advance in East Africa is breathtakingly fast, focused, efficient and highly successful. The approach is simple: one makes a business proposal that meets the wishes of the decision-makers, brings everything with you, including financing, and the project will be brought out with Confucian efficiency.

Because the customer is satisfied, follow-up orders are being placed. And the more orders there are, the more Chinese activities are there that no longer have anything to do with the original project: Trade, housing construction and business start-ups. And the more the debt with Chinese financiers rises, the more their interest grows in ensuring that the debt can be serviced.

China is fast - on its terms
In Kenya, the Chinese breakthrough came with the comparatively short road from Nairobi to Thika. The international donor community was willing to finance a road construction project, but only at the usual terms, such as regular feasibility studies and tenders, but at favorable interest rates. During the term of office of the former acting President at the time, all this would not have been completed.

Meanwhile, the Chinese made a different offer: shortest construction time and commercial credit with free hand and political backing. Residence permits were issued in an urgent procedure, and work had already begun before necessary expropriations had been completed. Everything was brought along, even truck drivers and food. Deliveries were made on time for the end of the President's term of office.

If customers are satisfied, there are follow-up orders. For example, a new railway - the favorite project of the current Kenyan President Uhuru Kenyatta - is also being built, financed and operated by the Chinese. The usual donors, such as the World Bank, had previously declined because the project was unlikely to pay off economically. Thanks to Chinese commitment, the first route from Mombasa to Nairobi was completed in time for the presidential election campaign and could be marketed as a political success. The fact that, in the opinion of critics, that the section was three times as expensive as necessary, was not contested by the voters.

Chinese appearance in the ripening process
Chinese companies had learned a lot from the first road project: They now know what the Kenyan business world and industry can and can't do, what they need, how they tick, how to do business in Kenya and how to deal with bureaucracy and widespread corruption, what cartels and monopolies one has to fear and how to deal with them if necessary.

Thanks to this knowledge and preferential treatment in work permits, Chinese construction and trading companies were able to gain a foothold within a very short space of time. And the more Kenyan government orders go to Chinese companies and the more Chinese traders gain a foothold in Kenya, the more Chinese goods flood the country.

But not only that: Chinese companies have been founded to manufacture locally. In addition, hordes of Kenyan workers are employed or Kenyan goods are being purchased if they are cheaper and/or better, or, logistically speaking, can they be procured more quickly. Kenyan companies and workers have also learned what is important to the Chinese partners - a learning and maturing process on both sides. Some Chinese people have married local and want to stay.

State acquisition perfected
Meanwhile, Chinese companies have virtually "perfected" their government procurement, reports the leading Kenyan daily newspaper "The Nation" with a sarcastic undertone: Chinese acquirers use an English first name that can be remembered and pronounced and, accompanied by a politically well-connected "fixer", visit together a cabinet secretary or the head of a semi-state company and make a proposal for a major infrastructure project combined with the promise to provide the financing.

A "Memorandum of Understanding" is then signed very quickly, followed by a commercial contract with the responsible ministry. Then only the Ministry of Finance has to sign the loan agreement and the deal is perfect. Parliament, budget controllers and the state auditor are excluded. The fact that high commissions and so-called kickbacks (bribes) are being paid in these transactions is in the nature of things.

German companies that participate in Chinese projects may be familiar with this background and are therefore usually very cautious. In other words: German-Chinese business relations in East Africa are reluctantly hanged on the big bell, because the German reputation could suffer. The German-Chinese business relationships that have nevertheless become known are quite different but show a range of possibilities.

Professional cooperation without ideology
On the one hand, there are German companies which are based in China, either independently, as joint ventures or in the form of cooperation. Such companies are considered "Chinese" because they know the rules of the game, the correspondence can be conducted in Chinese and the bank account exists in China. Then there are other German companies with whom one has already worked successfully together in Germany or elsewhere in the world - so why not again? And there are German companies that have a lot of experience in Africa and are well networked, such as consulting firms that can take over construction supervision. It is often the Kenyan client who demands a neutral and professional watchdog.

Many German products are appreciated by the Chinese. If a German company in Kenya is successful with construction chemicals, a Chinese company will also like to come back on them. And if a German construction machine has the desired specifications, it is also being bought by Chinese people in Kenya.

Chinese companies are first and foremost concerned with business and not ideology. German products and services have a good reputation worldwide, even among Chinese people. If China did not used them for its first projects in East Africa, it was because of a lack of knowledge of what is locally available and what is not. In the meantime, this has changed dramatically. And like everywhere in business life, contacts count and they need time to be established.

Chinese are the new Indians
It can already be foreseen that the driving force behind new industrial projects in Kenya will no longer come from entrepreneurs of Indian origin, but from Chinese ones. Once planned Chinese-built industrial parks are completed, there will be a wave of Chinese investment. If these investors first look at Chinese technology, it is only because they are better acquainted with the Chinese market. Anyone who knows and appreciates German products, on the other hand, will know how to weigh up the commercial advantages and disadvantages. For example, one of the first Chinese industrial projects in Kenya, the building materials supplier China Wu Yi Precast, has primarily installed German technology.

Farthest in Ethiopia
What applies to Kenya also applies to Ethiopia, where the Chinese advance is already much further ahead. There, too, the Chinese have built a railway, much more modern and cheaper than in Kenya. And more importantly, they are building industrial parks throughout the country where international companies can find good conditions for low-wage production. The first textile, clothing and leather factories report successes. Food processing and pharmaceutical companies are coming in a second wave. Of course, there are many Chinese companies in it, but not only. And, of course, German companies have good sales opportunities if they make the appropriate marketing efforts.

In Uganda are Chinese traders who have been mixing up the local market. The great Chinese engagement will only come with the start of the oil production and when the Kenyan railway has reached the Ugandan border. In Tanzania, the Chinese currently have less to report because the incumbent president, who is committed to fighting corruption, wants it that way. Instead of Chinese, he gets his railroad built by Turks. Meanwhile, Djibouti has become so heavily indebted to China that its influence can no longer be stopped.

New tones from Beijing
While the Chinese progress all over East Africa - even without Tanzania - can no longer be stopped, it remains exciting to see to what extent new tones from Beijing will affect China's involvement in East Africa. The Chinese leadership has declared its intention to curb corruption in its own government. If it is serious about this, it will also have to introduce stricter rules in its East Africa business.

And then there is the "socialism with Chinese characteristics" propagated by Chinese President Xi Jinping, with which he wants to make the world happy. So far it has been Western Europe and North America that have aggressively propagated their democracy as a form of government and political ideology in Africa. It seems that Xi Jinping now wants to counter this with Chinese principles. Chinese reforms can also be expected in the areas of environmental protection and sustainability, which at some point will also affect Chinese Africa business.

Investment projects in East African countries with Chinese participation
Country Project Investment mio. USD Status Note
Ethiopia Gas production and export 4,300 Talks Start 2020 Poly Group / GCL China
Ethiopia Industrial park 2,000 – 2,500 Different project statuses Developers primarily Chinese companies
Dschibuti Gas pipeline between Ethiopia and Djibouti 4,000 Talks; start of gas production mid-2019 Poly Group/GCL Petroleum Group Holdings Ltd. (both PR China)
Dschibuti 48 sqkm Chinese Free Zone 340 Under construction; largely completed in 2019 Dalian Port Corp., China Merchants Holdings (both PR China), Djibouti Ports and Free Zone Authority
Kenya High Grand Falls Dam (Kibuka) 1,500 Contract awarded; start of construction still pending China State Construction Engineering Corporation
Kenya Standard gauge railway Nairobi-Naivasha 1,500 Under construction; anticipated completion: September 2019 China Road and Bridge Corporation
Tanzania Mchuchuma Coal and Liganga Iron Ore Project 3,000 Planning Sichuan Hongda Group of China
Uganda Development of an oil production infrastructure More than 10,000 Development of a master plan Development of a master plan Joint project between Total, Tullow Oil and China National Offshore Oil Corp. (CNOOC)
Uganda Uganda Crude Oil Pipeline through Tanzania to Indian Ocean 3,600 Front End Engineering Design (FEED) completed Joint projects of Total, Tullow Oil and CNOOC
Uganda 800 MW Ayago hydropower plant N.A. Letter of intend Desired partner: China

Source: Research by Germany Trade & Invest

The entire study "China in Africa - Perspectives, Strategies and Cooperation Potentials for German Companies" is available free of charge: Print version under order number 21054 (32 pages) at Germany Trade & Invest, Kundencenter, Postfach 140116, 53056 Bonn, Germany, Telephone: 0228/24993-316, e-mail: vertrieb@gtai.de or as PDF document (german only) after short registration at http://www.gtai.de/china-in-afrika.

Source:

Martin Böll, Germany Trade and Invest www.gtai.de

06.11.2018

CHINESISCHES ENGAGEMENT IN OSTAFRIKA IM WANDEL

Kooperation und Produktion vor Ort der neue Trend
Nairobi (GTAI) - China dominiert in Ostafrika Infrastrukturprojekte und die Bauwirtschaft. Nun intensiviert das Reich der Mitte auch beim Handel und in der Industrie sein Engagement.

Der chinesische Vormarsch in Ostafrika ist atemberaubend schnell, fokussiert, effizient und höchst erfolgreich. Dabei ist der Ansatz einfach: Man macht einen Geschäftsvorschlag, der den Wünschen der Entscheidungsträger entspricht, bringt erst einmal alles mit, einschließlich der Finanzierung, und zieht das Vorhaben mit konfuzianischer Effizienz durch.

Kooperation und Produktion vor Ort der neue Trend
Nairobi (GTAI) - China dominiert in Ostafrika Infrastrukturprojekte und die Bauwirtschaft. Nun intensiviert das Reich der Mitte auch beim Handel und in der Industrie sein Engagement.

Der chinesische Vormarsch in Ostafrika ist atemberaubend schnell, fokussiert, effizient und höchst erfolgreich. Dabei ist der Ansatz einfach: Man macht einen Geschäftsvorschlag, der den Wünschen der Entscheidungsträger entspricht, bringt erst einmal alles mit, einschließlich der Finanzierung, und zieht das Vorhaben mit konfuzianischer Effizienz durch.

Weil der Kunde damit zufrieden ist, kommen Folgeaufträge. Und je mehr Aufträge es gibt, umso mehr chinesische Aktivitäten gibt es, die mit dem ursprünglichen Projekt nichts mehr zu tun haben: Handel, Wohnungsbau und Geschäftsgründungen. Und je mehr die Schulden bei chinesischen Finanzgebern steigen, desto mehr wächst deren Interesse, dafür zu sorgen, dass die Schulden bedient werden können.

China ist schnell - zu seinen Bedingungen
In Kenia kam der chinesische Durchbruch mit der vergleichsweise kurzen Straße von Nairobi nach Thika. Die internationale Gebergemeinschaft war bereit, einen Straßenausbau zu finanzieren, aber nur zu den üblichen Bedingungen wie ordentlichen Durchführbarkeitsstudien und Ausschreibungen, dafür aber zu günstigen Zinssätzen. Zur Amtszeit des seinerzeit amtierenden Präsidenten wäre das alles nicht fertig geworden.

Die Chinesen machten derweil ein anders Angebot: Kürzeste Bauzeit und kommerzieller Kredit bei freier Hand und politischer Rückendeckung. Aufenthaltsgenehmigungen gab es im Eilverfahren, mit den Arbeiten wurde schon mal begonnen, bevor notwendige Enteignungen abgeschlossen waren. Alles wurde mitgebracht, selbst Lkw-Fahrer und Nahrungsmittel. Geliefert wurde pünktlich zum Ende der Amtszeit des Präsidenten.

Wenn Kunden zufrieden sind, gibt es Folgeaufträge. Eine neue Eisenbahn zum Beispiel - das Lieblingsprojekt des aktuell amtierenden kenianischen Präsidenten Uhuru Kenyatta - wird ebenfalls von Chinesen gebaut, finanziert und betrieben. Übliche Geber wie die Weltbank hatten zuvor abgewinkt, weil sich das Vorhaben volkswirtschaftlich nicht rechnen dürfte. Dank des chinesischen Engagements ist die erste Trasse von Mombasa nach Nairobi zeitig zum Präsidentschaftswahlkampf fertig geworden und konnte als politischer Erfolg vermarktet werden. Dass das Teilstück nach Ansicht von Kritikern drei Mal so teuer war wie notwendig, focht den Wähler nicht an.

Chinesischer Auftritt im Reifeprozess
Bei dem ersten Straßenprojekt haben chinesische Firmen viel gelernt: Sie wissen nun, was die kenianische Geschäftswelt und die kenianische Industrie kann und was sie nicht kann, was sie braucht, wie sie tickt, wie in Kenia Geschäfte laufen und wie man mit der Bürokratie und der weit verbreiteten Korruption zu Recht kommt, welche Kartelle und Monopole man fürchten muss und wie man sich mit ihnen notfalls arrangieren kann.

Dank dieses Wissens und einer Vorzugsbehandlung bei Arbeitsgenehmigungen konnten chinesische Bau- und Handelsunternehmen in kürzester Zeit Fuß fassen. Und je mehr kenianische Staatsaufträge an chinesische Firmen gehen und je mehr chinesische Handelstreibende in Kenia Fuß fassen, umso mehr chinesische Waren überschwemmen das Land.

Aber nicht nur: Längst werden auch chinesische Firmen gegründet, die vor Ort fertigen. Zudem werden Heerschaaren kenianischer Arbeiter beschäftigt oder kenianische Waren eingekauft, wenn sie preiswerter und/oder besser sind oder, logistisch gesehen, schneller beschafft werden können. Dabei haben auch kenianische Firmen und Arbeiter gelernt, worauf es den chinesischen Partnern ankommt - ein Lern- und Reifeprozess auf beiden Seiten. So mancher Chinese hat mittlerweile eine Einheimische geheiratet und will bleiben.

Staatliche Akquise perfektioniert
Ihre staatliche Auftragsbeschaffung haben chinesische Firmen derweil geradezu "perfektioniert", berichtet die führende kenianische Tageszeitung "The Nation" mit einem sarkastischen Unterton: Chinesische Akquisiteure bedienen sich eines englischen Vornamens, den man sich merken und aussprechen kann, und werden in Begleitung eines politisch gut vernetzten "Fixers" bei einem Kabinettssekretär oder dem Chef eines halbstaatlichen Unternehmens vorstellig und machen einen Vorschlag für ein größeres Infrastrukturprojekt, verbunden mit dem Versprechen, für die Finanzierung zu sorgen.

Sehr schnell wird dann ein "Memorandum of Understanding" unterzeichnet, dem ein kommerzieller Vertrag mit dem zuständigen Ministerium folgt. Dann muss nur noch das Finanzministerium den Kreditvertrag unterschreiben und der Deal ist perfekt. Parlament, Haushaltskontrolleure und der staatliche Auditor bleiben außen vor. Das bei diesen Geschäften hohe Provisionen und sogenannte Kickbacks (Bestechungsgelder) gezahlt werden, liegt in der Natur der Sache.

Deutsche Firmen, die sich an chinesischen Projekten wie auch immer beteiligen, kennen diesen Hintergrund und sind deshalb meist zurückhaltend. Anders formuliert: Deutsch-chinesische Geschäftsbeziehungen werden in Ostafrika ungern an die große Glocke gehängt, weil der deutsche Ruf leiden könnte. Die dennoch bekannt gewordenen deutsch-chinesischen Geschäftsbeziehungen sind recht unterschiedlich und zeigen eine Palette des Möglichen.

Professionelle Kooperation ohne Ideologie
Da gibt es zum einen deutsche Firmen, die in China ansässig sind, entweder eigenständig, als Joint-Venture oder in Form einer Kooperation. Solche Firmen gelten als "chinesisch", weil sie die Spielregeln kennen, die Korrespondenz in Chinesisch geführt werden kann und das Bankkonto in China besteht. Dann gibt es zum anderen deutsche Firmen, mit denen man in Deutschland oder sonst wo auf der Welt schon erfolgreich zusammengearbeitet hat - warum also nicht wieder? Und es gibt deutsche Firmen, die in Afrika viel Erfahrung haben und gut vernetzt sind, wie zum Beispiel Beraterunternehmen, welche die Bauaufsicht übernehmen können. Oft ist es auch der kenianische Auftraggeber, der einen neutralen und professionellen Aufpasser verlangt.

Viele deutsche Produkte werden von Chinesen geschätzt. Wenn ein deutsches Unternehmen in Kenia erfolgreich mit Bauchemikalien ist, wird auch ein chinesisches Unternehmen darauf zurückgreifen. Und wenn eine deutsche Baumaschine die gewünschten Spezifikationen hat, wird sie auch von Chinesen in Kenia gekauft.

Den chinesischen Firmen geht es in allererster Linie ums Geschäft und nicht um Ideologie. Deutsche Produkte und Dienstleistungen haben weltweit einen guten Ruf, auch bei Chinesen. Wenn China bei seinen ersten Projekten in Ostafrika nicht darauf zugegriffen hat, dann lag das an der mangelhaften Kenntnis dessen, was lokal verfügbar ist und was nicht. Inzwischen hat sich das nachhaltig geändert. Und wie überall im Geschäftsleben zählen Kontakte und die brauchen eine Zeit, bis sie aufgebaut werden können.

Chinesen sind die neuen Inder
Es ist bereits abzusehen, dass die treibende Kraft bei neuen Industrieprojekten in Kenia nicht mehr wie bislang von indisch-stämmigen Unternehmern kommen wird, sondern von chinesischen. Wenn erst einmal geplante, von Chinesen gebaute Industrieparks fertig werden, wird es zu einer chinesischen Investitionswelle kommen. Wenn diese Investoren zuerst einmal nach chinesischer Technik schauen, dann nur, weil sie sich auf dem chinesischen Markt besser auskennen. Wer dagegen auch deutsche Produkte kennt und schätzt, wird die kommerziellen Vor- und Nachteile abzuwägen wissen. So hat eines der ersten chinesischen Industrieprojekte in Kenia, der Baustoffzulieferer China Wu Yi Precast, vornehmlich deutsche Technik installiert.

Am weitesten in Äthiopien
Was für Kenia gilt, gilt auch für Äthiopien, wo der chinesische Vormarsch schon viel weiter ist. Auch dort haben Chinesen eine Eisenbahn gebaut, deutlich moderner und billiger als in Kenia. Und was noch wichtiger ist: Sie bauen überall im Land Industrieparks, in denen internationale Firmen gute Rahmenbedingungen für eine Niedriglohnproduktion finden. Die ersten Textil-, Bekleidungs- und Lederfabriken melden Erfolge. Nahrungsmittel verarbeitende und Pharmaunternehmen kommen in einer zweiten Welle. Selbstverständlich sind viele chinesische Firmen dabei, aber nicht nur. Und selbstverständlich haben deutsche Firmen Absatzchancen, wenn sie die entsprechenden Marketinganstrengungen unternehmen.

In Uganda sind es bislang chinesische Händler, welche den lokalen Markt aufmischen. Das große chinesische Engagement wird erst mit dem Beginn der Ölförderung kommen und wenn die kenianische Eisenbahn die ugandische Grenze erreicht hat. In Tansania haben die Chinesen derzeit weniger zu melden, weil der amtierende Staatspräsident, der sich die Korruptionsbekämpfung auf die Fahne geschrieben hat, das so will. Statt von Chinesen lässt er seine Eisenbahn von Türken bauen. Dschibuti hat sich derweil so stark gegenüber China verschuldet, dass dessen Einfluss nicht mehr zu stoppen ist.

Neue Töne aus Peking
Während der chinesische Vorstoß in ganz Ostafrika - auch ohne Tansania - nicht mehr aufzuhalten ist, bleibt es spannend zu sehen, inwieweit sich neue Töne aus Peking auf das chinesische Ostafrika-Engagement auswirken. Die chinesische Führung will erklärtermaßen die Korruption in der eigenen Regierung eindämmen. Wenn sie es damit ernst meint, wird sie auch in ihrem Ostafrikageschäft strengere Regeln einführen müssen.

Und dann ist da noch der vom chinesischen Präsidenten Xi Jinping propagierte "Sozialismus mit chinesischen Charakteristika", mit dem er die Welt beglücken will. Bislang war es Westeuropa und Nordamerika, die ihre Demokratie als Regierungsform und politische Ideologie aggressiv in Afrika propagiert haben. Es scheint, dass Xi Jinping dem nun chinesische Prinzipien entgegensetzen möchte. Auch in Sachen Umweltschutz und Nachhaltigkeit ist mit chinesischen Reformen zu rechnen, die irgendwann auch auf das chinesische Afrikageschäft abfärben dürften.

Investitionsprojekte in ostafrikanischen Ländern mit chinesischer Beteiligung
Land Projektbezeichnung Investitionssumme (in Mio. US$) Projektstand Anmerkungwww.gtai.de
Äthiopien Gasförderung und -export 4.300 Gespräche; Aufnahme der Gasförderung: 2020 Entwickler: Poly Group/GCL Group (beide VR China)
Äthiopien Industriepark-Entwicklung 2.000 bis 2.500 Unterschiedliche Projektstände Entwickler sind vornehmlich chinesische Firmen
Dschibuti Gasleitung zwischen Äthiopien und Dschibuti, Gasverflüssigungsterminal 4.000 Gespräche; Aufnahme der Gasförderung Mitte 2019 Entwickler: Poly Group/GCL Petroleum Group Holdings Ltd.(beide VR China)
Dschibuti 48 qkm große chinesische Freihandelszone 340 Im Bau; weitgehende Fertigstellung 2019 Dalian Port Corp., China Merchants Holdings (beide VR China), Djibouti Ports and Free Zone Authority.
Kenia High Grand Falls Dam (Kibuka) 1.500 Auftragsvergabe; Baubeginn noch offen China State Construction Engineering Corporation
Kenia Normalspureisenbahn Nairobi-Naivasha 1.500 Im Bau; antizipierte Fertigstellung: September 2019 China Road and Bridge Corporation
Tansania Mchuchuma-Kohle- und Liganga-Eisenerzprojekt 3.000 Planung Sichuan Hongda Group of China
Uganda Aufbau einer Ölproduktions- Infrastruktur Mehr als 10.000 Erarbeitung eines Masterplans Gemeinschaftsvorhaben von Total, Tullow Oil und China National Offshore Oil Corp. (CNOOC)
Uganda Rohölpipeline durch Tansania zum Indischen Ozean 3.600 Front End Engineering Design (FEED) abgeschlossen Gemeinschaftsvorhaben von Total, Tullow Oil und CNOOC
Uganda 800-MW-Ayago-Wasserkraftwerk K.A. Absichtserklärung Wunschpartner: China

Quelle: Recherchen von Germany Trade & Invest


Die gesamte Studie "China in Afrika - Perspektiven, Strategien und Kooperationspotenziale für deutsche Unternehmen" können Sie kostenlos beziehen: Printversion unter der Bestellnummer 21054 (32 Seiten) bei Germany Trade & Invest, Kundencenter, Postfach 140116, 53056 Bonn, Telefon: 0228/24993-316, E-Mail: vertrieb@gtai.de oder als PDF-Dokument nach kurzer Registrierung unter http://www.gtai.de/china-in-afrika.

 

More information:
China Afrika Infrastruktur
Source:

Martin Böll, Germany Trade and Invest www.gtai.de

Usbekistan Photo: Pixabay
30.10.2018

UZBEKISTAN PUSHES FOR GLOBAL SHOE AND LEATHER MARKET

  • Projects worth USD 52 million planned

Tashkent (GTAI) - Uzbekistan wants to become an international player in the shoe and leather industry. The market offers foreign companies a lot of potential for cooperation.

The Government of Uzbekistan has adopted a new initiative for the modernization and expansion of the leather, footwear, leather goods and fur industries. It is aimed at increasing efficiency and expanding production as well as accelerating integration into the international market. Producers are focusing primarily on Russia and Kazakhstan, but also on Western markets such as France. Foreign companies are welcome to participate in the planned projects. In the long term, value chains are to be created, clusters established and exports promoted.

  • Projects worth USD 52 million planned

Tashkent (GTAI) - Uzbekistan wants to become an international player in the shoe and leather industry. The market offers foreign companies a lot of potential for cooperation.

The Government of Uzbekistan has adopted a new initiative for the modernization and expansion of the leather, footwear, leather goods and fur industries. It is aimed at increasing efficiency and expanding production as well as accelerating integration into the international market. Producers are focusing primarily on Russia and Kazakhstan, but also on Western markets such as France. Foreign companies are welcome to participate in the planned projects. In the long term, value chains are to be created, clusters established and exports promoted.

Cooperation with Uzbek companies are possible in the production of leather goods, passive contract finishing, supply of equipment, auxiliary materials and chemicals to companies or in the trade with footwear, leather and fur goods. There are plenty of high-quality raw materials and a large potential of available and motivated workers.

The framework conditions for companies in Uzbekistan have improved noticeably. Labor and energy costs are low. In 2017, the government initiated economic liberalization and opening of the country. Uzbekistan wants to more than double its shoe exports by 2020. In 2017 Uzbek manufacturers sold shoes worth USD 150 million abroad.

Foreign investors are planning new projects
The O´zcharmsanoat's key 2019 investment program lists projects valued at USD 52 million. In addition, there are other projects which have not yet been included in the program due to ongoing coordination with potential foreign investors or which are planned in companies that operate outside O´zcharmsanoat.
An overview of current and planned projects for the development of the leather, shoe, leather goods and fur industry in Uzbekistan can be downloaded here.

Association O´zcharmsanoat is the main contact partner
The Association of the Leather Industry O´zcharmsanoat acts on behalf of the state as the central regulator and coordinator of the sector. It was restructured in May 2018 and controls, among other things, investments and foreign trade. Almost all notable Uzbek players in the leather industry are active under its umbrella. These include 30 automated slaughterhouses (supplied by livestock farms), 63 tanneries, including pre-tanning facilities, 131 shoe manufacturers and 28 producers of other products, including fur products (as of June 30th 2018). It also operates 13 warehouses for the purchase of raw materials from private animal breeders.

The leather processing companies produce hard leather (foot and insole leather) and upper leather, mainly chrome leather goods and Russia leather. The annual raw material supply amounts to around nine million hides and five million skins. About two fifths of this volume is currently exported. Among the 252 companies, which are employing about 26,000 people, there are 47 companies with foreign capital participation as well as numerous purely private Uzbek companies.

Only about a dozen of the 131 shoe manufacturers, which are currently active at O´zcharmsanoat, employ 100 people or more. The development of efficient medium-sized structures in the sector is still in its infancy and is likely to gain momentum.

Government grants tax and tariff preferences for five years
The slaughterhouses and manufacturers of raw, semi-finished and finished goods as well as the new foreign trade company Uzcharmimpex will receive tax and customs relief. These apply to existing companies of the association O´zcharmsanoat until January 1st 2023. Newly established companies can benefit from the preferences for five years from the date of company foundation.
In detail, the following preferential conditions are granted:

  • Exemption from the profit and wealth tax or the uniform tax levy for micro and small companies
  • Exemption from compulsory contributions to earmarked central funds
  • Exemption from import duties for the import of equipment, completion parts, raw materials and materials which cannot be procured in the country and are intended for production.
  • Granting a 60-day deferment of payment of import duties (from the date of the customs declaration) for the import of all other equipment, completion parts, raw materials and supplies and other goods for production needs
  • VAT exemption for imports of raw materials and intermediate products for the use in production and of equipment for footwear production

Uzcharmimpex imports equipment for Uzbek companies
The foreign trade company Uzcharmimpex is engaged both in the export of sector products and in the import of equipment, spare parts, auxiliary materials and chemicals. The list of imported capital goods includes butchery, cutting, slicer, splitting and shaping machines, vacuum dryers, electronic measuring instruments for leather surface measurement, sewing machines and footwear assembly equipment.

The industry modernization initiative also provides for the creation of an industry development fund. This is fed by a levy amounting to 5 percent of export earnings from chrome-tanned hides and skins that have not yet been dressed (wet blue). These funds are intended for investment projects, the granting of loan guarantees, the financing of ISO certifications, the promotion of trade fair participations and the promotion of training and further education.

Usbekistan doubles shoe production
According to the Association of the Leather Industry O´zcharmsanoat, about 40 million pairs of shoes were produced in Uzbekistan in 2017, including 17 million pairs of full and partial leather shoes. An output of 34.2 million pairs of leather shoes is planned for 2020. Then the leather production is expected to reach a volume of 1.3 billion square decimeters. For 2018, the association expects 1 billion square decimeters of leather. O´zcharmsanoat aims to increase its total exports to USD 480 million by 2020 and to USD 1 billion by 2025 (Actual 2017: USD 150 million).

The collapse of the Soviet Union, a failed privatization policy and a difficult business climate led to a breakdown in production in the mid-1990s to around 2009/2010. On average, manufacturers produced less than four million pairs of shoes a year. Previously, around 30 medium-sized manufacturers brought 50 million pairs of shoes onto the market each year. In addition, 2.4 million bags and 200,000 pairs of gloves were produced annually. After 2010, there was a start-up boom in the sector thanks to preferential tax arrangements for particularly small companies.

Contact address
O´zcharmsanoat uyushmasi (Association of the Uzbek Leather Industry)
Contact person Sardor Uktamovich Umurzakov, Chairman of the Management Board
109, Mustakillik ave., 100192 Tashkent/Uzbekistan
T +99871 267 58 47, 268 40 66
F +99871 268 40 66rais@uzcharm.uzinfo@uzcharm.uz,
Directory of companies http://www.uzcharmexpo.uz/spravochnik
rais@uzcharm.uz, info@uzcharm.uz
http://www.uzcharm.uz

 

More information:
shoe industry Uzbekistan Leather
Source:

Uwe Strohbach, Germany Trade & Invest www.gtai.de

Indien fördert die Textilverarbeitung Photo: Pixabay
23.10.2018

INDIA PROMOTES TEXTILE PROCESSING

  • Integrated industrial parks necessary

New Delhi (GTAI) – The Indian textile sector is not only important for bringing foreign currency into the country, but also because of its role as an employer. The formation of new clusters is now getting supported by the government.

India, as one of the leading global producers not only of cotton, but also of wool, jute and silk, has a historic tradition in converting raw materials. Accordingly, India’s industry concerning spinning and weaving of fabric is broadly positioned, while contributing 14% of India's gross domestic product.

  • Integrated industrial parks necessary

New Delhi (GTAI) – The Indian textile sector is not only important for bringing foreign currency into the country, but also because of its role as an employer. The formation of new clusters is now getting supported by the government.

India, as one of the leading global producers not only of cotton, but also of wool, jute and silk, has a historic tradition in converting raw materials. Accordingly, India’s industry concerning spinning and weaving of fabric is broadly positioned, while contributing 14% of India's gross domestic product.

Even though the sector mostly consists of small enterprises, some clusters emerged. The textile industry can mainly be found in the federal states of Gujarat, West Bengal, Andhra Pradesh and Tamil Nudo.     
A more detailed structure is drawn by Sanjay K Jain, chairman of the textile Association “Confederation of Indian Textile Industry in an interview with Germany Trade & Invest: Knitwear clusters are found in Tirupur, Tamil Nadu, Kolkata, West Bengal, Ludhiana, and Kanpur. There are weaving centers in Ichankaranji and Bhiwandi (both Maharashtra), Erode (Tamil Nadu), Surat (Gujarat), and Bhilwara (Rajasthan). For ready-to-wear a cluster in Panipat (Haryana) and for the production of shirts and trousers has formed a cluster in Bangalore (Karnataka).
 
The state subsidy agency India Brand Equity Foundation (IBEF) recognizes four industrial centers – also according to the regional availability of raw materials. In the north (Kashmir, Ludhiana and Panipat) about 80 percent the production of woolen goods are concentrated. In the west (Ahmedabad, Mumbai, Surat, Raijkot, Indore and Vadodara) is the focus of the cotton industry. Hosiery (Tirupur, Coimbatore and Madurai) and silk products (Bengaluru, Mysore and Chennai) have their strengths in the South. The east of the country is focused on jute goods (Bihar and West Bengal). But also wool (Uttar Pradesh) and cotton goods (West Bengal) are represented. In addition, ac-cording to the IBEF, India has seven export-oriented Special Economic Zones for Textiles and Clothing in mid-2018.

A handicap for the textile industry is the missing size. For example, most low-capacity sites are scattered across the country. The construction of large integrated industrial parks is necessary. The various states and state institutions are also trying to promote new textile clusters.

The central government budget will provide ap-proximately US $ 4 million for the Scheme for Integrated Textile Parks (SITP) program in the fiscal year 2018/19 (April 1 to March 31). There are currently 47 projects in this field. The pro-gram intends the further development of such settlements with a common infrastructure.

More information:
Indien
Source:

Rainer Jaensch, Germany Trade & Invest www.gtai.de

Taiwan's Textile Industry sustains its Position with Innovations Photo: Pixabay
25.09.2018

TAIWAN'S TEXTILE INDUSTRY SUSTAINS ITS POSITION WITH INNOVATIONS

  • Manufacturers rely, among others, on German Machines

Tokyo (GTAI) - When it comes to functional textiles, Taiwan belongs to the international top league. To ensure that this remains the case, industry manufacturers invest in modern equipment and innovations.

Taiwan is an important global supplier of functional textiles. The sector wants to maintain this position and expand it as much as possible. They are therefore investing in new capacities, research and development. There are good sales opportunities for suppliers of pre-products and equipment.

The demand for functional textiles is increasing in the sports, leisure and footwear industries. In other sectors, such as the automotive and medical industries, building materials and agricultural aids, these are also increasingly being used. Functional textiles are usually not recognizable as Taiwan products. Nevertheless, some of them are very visible.

  • Manufacturers rely, among others, on German Machines

Tokyo (GTAI) - When it comes to functional textiles, Taiwan belongs to the international top league. To ensure that this remains the case, industry manufacturers invest in modern equipment and innovations.

Taiwan is an important global supplier of functional textiles. The sector wants to maintain this position and expand it as much as possible. They are therefore investing in new capacities, research and development. There are good sales opportunities for suppliers of pre-products and equipment.

The demand for functional textiles is increasing in the sports, leisure and footwear industries. In other sectors, such as the automotive and medical industries, building materials and agricultural aids, these are also increasingly being used. Functional textiles are usually not recognizable as Taiwan products. Nevertheless, some of them are very visible.

For example, at least 15 out of 32 teams at the 2018 FIFA World Cup wore clothing made with textiles of Taiwanese origin for internationally renowned brand names, according to the Taiwan Industrial Development Bureau (IDB). According to the Taiwan Footwear Manufacturers Association, Taiwanese manufacturers are responsible for approximately 80 percent of all sports shoes produced worldwide.

Textile manufacturers invest
Far Eastern New Century (FENC) is one of the largest textile manufacturers on the island. Its production capacity is nowadays mainly located abroad with productions in China, Japan, the USA and Vietnam. FENC is also expanding its capacity in Taiwan. Polyester spunbonded nonwovens have been produced for the Asian market in a joint venture with Freudenberg in Germany since 1987.

Freudenberg Far Eastern Spunweb has announced that it will set up a third production line for nonwovens at the Tayuan plant, thereby increasing the existing production of 20,000 tons by 11,000 tons per year. Construction of the new production facility, which is scheduled to start operations in 2020, has now begun. The latest automated production technology is to be used. According to the company, the investments amount will approximately be at USD 43 million.

Biggest companies in the textile industry in Taiwan by sales
(in USD million; change compared to previous year in %)

Company 2016 2017 Change
Far Eastern New Century Corp. 6,679 7,157 0.,9
Formosa Taffeta Co., Ltd. 1,233 1,337 2.2
Shinkong Synthetic Fiber Corporation 1,066 1,200 6.1
Eclat Textile Co., Ltd. 759 796 -1.2
Makalot Industrial Co., Ltd. 685 735 1.2
Tainan Spinning Co., Ltd. 602 692 8.3

Source: CommonWealth Magazine, Taiwan Stock Exchange

Germany remains an important equipment supplier
Taiwan's textile manufacturers import their equipment mainly from China, Japan and Germany, with some of the machines produced in China coming from companies with Japanese, German, Italian or Taiwanese parent companies. German deliveries declined by 13.7 percent to USD 71.1 compared to 2016 million in 2017. However, Taiwan's imports from Germany increased by 24.3 percent in the first six months of 2018, exceeding deliveries from Japan at USD 42.5 million.

The fact that the import of equipment remains at a high level has to do with the fact that companies in the textile industry in Taiwan are modernizing existing plants and converting them to Industry 4.0. In addition, the number of textile manufacturers in Taiwan has increased in recent years. According to statistics from the Taiwan Federation of Textiles, the number of companies rose from 3,143 to 3,214 between 2014 and 2017.

Main suppliers of textile machinery *)
to Taiwan (USD million; change in % compared to previous year)

Supplying country 2016 2017 Change
China 108.7 111.0 2.1
Japan 97.2 97.2 0
Germany 82.5 71.1 -13.7
Italy 32.8 23.8 -27.3
Switzerland 13.6 14.1 3.6
USA 19.2 12.1 -37.2
Total 405.4 364.7 -10.0

*) HS-Codes 8444-8453; without 8450
Source: Customs Statistics, Ministry of Finance

Core functions remain in Taiwan
By contrast, the production value of the textile sector fell slightly. In local currency terms, it fell in 2017 compared with 2016 by 1.7 percent. Converted to US dollars, the production value of textiles was USD 9 billion, according to the statistics from the Ministry of Economic Affairs. The production of synthetic fibers stagnated at just under USD 3 billion in 2017.

Taiwan is home to the headquarters of the often family-run textile companies. Purchasing and marketing decisions are mainly made here, and, last but not least, research and development are carried out here too. For example, several manufacturers are currently developing smart textiles with integrated temperature control, heart and location functions.

Foreign activities are diversified
The textile manufacturers are investing predominantly in new capacities outside Taiwan. For example, FENC 2018 is expanding its capacity for PET (polyethylene terephthalate) and terephthalic acid (PTA), which among others are required for the production of synthetic fibers. Together with an Indonesian and a Mexican partner, FENC acquires two new plants of a bankrupt US company in West Virginia and Texas. Among other things, this reduces the risk of possible trade restrictions and, conversely, increases the opportunity to benefit from free trade agreements.

Vietnam is also a focus of investment. Here, most Taiwanese textile companies are in the process of establishing or expanding new capacities. FENC, Formosa Taffeta, Eclat, Makalot and several others invested in the southeast Asian tigerland several years ago. By contrast, new investments in China have become rare, primarily due to rising wage costs.

 

More information:
Taiwan
Source:

Jürgen Maurer, Germany Trade & Invest www.gtai.de

INDIA'S GOVERNMENT SUPPORTS TEXTILE INDUSTRY Photo: Pixabay
11.09.2018

INDIA'S GOVERNMENT SUPPORTS TEXTILE INDUSTRY

  • Clothing exports are declining 

New Delhi (GTAI) - Structural weaknesses and fiscal reforms are affecting the Indian textile industry. Modernization and diversification are necessary. For this where support measures will come into force.

  • Clothing exports are declining 

New Delhi (GTAI) - Structural weaknesses and fiscal reforms are affecting the Indian textile industry. Modernization and diversification are necessary. For this where support measures will come into force.

In the 2016/17 fiscal year (April 1st to March 31st), India's government initiated a number of fundamental reforms such as the introduction of the nationwide Goods and Services Tax (GST) and a partial currency devaluation. These measures are intended to advance the economy as a whole in the medium to long term, but have led to uncertainty and difficulties in individual sectors, including the textile industry. Added to this are high cotton prices. The government is now trying to help the industry with individual measures. It remains to be seen whether these will be sufficient and lead to a sustained improvement. Finally, there are structural weaknesses which are also slowing down the growth of the Industry.

"The by the introduction of GST caused dent and monetary depreciation has now been overcome. However, the structural problems remain, so that no fundamental changes in the textile industry are to be expected", according to the assessment of a German supplier with many years of experience in India in talks with Germany Trade & Invest (GTAI).

Government launches aid measures
However, some government measures should provide relief. At the beginning of August 2018, import duties on 328 textile products, especially fabrics and nonwovens, were increased from around 5 to 10 percent to up to 20 percent. Also, at the beginning of the month, the Executive Board introduced four bills to amend the general VAT Act introduced on July 1st 2017. This should make refunds, for example of taxes on intermediate products, easier and faster. The introduction of GST and the delays in reimbursement have put particular pressure on the liquidity of small and medium-sized companies, which make up the bulk of textile companies. For example, the denim industry temporarily had to take 25 to 30 percent of its capacity out of production after the tax introduction.

 Also, the Ministry of Textiles wants to strengthen the to it entrusted weakening industry. At the beginning of August 2018, for example, it added changes to the Technology Upgradation Funds Scheme (TUFS), which has been in existence since 1999. This now expanded technology promotion program allows cooperative banks to provide financing to textile companies for technological improvements. They also become accessible for liability partnerships. Of the approximately USD 1.1 billion, that the central government budget is holding for the textile industry in the fiscal year 2018/19, one third, 14 percent more than in the previous year, are intended for the TUFS. Manufacturers of synthetic fibers and the clothing industry in particular are likely to benefit from this, according to industry sources.

The existence of an own Ministry of Textiles shows how important this industry is for India, not only as a source of foreign exchange, but also as an employer. The entire sector, from spinning mills, weaving mills to clothing and other finished goods, contributed around 14 percent to value creation in the manufacturing industry and 13 percent to foreign exchange revenues in 2017, and employs directly 40 million and indirectly 60 million workers.

As one of the world's leading producers of cotton, jute and silk, India has comparative advantages in the textile sector and can look back on a long tradition in processing. Accordingly, cotton is the main raw material in yarn and fabric production. After all, 5.7 billion tons of yarn were spun in 2016/17, achieving an annual average increase of 3.1 percent between 2011 and 2017. The weaving mills processed 63.5 billion square meters of fabric in 2016/17, after 61.7 billion in 2011. The proportion of cotton fabrics rose from 51 to 61 percent in 2011 to 2017. The remaining part is accounted for approximately equally by synthetic and blended fabrics.

 
Production and export growth come to a halt Based on the previously strong growth the government is optimistic. According to forecasts by the Ministry of Textile, India's textile and clothing industry is expected to more than double its sales between 2015 and 2021. Exports are expected to increase from USD 35 billion to USD 82 billion, after doubling in the period from 2006 to 2014 from USD 17.6 billion to USD 37.6 billion. After that, however, they stagnated and, at USD 35 billion in 2017/18 and missed the by the government set target by USD 10 billion. The production of textiles and clothing declined from 2015 to 2017. It is unlikely to improve in 2018.

Textile and clothing industry in India 1)
  2015/16
 
2016/17 2)  2017/18 2)
Export of textiles and textiles products USD in USD billion 18.1 18.2 18.7
Export of clothing 17.0 17.4 16.7
Import of yarn, fabrics, made-ups in USD billion 1.7 1.5 n.a.
Change of production of textiles in % -0.2 -3.2 n.a.
Change of production of non-knitted clothing in % -3.6 -3.3 n.a.


1) Financial years from 1 April to 31 March; 2) Provisional data for 2016/17 and 2017/18
Source: Statistical Office India
     

Clothing industry needs to modernize 
India's textile industry has cost advantages over industrialized countries and advanced emerging countries such as China. Smaller developing countries, however, have become well-known competitors in the meantime and have partly surpassed India in terms of clothing. So Bangladesh and Vietnam exported more clothing than India. In addition there is growing competition from other low-wage countries such as Cambodia, Sri Lanka and Indonesia. Some of these countries have free trade agreements with the EU, while India has difficulties in negotiating them. The smaller competitors have also geared their clothing industry to exports and modernized it accordingly. After all, they do not have significant local markets. The Indian textile manufacturers are different: If there is not enough quality for export, the domestic market, which has a population of 1.3 billion inhabitants and is growing strongly, is still there, industry representatives explain to GTAI.

India's apparel industry therefore still has a considerable potential for modernization and requires new production technologies, particularly to improve operating efficiency. Other structural weaknesses include strong wage increases with insufficient productivity growth and a shortage of well-trained skilled workers. Other disadvantages are the fragmentation of the clothing industry - many companies lack size - and the lack of adaptation to global fashion trends. While the fashion world is more prone to fiber mixed fabrics, the Indian clothing is not yet following this trend. There is a lack of product diversification.

The spinning and weaving sector looks more modern. Industry experts attest to it a leading international position in terms of size, technology, productivity, quality and price. This is also evident when importing machines. India was the most important export market for German spinning machines to China in 2017 and the fifth largest market for weaving machines, according to the Textile Machinery Association of the German Engineering Federation (VDMA). In textile finishing machinery, India does not rank among the top six export markets, but its competitor Bangladesh does.

Double-digit growth in foreign direct Investment 
Foreign investments in the Indian textile industry are welcome and 100 percent foundations by foreign companies are welcome. On promotional trips to countries such as Japan, Germany, Italy and France, India is actively attracting investors and has not been unsuccessful. The inflow of foreign direct investment into the textile sector, including dyed and printed textiles, amounted to USD 2.7 billion between April 2000 and September 2017. Cumulative investments increased by an annual average of 17.3 percent between 2010 and 2017. However, the bulk of the investment is being stemmed by national Indians. Total investments in India's textile sector from June 2017 to May 2018 amounted to USD 4.2 Billion.

Contact Details
Name Internet Remark
Germany Trade & Invest http://www.gtai.de/indien Foreign information for the German Export Business
AHK Indien http://www.indien.ahk.de Contact for German companies
Ministry of Textiles http://www.texmin.nic.in Ministry
Office of Textile Commissioner http://www.txcindia.gov.in Government 
Confederation of Indian Textile Industry http://www.citiindia.com Textile Association
Textile Association India http://www.textileassociationindia.org Textile Association India
The Clothing Manufacturers Association of India http://www.cmai.in Clothing Association


    

More information:
India Bangladesh(7621)
Source:

Rainer Jaensch, Germany Trade & Invest www.gtai.de

Photo: Pixabay
04.09.2018

HONG KONG COMPANIES ARE WITHDRAWING PRODUCTION FROM CHINA

  • Capacities are relocated to Southeast Asia

Hong Kong (GTAI) - Thanks to President Trump, the emigration trend from the PRC is getting an additional boost. As far as logistics companies are concerned, Beijing is getting increasingly worried.

Already a decade or so ago, China began to relocate production facilities. As wages increased in the rich coastal cities, more and more companies were forced to move their factories inland or to so-called low-wage countries. There salaries, but also land, were more affordable. The environmental requirements were meanwhile laxer too.

The southern Chinese Pearl River Delta - probably the largest industrial settlement in the world - also felt this trend. In the 1980s and 1990s, investors from neighboring Hong Kong had outsourced virtually all of the industrial production of the Special Administrative Region (SVR) there. But around 2008/09, there came a change of opinion. 

  • Capacities are relocated to Southeast Asia

Hong Kong (GTAI) - Thanks to President Trump, the emigration trend from the PRC is getting an additional boost. As far as logistics companies are concerned, Beijing is getting increasingly worried.

Already a decade or so ago, China began to relocate production facilities. As wages increased in the rich coastal cities, more and more companies were forced to move their factories inland or to so-called low-wage countries. There salaries, but also land, were more affordable. The environmental requirements were meanwhile laxer too.

The southern Chinese Pearl River Delta - probably the largest industrial settlement in the world - also felt this trend. In the 1980s and 1990s, investors from neighboring Hong Kong had outsourced virtually all of the industrial production of the Special Administrative Region (SVR) there. But around 2008/09, there came a change of opinion. 

In addition to cost pressures, they got headwind from local governments. In booming cities like Shenzhen, where land was becoming increasingly scarce, light industry companies were no longer welcome. Also polluting and power-consuming industries, such as the production of ceramics, were moved out with more or less gentle pressure.

Companies pursue hybrid strategy
Many companies followed a hybrid strategy. The production of higher quality items  remained in the Pearl River delta, which has recently became named as the Greater Bay Area. The production of mass products, on the other hand, was shifted to cheaper locations. Some manufacturers went to Southeast Asia. Especially in Vietnam many companies found a new home.

This relocation process has been steadily progressing ever since. With the ever-widening trade conflict between the People's Republic of China and the US, it now receives additional impetus. Many investors have been shifting parts of their production from their Chinese production cities to their Southeastern Asian factories since the announcement, at the latest since the introduction of the first tariffs.

This is possible in the short term and to a limited extent, initially without major investments, as long there is still enough free manufacturing capacity in the ASEAN (Association of Southeast Asian Nations). That should be true in most cases. In addition, in the second half of 2018, investors will also withdraw production equipment such as machines from China and send them to Southeast Asia.

Relocation preferably to Vietnam, Malaysia and Laos
At the end of July 2018, the Hong Kong-listed carrier Kerry Logistics reported in the South China Morning Post that its business had noticeably picked up as a result of the trade dispute. The customers would relocate production steps especially to Malaysia, Vietnam and Laos. In the aforementioned countries, an increase in export activity is expected in the second half of 2018.

According to the president of the Hong Kong Young Industrialists Council, the member companies are relocating their production mainly to Malaysia and Vietnam in order to avoid rising costs and the tariff conflict. The CEO of the Hong Kong fashion producer Lever Style told reporters that already now only 50 percent of its production comes from the People's Republic of China. Eight years ago, the quota was still at 100 percent.

This so-called "China Plus One" strategy is therefore a natural development. The companies pursue it for years not only for cost reasons, but also to spread their risk, which now turns out to be the right good one. For China this development is not threatening at this time. The country is aiming for a permanent higher positioning of its industry anyway. As part of the "Made in China 2025" strategy, the People's Republic wants to become the technological world leader even in ten sectors.

But if the accelerated relocation process increases unemployment and stutters the economy, Beijing may be come under pressure. The negative effects of the trade conflict are already being felt. Stock prices plummeted and the Chinese yuan lost significant in value against the US dollar, what could trigger a capital flight.

Source:

Roland Rhode, Germany Trade & Invest www.gtai.de 

Photo: Pixabay
28.08.2018

STRONG INVESTMENT IN NEW HOTELS IN JAPAN

  • Hundreds of new projects planned, especially until 2020

Tokyo (GTAI) - More and more tourists are visiting Japan. The demand for accommodation is increasing accordingly, as is investment in hotel capacities. A number of industries is benefitting from this.
Japan has become a tourist magnet. Arrivals of foreign visitors have been increasing for several years. Tokyo will also attract many curious visitors as the venue for the Summer Olympics 2020. The Land of the Rising Sun is preparing for this. Investments in new accommodations have exploded and existing hotels are being modernized.

  • Hundreds of new projects planned, especially until 2020

Tokyo (GTAI) - More and more tourists are visiting Japan. The demand for accommodation is increasing accordingly, as is investment in hotel capacities. A number of industries is benefitting from this.
Japan has become a tourist magnet. Arrivals of foreign visitors have been increasing for several years. Tokyo will also attract many curious visitors as the venue for the Summer Olympics 2020. The Land of the Rising Sun is preparing for this. Investments in new accommodations have exploded and existing hotels are being modernized.
According to the trade magazine "HOTERES", which regularly reports on the development of the hotel and catering industry, up to 750 new hotels of various categories will be built between 2018 and 2022 according to currently known plans. This should increase the number of rooms by 109,000 units. This includes 600 hotels and more than 90,000 rooms until the Olympic Games 2020.

The Capital needs many new hotel rooms
Tokyo is certainly a focal point, but a number of hotels are also being built in Osaka and Kyoto. The three largest cities of the country form the so-called "golden route" of the tourist flow. They are also important economic centers where business people need accommodation. Not to forget the domestic tourism as a source of income too.
This results in a multitude kind of business opportunities. Apart from the construction industry, hotel operators are looking for new furnishings for hotel rooms and restaurants as well as for entertainment and activity areas. According to Japan Tourism Agency, about three-quarters of the travelers' accommodation used in Japan is western style, followed by about 19 percent in Japanese style.
According to a sector report by the real estate service provider CBRE, a total of around 80,000 new rooms will be built in the country's eight largest cities by the end of 2020. This is 30 percent more than at the end of 2016. Despite the boom in new construction, a shortage of hotel rooms is still expected for Tokyo in 2020.

Extensive investments to be expected
According to statistics from the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), investment costs in hotel buildings have already increased eightfold in 2017 compared to 2012, and the newly built area has increased fivefold. The new building area for hotels reached around 3 million sqm in 2017. With investment costs of around USD 940 billion in 2017, this was more than 50 percent higher than in 2016.

Investments will continue to rise with the many hotel construction projects in the pipeline. Japanese hotel groups, such as Route Inn Hotels and APA Hotels & Resorts, are at the forefront as investors. In addition, Japanese property developers are diversifying into the hotel sector, as the office property portfolio is already showing signs of oversupply.
Another real estate developer, Sumitomo Fudosan, is planning two major hotel construction projects, both scheduled for completion in 2020. These include a hotel at Haneda Airport with approximately 1,700 rooms and a hotel in Tokyo's Ariake area with 800 rooms. The company has not disclosed the investment costs for this.

Selected hotel projects between 2018 and 2021
Hotel Group Number of Projects Homepage
Route Inn Hotels 47 http://www.route-inn.co.jp
APA Hotels & Resorts 35

http://www.apahotel.com/ja_en/

Tokyu Group 28 -
.Tokyu Hotels 5 http://www.tokyuhotelsjapan.com
.Toyoko INN 23

http://www.toyoko-inn.com

Hotel LiVEMAX 24 http://www.hotel-livemax.com
Mitsui Fudosan Group 17 -
.Mitsui Fudosan Hotel Management 9 https://corp.gardenhotels.co.jp
.Mitsui Fudosan 8 http://www.mitsuifudosan.co.jp
Daiwa Group 19 -
.Daiwa Roynet Hotels 14 http://www.daiwaroynet.jp/english/
.Daiwa House 5 http://www.daiwahouse.co.jp
Kyoritsu Hotels & Dormitories 13 http://www.kyoritsugroup.co.jp/en/

Source: HOTERES (as of June, 1 2018)

International chains want to establish themselves more strongly
In addition, some international operators are also interested in hotel openings in Japan. These include, for example, the Best Western Hotel Group. According to an interview in the Nikkei business newspaper of April 30, 2018, it plans to increase its inventory in Japan from 13 hotels at present to around 30 by 2020. The American hotel chain Hyatt is planning to expand its portfolio to ten locations in Japan by 2020.

Marriott International is also already on the market and plans to open its first W-brand hotel in Japan in 2021. This luxury hotel with 337 rooms is to be built by the Japanese construction company Sekisui House. With a luxury hotel of 98 rooms Bulgari wants to expand its presence in Tokyo in 2022. This will be located on the upper floors of a new mixed-use building planned by Mitsui Fudosan in the Yaesu district.

While the international hotel operators focus more on luxury, Japanese hotel investments are more focused on facilities with limited services, such as business hotels. However, in the view of the large flow of visitors this is likely to change somewhat. The experience value and the length of stay are to be increased in order to increase the occupancy and the yield per overnight stay.

Foreign tourists are important guests
After all, the fastest-growing category of guests are foreign tourists, rather than business travelers or domestic tourists. The government expects about 40 million foreign tourists to visit the country in 2020. According to an estimation of the governor the capital Tokyo will be visited by 25 million tourists alone.

At the end of 2017, the Japan National Tourist Organization registered 28.7 million foreign visitors. Over 7 million tourists each from China and South Korea as well as almost 4.6 million tourists from Taiwan came to Japan. With 13.1 million foreign visitors, less than half of the international tourists visited Tokyo exclusively.

 

NIEDERLÄNDER KAUFEN GERNE ONLINE EIN Photo: Pixabay
14.08.2018

DUTCH PEOPLE LIKE TO BUY ONLINE

  • E-commerce to grow by 17 percent in 2018

Berlin (GTAI) - E-commerce in the Netherlands is expected to grow in 2018. The most popular products are media and entertainment. Strong growth was recorded in the food trade.
The Dutch online food trade is gaining momentum, and high growth rates are expected for 2018. Customers also look beyond the borders and shop abroad. However, the online shops with the highest turnover are in Dutch hands.

  • E-commerce to grow by 17 percent in 2018

Berlin (GTAI) - E-commerce in the Netherlands is expected to grow in 2018. The most popular products are media and entertainment. Strong growth was recorded in the food trade.
The Dutch online food trade is gaining momentum, and high growth rates are expected for 2018. Customers also look beyond the borders and shop abroad. However, the online shops with the highest turnover are in Dutch hands.

Dutch people are very open to new technologies. In 2018, around 97 percent of the population (16.8 million people) will have an Internet connection. On average, the 13.9 million online shoppers spend EUR 1,242 a year. In 2018, e-commerce revenue will grow by around 17 percent to EUR 26.3 billion. This is predicted by an investigation of the organization Thuiswinkel. Already in the first quarter of 2018, EUR 6.3 billion were spent online, an increase of 13 percent compared to the same quarter of the previous year. The last quarter of a year with the holidays (Christmas, Santa Claus and Black Friday), in which 30 percent of the annual sales are taken place, is always very promising.

According to the Portal Commercenews online trading amounted to EUR 22.5 billion in 2017, up 13 percent from 2016, accounting for 9.7 percent of the total retail sales, which grew by only 4.2 percent. The e-commerce boom was followed by new company foundations: around 9,200 new webshops were established, but 5,400 were closed too. Most of these webshops also have foreign markets in their view.

Laptops are most commonly used for online purchases, but mobile devices are becoming increasingly popular. 2017 was marked by growing mobile commerce (m-commerce), a further increase is expected in 2018. After all, the country has more mobile devices than inhabitants (110 percent).

Not only the web shops benefit from the booming e-commerce. The Dutch Post is also pleased about the growth. Their e-commerce revenue is estimated at 42 percent of total revenue in 2018 (2017: 34 percent).

Food is bought more frequently online
Demand is focused on the media and entertainment sectors, where some 8.5 million purchases were made in the first three months of 2018. Food and near-food products (goods that are not food but are also available in supermarkets) were in demand in the first quarter of 2018, 42 percent more than in the same period of last year. Although their share of total purchases is still low, experts are already forecasting 3.7 percent in 2018 after 2.9 percent in 2017, when the sales exceeded EUR 1 billion for the first time. The purchases were mainly made at the large Albert Heijn and Jumbo supermarkets. The third important market Picnic, which only operates online, wants to expand into Germany and has already started a pilot project in the Düsseldorf area.

The Albert Heijn supermarket is about to make it even easier for its customers, to receive goods even when they are not at home. It is testing a so-called intelligent key (smart door lock) from Nuki. Customers can use their mobile phones to control who enters the apartment in their absence. By this this way he can let the delivery service in after his call..

Buyers are usually satisfied with their online purchases. Nevertheless, they fear that the goods are not clearly enough illustrated and described, as well as difficulties in returning them and their costs. Web shops can score points if they offer free shipping and fair return options.

The thrifty Dutch also compare when buying on the Internet. According to Ecommerce Foundation, 60 percent look around at multiple merchants before deciding, 53 percent use websites that compare prices or products, half consider other users' reviews on the web and only 8 percent buy spontaneously based on advertising or social media ads (multiple answers possible).

Dutch spend more and more abroad
Around 3.8 million Dutch people bought from foreign webshops in 2017, spending rose by 28 percent compared to the previous year. In 2017, they spent around EUR 1.5 billion on webshops in the European Union. Also Chinese sites with favorable offers are popular. Around EUR 248 million were invested in shops such as Aliexpress, Banggood, Dealextreme, Geekbuying, Gearbest, MiniIn TheBox. The most popular countries were China, the United Kingdom, Germany and the USA.

The most popular payment provider on the Internet is iDEAL. Around 95 percent of customers use the Dutch online payment system, in which several local banks are involved. Its market share is an impressive 57 percent. In 2017, the number of transactions via iDEAL grew by almost 34 percent. Foreign webshops have also joined the system: About one third of the payments went to them.

Most popular online payment methods
(in %, multiple selections possible)
iDEAL      95
Kreditkarte    50
pAYPAL 31
Tikkie 22

Source: Ecommerce Foundation

Many Dutch retailers among top online shops
Many of the most successful online retailers are Dutch companies. Bol, the local online seller with the highest turnover, was able to grow because large e-traders such as eBay or Amazon were not yet present in the Netherlands. Bol developed from a project of the German Bertelsmann Group with a focus on books and DVDs, but is now in Dutch hands and has considerably expanded its offering to other product groups. In 2012 Bol was acquired by the Ahold Group.

The Rotterdam-based company Coolblue launched an online store in 2000. Subsequently, several web shops were opened, each focusing on one product category. A stationary business was added in 2005. Coolblue today sells mainly consumer electronics, white goods and fitness equipment and is the second largest online retailer. The company is known for its excellent customer service.

Wehkamp began as a mail order company in 1952 and sold all articles via its Internet platform before 2000. The Internet pioneer has developed slowly, but has recently invested heavily in order to survive in the Dutch top league.

Like eBay in Germany, Marktplaats.nl in the Netherlands is the marketplace for second-hand goods. Google Shopping achieved strong growth in 2017. The portal is also expected to become the most important comparison portal in the Netherlands in a short time.

Important e-commerce events in the Netherlands
Event Date
Digital Marketing World Forum, DMWF Expo Europe, Amsterdam 19 - 20 September 2018
Savant Supply Chain Congress, Amsterdam 2 - 3 October 2018
Shopper Insights & Retail Activation International, Amsterdam 29 - 31 October 2018

 

More information:
ecommerce Onlineshopping
Source:

Inge Kozel, Germany Trade & Invest www.gtai.de

Shopping malls Photo: Pixabay
24.07.2018

NEW TRENDS IN ITALIAN RETAIL OPEN UP OPPORTUNITIES

  • Franchising takes off, more and more German retail chains discover Italy

Milan (GTAI) - The Italian retail sector is modernizing and the franchise economy is growing. Italian franchise systems are gaining ground. New modern shopping centers, including the largest in Europe, create space for new shops. German retail chains are expanding in many segments, from discount food and other consumer goods to services. Northern Italy is considered a popular test site. High quality and a price advantage are the keys to success.

  • Franchising takes off, more and more German retail chains discover Italy

Milan (GTAI) - The Italian retail sector is modernizing and the franchise economy is growing. Italian franchise systems are gaining ground. New modern shopping centers, including the largest in Europe, create space for new shops. German retail chains are expanding in many segments, from discount food and other consumer goods to services. Northern Italy is considered a popular test site. High quality and a price advantage are the keys to success.

The Italian retail sector is changing. The number of classic corner shops is declining, the modern organized retail trade is growing. The franchise economy in particular is developing positively. Beyond the classical areas such as food and fashion, various Italian franchise systems are spreading more and more visibly in the big cities.
 
According to the industry association Assofranchising, the franchise industry had a turnover of approximately EUR 24.6 billion in 2017. This represents an increase of 2.6 percent compared to the previous year and an increase of 5.7 percent since 2014. With a similar number of systems (929 in Italy, 972 in Germany), the German franchise industry generated almost five times as much turnover. One reason for this is that German franchise systems have on average more than three times as many businesses per franchise.

Development of the franchise economy in Italy
  2016 2017 Change (in %)
Sales (Euro Mio.)  23,930 24,545 2.6
Franchise systems 950 929 -2.2
Businesses 50,720 51,671 1.9
Italian businesses abroad 7,871 10,079 28.1
Italian businesses abroad (min. 3 companies) 169 179 5.9
Foreign systems in Italy 61 71 16.4
Employees 195,303 199,260 2.0
Average size of systems in Italy (number of companies) 53.4 55.6 4.2
Average size of Italian systems abroad (number of companies) 46.6 56.3 20.9

   Source: Rapporto Assofranchising 2018

But the segment is catching up in Italy. Italian franchise systems are expanding, also abroad. Outside Italy, their number increased by around 6 percent in 2017, while their average size (measured by the number of businesses) increased by around 21 percent. The domestic average dimension is also growing. The country is also becoming more attractive for foreign franchisors. In 2017, the number of foreign franchise systems increased by 16 percent. The relevant trade fair is the Salone Franchising, which will take place from October 25th to 27th 2018 in Milan.   

New shopping centers are driving the developments forward
Developments in the retail sector are accompanied by new construction projects. A number of new shopping centers are currently under construction in Italy, creating space for the new generation of franchises and retail chains. The major CityLife project on the former Milan exhibition grounds is a current example. In addition to two of the three planned skyscrapers (including Allianz's new headquarter in Italy), a new shopping center was inaugurated in autumn 2017. Particularly in the catering sector new Italian chains, which are expanding nationwide, can be seen. A new gastronomy floor with restaurants and cafés in the middle price segment was recently inaugurated at the Termini railway station in Rome.

A number of modern shopping centers are still under construction, including the new Westfield Milan. Project operators describe it as the largest shopping center in Europe. With an investment EUR 1.4 billion Westfield Milan is to be inaugurated in 2020. The majority of the new construction projects are located in the larger cities in the north, but Rome and Naples will soon receive new shopping centers also.

Shopping centers under construction in Italy
Designation Investment (Mio. Euro) Area (1,000 sqm) Completion Remarks
Westfield, Milan 1,400 60 2020

http://www.westfieldcorp.com

Maximo, Rome 300 61 2019 Cushman & Wakefield
Emilia Shopping District, Parma 200 74 2019

http://www.sonaesierra.com

Maximall Pompeii, Napoli 150 200 2019

http://www.maximall.it/pompeii

Falcon Malls Cascina Merlata, Milan n.a. 65 2021 http://falconmalls.it
Falcon Malls Concordia, Milan n.a. 131 2021 http://falconmalls.it
Waltherpark Shopping - Bozen 23 k.A. 2021

https://waltherpark.com

    Source: Research of Germany Trade & Invest

Opportunities for German retail chains
Another trend in Italy is the expansion of German retail chains. One growth area is the market for discount foods. According to Nielsen, discounters had a market share of 17 percent of the sold food at the end of 2017. The market leader is Eurospin from Italy, followed by Lidl. In 2018 Aldi opened its first store in northern Italy and by the end of 2018 it is planned to open 45 stores. Lidl is defending itself against its new competitor with planned investments in Italy amounting to EUR 350 mio for a new inner-city store concept. A total of 40 new points of sale are planned, and a further 50 stores are to be modernized.

Both German supermarket chains confirm that a local strategy for Italian gourmets is indispensable. Lidl sources 80 percent of its food products from Italy, while Aldi's share is almost as high at 75 percent.

In terms of price, the recipe for success of the German retail chains is somewhat different from Germany. Although German retailers continue to score with a good price-performance ratio, the focus in Italy is on the mid-price segment.

The latest example is the drugstore chain dm. The first branch was inaugurated at the end of 2017. There are plans to open 100 stores in northern Italy by 2020. dm offers not only a price advantage over its Italian competitors, but also high-quality products. In addition, there are hardly any "one-stop shops" in Italy, which are also drugstores, but also sell beauty products, organic and natural products as well as baby products.   

The Douglas perfumery chain is expanding also in Italy. At the end of 2017, Douglas' parent company completed the acquisition of two of the leading perfumeries in Italy, Limoni and La Gardenia.    

Fielmann is another example of a German chain that has conquered the Italian market in recent years with high-quality products and a price advantage. With entry into the South Tyrol market and ongoing expansion in northern Italy, Fielmann is popular with Italian consumers despite the large competing manufacturers of glasses in Italy due to its price advantages.

Germany's successful model is not limited to food and other consumer goods. The Berlin-based company Flixbus is an example that the concept of quality and price competition can also be successfully applied to the service sector. Flixbus has been in Italy since 2015 and the number of passengers is increasing constantly. In 2017, 40 million Italians were on the road with Flixbus, twice as many as the year before. Italy is the fastest growing market among 26 countries for the company.

More information:
Italy Franchisesysteme Retail
Source:

Robert Scheid, Germany Trade & Invest www.gtai.de

Hong Kong Photo: Pixabay
17.07.2018

CHINESE ALIBABA GROUP BUILDS LOGISTICS CENTER IN HONG KONG

  • Investment costs of USD 1.5 billion
  • State-of-the-art technology to be used

Hong Kong (GTAI) - Chinese e-commerce giant Alibaba wants to build up a global sales network. The Hong Kong Special Administra-tive Region (SAR) plays an important role in its strategy. A 380,000 square meter logistics center is to be built there, in which state-of-the-art warehouse and robot technology will be used. According to the plan, it will be operational by 2023. Foreign specialist suppliers can hope for orders.

The Chinese Alibaba Group is the largest e-commerce provider in the country. Now it wants to ex-pand into other markets. According to the company announcement, more than USD 1.5 billion are to be invested in the development of a worldwide distribution and logistics network.

  • Investment costs of USD 1.5 billion
  • State-of-the-art technology to be used

Hong Kong (GTAI) - Chinese e-commerce giant Alibaba wants to build up a global sales network. The Hong Kong Special Administra-tive Region (SAR) plays an important role in its strategy. A 380,000 square meter logistics center is to be built there, in which state-of-the-art warehouse and robot technology will be used. According to the plan, it will be operational by 2023. Foreign specialist suppliers can hope for orders.

The Chinese Alibaba Group is the largest e-commerce provider in the country. Now it wants to ex-pand into other markets. According to the company announcement, more than USD 1.5 billion are to be invested in the development of a worldwide distribution and logistics network.

The Small Special Administrative Region (SVR) plays a deciding role in its expansion strategy. It is home of the largest cargo airport in the world. According to the Hong Kong Civil Aviation Department, the volume there amounted to almost 5 million tons in 2017. According to the prognosis of the Airport Authority, the state operator, it should reach almost 9 million tons by 2030.

Hong Kong offers decisive locational advantages for international logistics groups and e-commerce providers. According to calculations by the Air-port Authority, around half of the world's population can be reached within five flight hours. As there are no customs duties or VAT and the SVR has an efficient bureaucracy, a fast dispatch is practically guaranteed. This fits into Alibaba's strategy, as the group wants to limit the delivery time for or-ders from abroad to a maximum of 72 hours.

Handling capacity of up to 1.7 million tons of freight
The e-commerce giant therefore wants to set up one of its worldwide distribution centers in Hong Kong via its logistics arm called Cainiao - others are planned in Hangzhou, Dubai, Kuala Lumpur, Liège and Moscow. It should get a size of around 380,000 square meters in size and will be able to handle a maximum of 1.7 million tons of freight. The corresponding investment costs will summarize to around USD 1.5 billion. It is scheduled to go into operation by 2023.

The group informed through the South China Morning Post (which it owns) that the new logistics center will be equipped with state-of-the-art technology. An automatic warehouse and highly efficient air conditioning are planned. According to industry experts, artificial intelligence-based systems and numerous robots will be used.

The project should thus also generate business opportunities for foreign suppliers of building and storage technology. There are hardly any sector manufacturers in Hong Kong itself. There are corresponding producers in China. However, they cannot always offer the most modern and best products and services available on the market. Particularly there is a pent-up demand for software.

Contact addresses
Designation Internet address Note
Alibaba https://www.alibabagroup.com/en/news/article?news=p180606 (homepage); https://www.alibabagroup.com/en/news/article?news=p180606 (project press release) Biggest e-commerce pro-vider in China
South China Morning Post http://www.scmp.com/frontpage/international (homepage); http://www.scmp.com/tech/enterprises/article/2149561/alibaba-affiliate-cainiao-forms-jv-build-us15-billion-logistics
(project review)
Renowned English-language newspaper. Be-longs to Alibaba
Civil Aviation Department https://www.cad.gov.hk/english/home.html (homepage)
https://www.cad.gov.hk/english/facts_statstics.html
(Hong Kong Air Traffic Statistics)
Supreme Aviation Authority Hong Kong

 

Further information
For more information on Hong Kong's economy, industries, business practices, law, customs, tenders, and development projects, visit http://www.gtai.com/hongkong.
The page http://www.gtai.de/asien-pazifik offers an overview of various topics in the region.

Source:

Roland Rohde, Germany Trade & Invest www.gtai.de

Industry Check in Asia Photo: Pixabay
19.06.2018

TEXTILE AND CLOTHING INDUSTRY IN ASIA: GTAI CHECKING THE SECTOR

Every day, GTAI experts observe and analyze the development of the most important German export industries on the world markets. Here you will find summarized information on the textile and clothing industry in Asian markets.
 
GTAI Industry Check - Vietnam
Textile and clothing industry: Vietnam needs more than sewing

Every day, GTAI experts observe and analyze the development of the most important German export industries on the world markets. Here you will find summarized information on the textile and clothing industry in Asian markets.
 
GTAI Industry Check - Vietnam
Textile and clothing industry: Vietnam needs more than sewing
The textile and clothing industry is one of the most important pillars of the Vietnamese industry and accounted for around 6 percent of total exports in 2017 with exports amounting to USD 26 billion. For 2018, the industry is aiming for growth of 7 to 8 percent and exports are expected to rise to over USD 33 billion. In order to comply with the rules of origin of the free trade agreements concluded by Vietnam, the country must achieve a higher added value. Domestic companies such as the Vinatex Group or Garco10, but also foreign companies are increasingly investing in technical innovations and expanding processes such as spinning, weaving and dyeing upstream of pure sewing. In addition, the first companies are beginning to automate their production processes.

GTAI Industry Check - Uzbekistan
Textile and clothing industry: Investments of more than USD 2 billion planned
The industry program for 2017 to 2020 lists around 130 projects with a total value of USD 2 billion. About half of the planned investments are to be
accounted for foreign commitments. The aim is to double the annual output of finished textile products during this period. With an annual production of more than 3 million tons of raw cotton, Uzbekistan is one of the world's largest producers of the white gold. A second industry programme foresees the implementation of five projects for the production of raw silk, silk wadding and silk fabrics and finished silk products between 2018 and 2021. The minimum investments required are estimated at USD 26 million.
 
GTAI Industry Check – Myanmar
Textile and clothing industry: Export strength through low wages
The lifting of sanctions by the EU and the US has noticeably revived the investment climate in the sector, especially as this was linked to the reactivation of the EU's GSP import status (Generalized System of Preferences). Most investors came from China, Hong Kong, Taiwan or South Korea, and Western brands such as GAP, H & M, Primark or Marks & Spencer were also included. Currently, about 400,000 workers are employed in almost 400 factories, mostly geared to CMP (cut-make-pack), including 171 foreign investors and 22 joint ventures. According to the Myanmar Garment Entrepreneurs Association, exports are expected to have increased by 40 percent to over USD 3 billion by 2017. For the first time the largest customer was the European Union, primarily Germany, ahead of Japan and South Korea.

GTAI Industry Check – Georgian Republic
Textile and clothing industry: Several expansion projects planned
The apparel industry produces garments for up to USD 70 million annually. The main products manufactured are international brands for export. Several new projects in the industry are in preparation. For example, the Turkish jeans manufacturer Baykanlar Textil plans to build a factory for the production of brand jeans in Ozurgeti by the end of 2018. A total of USD 15 million will be invested in the project. The Romanian company MGMtex, a subsidiary of the Swiss company Ottorose, is planning to start production of branded clothing in Kutaisi in cooperation with a local partner. The investments for the first and second project phases amount to more than USD 1.5 million. For the procurement of equipment, the company benefits from subsidies from the state program Produce in Georgia.

GTAI Industry Check - Turkmenistan
Textile and Clothing Industry: Investments of around 300 million US dollars planned
The textile and clothing industry represents 20 percent of Turkmenistan's industrial production and 30 percent of its manufacturing industry. A good USD 300 million will be invested in 2018 to 2020/21. The project list includes the construction of a large textile complex for the annual processing of up to 5,000 tons of fine-fibred cotton into semi-finished and finished products. Start March 2021; contractor: Cotam Enterprises Ltd, British Virgin Islands/Turkey) and a factory for the annual production of 6,000 tons of cotton yarn (2019/20, Hilli yol), the modernization of a textile factory (Daschogus), a cotton spinning mill (Tachtabasar) and a factory for medical wadding and cosmetic cotton (Ashgabat; 2018/2019 each). The potential of medical textiles, cotton fabrics, man-made fibers and the processing of wool and cocoons is still little used.
 
GTAI Industry Check – Azerbaijan
Textile and clothing industry: Light industry business park attracts investors
Azerbaijan launched several projects to revive the industry (output in 2017: USD 100 million). An industrial park for light industry has been under construction in Mingachevir since autumn 2016. Nine new factories are planned for cotton, acrylic and woolen yarn, clothing, hosiery and leather shoes. The project is worth up to USD 150 million. The first factory for the annual production of 20,000 tons of yarn is under construction. Under the umbrella organization for the Azerkhalcha carpet weaving mill founded in 2016, ten further smaller factories will be put into operation in 2018. Gilan Textil Park, Sumqayit, wants to expand its exports of home textiles. In the medium term, the construction of a silk spinning mill with an annual capacity of 3,000 tons of yarn is also planned.
 
GTAI Industry Check - Armenia
Textile and clothing industry: interest from abroad increases
Rising exports of clothing to Russia and western markets lead to expect further investments in the textile and clothing industry in 2018. Italian investors are planning to build a large jersey factory in Kapan (Sjunik region). The company SASSTEX in Artik (Schirak region) invests in two factories for the production of fashion (ZARA brand) and workwear. The Egyptian Wassef Group is considering the production of cotton fabrics and products therefrom. Yerevan-based hosiery and children's apparel manufacturer Alex Textile will continue its USD 28 million investment program in 2018 to expand apparel and hosiery production at several sites in Armenia.

More information:
Asia Export
Source:

Germany Trade & Invest www.gtai.de

Photo: Pixabay
29.05.2018

ITALIAN FASHION INDUSTRY ON COURSE FOR INNOVATION

  • FOCUS ON DIGITIZATION AND SUSTAINABILITY

Mailand (GTAI) - The Italian fashion industry is changing. The digitalization of production and the growth in online trading are forcing a rethinking in the traditional sector. The topic of sustainability is becoming increasingly important. Against this background, Italian fashion houses are increasingly investing in their future strategies. German companies see good business opportunities as technology partners.

The Italian fashion industry is one of the core sectors of the Italian economy. In 2017, the sector increased its sales by 2.4 percent to EUR 54.1 billion, as reported the industry association Confindustria Moda. For 2018, the association expects a further increase of 2.6 percent to EUR 55.4 billion. The goal is to exceed the EUR 60 billion by 2020.

  • FOCUS ON DIGITIZATION AND SUSTAINABILITY

Mailand (GTAI) - The Italian fashion industry is changing. The digitalization of production and the growth in online trading are forcing a rethinking in the traditional sector. The topic of sustainability is becoming increasingly important. Against this background, Italian fashion houses are increasingly investing in their future strategies. German companies see good business opportunities as technology partners.

The Italian fashion industry is one of the core sectors of the Italian economy. In 2017, the sector increased its sales by 2.4 percent to EUR 54.1 billion, as reported the industry association Confindustria Moda. For 2018, the association expects a further increase of 2.6 percent to EUR 55.4 billion. The goal is to exceed the EUR 60 billion by 2020.

But the sector is developing inconsistently. Sales of intermediate products such as fabrics have been stagnating for years, while sales of end products such as clothing, shoes and bags are increasing. Both areas grew in 2017. End products (+2.9 percent) continue to be more successful than primary products (+2.2 percent). The main reason for the positive development of the fashion industry in recent years is the strong export demand for Italian products. In 2017 exports rose by a total of 3.5 percent and exceeded the EUR 30 billion mark for the first time.

The main export hits are clothing (one third of fashion exports), leather goods (around 20 percent) and shoes (around 18 percent), followed by fabrics (9 percent) and home textiles (9 percent). Sector representatives are concerned about developments in some important sales markets. Exports to the USA and Japan declined in 2017, the rising demand from China and Russia could not compensate these losses.

Significant rise in fashion imports
Domestic demand for fashion stagnated in 2017, while significantly more preproducts from the Far East and end products from industrialized countries were imported. Overall, imports increased by 2.2 percent to EUR 21.1 billion in 2017, Confindustria is expecting a further increase of 2.4 percent in 2018.

Germany is one of the most important markets for Italian fashion manufacturers; Italian shoes and bags are particularly popular with German customers. In return, Germany, with imports worth EUR 1.3 billion (plus 4.1 percent), ranked fourth as a supplier country in 2017, behind China, France and Spain. Clothing accounts for about half of German fashion imports and textiles for the other half. Germany is an important supplier of technical textiles, including sports goods and for the automotive industry.

Many companies strengthen their online presence  
The digitalization of the Italian industry does not stop at the fashion industry either. Thanks to the new technologies, traditional manufacturers can increasingly reach their customers directly without intermediaries.

How well this works was demonstrated by the Italian start-up company Yoox, an online luxury fashion retailer. Founded in 2000, the company merged with the French online fashion company and strong competitor Net-a-Porter in 2015. The Group is now active in 180 countries and generated sales of EUR 2.1 billion in 2017.
Many companies are strengthening their online presence and using their stores primarily as showcases to promote brands or new collections. The company Beste with the still new brand for men Monobi is an actual example. The traditional fashion houses Loro Piana and Zegna have been active in this direction already for several years.

Industry 4.0 sets impulses
Digitalization also makes new production processes possible for fashion houses. The networking of machines reduces production times, increases efficiency and reduces electricity and water consumption. In addition, manufacturers get the opportunity to offer tailormade solutions. Digitalization also ensures through just-in-time concepts that inventories and sales areas can be reduced, which leads to falling costs.

Well-known Italian fashion houses are investing heavily into the future. The luxury company Gucci has invested around EUR 100 million in a new innovation center, the so called ArtLab, in the greater Florence area. The company Beste has started two research projects in the field of Industry 4.0. The intensive research focuses on the development of new, environmentally friendly materials and the development of a digital platform for the planning, production and distribution of garments.

Sustainability is increasingly becoming a sales argument
The topic of sustainability is becoming increasingly important. The National Chamber of Italian Fashion (CNMI), for example, organizes discussion rounds on the subject. The fashion house Ferragamo has presented a sustainability plan to reduce greenhouse gas emissions and energy consumption. A new development by Ferragamo is also a sustainable fabric made from orange peels.

Gucci, Armani, Bulgari, the list of the world-famous Italian fashion companies is long. At the same time, Italy also has a large number of small and very small companies in the fashion sector. In 2017, the average number of employees in the companies was 9. Small and medium-sized com-panies also rely on sustainability.

The major Italian bank Unicredit, together with the European Investment Bank, is providing low interest loans for small and medium-sized fashion companies (up to 250 employees) for relevant investments. Similar programs are provided by the major bank Intesa Sanpaolo.

Source:

Robert Scheid, Germany Trade & Invest www.gtai.de

ETHOPIA CAN SET UP FURTHER TEXTILE FACTORIES Photo: Pixabay
15.05.2018

ETHOPIA CAN SET UP FURTHER TEXTILE FACTORIES

  • Sudanese and Chinese investors want to secure raw material supplies

Nairobi (GTAI) - Ethiopia has further successes in attracting textile companies: One British company is planning to invest USD 100 million, one Chinese company even plans to invest USD 220 million. This means that the textile sector is increasingly becoming a self-starter, as donors increasingly want to supply domestic industry with pre-products. Meanwhile, those who invest should not only raise the financial means, but also the raw material cotton, according to market experts.

  • Sudanese and Chinese investors want to secure raw material supplies

Nairobi (GTAI) - Ethiopia has further successes in attracting textile companies: One British company is planning to invest USD 100 million, one Chinese company even plans to invest USD 220 million. This means that the textile sector is increasingly becoming a self-starter, as donors increasingly want to supply domestic industry with pre-products. Meanwhile, those who invest should not only raise the financial means, but also the raw material cotton, according to market experts.

The Ethiopian textile and clothing market has two new entrants: the British Intrade Co. UK Ltd. and the Chinese Wuxi No. 1 Cotton Investment Co. Ltd, Intrade intends to build a textile and clothing factory in the Mekelle Industrial Park (Tigray Regional State), which was opened in July 2017. Initial cost estimates are around USD 100 million. Intrade is an offshore company of the Sudanese Mahgoub-Sons Group. The company has reached an agreement with the Ethiopian Investment Commission to invest USD 200 million in three projects. The textile project is to be completed in 16 months.

Security of supply for cotton is becoming an issue
The Sudanese group is not only interested in textile production, but also with lucrative supply transactions for its own cotton. They have the capacity to supply 500,000 tons of long staple quality cotton annually, Wagdi Mirghani Mahgoub, Managing Director of Intrade says. The supply of raw cotton has become an increasing problem for the emerging Ethiopian textile industry since some Asian countries ordered export stops for the raw material, including the PR China and India. The African Plantation, which cultivates 33,000 hectares of agricultural land in Sudan, also belongs to the Mahgoub-Sons Group.

However, Wuxi No. 1 Cotton Investment has announced the second and larger textile investment of 2018: a textile factory will be opened shortly in the Dire Dawa Industrial Park. In a first phase, USD 80 million are planned, followed by further investments totaling USD 140 million. The company intends to install state-of-the-art textile machines to produce and supply goods for the demanding markets in Europe, Japan, South Korea and Southeast Asia. According to their own statements, partners are leading world machinery brands. Wuxi is already pursuing a project in the Ethiopian city of Adama and also has plans to grow cotton in Ethiopia.

Ethiopia is considered the first textile address in Africa
"Clothing companies are nomads," an industry consultant knows, "they go where it is cheapest for them. If wages and ancillary costs rise too much in countries like Bangladesh or the PR China, the caravan moves on." South of the Sahara, only Mauritius has made a name for itself as a producer of high-quality clothing. Attempts to establish larger-scale textile and clothing companies in Namibia and Lesotho have so far been unsuccessful. Meanwhile, Kenya and Ghana have production conditions that are far too expensive.

Ethiopia offers several advantages at the same time: Wages and ancillary costs are extremely low and far below those in China. The US Centre for Global Development found out that a worker in Ethiopian sweatshops earns an average of USD 909 a year. In Bangladesh, however, it is US$ 835 and in Tanzania and Kenya even US$ 1,776 and US$ 2,118 respectively. Another advantage: Ethiopian seamstresses are considered to be extremely hardworking and reliable. In addition, there is a tradition in textile and clothing production as well as in leather processing and thus there is a basic pool of trained specialists.

Infrastructure is making huge progress
Meanwhile, the supply of domestic cotton and leather needs to be expanded, because in the drought years 2016 and partly 2017 the supply of cotton was insufficient. The government is cooperating and is increasingly listening to the needs of producers. The infrastructure is currently undergoing sustained improvement, in particular the transport routes to the neighboring seaport of Djibouti, from where Europe can be reached more quickly than from the Far East. And, last but not least, the Ethiopian capital Addis Ababa has a capable air traffic hub with a dozen direct flights to the EU, including Frankfurt and Vienna. In addition, there is a modern air freight center.

Just as important as the delivery routes are the comparatively modern production conditions in the newly emerging industrial centers throughout the country. Everything here is "Made in China": fences, access controls, roads, electricity and water supply, waste and sewage disposal, workers' settlements. From a European perspective, this may look like Chinese dominance, but from an Ethiopian perspective it creates jobs, feeds families and earns foreign exchange. Under better working conditions than in Bangladesh, experts mean.

According to the ideas of the Ethiopian government, the country is undergoing a transformation process: away from an agrarian-based economy and towards an industrial state. By 2025, the country is expected to reach middle-income status and to become Africa's largest industrial production hub. To achieve this, Ethiopia is investing heavily in roads, railways and power generation, health and education, urban and rural development and the creation of industrial clusters.

Customs advantages in the USA and Europe
Ethiopia has so far benefited from the African Growth and Opportunity Act (AGOA) of the USA, which, for example, allows savings of 16.8 percent in import duties on cotton trousers and 30 percent on synthetic shirts. Ethiopia also has duty-free access to the EU market under the Everything but Arms initiative. Fears that US President Donald Trump might stop AGOA have not yet come true.

Ethiopian exports of textiles, clothing and leather products
(including footwear; in US$ millions)

SITC-Commodity Group
 2014 2015 2016
61 Leather and leather goods    97.51    98.20
78.63  
65 Yarn, fabrics, finished textile products and related articles  39.34  39.12 29.61
84 Clothing and apparel accessories  55.53  77.94  68.25
85 Shoes         
 33.88
 37.69  43.80
Total 226,26 252,95  220,2

Source: Comtrade

German exports can be expanded
German sales representatives of technology for the textile, clothing and leather industry are not yet well positioned in Ethiopia. According to preliminary figures from the Federal Statistical Office (SITC 724), only EUR 2.84 million of relevant technology where sent to Ethiopia in 2017, though 169 percent more than in the previous year.

Ethiopian imports of machinery, equipment and parts for the textile and leather industries
(SITC 724; in USD millions)

Supplying Country 2014    2015 2016
Total 131.30 170.51 111.10
.. PR China  43.87  42.40 62.07
..Italy 6.38 11.75 11.72
..Japan 4.40 10.11 6.89
..Turkey   4.86 19.14 4.92
..Other Asian countries, not specified 1.85 1.87 4.11
..India  6.07 6.49 3.06
..Germany 9.22 9.08 2.44

Source: Comtrade

 

Source:

Martin Böll, Nairobi (GTAI)

Foto: Pixabay
08.05.2018

IN INDONESIA DEMAND FOR TEXTILE MACHINERY STAGNATING

  • Clothing exports stagnate
  • Shoe production becomes more important
  • Investment in modern technology necessary

Bonn (GTAI) - The Indonesian textile industry faces strong regional competition. Since their demand for machinery and clothing exports peaked about five years ago, the industry's exports have stagnated. Nevertheless, the archipelago is important for international market participants at least as a second location alongside the major producing countries. In the meantime, the country has developed into an important shoe manufacturer and is further expanding its production capacities.

  • Clothing exports stagnate
  • Shoe production becomes more important
  • Investment in modern technology necessary

Bonn (GTAI) - The Indonesian textile industry faces strong regional competition. Since their demand for machinery and clothing exports peaked about five years ago, the industry's exports have stagnated. Nevertheless, the archipelago is important for international market participants at least as a second location alongside the major producing countries. In the meantime, the country has developed into an important shoe manufacturer and is further expanding its production capacities.

Indonesia is one of the top 15 clothing exporters. Over the past decades, the archipelago has continuously increased its production and thus created a growing demand for textile machinery. But the market has been stagnating for five years: exports are at around USD 7.5 billion per year, and imports of textile machinery have fallen from USD 1 billion per year to only around 800 million US dollars.

The most important supplier of textile machinery is the PR China, which has expanded its import share to around 30 percent in recent years and displaced Japan from first place. According to Indonesian import statistics, the German delivery ratio fluctuates by 10 percent.

The Indonesian textile association API cites the lower demand for clothing, especially from the USA and Europe, as the reason for the weak export development. About half of industry exports goes to North America. The largest customers are Japan, Germany, South Korea and the United Kingdom. What the association does not say: Bangladesh, Vietnam, India, Cambodia and Myanmar have all significantly increased their clothing exports in the past five years.

Indonesia's import of textile machinery *) (in USD million)
2007 360.5
2008 580.9
2009 339.9
2010 641.1
2011 952.1
2012 1.021.7
2013 973.8
2014 940.2
2015 804.3
2016 822.9

*) SITC 724
Source: UN Comtrade

Shorter production cycles
Indonesia's textile companies must therefore invest in order to remain competitive. Even though, according to API, more than half of the member companies are already technologically advanced, many market participants still have an outdated machinery. And especially against the background of fiercer competitive conditions, this is a decisive disadvantage. According to the association, larger fashion chains insist on ever shorter delivery times. Where the producers used to have three months, today it is only three weeks.

Regional competition is also a problem for manufacturers. The archipelago has good conditions for a labor-intensive industry such as the textile industry. Wages are low - outside the conurbations - and the labor supply is inexhaustible (also because many men work as sewers in the factories). Nevertheless, the country has not yet managed to become serious competition for the main export countries of cheap mass-produced goods.

Indonesia's import of textile machinery by supplier countries *) (in USD million; Change in % compared to previous year)
  2014 2015 2016 Change
PR China 279.4 269.2 524.7 -5.4
Taiwan 79.7 86.8 98.3 13.2
Germany 104.5 68.4 93.6 36.8
Japan 163.7 91.3 85.1 -6.8
Korean Rep. 60.5 65.8 57.0 -13.4
India 48.3 43.1 42.6 -1.2
Singapur 37.1 33.4 41.3 23.7
Italy 47.1 39.1 36.3 -7.2

*) SITC 724
Source: UN Comtrade

The archipelago also has locational disadvantages: it is further away from the European sales markets than other manufacturing countries and has a greater distance to China also, which, due to the high wage increases, is increasingly relocating its clothing production to its immediate neighbors. Moreover, in Indonesia, which is comparatively wealthy due to its large raw material exports, the minimum wages of India, Cambodia, Bangladesh or Myanmar cannot be undercut.

Asia's top clothing exporters 1) (USD billion;
change 2016 compared to 2011 in %)
  2011 2016 Change
PR China 153.7 158.2 2.9
Bangladesh 19.2 29.5** 53.6
Vietnam 13.1 22.9** 74.8
India 14.7 17.9 21.8
Indonesia 8.0 7.5 -7.1
Cambodia 4.0 6.6** 65.0

1) SITC 84; 2) Mirror statistics of partner countries
Source: UN Comtrade

Investments at previous year's level
After all, Indonesia has managed to become an important second location for international apparel companies, mitigating risks in major manufacturing countries. Most of the manufacturers are located in populous Java. For the government, further expansion of the industry is important in order to bring the large number of unskilled workers to work.

According to the latest available data from the Federal Statistical Office (BPS), the number of employees in the roughly 2,600 medium and large companies in the sector has increased from 470,000 (2008) to 550,000 (2014). In addition, there are just under 210,000 workers in small and micro companies (2015), most of whom are one- or two-person businesses.

The BKPM investment agency reports FDI of USD 184 million for the first half of 2017 for 494 projects. This corresponds almost exactly to the sum of the same period of the previous year. For the full year of 2016, USD 321 million of FDI had flowed into the sector.

Shoe manufacturers expand capacities
The domestic footwear industry is developing far more dynamically than the textile industry. Indonesia has become the third most important exporter in terms of cheap mass production in a few years, but it is far behind China and Vietnam. After all, the corresponding exports between 2011 and 2016 have steadily increased from USD 3.3 billion to USD 4.6 billion.

Asia's most important footwear exporters 1 (in USD bn, change 2016 compared to 2015 in %)
  2011 2016 Change
PR China 41.7 47.2 13.1
Vietnam 6.7 13.0** 93.5
Indonesia 3.3 4.6 40.5
India 2.1 2.7 31.4

1) SITC 82; 2) General Statistics Office of Vietnam
Source: UN Comtrade

And the signs are still on expansion: In the first six months of 2017, the leather and footwear sector had FDI of USD 187 million, a third more than in the total year 2016. Domestic market participants are also expanding. The Indonesian manufacturer SCI is currently building a new production facility in the central Javanese Salatiga, near the port city of Semarang. It should be completed in October. In the first phase 300,000 to 500,000 pairs of shoes per year could be produced, the maximum capacity is 1 million pairs.
 

Source:

Frank Malerius, Germany Trade & Invest www.gtai.de

THE POLISH FURNITURE INDUSTRY CONTINUES TO INVEST Photo: Pixabay
01.05.2018

THE POLISH FURNITURE INDUSTRY CONTINUES TO INVEST

  • Exports increase
  • Domestic demand rises

Poland strengthens its position as a major furniture producer. Many companies are expanding their capacities. The industry structure is very fragmented. Among the small to large companies, a certain consolidation trend is noticeable. There are also numerous micro-companies on the market. Furniture exports are expected to increase again in 2018, and the demand for housing, office and shop fittings is also growing in the country itself.

  • Exports increase
  • Domestic demand rises

Poland strengthens its position as a major furniture producer. Many companies are expanding their capacities. The industry structure is very fragmented. Among the small to large companies, a certain consolidation trend is noticeable. There are also numerous micro-companies on the market. Furniture exports are expected to increase again in 2018, and the demand for housing, office and shop fittings is also growing in the country itself.

Poland is an important producer of furniture that is heavily exported, especially to Germany. The producers are expanding their capacities: For example, at the end of October 2017 the Austrian company Egger started construction of a large chipboard factory in the south of Biskupiec (Bischofsburg), which is scheduled to start operations in the fourth quarter of 2018. It is being built on 85 hectares of land within the Warmia-Masuria Special Economic Zone (SEZ) and is expected to produce around 650,000 cubic meters of slabs annually.

The value of this investment amounts to almost EUR 240 million. The products are intended for both domestic and foreign customers. They should meet strict environmental standards and be up to 30 percent of recycled wood. 400 new jobs will be created in the new factory itself and another 600 will be created in cooperating companies.

An important buyer of chipboard will be the furniture industry, which also invests by itself. According to the daily Rzeczpospolita, the company Meble Wojcik plans to build a production facility as well as a warehouse and logistics warehouse for a total of EUR 12 million. These are to be equipped with automated production lines and logistic equipment. In addition, the further development of the IT system is planned so that the production can be adapted very fast to individual customer requirements. The investment project will create at least 120 jobs. The sales of Meble Wojcik in 2017 amounted to more than EUR 100 million.

New sawmill planned
A project of comparable value is being undertaken by the manufacturer of upholstery furniture DFM, which wants to produce wood frame elements in Dobre Miasto (Guttstadt). A modern sawmill is being built there, the construction elements of which are not only intended for DFM itself, but for other customers also.

The furniture manufacturer Szynaka Meble wants to raise more than EUR 5.3 million to build a new warehouse in Ilawa (German Eylau). There 30 employees will be employed. Among other things, the procurement of a modern software for material management is planned.

The six plants of Szynaka Meble produced furniture worth around EUR 235 million in 2017 (on a zloty basis) +5 percent compared to 2016. For 2018 the company expects a growth of 15 percent, mainly due to increased exports to North America, where it intends to sell one-fifth of its production.

Location of the Meble Wojcik, DFM and Szynaka Meble projects is also the Warmia-Masuria SEZ, located in a wood rich area. According to press reports, the manufacturer of shop fittings Modern-Expo plans to build a factory in Lublin. In the first three quarters of 2017, the Polish furniture industry invested a total of around EUR 200 million, according to the main office of CIS. On a zloty basis, the amount stagnated compared to the same period of the previous year.

The sector structure is fragmented
The furniture industry plays an important role in the Polish industry. Around 25,800 companies in Poland are involved in the manufacture of furniture and interiors. Nevertheless, elements and components are also imported, including from Germany. More than 90 percent of the companies are micro-companies, which, according to the market research firm B + R Studio, together however account for 10 percent of the domestic sales only. Only about 90 companies are classified as being large. Together with the approximately 320 medium-sized companies, they sell about three quarters (76 percent) of the relevant products. Small businesses account for a part of 14%. According to CIS at the end of 2017 there were around 161,000 employees in the furniture industry, around 6,000 more than the year before - (+4 percent).

Turnover of Polish furniture manufacturers (in EUR billion)
2013 2014 2015 2016 2017 1)  2018 2)
7.5 8.4 9.3 10.0 10.5 11.1

1) Estimation; 2) Forecast

Source: B+R Studio

For 2018 B + R Studio expect total domestic sales of more than EUR 11 billion, which represents a 3.1% increase on Zloty basis compared to 2017. For years the market leader has been the Polish subsidiary of the Swedish Ikea Group, with revenues of around EUR 1 billion in 2016. Far off is the domestic group Black Red White, which raised a total of EUR 335 million in 2016. It estimates its turnover in 2017 at around EUR 400 million (on Zloty basis +16 percent); the export share is 35 percent.

The company Nowy Styl, which specializes in office furniture and chairs, comes third, with revenues estimated at EUR 340 million in 2017 (+8 percent compared to 2016). The mattress manufacturer Correct follows with a turnover of EUR 291 million in 2016, ahead of the stock exchange listed company Fabryka Mebli Forte with EUR 252 million, which aims to reach EUR 400 million revenues for 2020. Forte will take its 5th factory in operation in late 2019 / early 2020, increasing its production capacity to 6.5 million pieces of furniture annually.

Of importance is also the manufacturer of upholstery furniture Com.40 Limited. Seating is by far the most important category of furniture produced in Poland, accounting for almost half of the total sales.

Exports revive
According to the B + Studios the furniture exports are expected to rise to EUR 10.6 billion in 2018. On a zloty basis this means an increase of about 2 percent compared to 2017 with an estimated EUR 10.1 billion, when the exports fell by 1 percent. Domestic demand for furniture is also increasing thanks to residential and commercial property construction. The increasing purchasing power of the population also makes it possible to replace old facilities with new ones. Imports complement the offer of domestic industry.

Furniture sales in Poland (in EUR billion)
2013 2014 2015 2016 2017 1) 2018 2)
1.2 1.2 1.3 1.3 1.4 1.5

1) Estimation; 2) Forecast

Source: B+R Studio

The industry is suffering from an increasing labor shortage, which leads to higher wages. According to CIS, the average gross wages in 2017 were EUR 833 per month compared to EUR 738 in 2016. On Zloty basis, this corresponds to a nominal growth of 7.3 per cent.

Contact addresses:

Ogolnopolska Izba Gospodarcza Producentow Mebli (OIGPM)
(Polish Chamber of Commerce of Furniture Producers)
Contact: Michal Strzelecki
Al. Stanow Zjednoczonych 51, pok. 614
04-028 Warszawa, Polen
T +48 (0)22 517 78 39
oigpm@oigpm.org.pl
http://www.oigpm.org.pl

B+R Studio Analizy Rynku Meblarskiego
Market research institute for the furniture market:
Head of the Analysis Department: Martin Czyrnia
MD Connect Sp.z o.o.
ul. Oleska 35
46-380 Dobrodzien, Polen
T +48/507 96 66 23
brstudio@brstudio.eu
http://brstudio.eu

Furniture producers     Internet addresses
Egger      http://www.egger.com
Meble Wojcik http://www.meblewojcik.com.pl
DFM http://www.dfm.com.pl
Szynaka Meble http://www.szynaka.pl


 
  

More information:
Poland Furniture market
Source:

Beatrice Repetzki, Germany Trade & Invest www.gtai.de

Furniture market in France Photo: Pixabay
24.04.2018

FURNITURE MARKET IN FRANCE IS GROWING VIGOROUSLY

  • Sales of Kitchens and Beds is outperforming
  • E-commerce puts pressure on the Sector

Paris (GTAI) - Furniture sales in France rose sharply in 2017 for the third year in a row, although the record level of 2011 has not yet been reached. This is reported by the association FNAEM in its annual balance sheet and refers to the close connection with the booming housing market. This also should push the furniture sector in 2018.

  • Sales of Kitchens and Beds is outperforming
  • E-commerce puts pressure on the Sector

Paris (GTAI) - Furniture sales in France rose sharply in 2017 for the third year in a row, although the record level of 2011 has not yet been reached. This is reported by the association FNAEM in its annual balance sheet and refers to the close connection with the booming housing market. This also should push the furniture sector in 2018.

After growth rates of 2.4 and 2.3 percent in 2015 and 2016 the French furniture market has again achieved a stable growth of 2 percent in 2017. According to the FNAEM Federation (Federation française du negoce de la ameublement et de equipement de la maison), the market developments are closely linked to the housing and real estate markets. According to the association, every third furniture purchase was made by a household that has moved within the last 24 months.
 
In 2017 16 percent more homes were built in France compared to the previous year. By the end of October 2017, the real estate market also had also registered 16 percent more transactions. The FFB (Federation française du batiment) expects a strong total construction activity again but with a slight decline of 2.5 per cent in the construction of new housing in 2018.

The development of the overall economy and the political environment also have a strong influence on the furniture market. For example, the presidential elections and the change of government in France led to an initial uncertainty among consumers and delays in the awarding of public contracts. Sales of furniture initially developed weakly in the first half of 2017, but then all the more dynamically.

Furniture market in France 2017
  Sales 2017 (in Euro billion) Change  2017/16 (in %) Share (in %)
Kitchen furniture 2.57 4.0 26.3
Upholstered furniture (sofas, armchairs and benches) 2.42 2.3 24.8
Beds 1.34 3.0 13.8
Bathroom furniture 0.24 -1.6 2.5
Garden furniture 0.13 2.0 1.4
Other home furniture (tables, chairs, chests, drawers) 3.06 0.1 31.2
Total 9.76 2.0 100.0

Source: IPEA (Institut de prospective et d'etudes de l'ameublement)

Most strongly grew the kitchens segment in 2017, whereas in recent years in particular bedroom furniture led the sales. Kitchens are particularly benefiting from the improving housing market and a continuing trend in French households to pay more attention to kitchen equipment.

Fitted kitchens gain market share
According to an analysis by the market research company IPEA (Institut de prospective et d'étes de l'ameublement), only 60 percent of households in France have fitted kitchens, much less than in other Western European countries (Germany: around 80 percent). This difference promises good growth rates for this segment for years to come.
According to the market researchers, the gap between the well-running segment of sofas and armchairs over benches is increasing in favor of upholstered furniture. Above all, folding sofas, which are always offered cheaper, continue to make competition to banks.

Other home furniture such as tables, chairs or chests, which continue to make the majority of the market, were, according to the FNAEM association, unable to make up much ground in retailing compared to kitchens and beds in 2017. Also, in 2018, according to the association's expectations, there will be no signs of recovery. According to FNAEM at most the online trade should continue to grow in the home furniture segment.
The sales of garden furniture benefited from warm weather periods in spring 207, which extended the sales season. According to IPEA bathroom furniture could not fully benefit from the upturn in the housing market in 2017. The business often depends on the hardware stores, which often promote low-cost products. Installers would have sold less bathroom furniture in favor of heating systems.
 
Good sales forecasts for beds
The bedroom segment, the leader in growth in recent years, has developed less strongly in 2017. IPEA attributes this to a tougher competition with more price promotions. Lower prices had slowed the sales despite good volumes. The buyers continue to ask for larger beds sizes with a width of 160 cm.

According to a study by the market research firm Xerfi, the bedding segment is expected to grow steadily by 3.3 percent per year until 2019, supported by the housing market and higher disposable income. French consumers would also exchange their mattresses now more often. According to the trade Frenchmen buy a new mattress every 14 year, whereas this happens in the US every eight years. The association of the mattress industry calls 13,5 for Germany.

Retailers operate multichannel strategy
However, the competition in the bed and mattress market is growing, above all due to the success of e-commerce. Online mattress suppliers such as Casper from the USA (with production in Germany), Tediber and Ilobed from France or Simba and Eve Sleep from the UK have launched massive advertising campaigns in France. According to estimations of the providers, they now have reached a market share of about 5 to 6 percent in the mattress segment.

The stationary trade with furniture stores like Ikea, Conforama or But and the bed specialists Maison de la literie, Compagnie du lit or Litrimarche defend themselves against the pure on-line offerors. All major retailers now operate a multichannel strategy, meaning that they try not only to sell in their furniture stores but also via their own online channels. At the same time the shops are upgraded by events, more advice or more frequently changing exhibitions.

Leading in France are the large furniture stores Ikea, Conforama and But. Market leader Ikea claims a market share of 19.4 percent in 2017. Conforama and But did not publish any shares for 2017 but came to 16.1 and 13.4 percent respectively in 2016. According to estimates by IPEA, online commerce accounts for a total market share of around 12 percent. Half of this is accounted for by pure online providers and internet sales by conventional, previously purely stationary, providers.

Ikea aims for a 10 percent online share in France. Conforama claims to already generate 10 percent of its sales via the Internet. However, the company also offers entertainment and household electronics. Of the online furniture purchases, 82 percent are still being picked up at the stores. Conforma wants to do justice to this with additional furniture markets in the low-price segment. At the same time, other sales rooms should be created in which new furnishing ideas will be presented.

Furniture retail in France by sales channel 2017
  Sales 2017 (in EUR billion) Change 2017/16 (in %)
Furniture stores 4.91 +0.9
Kitchenhouses 1.30 +6.0
Furniture stores, medium segment 1.02 +1.4
Luxury furniture stores 0.37 +2.0
Craft 0.33 -0.4
E-Commerce, catalog-trading and others 1.83 +3.3
Total 9.76 +2.0

Source: IPEA

Conforama joined the French online pioneer Showroomprive.com in 2017 as an investor, hoping to gain expertise in online marketing. Due to the impending bankruptcy of the South African parent company Steinhoff Conforama sold its shares in early 2018 to the supermarket chain Carrefour.

However, the company intends to take advantage of the increased customer interest in the bedding segment with a new high-end store chain under the brand "Il etait une nuit" and is buying additionally more smaller bed houses. The chain But was for a long time for sale until it was taken over in mid-2016 by the third largest furniture retailer Lutz from Austria together with financial investors.

Contacts
Name Internet address Comments
AHK Frankreich http://frankreich.ahk.de Advises on entering the market in France
Federation française du negoce de l'ameublement et de l'equipement de la maison (FNAEM) http://www.fnaem.fr Association of the furniture trade
Union nationale des industries de l'ameublement français http://www.ameublement.com Association of the French furniture manufacturers


      

More information:
France Furniture market
Source:

Peter Buerstedde, Germany Trade & Invest www.gtai.de. Translation Textination.

German Shopping Miles attract Turkish Merchants Photo: Pixabay
10.04.2018

GERMAN SHOPPING MILES ATTRACT TURKISH MERCHANTS

  • Companies expand branch network

Bonn (GTAI) - Thanks to the constantly good economic situation, the Germans are in best consumer mood. Turkish retailers also want to benefit from this and are expanding their store network in Germany. However, in order to be successful in the country, they have to respect a lot. Turkish investments in production facilities are seldom in Germany. However -the location offers a decisive advantage to the companies.

  • Companies expand branch network

Bonn (GTAI) - Thanks to the constantly good economic situation, the Germans are in best consumer mood. Turkish retailers also want to benefit from this and are expanding their store network in Germany. However, in order to be successful in the country, they have to respect a lot. Turkish investments in production facilities are seldom in Germany. However -the location offers a decisive advantage to the companies.

Modern furnished industrial lofts characterize the picture of the Düsseldorf Schwanenhöfe. Scenery restaurants, studios and companies have recently established themselves on the former chemical site in the district of Flingern. Since September 2017, the Turkish glass manufacturer Pasabahce became represented here with a showroom. On nearly 300 square meters expensive wine glasses, carafes and numerous other glass products are exhibited. After New York, Madrid, Milan, Shanghai and Moscow, it is the sixth outlet outside Turkey for the Istanbul company. Pasabahce is part of the Sisecam Group and one of the largest glass producers in the world.
 
Most Turkish investors come from the clothing industry
Turkish companies are currently focusing on the consumer goods market in Germany and are opening up business like Pasabahce. The investment focus is on the apparel market. Of the 211 projects by Turkish companies listed the Financial Times fDi-intelligence database between 2003 and 2017, every fifth is assigned to the textile and clothing industry. Another 11 percent comes from areas such as the furniture or cosmetics industry. For most traders, the local Turkish community does not play a major role as a target group. The Turkish companies are competing with other international brands in the German market for a broad western consumer group.

Turkish fashion houses are expanding
This includes the newcomer Yargici, which opened  four stores in top location throughout Germany in 2017. It was the first foreign engagement of the Istanbul clothing company. "In this and the coming years, more branches will be added, after all, we did not come to Germany to open just a few stores only", Germany boss Erik Schaap explains confidently.

The Turkish fashion company Sarar has been present here for over 17 years. In the year 2000 it opened its first branch on the Düsseldorf Königsallee. Since then, the company has invested about EUR 15 million in the country and opened eight boutiques. Sarar also wants to continue growing and is planning to reach 20 stores by 2020. However, Turkish retailers in Germany do not find it easy, as Sarar Europe GmbH marketing manager Salim Ünyeli admits: "The competition is very strong due to the ubiquity of Zara, H & M and Co. Most consumers do not know Turkish labels and prefer for the same price known Western brands."
"The tensions between Germany and Turkey have damaged our business, and potential customers are deterred from buying from a Turkish company." (Marketing Manager Salim Üniyeli of Sarar Europe GmbH.

Who thinks Turkish, fails
Turkey expert Suat Bakir knows the typical pitfalls for Turkish companies looking to start a business in Germany. Bakir is the capital representative of the German-Turkish Trade Association (DTW) and was previously managing director of the Turkish-German Chamber of Commerce and Industry for seven years. "Many fail because they do not spend money on professional advice and ask a Turkish acquaintance for advice instead," Bakir said. Gastronomy and clothing chain in particular have a high fluctuation rate, because it is particularly important in these segments to find and use the right location and a suitable marketing. "Anyone who thinks in Germany like a Turk and does not adapt its products to German consumer taste will not succeed on the long term," Bakir says. Because of the strained relations between the two countries, he advises against introducing a Turkish brand on the German market right now: "The German tourist, who is currently avoiding Turkey, will probably not buy from a Turkish company."
 
Deutsche Bogenn opens factory
Although only very few Turkish companies have invested in production facilities in Germany so far, Suat Bakir recognizes potential in this area. Turkish companies could adopt the positively occupied brand made in Germany, if they would manufacture in the country. The most recent example is the company Deutsche Bogenn, which opened a new plant for plastic pipes last year on Rügen. Behind the extra German sounding name the Turkish Dizayn Group is hided. From its new location, the company wants to produce pipes for various infrastructure projects with 100 employees and sell them worldwide.

Low investment volume
Turkey so far has played a minor role as an investor in Germany - despite the many bilateral relations. Turkish companies have invested just EUR 1.8 billion in the Federal Republic. According to Suat Bakir a key reason is the low level of internationalization of Turkish companies. Another obstacle are the visa restrictions for Turkish business people. The DTW estimates that so far 1,300 companies of Turkish origin have settled in Germany, one in three in North Rhine-Westphalia alone. That is a merit of a committed location marketing. Suat Bakir recommends that all federal states should exploit the interest of Turkish companies and promote their state more in Turkey. Mecklenburg-Vorpommern has already recorded a recent success with the establishment of Deutsche Bogenn on Rügen.

More information:
Retail Turkey
Source:

Sofia Hempel, Germany Trade & Invest www.gtai.de

RETAIL IN HONG KONG EXPECTS STRONG UPTURN Photo: Pixabay
27.03.2018

RETAIL IN HONG KONG EXPECTS STRONG UPTURN

  • Sales increase of 4 to 6 per cent targeted for 2018
  • Population favors traditional shopping experience

Hong Kong (GTAI) - Hong Kong's favorite pastime is shopping. Chinese tourists also visit the city just for shopping quite often. The demand for jewelry, watches and cosmetics in particular is booming. The retail sales of the Special Administrative Region (SVR) is expected to rise to around USD 60 billion in 2018. The status-conscious consumers prefer Italian and French luxury goods. German providers can score in certain categories.

  • Sales increase of 4 to 6 per cent targeted for 2018
  • Population favors traditional shopping experience

Hong Kong (GTAI) - Hong Kong's favorite pastime is shopping. Chinese tourists also visit the city just for shopping quite often. The demand for jewelry, watches and cosmetics in particular is booming. The retail sales of the Special Administrative Region (SVR) is expected to rise to around USD 60 billion in 2018. The status-conscious consumers prefer Italian and French luxury goods. German providers can score in certain categories.

The Hong Kong Special Administrative Region (SAR) retail sector experienced one of its worst years of recent history in 2016. According to the statistics office, sales shrank nominally by 8 percent compared to the previous year. On the one hand, domestic consumers showed themselves buttoned-up side in the face of a rather sluggish economy. Private consumption rose in real terms by just under 2 percent.
 
On the other hand, the number of foreign visitors decreased. The tourism authority counted around 57 million arrivals in 2016 only, which was almost 5 percent less than in 2015. Three quarters of the tourists traditionally come from the neighboring Chinese mainland and are particularly eager to buy. But in 2016, they restricted their purchases.

Domestic consumption rose in real terms by nearly 7 percent in the third quarter of 2017
However, the second half of 2017 brought the turnaround. The overall economy of SVR revived noticeably. Consumer spending in the third quarter increased by nearly 7 percent in real terms compared to the same period of the previous year. The number of tourists also rose again. From January to December, the authorities registered a growth of more than 3 percent.

Foreign visitor arrivals in Hong Kong (in millions)
Year Visitors
2014 60.8
2015 59.3
2016 56.7
2017 58.5
2018 *) 60.0

*) Forecast
Source: Hong Kong Tourism Board

Retail sales rose in 2017 as a result by just over 2 percent to more than USD 57 billion. Especially at the end of the year, business had developed very briskly. In the fourth quarter, revenues increased by nearly 6 percent compared to the same quarter of the previous year. That leaves the economic researchers hoping for 2018. The auditing company PWC, for example, expects a market growth of 4 to 6 percent. As a result, the total revenues should rise to around USD 60 billion. It would thus be on about the same level as in 2014, but only in nominal terms.

Hong Kong retail sales (in USD bn, change on year to year in %)
Year Value Change
2015 60.9 -3.7
2016 56.0 -8.1
2017 57.2 2.2
2018 *) about 60,0 4.0 to 6.0

*) Forecast
Source: 2014 til 2017: Hong Kong Statistical Office; 2018: PwC

The individual sectors of the retail trade developed very differently in 2017. The demand for electronic articles was weakening. But the business with jewelry, watches and cosmetics flourished. These are small and light goods, that Chinese tourists usually can take across the border without customs clearance. The equally lively sales of food and beverages as well as motor vehicles is mainly due to the greater spending pleasure of domestic consumers.

Retail sales in 2017, by product group
(in USD bn, year-on-year change in %)
Product group Value Change
Jewelry and Watches 9.6 3.4
Textiles 7.7 0.2
Medicine and Cosmetics 5.6 5.5
Food and Beverages 5.4 3.2
Electronic Articles 3.1 -9.0
Automotive, incl. parts 2.0 3.1
Furniture 0.9 2.2
Books and Stationery 0.9 1.0

Source: Hong Kong Statistical Office
 
For German providers of consumer goods, the former British colony is a not unattractive market. Although the population of 7.4 million is quite small, it has a gross domestic product (GDP) per capita that is at the level of Germany. Since there is virtually no manufacturing industry, almost all goods need to be imported. The Chinese tourists increase the volume of demand. In 2017 45 million visitors from the People's Republic came to Hong Kong. Many of them came just for one day, whose only goal was shopping.

German consumer goods are quite popular with both domestic consumers and Chinese tourists. However, there are big differences between the different sectors. Apparel, leather goods and cosmetics are dominated by French and Italian brands in the upper market segment. For furniture (especially kitchens) or stationery German suppliers however play a significant role. Also body care and food "Made in Germany" enjoy a great popularity.

Big chains dominate the market
The retail sector is predominantly in the hands of large corporations. In the food sector the chains Wellcome and ParknShop dominate, in the drugstore area Watsons and Mannings as well as in the electronics division Fortress and Broadway. The e-commerce however has undermined its dominant position a bit.
However - the population still prefers the traditional shopping experience. Purchasing via the Internet does not yet play a major role for the end customer as in other countries around the world. But it has changed the business in the B2B area. In the meantime restaurants and hotels mostly shop online.

Internet addresses
Name Internet address
Census and Statistics Department http://www.censtatd.gov.hk/home/index.jsp (Homepage); http://www.censtatd.gov.hk/hkstat/sub/sp320.jsp?tableID=089&ID=0&productType=8
(Overview of retail sales);
http://gia.info.gov.hk/general/201802/01/P2018020100410_277399_1_1517469181773.pdf
(Detailed retail sales statistics)
Hong Kong Tourism Board http://partnernet.hktb.com/filemanager/intranet/pm/VisitorArrivalStatistics/ViS_Stat_E/VisE_2017/Tourism%20Statistics%2012%202017.pdf
(Visitor Information and arrivals)  


   

 

More information:
Hong Kong Retail
Source:

Roland Rhode, Germany Trade & Invest www.gtai.de

13.03.2018

CONVERSION OF THE CLOTHING INDUSTRY IN BANGLADESH NOT YET COMPLETED

  • Eports grow slowly
  • Industry needs new concepts

Dhaka (GTAI) - The garment industry is the main industry in Bangladesh. The state of the companies has improved since 2013 - when a building with several factories collapsed. Domestic and foreign companies have invested in new processes. Government and associations want to further increase the security. Exports are growing slower. The international competition forces the companies to produce not only more sustainable, but also more efficient and innovative.

On April 24th 2013, north of the Bangladeshi capital Dhaka, the Rana Plaza building collapsed, housing five clothing factories. The disaster claimed 1,138 lives and more injuries. The disaster in-cised deep into the country's largest industrial sector. The massive problems with building and safety as well as violations of workers' rights became internationally visible at once and then vigor-ously tackled.

  • Eports grow slowly
  • Industry needs new concepts

Dhaka (GTAI) - The garment industry is the main industry in Bangladesh. The state of the companies has improved since 2013 - when a building with several factories collapsed. Domestic and foreign companies have invested in new processes. Government and associations want to further increase the security. Exports are growing slower. The international competition forces the companies to produce not only more sustainable, but also more efficient and innovative.

On April 24th 2013, north of the Bangladeshi capital Dhaka, the Rana Plaza building collapsed, housing five clothing factories. The disaster claimed 1,138 lives and more injuries. The disaster in-cised deep into the country's largest industrial sector. The massive problems with building and safety as well as violations of workers' rights became internationally visible at once and then vigor-ously tackled.

Foreign companies have invested heavily in the textile and clothing industry in recent years, with a record high in the year after the disaster. According to the Central Bank, foreign direct investment (FDI) in the textile and clothing industry in June 2017 reached a respectable USD 2.6 billion. Com-panies from South Korea have been the largest contributors with USD 766 million, followed by Hong Kong investors with USD 448 million and the United Kingdom with USD 243 million

FDI inflows into the Bangladeshi textile and clothing industry (in USD millions.)
Financial year 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
FDI inflows, net 241 412 446 352 396 360

      *) Financial year from July 1st to June 30th

Several successful programs for more security
Government and international organizations responded with many measures and initiatives at Rana Plaza. The International Labor Organization (ILO) launched programs to improve work-ing conditions. Buyers and industry representatives were looking for solutions.

International traders, trade unions and non-governmental organi-zations finally signed a binding agreement for more fire and building safety in 2013 (Accord on Fire and Building Safety). Employees of Accord have since reviewed more than 1,600 tex-tile and garment factories. Approximately 86 percent of the iden-tified deficiencies were eliminated according to an interim report dated January 2018. Accord will expire in November 2018 after five years. Some participants of the alliance have agreed an ex-tension of the program of three years.

In particular North American importers launched the Alliance (Al-liance for Bangladesh Worker Safety) program in 2013. The Al-liance has since reviewed 666 factories that, as of February 2018, have remedied approximately 87 percent of the deficien-cies. The program will expire also after five years in May 2018.
Representatives of industry and government, trade unions, ILO, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and international buyers want to co-ordinate the control and rehabilitation measures together. The BGMEA and the government rely on the NI National Initiative, which they developed together with ILO. The Department of Inspection of Factories and Establishments is responsible for NI controls. Under the NI program 1,500 factories have been inspected which are working for do-mestic customers. The program is to be extended to exporting companies and will replace Accord and Alliance.

Workers demand more rights and higher wages
The government made it easier to found and to engage in trade unions after the Rana Plaza disas-ter. According to observers, the approximately 4 million workers in the textile and clothing industry continue to have little formal organization and went repeatedly on strike for higher wages.

A government commission recently increased the monthly minimum wage in the garment industry from Taka 3,000 to 5,300 in 2013. This amount corresponds currently with EUR 52 only. (1 EU-RO = Taka 102.13, exchange rate of March 5th 2018). Trade unions demanded tripling of the minimum wage at the beginning of 2018, because unskilled workers are given this low pay when they are first employed, which is barely enough to survive. The reward grows only later with the skills and experience.

Employees often change their jobs. According to observers, the fluctuation should average be-tween 5 and 7 percent per month. Fair wages and good working conditions would give a good in-fluence on this issue in the companies concerned.

Bangladesh is the second largest exporter of clothing after China
The globally active clothing retailers are buying in Bangladesh on a large scale. Some have offices with hundreds of employees. Major clients include Inditex (Spain), H & M (Sweden), C & A and Tchibo (Germany).

Clothing exports, however, stagnated in the financial year 2016/17. One reason for the weak growth was the strengthened exchange rate. Taka's national currency increased against the US dollar, making exports more expensive and less competitive.

The government is targeting an export growth of 8.1 percent to USD 30.2 billion in 2017/18. The industry is on track indeed, reaching 7.8 percent in the second half of 2017 compared to the same period of the year before. The most important customers are the USA and Germany.

Bangladesh's Apparel Exports (in USD million) 2014/15 *) 2015/16 *) 2016/17 *)
Total     25,491 28,094   28,150
Thereof           
.Weaving goods             13,065 14,739 14,393
.Knitting goods  12,427  13,355 13,757
Customers        
.USA            5,288 5,625 5,204
.Germany  4,339 4,653 5,135
.Great Britain  2,904  3,524 3,307
.Spain        1,626 1,864 1,879
.France  1,618 1,714 1,765
.Italy       1,243 1,278  1,349
.Canada             929 998 946
.Netherlands  627  660 814
.Belgium   772 835 753
.Japan            653 774  744
Poland         548  616 720

*) Financial year from July 1st to June 30th
Sources: Export Promotion Bureau, Bangladesh Garment Manufacturers and Exporters Association

Exports from this emerging country enjoy exemption from duty in many developed countries. The European Union grants duty-free and quota-free access. Australia and Japan grant preferential access to the Generalized Scheme of Preferences (GSP). , The USA however has suspended the GSP status in 2013 and imposed tariffs and duties on imports from Bangladesh.

Companies want to grow and become more efficient
The Association of Garment Export Companies BGMEA estimates that over 3,000 garment factories work exclusively for international clients. Another 800 to 1,000 companies sew for local retailers who sell clothing to the country's 160 million inhabitants.

There are no data on company sizes or on the companies with the highest turnover. Clothing companies are mostly registered as private companies and do not publish business figures. The larger ones belong to local conglomerates operating in different economic sectors.

The companies are investing in more modern production facilities to process larger orders faster and at lower unit costs. Imports of machinery and equipment for the textile and clothing industry totaled USD 1.4 billion in 2015. The BGMEA believes that the garment industry has increased its purchases of equipment since.

The added value along the local textile chain is expandable. Simple fabrics and materials are produced locally. The production capacities for fabrics however are not sufficient and need to be increased. The clothing industry is also switching to higher quality synthetic fiber products. Producers hope for higher margins, if, for example, they produce clothing made of elastic fibers or functional clothing made from mixed fibers.

Many pre-products are imported from China and South Korea. Imports however are difficult due to the limited handling capacities of seaports and airports. Logistics costs are high. The clothing sector still has some challenges to overcome.

 

 Bangladesh Garment Manufacturers and Exporters Association

http://www.bgmea.com.bd
Vereinigung der Bekleidungsexportfirmen
Bangladesh Textile Mills Association http://www.btmadhaka.com
Accord on Fire and Building Safety in Bangladesh   http://bangladeshaccord.org  
Alliance for Bangladesh Worker Safety  http://www.bangladeshworkersafety.org

 

 

 

Source:

Thomas Hundt, Germany Trade & Invest www.gtai.de