Textination Newsline

• 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.

• 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.

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.

• Opportunity for manufacturers to star as trendsetters in the flooring industry

The redesigned DOMOTEX – with its more transparent clustering of allied products and the visually stunning  “Framing Trends” showcase – has been warmly embraced by the market and is now gearing up for its second season. DOMOTEX 2019 will run under the banner of “CREATE’N’CONNECT”, a keynote theme that puts the spotlight on innovative flooring industry developments and ideas inspired by today’s connectivity megatrend. Powered by advanced technology and digital change, being connected is a tremendously important aspect of our daily lives and interaction at home and on the job.   Connectedness is an important aspect of flooring in the sense that floors are unifying, connecting elements of room design. Floors and flooring provide the very foundation for the rooms in which we live and work. Floors inspire us, give us orientation and set the stage for human interaction.
 
“CREATE’N’CONNECT” keynote theme to be creatively staged by trend leaders
The “Framing Trends”special area in Hall 9 at DOMOTEX 2019 is a unique opportunity for manufacturers to breathe life into the “CREATE’N’CONNECT” theme and thereby demonstrate their creative genius and position themselves as trendsetters of the flooring industry. Complete with a quality supporting program of talks, lectures and discussions inspired by the keynote theme, “Framing Trends” is a vibrant networking platform and the beating heart of DOMOTEX. It is a place where creatives from all parts of the design spectrum can gather, make connections and contacts and spark new business opportunities. For manufacturers, retailers and designers, it is also a rich source of inspiration for new collections. With its out-of-the-ordinary artistic staging and groundbreaking product presentations, “Framing Trends” is an absolute magnet for fashion and lifestyle-savvy visitors, architects, interior decorators, designers and influencers.

“Framing Trends” - Apply to exhibit and start making connections  
As a major highlight of DOMOTEX, the “Framing Trends” special area is one of the main stops on the show’s special Guided Tours for architects and journalists. This premium exposure is further enhanced by the area’s strong presence in the organizer’s social media channels and on the DOMOTEX website. Furthermore, companies that give exclusive interviews at DOMOTEX are permitted to use the interviews for their own promotional purposes. As in 2018, the “Framing Trends” showcase at DOMOTEX 2019 will have a Blogger Lounge where bloggers and visitors can meet up, talk and collaborate.

The “Framing Trends” area includes the “Flooring Spaces” zone – a series of spaces where selected exhibitors and companies from the flooring industry can stage their unique, creative visions of the “CREATE’N’CONNECT” theme in the form of physical installations, interactive display circuits or workshops. Applications for participation at the “Flooring Spaces” zone are now open. Each applying organization is invited to submit a design proposal for a “Flooring Space” of any size from 20 sqm to 60 sqm. On request, the DOMOTEX organizers will arrange for designers to help applicants with their proposals. An expert jury made up of big-name designers and architects will select the participating exhibitors from among the applicants. The jury will make its decision by the fall of 2018.

Examples of creative flooring-related connections
The connectivity theme can be creatively expressed in many wonderful ways, as the following examples from the flooring and various allied industries show.
In teamwork with the studio Lotta Agaton Interiors, Austrian carpet maker Tisca Textil staged a home environment collage at DOMOTEX 2018 combining handmade woolen rugs with furniture by Vitra, Artek and Team7.

The lively graphic motifs used in the Infused Collection by Mannington Mills conjure up various aspects of five different U.S. metropolises. This LVT tile collection’s mix-and-match approach lends itself to the creation of imaginative mosaics using any combination of tiles desired.

Swedish design firm Kinnasand presents its rugs on a limited series of steel tubing “structures” created in cooperation with Berlin design studio Greiling. Draped over stylized bench, ottoman and daybed structures, the carpets take on a three-dimensional aspect.

Furniture manufacturer Walter Knoll uses the floor pillows and daybeds in its “Badawi Pillows” collection to create connections with its own sofa and carpet range. Details like the finishing on the leather headrest rolls attest to the firm’s high level of craftsmanship.

Gan, the rug and textile brand of Spanish outdoor furnishing company Gandia Blasco, includes a whole range of new products that explore the connection between rooms and their floors. For example, the “Parquet” kilim collection by Swedish designer duo Front (Sofia Lagerkvist and Anna Lindgren) reinvents the timeless aesthetic of wood parquet in soft floor coverings. Meanwhile, the “Mirage” collection by Spanish designer Patricia Urquiola comprises hand-knotted rugs made from New Zealand wool that look like they are woven from three dimensional planks whose ends protrude into the surrounding space. Her “Garden Layers” collection features layers of rugs, mats, roll pillows, cushions and even textile-covered Indian beds. The individual elements can be arranged in many different ways to create infinite inviting possibilities for outdoor living.
 
“Framing Trends” showcase well received by the market
Business decision-makers who participated in the inaugural “Framing Trends” showcase were full of praise for the enhanced DOMOTEX format. Their stories are glowing reports of successful business contacts made at DOMOTEX 2018. For instance, Jutta Werner, CEO of Nomad, an interdisciplinary design firm in Hamburg, described the “Flooring Spaces” area as a “well signposted proving ground for innovation and contemporary thinking.” She said the response to her presentation there was “overwhelming.” Benny Jensen, CEO of Denmark’s Fletco Carpets, was impressed with the Guided Tours and their ability to communicate targeted information to visitors. He said the tours enabled his company to present its new, award-winning “LockTiles” product directly to a quality, pre-qualified audience. Jensen noted that “architects, designers and planners made a special point of visiting the ‘Framing Trends’ display.” Floor coverings manufacturer Classen used the “Flooring Spaces” zone at “Framing Trends” to present a vision of a living space from the future. The flooring creation at the heart of Classen’s “Flooring Space” was developed specially for DOMOTEX at the company’s own design center, while the creative design and production of the space as a whole was undertaken on Classen’s behalf by a designer. The presentation raised Classen’s profile as an innovator. Marketing Director Heinz-Dieter Gras says the visitors showed a “great deal of interest” and described the presentation as “spectacular” and “masterfully done”.

Thomas Trenkamp, CEO of Carpet Concept, was very pleased with the “massive response” to his company’s “Framing Trends” presentation generated in the press and among industry peers and trade visitors. The kaleidoscope project which Carpet Concept realized in partnership with Schmidhuber, Munich, was a major attraction on site, in the press and across social media channels. Creative Matters, a Canadian design firm that specializes in carpets, rugs and wall coverings, staged a series of creative workshops that proved enormously popular with attendees. President and co-founder Carol Sebert described “Framing Trends” as a “vibrant, high-energy” showcase that enabled exhibitors and visitors to “experience the latest innovations and creations in the flooring world first-hand.” Jürgen Dahlmanns, the founder and creative mind behind cutting-edge German carpet label Rug Star, believes that DOMOTEX’s managers have moved the show in an “exciting new direction” with Framing Trends. “It’s a fun thing to be involved in as an exhibitor”. Textile floor coverings specialist Balta Group, of Belgium, has been exhibiting at DOMOTEX right from the early days. Marketing Director Geert Vanden Bossche said the new format has “further cemented the strong connection” his organization felt with DOMOTEX. Balta exhibits both at DOMOTEX in Hannover and at DOMOTEX asia/CHINAFLOOR in Shanghai.

DOMOTEX 2019 will be held in Hannover, Germany, from 11 to 14 January (Friday through Monday). The show is expected to feature around 1,400 exhibitors from more than 60 nations.

• The important trade fair platform for entry into the Chinese consumer market with China's most influential consumer group for the fashion and beauty sector with the strongest growth in consumption - the millennials - as target group
• The international fashion showcase for decision makers with an overview of na-tional and international fashion brands
• Strategic market development through comprehensive visitor marketing for inter-national brands at CHIC

 
CHIC, China International Fashion Fair presents around 800 exhibitors in an exhibition space of approx. 50,000 sqm (CHIC in March 100,000 sqm) in two halls from 27 to 29 September 2018 at the National Exhibition & Convention Center in Shanghai.
The current conditions for international fashion companies in the Chinese market offer significant improvements for international brands. Import tariffs will be lowered from 15.9% to 7.1% to further promote the import and upgrade of the industry.  

The McKinsey study "THE `Chinese consumer´ no longer exists” defines Chinese consumers no longer as interested only in low prices, but as selective, healthconscious with diverse shopping hab-its and preferences. The fashion awareness changes to an individual sense of style, influenced by international and national trends. China's millennials are the WORLD'S most influential consumer group, with a 16% share of the population, driving consumption growth in the Chinese market and contributing more than 20% from today until 2030.  
 
According to the edition's motto "New Makers", Asia's leading fashion fair is picking up on the latest changes in the Chinese fashion market and providing the essential tools for the Chinese market. The new, young design of the fair, which was launched in March this year at CHIC, is being ex-panded. The individual sections of CHIC present the latest trends in the Chinese and international fashion market. CHIC connects and brokers partnerships and launches the new generation gar-ment industry, which builds on high-tech strategies and interlinks industrial production with modern information and communication technologies, relying on intelligent, digitally networked systems in self-organized production.

The individual fashion areas of CHIC  
FASHION JOURNEY puts the focus on interna-tional exhibitors. In addition to the large Italian pavilion, the French pavilion "Paris Forever" and the Korean show-inshow "Preview in China", in-dividual participants from Poland, the UK, France, Italy, Spain, Japan and the USA use CHIC as a bridge in the Chinese market. The next German group participation is planned for March 2019, whereby Germany will also be rep-resented with individual brands such as ESISTO in the area NEW LOOK.

IMPULSES, CHIC's designer section, features emerging designer brands such as Junne, Hua Mu Shen, King Ping, Anjaylia, Mao Mart homme, Tuffcan, etc.

The SUSTAINABILITY ZONE, first showcased at CHIC in the fall of 2017, is receiving even greater emphasis due to the increasing environmental and health awareness of Chinese consum-ers, featuring sustainable supply chain solutions, sustainable innovation and sustainable fashion collections. Programs such as Chemical Stewardship 2020, Carbon Stewardship 2020, Water Stewardship 2020 and Circular Stewardship 2020 are presented. The womenswear section NEW LOOK of CHIC presents next to the leading Chinese brands like AVRALA, and CMH also international brands like Saint James from France, ESISTO from Ger-many, Trenz Eight from Canada or PN JONE, USA.

Beside the suppliers of classic menswear, URBAN VIEW, the menswear section, also includes casualwear brands like NRDMA and SUPIN as well as bespoke companies like H. Pin& Tack, Jin Yuan Yang, Fa Lan Qian Mu, Long Sheng and DANDINGHE.
CHIC YOUNG BLOOD shows young lifestyle brands, KID'S PARADISE offers e.g the largest fashion group in China for children's fashion XTEP KIDS.

SECRET STARS (fashion accessories), SHANGHAI BAG (bags), HERITAGE (leather & fur), SUPERIOR FACTORY (ODM) and FUTURE LINK (services) complete the fashion offer at CHIC. FUTURE LINK gathers fashion service providers for among others supply chain solutions, smart retail and smart production, RFID, laser technology and data utilization.

Visitor management
On the rise in China's retail scene, multi brand and custom stores are the fastest growing offline sector. The number has increased significantly in the last five years from less than 100 to more than 5,000 stores. Exclusive shopping experiences and an individual offer are important. Custom-ers value a wide range of products: a mix of international and national exclusive brands is the most common concept.

The high investments of the CHIC organizers in the visi-tor management for the fair pay off: CHIC has a per-sonalized trade visitor database of over 200,000 con-tacts, which are used intensively for the visitor marketing in the run-up to the fair for a commercial matching for the exhibitors. At the fair, VIP match making activities will take place especially for selected international brands, that will have the opportunity to present them-selves there and make the relevant contacts in the Chi-nese trade. Meetings are organized among others with multi brand stores and buyers such as The Fashion Door, Dong Liang, Jing Dong, VIP Shop and department stores, and retailers such as Carrefour, Amazon, De-cathlon, Wang Fujing, etc. An important tool for the CHIC visitor marketing is social media; for this special programs are run, in which individual brands are pre-sented to prospective visitors.    

CHIC is visited by representatives of all distribution channels for distribution in the Chinese market, at the last event in autumn 2017 more than 65,722 visitors from all over China and other nations were registered at the CHIC, with a significant increase in multi brand stores.
 
Seminars and shows
The future of fashion business in China will be discussed in a panel of experts as part of CHIC TALKS. Furthermore, a trend seminar from WGSN for FW 2019 and a workshop on bag and shoe production from the Moda Pelle Academy are planned.

CHIC shows provide an overview of selected international brands.

CHIC is organized by Beijing Fashion Expo. Co. ltd. and China World Exhibitions, supported by China National Garment Association, The Sub-Council of Textile Industry (CCPIT) and China World Trade Center.

• 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.

• 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.

*) 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.

*) 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.

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.

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.
 

• The association's zero tolerance standard was presented at Intertextile Shanghai Home Textiles between 14 and 16 March
• The association enjoyed a successful appearance together with three certification bodies from Germany, Japan and the US/China
• Chinese manufacturers showed great interest in the unique combination of animal welfare and quality control

‘We met many committed companies – primarily from China – that showed great interest in traceability and the ethically sound sourcing of feathers and down. The potential that Downpass offers as a traceability standard together with continuous quality control was clearly recognised and won companies over not only for export-oriented purposes, but also for the domestic Chinese market’, explained Dr Juliane Hedderich, who was responsible for the trade fair appearance as managing director of Downpass e.V.
‘The follow-up after the trade fair will be crucial to translate Chinese companies’ interest into actual memberships.’

The association's representatives and rotating teams from the certification bodies Wessling, QTEC and IDFL advised visitors at a large stand in the foyer of hall 4.2 (HOME) with a deliberately puristic design. These independent testing institutes and auditing organisations are companies’ direct contacts for audits and product monitoring. As is common for trade fairs, the largest crowds were seen on the afternoon of the first and second day of the event.

The markets are increasingly demanding materials that guarantee trading partners and therefore consumers the greatest possible security when it comes to ethics and sustainability, alongside high product quality. Products certified by independent testing institutes gain in importance and set sales standards.

Ms Anna Elisa Wessling, legal representative of the subsidiary Wessling Consulting (Shanghai) Ltd. and representative of the German Wessling Group at the trade fair, was happy to engage with customers directly, explaining, ‘our presence as a consulting, analysis and testing company at Intertextile Home gave us the opportunity to talk to visitors and thus allowed us to increase transparency on the Chinese market such that retailers and consumers are suitably informed of the highest requirements of product quality and of the origin of bedding filled with feathers and down.’
As a German family company, the Wessling Group has stood for continuous improvement in the quality and security of products and processes for 35 years and is set to move into new, larger premises for its subsidiary in Shanghai in the near future so that it can fulfil the increasing number of testing requests in Asia with a larger team.
‘We expect constant growth in our analysis and consulting segment feathers and down, especially as our international customers see Downpass as a clear advantage for customer acquisition domestically and abroad. As an independent testing institute, we play a substantial role in underpinning trust in the Downpass brand’, highlighted Ms Weßling.

The Japanese institution QTEC also confirmed Downpass’ high level of visitor interest and, like its colleagues, stressed the importance of an institute’s independence. The managing director of Shanghai QTEC Testing Laboratory, Hiroyuki Nakamoto, who successfully presented the company’s three Chinese sites – including Shanghai and Wuxi – at the home textiles trade fair, explained, ‘our knowledge of the Japanese market, together with our testing expertise, make us a top contact for manufacturers of bedding and clothing products filled with feathers and down to ensure the supply chain is ethically sound.’ The institute expects a steady rise in the number of testing requests for Downpass, especially at Chinese sites.

A large, bilingual English-Chinese sales team from IDFL China, based in Hangzhou was available at the trade fair in Shanghai to answer all questions relating to audits and testing procedures with its varied specialist expertise. Together with its cooperation partner, the Chinese national down and feather laboratory CIQ Xiaoshan, IDFL has capacities for a broad range of different tests and audits.
IDFL’s Global Audit Manager Bryan Mortensen highlighted that Downpass had become a standard and therefore a seal that is recognised worldwide and in China in particular. The joint appearance with other certification bodies provided the opportunity to answer the questions of Chinese companies along the supply chain, from wholesalers to clothing and home textile brands and trading partners.
‘We are seeing strong demand for the current version of the standard, Downpass 2017, and its seal. IDFL carried out numerous audits across the globe in 2017 and we receive new requests every day. Overall we anticipate a successful future for Downpass in the down and feather industry’, explained Mortensen. IDFL – which will celebrate 40 years in the industry in 2018 – has been carrying out audits in the field of down and feathers for more than 10 years and is currently undergoing certification in accordance with ISO/EN 17065 and 19011.

In their first summary of the event, the extended Downpass trade fair team took stock of a successful trade fair premiere. ‘We aim to promote the sustainable use of natural resources across the globe and to increase transparency in the supply chain’, explained Dr Juliane Hedderich. ‘Animal welfare and guaranteed product quality are our hallmarks. We did a great job in Shanghai of jointly informing others about these and finding new collaborators.’

About the zero tolerance standard DOWNPASS 2017
Products filled with feathers and down that are certified in accordance with Downpass 2017 exclude products sourced from live plucking and production based on force feeding. The animals’ rearing is monitored and monitoring may be extended to the parent animal farms.
To this end, farms, commodities traders and producers are subject to audits and monitoring.
Pre-made products are bought by mystery shoppers at the point of sale and subsequently undergo quality control in independent testing laboratories.
As of January 2018, 503 million animals had been audited in accordance with DOWNPASS 2017.
Labelled products are available in North America, Europe and Asia.

After five action-packed days the world’s leading trade fair of the consumer goods industry finished in an upbeat mood today. Trade visitors from more countries than ever before spent their time networking and ordering the latest products from all over the world for their companies. They also obtained worthwhile stimuli for a digital future.

Occupying an exhibition space of 308,000 square metres (gross), [1] 4,441 exhibitors from 89 countries [2] revealed the trends of this coming business year. 81 per cent [3] of all exhibitors came from outside Germany, making Ambiente the most international consumer goods trade fair of all times. The proportion of senior international decision-makers across all trade sectors had gone up by six per cent compared with last year, making up 60 per cent of visitors. It was the highest share ever recorded. This led to good export transactions and an excellent mood in the halls. In total, 134,600 buyers from 168 countries [4] visited Frankfurt am Main to attend Ambiente. As expected, there were fewer German visitors in Frankfurt. This was partly due to changes in the German retail landscape, and partly because the event coincided with Carnival as well as school holidays in Germany’s southern states, while being dependent on the international trade fair calendar.

“Consumerism is fashionable! Ambiente hosts the entire world. Every February, the international consumer goods industry receives direction here for the entire year. This is impressively borne out by the number of orders and the quality of German and international buyers,” says Detlef Braun, Member of the Executive Board of Messe Frankfurt GmbH. A similarly positive conclusion is reached by Thomas Grothkopp, Managing Director of the German Trade Association for Residential Accommodation and Offices (HWB): “Ambiente has shown us once again that nothing can replace personal contact with new and existing suppliers and their innovative products. This trade fair in Frankfurt has totally met the expectations of the retail trade.”
The top ten visitor nations after Germany were Italy, China, France, the United States, the UK, the Netherlands, Spain, Turkey, Korea and Switzerland. Satisfaction ratings among visitors remained stable at an extremely high level of 96 per cent. Above-average growth in visitors’ numbers was recorded from China, Korea, Russia, the North African countries, South Africa, all of South America, Turkey, Lebanon and Cyprus.

Exhibitors’ voices

Despite a slight dip in Ambiente’s visitor numbers, the quality and number of visitors were just right. On this point all exhibitors at Ambiente were unanimous.

Dining

Birgit Dubberke, Marketing Director at BHS Tabletop, says:
“We keep being impressed by the internationalism of Ambiente – not just in terms of exhibitors, but also visitors. It’s the meeting point of the industry. It’s a place for making valuable contacts with countries we’d normally never get to. As I see it, the HoReCa market is very much up and coming. The visitors are different, requiring a more emotive appeal – as private individuals – and this is reflected in the restaurants, hotels and the food. And we can also see it at Ambiente. The demand is there.“
Maren Lehmann, Director of Internal Sales at the porcelain company Staatliche Porzellan-Manufaktur Meissen, says:
“Ambiente 2018 went very well for us. We reached our targets, and so we can be pleased with the results. Meissen presented itself in a new way. We wanted to show that we can do far more than be traditional – and we’ve succeeded. The trade fair provided us with an excellent platform. And the organisation was first class, too.”

Living

Alexander Haas, Sales Manager at Scholtissek, says:
“Whether it’s architects, hotels or restaurants and cafés, Ambiente attracts the B2B visitors we want to appeal to. Contract business went extremely well again this year: Both the quality and the number of visitors were just right. We achieved our sales targets, and we are pleased.”
Michael Rossmann, Managing Director at PAD Home, says:
“Ambiente has an international audience and a very good venue. Our stand had a great atmosphere, lovely products and committed staff. This is why things went so amazingly well for us at Ambiente 2018. When it comes to internationalism, then the trade fair was in an even better position this year: Our stand was visited by an unusual number of Italians, as well as Argentinians and other South Americans, which was quite new to us.”

Giving

Rebecca Staton, Sales Manager for France and Germany at Jellycat, says:
“The trade fair went pretty well for us. This was already the case last year, and so we are very pleased. Although there were lots of people just having a look, we also received a good number of orders. The quality of visitors was good, and so was the level of internationalism. France was there, lots of visitors from Germany, Luxembourg and Switzerland, and a few Asian countries. Another figure that met our expectations was the number of new customers we gained.”
Ralf Vogt, owner of Noi:
“We are pleased with the result. Ambiente went well for us, our collection was well received, and there is a general demand for it. Also, I can’t complain about the quality of visitors or their willingness to place orders: those who come to Ambiente are also authorised to place orders.”

Vaarwel Netherlands, Namaskar India!

The world’s leading trade fair ran very much under the Dutch banner in 2018. The traditional partner country presentation had been staged by the Dutch industrial designer Robert Bronwasser. DO DUTCH put consumer goods from the Netherlands into a new and unusual context. Also, numerous activities and events were held on the partner country day – all masterminded by Dutch organisers. The guest of honour attracting everyone’s attention at Ambiente yesterday was Sylvie Meis. The well-known TV presenter and entrepreneur, who is also from the Netherlands, went on a tour round the exhibition halls exploring modern design from the Netherlands and Germany. Next year’s Ambiente will be held from 8 to 12 February 2019 and will be focused very much on the Indian subcontinent.

• Industrial parks should enable a quantum leap
• Progress in infrastructure, Deficits in foreign exchange provision

The Ethiopian textile, clothing and leather industry scores not only with comparatively low wages and high-performing personnel, but also with modern industrial parks. In the meantime the technology has to be fully imported and the supply of materials needs to be greatly expanded. There is a great progress in logistics, but unfortunately not in foreign exchange procurement. German suppliers of relevant equipment should definitely consider Ethiopia in their acquisition.

So far, only Mauritius has made a name for itself as a producer of high-quality clothing south of the Sahara. Attempts to locate textile and clothing companies in Namibia and Lesotho in a larger style have not been very successful. Meanwhile Kenya and Ghana have far too expensive production conditions. "Clothing companies are nomadic,” says a consultant, who is specializing in the trade, "they go where it's cheapest for them."

Meanwhile, Ethiopia offers several advantages: Wages and additional costs are far below the Chinese ones. A worker in the Ethiopian factories earns an average of USD 909 a year, according to a survey by the US Center for Global Development, compared to USD 835 in Bangladesh, USD 1,776 in Tanzania, and USD 2,118 in Kenya. Another advantage is appreciated by employees: Ethiopia has a long tradition of textile and clothing production as well as in leather processing and thus at least an expandable base of skilled workers.

The supply of native cotton and leather meanwhile is considered strongly expandable. In times of drought, such as in 2016 and partly in 2017, the supply of cotton is insufficient. However, the government is cooperative and increasingly open to the needs of producers. Thus, the infrastructure has been currently sustainably improved, in particular the transport routes to the seaport Djibouti, from where Europe is much faster to reach than from the Far East. In addition, the Ethiopian capital Addis Ababa has a capable aviation hub with a dozen direct flights to the EU, including Frankfurt and Vienna. There is also a modern air freight center.

Modern industrial parks as a game changer

Just as important as the delivery routes are the "modern" production conditions in the emerging industrial centers all over the country, Made by China: pothole-free roads, guaranteed electricity and water supply, proper waste and wastewater disposal, workers' settlements in the vicinity. From the Ethiopian point of view, a great many jobs are created, families are fed and foreign exchange is earned.

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

Ambitious export specifications

In July 2016 the Hawassa Industrial Park was officially opened, dedicated to the export of textiles and clothing, and is the largest industrial park in sub-Saharan Africa. As early as 2018, the park is expected to employ 60,000 workers and generate USD 1 billion in exports of clothing and textiles - a steep target given in a view of the current export figures. As early as 2030, Ethiopia wants to reach a total of USD 30 billion by exporting textiles and clothing - but it's still a long way off. At present, 15 in-ternational companies are already investing in Hawassa, including the US PVH Corporation (formerly Phillips-Van Heusen Corporation, prominent brands: Calvin Klein and Tommy Hilfinger) and Epic Group (Hong Kong), a supplier of, among others, Walmart , JC Penny, Levi Strauss, VF Corporation, Tesco, Sansbury's, Marks & Spencer and C & A. Epic wanted to go to Kenya first, but then decided for Ethiopia at the last minute, which, according to Epic boss Ranjan Mahtani, is "still unpolished," but has the most potential.

The challenges are considered to be high: "Our seam-stresses have never got a job before and have never seen a sewing machine," Mahtani says training therefore is a top priority. At the same time, however, his company also relies on state-of-the-art automatic machines, for example for attaching bags. The production halls are also all around computerized with RFID technology. The current efficiency Mahtani estimates at 25 to 30 percent. After experience with other production sites, results of 75 to 80 percent are possible after about ten years.

Wide range of new industrial parks under construction

In July 2017, another industrial park was opened in Kombolcha City. A whole range of other parks are in various stages of realization and all are focused on the apparel, textile, pharmaceutical and medical device manufacturing sectors. According to the Ethiopian Government, there is no shortage of interested investors from the PR of China, India, Turkey, the US, Hong Kong and South Korea. Ethiopia benefits from the African Growth and Opportunity Act of the United States, which, for example, reduces its import duties by 16.8 per cent on cotton pants and 30 per cent on synthetic shirts. In addition, Ethiopia has a duty-free access to the EU market under the Everything-but-Arms initiative.

Source: Comtrade, as of 18 October 2017

Note: The import figures mentioned above are based on Ethiopian data, which for various reasons are not considered particularly reliable. Equally not reliable are often the relevant export data of the partner countries, because all sea transports go via Djibouti and deliveries statistically are recorded often as exports to Djibouti.
Source: UN Comtrade, as of 18 October 2017

German exports expandable

German exporters of technology for the textile, clothing and leather industries are not yet well positioned in Ethiopia. According to the preliminary figures of the Federal Statistical Office (SITCM 724), in 2016 only EUR 1.06 mio of relevant technology went to Ethiopia, compared to EUR 1.05 mio in the previous year and EUR 5.02 mio in 2015.

• New hall configuration and venue layout
• Keynote theme “UNIQUE YOUNIVERSE” brought to life in amazing immersive display zones by exhibitors, artists and emerging designers 
• New Friday-to-Monday run of the show