Overview of the Global Textile Industry - ICAC.ORG in Textile Industry Sets theFAI in Textile Industry Sets the ... • Although domestic demand is weak today, ... Robert Antoshak.ppt

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BUSINESS INTELLIGENCE FOR AN INTERWOVEN WORLD

Overview of the GlobalOverview of the GlobalTextile IndustryTextile Industry

Bangladesh Cotton & Textile ConventionBangladesh Cotton & Textile Convention20072007

Dhaka, BangladeshDhaka, Bangladesh


Topics To Be Considered Topics To Be Considered ……

• Global Trends

• The Trade/Sourcing Outlook

• Impact of China

• Market Requirements forQuality Cotton


When Viewing Topics, Keep in Mind ...When Viewing Topics, Keep in Mind ...

• The worldwide textile industry is moving

into a slow-growth period

• After years of explosive growth, the

industry has matured

• China and the Indian Subcontinent have

had a enormous impact on the global

market for textiles


First, LetFirst, Let’’s Establish as Establish aBaseline Baseline ……

• Current forces affecting global textile

and apparel trade

– Aggregate production/consumption

– International trading patterns

– Tariff reductions under WTO

– Free trade agreements


ThereThere’’s been huge growth in worldwides been huge growth in worldwide

textile consumption over the years textile consumption over the years ……

Source: ICAC, Wool Bureau,

UN/FAO/Globecot Estimates

Thousand Tons


…… but the rate of growth is slowing but the rate of growth is slowing

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1770-1800

1800-1850

1850-1900

1900-1950

1950-2000

1950-1960

1960-1970

1970-1980

1980-1990

1990-2000

2000-2010

2010-2020

% G

row

th

Consumption Per Capita

Source: Globecot Calculations

2


Worldwide cotton production isWorldwide cotton production isconcentrated in a few regions concentrated in a few regions ……

Based on Millions of 480-lb Bales

2004/5 Projected Production

Source: USDA


…… the same goes for worldwide the same goes for worldwidepolyester fiber production, toopolyester fiber production, too

2006 in Billion Pounds

Source: FEB


Asian mills consume the most fiber Asian mills consume the most fiber ……

Billion Pounds, Cotton, Synthetics, Wool2006

Source: FEB


…… with the U.S. playing a greater role as an exporter with the U.S. playing a greater role as an exporter

of cottonof cotton…….and China playing a greater role as an.and China playing a greater role as an

importer of cottonimporter of cotton


Cotton yarn is mostly made in Asia Cotton yarn is mostly made in Asia ……

Source: ICAC; 2005/2006 forecast by ICAC


…… the same is true in cotton fabric. the same is true in cotton fabric.

Source: ICAC; 2005/2006 forecast by ICAC

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Asia buys the most textile equipmentAsia buys the most textile equipment

globally globally ……

Source: ITMF

(Cumulative Weaving Machine Shipments 1990-1999)(Cumulative Weaving Machine Shipments 1990-1999)


The largest apparel importersThe largest apparel importersare in the developed world are in the developed world ……

Source: UN (Imports in 2004)(Imports in 2004)


…… while the largest apparel exporters while the largest apparel exportersare in the developing worldare in the developing world

Source: UN(Exports in 2004)(Exports in 2004)


The other side of the equation The other side of the equation ……

The Impact of ChinaThe Impact of China


Current State of the ChineseCurrent State of the Chinese

IndustryIndustry

• Key factors affecting industry growth:

– Internal advantages• Low-cost labor

• Large raw material supply

• Huge export platform

• Growing domestic demand

– External factors• Foreign investment and technical know-how

• Expanding global market (for now)


25

75

125

175

2002 2003 2004 2005 2006

In b

illi

ons

of y

uan

FAI

$4.6 billion

$10.5 billion

$13.2 billion

$18.56 billion

$23.68 billion

FAI in Textile Industry Sets theFAI in Textile Industry Sets the

Stage for ChinaStage for China’’s Future Growths Future Growth

4


China Already has a Huge Share ofChina Already has a Huge Share ofGlobal Textile CapacityGlobal Textile Capacity……and Risingand Rising


Overview of ChinaOverview of China’’ss

Textile IndustryTextile Industry

• Production expanding, but varies by sector

• Fibers– Strong competition for cotton from polyester staple

• Yarns– New growth after industry rationalization

• Fabrics– Slowly improving quality, improved export sales

• Apparel and made-ups– Strong export growth drives production, but the future

may be in the hands of Chinese consumers


China: Spinning Capacity andChina: Spinning Capacity and

Spun Yarn OutputSpun Yarn Output


China:China:

International Trade SummaryInternational Trade Summary• Despite quotas in the U.S. and EU thru

2004 and more recent safeguards, Chinahas rapidly expanded exports

– But expansion comes after a period of flatexport growth

• For imports, China remains a dominantimporter of basic yarns and fabrics

– In particular, China imports heavily from otherAsian suppliers


China imports more cotton yarn

than it exports

10,000

20,000

30,00040,000

50,000

60,000

70,00080,000

90,000

100,000

Jan '0

5M

arM

ayJuly

Sept

Nov

Jan. 0

6M

arM

ayJuly

Sept

Nov

Jan '0

7Feb

in t

on

s

Exports Imports


China:China: Domestic ApparelDomestic ApparelConsumptionConsumption

• Although domestic demand is weak today, strong

growth is forecast for the future– Urban apparel sales drive current domestic consumption

– Rural consumers may take on greater role in the future

• If they do, apparel sales will skyrocket

• If they don’t, apparel sales will increase based primarily on the buying

power of urban consumers

– Home textile sales will also be important based on continued

expansion of housing in rural areas

5


China: Per Capita Annual Expenditure onChina: Per Capita Annual Expenditure onApparel/AccessoriesApparel/Accessories


China:China:Outlook for the FutureOutlook for the Future

– Trade• Growth in apparel exports will slow between 2010-

2015, in turn, impacting production

• Textile exports will increase through the end of thedecade, but then decline

• Market saturation will begin to occur before the endof the decade and accelerate towards 2015

• China will become an even larger importer oftextiles – but also by 2015, China will be a majorimporter of finished apparel


China Becomes DominantChina Becomes Dominant

Supplier of U.S. Apparel ImportsSupplier of U.S. Apparel Imports


China Will Have Rapid Apparel/Made-UpChina Will Have Rapid Apparel/Made-UpExport Growth Thru 2010Export Growth Thru 2010

0

5

10

15

20

25

30

35

40

45

50

1992 1995 2000 2002 2005 2010 2015

Bil

lio

n U

S D

oll

ars

Apparel

Made-Up


But Will be Tempered by Rising ChineseBut Will be Tempered by Rising Chinese

Imports of Apparel, Replacing DomesticImports of Apparel, Replacing Domestic

Output Over TimeOutput Over Time


So what do these changes meanSo what do these changes meanfor textile producers around thefor textile producers around the

world?world?

For one thing, textile mills willFor one thing, textile mills willwant to run better cotton.want to run better cotton.

Why?Why?

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Spinners Around The WorldSpinners Around The WorldDemand Better Quality Cotton Demand Better Quality Cotton ……

• Competitive advantage

• Supply chain looks for it

• Options can be limited depending

upon price and supply


So What Do Spinners SaySo What Do Spinners SayAbout Cotton Quality?About Cotton Quality?


Cotton Board SurveyCotton Board Survey• Recently conducted by Globecot with

more than 100 spinners around the world

• Survey results provide insight into thoseissues that will most likely affect currentand future fiber processing requirements

• Also, survey results provide valuableinsights for maintaining the exportbusiness


Expansion of Asian textileExpansion of Asian textileindustry necessitates highindustry necessitates high

quality for cottonquality for cotton

• Longer staple length

• Better color, lower contamination

• Improved inspection procedures

• Better delivery

• Transparent business interactions


Issues With U.S. CottonIssues With U.S. Cotton

• Quality cited as an important

deterrent to buying more U.S.

cotton

– Stickiness

– Small problem has much wider

influence


Issues With U.S. CottonIssues With U.S. Cotton• Staple length can be an important

deterrent to buying more U.S.cotton

– U.S. Memphis/Eastern crop hashistorically moved to domestic mills

– But with downsizing of domesticindustry, growers forced to find newbusiness off-shore

– However …

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Issues With U.S. CottonIssues With U.S. Cotton• As overseas spinners have

upgraded their equipment, theytend to run longer staple cotton

– SLM 1-1/16” had been the standard

– M 1-3/32” is the new standard

– Most spinners overseas knowrelatively little aboutMemphis/Eastern

– Had to sell at big discounts


Survey Question:

“What factors would prompt you to buy

more U.S. cotton?”

• Improved quality: 62.12 %

• More familiarity with U.S.

growths: 56.93 %


Concluding RemarksConcluding Remarks

• Global shifts in textile production … driving shiftsin cotton purchasing patterns

• Requires close attention to quality, price andvarieties

• In the long run, U.S. cotton export sales will notjust support global textile exports but risingdomestic textile consumption in China andelsewhere



• China’s growth will be offset bydeclining consumption in the developedworld

• Further changes to the global textilebusiness will be affected by changingdemographics– Age

– Buying power



• China will only be a textile exportjuggernaut for a fixed period of time …perhaps 10 years, 15 years?

• In order to maintain market share,suppliers will be forced to evaluate theirfocus on quality versus quantity– Choice of production

– Future viability at stake



• Will new free trade agreements

accelerate global shifts in the textile

business?

• Biggest wildcard: How will China

“The Consuming Nation” alter the

global textile business?

Overview of the Global Textile Industry - ICAC.ORG in Textile Industry Sets theFAI in Textile Industry Sets the ... • Although domestic demand is weak today, ... Robert Antoshak.ppt

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