Vol. No. 028 - July, 2012 Pakistan Hosiery Manufacturers and Exporters Association PHMA MAGAZINE I n f o r m a t i o n - Yo u r E x p o r t P a r t n e r Inside this Magazine Editorial Apparel sector‟s share in global market Textile Industry of Pakistan: Applied Level of Engineering and Technology Ten Strategies to Improve Profitability in Apparel Business News Corner Japan Fashion Week – Tokyo Global Clothing & Textile Industry Call for Write up
The magazine is published monthly. This issues of the magazine includes • The Budget Game • Exporting Value in Textile • Knitted Garments Production Competitiveness A way for sustainability • Readymade Garment Industry-EU Package Delay Worries Exporters • News of the Month
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Vol. No. 028 - July, 2012
Pakistan Hosiery Manufacturers and
Exporters Association
PHMA MAGAZINE I n f o r m a t i o n - Yo u r E x p o r t P a r t n e r
Inside this Magazine
Editorial
Apparel sector‟s share in global
market
Textile Industry of Pakistan: Applied
Level of Engineering and Technology
Ten Strategies to Improve Profitability in Apparel Business
News Corner
Japan Fashion Week – Tokyo
Global Clothing & Textile Industry
Call for Write up
Editorial Note
Strengths Turning Into Weaknesses
The statistics released by Federal Bureau of Statistics reveal that exports of country registered 4.71% decrease
over the last year. This is alarming because the wheel of our economy seems to be moving on reverse
gear. Textile sector has always been admitted and recognized as backbone of economy as besides being the
largest foreign exchange earning sector; its backward and forward linkages pose visible impact on the economy.
Talking particularly of the value added knitwear garments, it earned U.S. $ 1.974 billion during fiscal 2011-
2012 as against U.S. $ 2.306 over the last year showing 14.37% decrease. Similarly woven garments sector
earned U.S. $ 1.635 compared with U.S. $ 1.774 during the said period with a decrease of 7.84%.
Knitted and woven garments sectors taken together are the largest employment generators of economy but the
chronic load shedding of electricity and gas are working as rival forces against their growth efforts. An article
appeared in Business Recorder of 26th
July 2012 tells that Bangladesh has exported garments this year worth
U.S. $ 19 billion that makes more than 5 times of Pakistan‟s. They expect to triple it by the year 2020.
With all the realities of preferences enjoyed by Bangladesh, do we ever think of preparing ourselves for this
race? The economic managers and the state institutions entrusted with this task do not seem to have this item on
their agenda. God knows when they would wake up and realize their duties. With present state of mindset, our
strengths will only go on to turn into weaknesses.
MOHAMMAD AYUB
Secretary PHMA (NZ)
Apparel Sector’s Share in Global Market
Razi Syed
Pakistan‟s apparel sector is losing its share in the $400 billion
global textile market as its share has declined by $1.26 billion or
10 percent to $9.24 billion in fiscal year 2011-12 as against $10.5
billion in fiscal year 2010-11. The observed reasons are;
Increase in cost of production
Worst law and order situation and
Continuous power and gas load shedding.
The value-added textile exports of Pakistan have gone down by 9.8
percent in February 2011-12 to May 2011-12, whereas exports of
competitors like India have gone up by 23.87 percent, Bangladesh 7.86 percent and China 2.05 percent. it looks
that doing business at high cost , the government wants to push this huge foreign exchange earning industry to
the wall and drive the orders away to Bangladesh where gas price is 64 percent lesser as well as many more
attractive incentives exist as compared to Pakistan. Current tariff of Bangladesh is six cents per cubic metre
whereas in Pakistan it is 17 cents, which is 183 percent higher than in Bangladesh.
After increase in cess of Rs 100 per million British thermal unit (mmbtu), gas tariff in Pakistan will be 19 cents
per cubic metre, which is 216 percent higher than in Bangladesh.
The government should make sure adequate gas and power at competitive price is made available to the textile
industry instead of such frequent increase in gas prices. Consequently the end result would be that Bangladesh
will be quite competitive and we will be out of competition in the world market, he added.
The situation is other apparel trade market is as;
China is representing around 45 percent of global trade; China‟s rising costs and perceived risks are
creating more opportunities for other low cost countries.
India represents around 20 percent and Pakistan, Vietnam, Cambodia and Bangladesh are relying on their
low manufacturing costs due to cheap labour available, thus, they are building up more capacity in textile
manufacturing. India is the second most preferred country after China for textile and apparel sourcing. Its
apparel industry is touching an export target of more than $25 billion.
Turkey closely connected to Italy, is fast emerging as a critical regional player. Turkey and Brazil are the
emerging markets for investment by apparel manufacturers and traders.
Bangladesh has emerged as a key player in Ready Made Garment (RMG) sector. Seventy-six percent of
its total textile and clothing export earnings comes from the apparel industry.
Eastern European countries have suffered a slight set back due to their growing costs. As a result they
are rapidly refocusing and repositioning on higher market segments. The apparel industry supply chain
can be broadly categorised into five major components as
1. Raw materials 2. Textile plants 3. Apparel plants
4. Export chains 5. Apparel manufacturers
The apparel industry is estimated to grow at very high pace and will provide employment to a large number of
people all across the world. Developing countries in Asia continue expanding their textile garment industry due
to their very-low-cost production. Apart from China, the true gainers of the post-quota period are India,
Bangladesh, Cambodia and Vietnam. It is also assumed that global textile production has started growing and
by 2014, it would be 50 percent from current 30 percent growth.
Building trust with buyers goes beyond answering their e-mail queries on time. The buyers has to be won over
by his having to invest very little time on production follow ups and wondering if he will get his order in full
and on time (OTIF- On Time In Full). Manufacturing or infrastructure can be replicated but great service is very
difficult to copy. This can become a truly distinguishing feature for Indian companies if they put their heart and
mind to it. If the buyer can‟t be provided with online access to his order status, then needs to be updated on all
relevant information without them asking for it. No last minute surprises should be sprung upon them!
Companies need to set the benchmark and have self-belief that they can actually deliver 100% of the orders on
time and in full. Apparel companies should move up from providing just a product to a product plus service
bundle which can take up a large part of what the buyer has to do. This can include pre-production pattern
making, prototype development, production monitoring, in house inspection and testing including shipment
audit.
4. Responding to the challenges and enter in domestic market: Apparel exporters need to focus on the
domestic market also, as there is huge growth in domestic apparel retail (Indian market). Exporters can give a
much better product at a lower cost. This will help them mitigate and diversify their risks; spare capacities can
be used more effectively.
Another aspect which merits serious considera
tion is going for two shifts. Needless to say that production can be almost doubled while cost per unit would
come down. Factories should look at forming alliances with other factories in a particular region so that spare
capacities can be effectively utilized. So a particular factory which has an order booking more than its capacity
can utilize the capacity of another factory which may be facing a shortfall of orders. The important thing is that
factories should be running at peak capacities throughout the year.
5. Improve work environment to drive revenue growth: Apparel companies should look at novel human
resource practices to make their organizations a place which attracts the brightest young talents of the country.
The work atmosphere should be such that it helps a person be at his creative best rather than a culture of getting
work done through stick alone. Also senior management should give a patient hearing to these youngsters who
may be brimming with radical ideas which could provide an innovative new method or even a breakthrough.
Everyone needs to be respected no matter how low they are in the organizational hierarchy. (The following five strategies can be classified under immediately addressable areas 3-6 months‟ time frame).
TDAP is participating in the captioned fair to be held in Tokyo - Japan from 23-25 January 2013.Interested members may get their names registered directly with TDAP under intimation to this Association.
Global Clothing & Textile Industry The world clothing and textile industry - encompassing clothing, textiles, footwear and luxury goods - reached
almost $2,560 trillion in 2010, according to MarketLine. The apparel, luxury goods and accessories portion of
the market, which accounts for over 55% of the overall market, is expected to generate $3,180 billion in 2015,
with a yearly growth rate in excess of 4%.The market uses intelligent bar codes to track products in a system
called radio-frequency identification (RFID). According to IDTechEx, the apparel market will call for 20
billion FTID tags a year from 2021, at a cost of $1 billion.
Market Outlook
The global clothing and textile industry has been affected by the economic recession, with consumer spending
and confidence in the West being reigned in. In Asia, consumer spending continues upward curve. With cost
cutting an essential practice in the industry, companies will continue to optimize energy use and other resources.
Many textile manufacturers are reviewing their processes and input streams to cut down on demand for energy
to boost competitiveness.The future may hold changes for regional markets should Pakistan be granted duty-
free access to the EU, which is under consideration. Duty-free access, under the Generalized System of
Preference in the EU, has been opposed by other emerging country rivals including India, and the European
Apparel and Textile Confederation.EU demand for clothing and textiles will likely remain relatively weak
through 2015 due to the debt crisis.
Regional Market Share According to textile Intelligence report the clothing imports in the EU exceeded $91 billion in June 2011. This
represents an 18% rise, which was mainly due to a 13% rise in average import prices as import volume grew
less than 5% to just over 4.4 million tons. Average import prices reached a nine-year high in 2011, mainly due
to raw materials prices.
Key Market Sector: Glimpse
The world children‟swear market is expected to exceed $186 billion in 2014, marking a 15% increase in
five years. Americaholds under 40% of global market.
The world bridalwear market is expected to reach almost $57 billion by 2015. The market is driven by a
trend toward making weddings more and more exceptional, with the wedding dress a focal point.
The world menswear industry is expected to exceed $402 billion in 2014 representing over 14%
expansion in five years. The leading market sub segment is clothing and footwear, with over 58% of the
market. Americahas a 35% stake in the overall market.
The world women‟swear industry is expected to exceed $621 billion in 2014representing over 12%
yearly growth. The leading market sub segment is clothing retailers, with over 64% of total market
value. The EU has a more than 37% stake in the world market, which is relatively fragmented and
highly competitive.
The global smart fabrics and interactive textile market is expected to reach almost $2 billion by
2015.Market will be driven by economic recovery, new product offerings and a rising degree of
consumer confidence. Product innovation will partly concern new generation fibers, including hybrid
materials and nanofibers.
The world technical textile market continues to record strong growth. Technology usage is on the rise
due to technical textiles and demand for better quality products using materials such as wool and fiber.
As new high-tech fibers are more complex than traditional fibers, the production process calls for more
research and qualified engineers.
The world market for textiles made from organically grown cotton was worth over $5 billion in 2010.
US and EU clothing imports and China‟s exports grew in value in 2011. Companies that recorded
increased revenue include: Benetton, Levi Strauss, H&M, Gap, Marks and Spencer, GildanActivewear,
TJX and Perry Ellis. In the EU, the clothing market is predicted to show almost 5% yearly growth from
2010 to 2015.
Source with thanks: http://www.reportlinker.com/ci02115/Clothing-and-Textile.html
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