Global recovery in yarn and fabric production was witnessed in the 4th quarter of 2009, with reference to the data released by the International Textile Manufacturers Federation (ITMF).

Yarn and fabric production rose in Asia and Europe, whereas South and North Americas recorded reduced output levels compared to the previous quarter. Production in North America reached lowest levels ever, the ITMF said.

World yarn production rose 6.1% in 2009 Q4 in comparison to the previous quarter. It underlined an upward trend, which could be observed since the first quarter of 2009. While Europe and Asia registered increases of 12.8% and 5.5% respectively, yarn production in North and South America fell by 2.6% and 10.2% respectively. This was the lowest level ever recorded in North America.

Fabric production grew worldwide by 4% in the last quarter of 2009. Europe and Asia recorded higher output levels of 18.8% and 5% respectively, whereas South and North Americas reported lower output levels of -17.2% and -7.3% respectively. Year-on-year global fabric production rose 9.3% as a result of higher output in Asia (+11.9%). Europe (-1.9%) and South America (-2.8%), on the other hand, recorded slightly lower production levels compared to the previous year.

East Asia

China

Textile and apparel exports fell in March

China's General Administration of Customs said export value of textiles and apparel in China in March 2010 fell 9.54% year-on-year or 12.9% from this February to US$11 billion.

In its latest report, the Chinese customs said the export value of textile products was US$5.05 billion in March, up 6.7% year-on-year and 10.6% comparing to this February.
The value of apparel exports was US$5.96 billion, down 19.8% from the same period of last year and 26.2% from the previous month.

In the first quarter of 2010, the country's exports of textiles and apparel increased 15.3% from that in the previous year to US$39.25 billion in total.

The exports of textile products grew 26.6% comparing March 2009 to US$15.21 billion in Q1 this year, while export of apparel rose 9.1% to US$24.04 billion.

Southeast Asia

Indonesia

Local industry called to supply domestic market

Seeing the potential of the domestic market, local apparel sellers encouraged Indonesian textile and apparel producers to supply their products locally.

When discussing the possible impact following the implementation of ASEAN China Free Trade Area (ACFTA), Perry Tristianto, owner of Raja Factory Outlet in Indonesia, commented that a flooding of imported apparel from many different countries has been observed since a long time ago. The FTA thus should not be seen as a new threat.

Local consumers have developed an affection with imported apparel e.g. from China not only because of a lower price but the entailed added value in terms of trendiness. "Consumers no longer consider price as the main concern but also the current fashion trend, imported apparel can answer this need," said Mr Tristianto.

Domestically made apparel intended for the home market is considered not paying much attention to current fashion trends. Moreover, he was surprised that quality, domestically made products are mostly meant for export markets. "Many producers in China and India come to me to supply but not local producers," he says.

At a recent seminar in Jakarta, Ansari Bukhari, Indonesia's director general for textiles at the Industry Ministry, reported that out of the Rp50-trillion local market, 64% was made domestically while the remaining 36% is imported, including roughly 10% of illegal imports.

Restructuring subsidy to large firms continues through 2015

While continuing the textile restructuring program between 2007 and 2015, the Indonesian government will add new inputs starting 2010, according to Ansari Bukhari, director general for textiles at the Industry Ministry.

"Having reviewing our experience in the previous years, we came to a conclusion that the program will only focus on the Scheme I intended for large companies, and we no longer involve SMEs in the Scheme II," he said.

The program comprised two parts of schemes during 2007 and 2009 providing a subsidy of 10% for purchasing textile machines for large companies in the Scheme I and a cut of interest loan for SMEs in the Scheme II.

However, due to a low utilization of the fund by SMEs and bad loans generated after these three years, the ministry decided to focus on the Scheme I from this year onwards. The ministry will cooperate with management and monitoring consultants from Sucofindo (a government-affiliated inspection company) and independent surveyors from PT Surveyor Indonesia.

Industry asks help to cut production costs for SMEs

Chairman of Indonesian Textile Association Benny Soetrisno believed the government's support of the textile and apparel industry is important and it should help cut the production cost of the industry, particularly at the SMEs level, which group is fragile in the ASEAN-China (ACFTA).

Mr Soetrisno made three suggestions. First, the government can consider regulating the market to make room for SMEs. When procuring for uniforms and etc, governmental departments should buy locally made textile and apparel products.

Subsequently, banks should be encouraged to lower the borrowing costs of textile entrepreneurs. For instance, the bank loans for these enterprises should not too costly compared to the rate of Bank Indonesia.

Thirdly, the textile and apparel industry is labour-intensive and a large employer in the nation. Loan access for SMEs to banks should be made as a priority for this reason, he said.

Mr Soetrisno hoped the government to take necessary actions timely for the SMEs. He was concerned with the implementation of ACFTA (ASEAN-China) effective January 1 this year, given that the textile and apparel trade with China recorded a deficit of around US$900 million in 2009.

Vietnam

Exports rose 12.3% in Q1

Textile and apparel exports of Vietnam reached US$2.2 billion in the first quarter 2010, or up 12.3% from last year, amounting 15.7% of the country's total export turnover.

This remarkable growth was largely attributed by the strong foreign order increase received by local manufacturers in late 2009 and early 2010, exhibiting a recovergy in overseas export markets, according to the Vietnam Textile and Apparel Association (Vitas).

The Vitas commented that orders so far received by local textile and apparel manufacturers have already allowed them to work until the third quarter of the year, and some for the whole year.

Cotton price hikes erode profit

Rising imported cotton prices was another concern of the local industry as it relies heavily on the supply of imported cotton.

The price of imported cotton in April rose 35% compared to that in January, and up 50% from the same month in 2009, according to the data of Vitas.

These textile and apparel makers explained that the cotton price was relatively low when they signed contracts with clients. Hence, they faced difficulties in the input material cost and a slimmed profit.

The Vietnam National Textile and Apparel Group (Vinatex) started negotiating with partners in Cambodia and Myanmar for cotton plantation in these countries since last year, but agreement has not been reached.

Electricity cut-off hinders production

Though the Vietnam's textile and apparel industry was pleased with the rebounded demand, they were concerned with electricity cut-off.

From mid-April, industry players situated in the Central and Southern provinces of Vietnam experienced energy stoppage that interrupted the production.

Tran Dang Tuong, General Director of Thien Nam Spinning Company, for example, was worried about the electricity supply pauses since the factory had orders to complete and deadlines to meet. "To finish the signed contracts, we have to work even in holidays to utilize the daytime when the electricity is supplied. We were notified by the local electricity supplier that the electricity supply has a break of eight days per month, which is translated into a reduction of our production capacity by one-fourth. More working shifts on days with the electricity supply and weekends will result in higher costs," he said.

Chairman of Vietnam Textile and Apparel Association (Vitas), Le Quoc An, said that the association has worked with local enterprises to promote the development of the industry, although some local players found that discontinuity of energy supply, often without prior notice, was a source of headache for them.

Vietnam-ASEM trade revenue might reach US$107 billion

Import-export revenue between Vietnam and members of the Asia-Europe Meeting (ASEM) reached US$22 billion in the first quarter this year, representing an anuual increase of 9.2%.

ASEM is a multilateral channel for communication and dialogue between Asia and Europe since 1996. The 45 ASEM partners represent half of the world's GDP, almost 60% of the world’s population and 60% of global trade.

Total import-export earnings between Vietnam and ASEM might reach US$107 billion if Vietnam can maintain an export growth rate of 28% as it did in the 2005-2008 period, according to the Vietnam Customs. The figure might stand at US$99 billion if the growth rate was about 18%.

Markets with more than US$1 billion revenue accounted for 80% of Vietnam's total export value and nearly 90% of its total import value in 2009. Over 80% of the country's exports to ASEM were to China, Thailand, Singapore, Japan, Malaysia, the Republic of Korea, Indonesia, Germany and India.

With a total import revenue of US$6.29 billion, Japan was the country's largest import partner, followed by China with US$4.9 billion and Singapore with US$2.08 billion, the Vietnamese customs office observed.

More than 70% of Vietnam's total export earnings came from crude oil, apparel and textiles, seafood, footwear and more.

South Asia

India

Protest of US against India

The United States requested the World Trade Organisation (WTO) this March to examine whether India still qualifies for concession, which allows it to give export subsidies to the domestic textile and apparel sector. India, on the other hand, is confident that its short-term subsidies to textile exporters are legitimate.

The US authorities, in a recent submission to the WTO committee on subsidies and countervailing measures (SCM), stated that it has reason to believe that India has met the definition of "export competitiveness", as defined in the SCM Agreement for certain products. The agreement exempts developing country members (with per capita income below US$1,000) from prohibition on export subsidies, as long as exports of individual products are lower than 3.25% of world trade for two consecutive years.

"The US requests that the Secretariat (WTO) undertake a computation of the export competitiveness of textile and apparel exports from India, in accordance with Article 27.6 of the SCM Agreement," the submission stated.

Since most of the support given by the Indian authorities to textile exporters was on a short-term basis, there was a low risk of the US move leading to action against India's exports, according to an Indian government official. "Things are at an initial stage. We are certainly going to keep an eye on how things develop," he said.

At present, the subsidies being given to Indian textile exporters (which includes handicrafts and carpets) include discount on interest on loans and incentives for exporting to particular markets in the form of duty-free import scrips tradable in the market. These benefits are part of the Indian authorities' efforts to help the domestic industry amid the global economic downturn.

Other industry observers, such as Manab Majumdar, head of the WTO committee at the Federation of Indian Chambers of Commerce and Industry (FICCI), mentioned that the country could give subsidies under other flexibilities allowed by the WTO. "India is also allowed to give support to exporters under the special & differential treatment (S&DT). So, I don't foresee any problem," he said.

Seeking closer ties with EU

A high official from the European Union believed it is of mutual benefit to speed up talks on the proposed free trade agreement (FTA) between India and the European Union.

EU Trade Commissioner, Karel De Gucht, had his first official visit to Asia (Vietnam, Singapore and India) this March with advances in bilateral trade deals in the region.

In India, both Commissioner De Gucht and Minister of Commerce and Industry Anand Sharma expressed their determination to conclude the FTA negotiations ahead of the EU-India summit in October.

In Hanoi, the first stop of the trade tour, Vietnamese Prime Minister Nguyen Tan Dung and Commissioner De Gucht agreed to launch a bilateral Free Trade Agreement (FTA). This step marked a desire to deepen trade relations and improve the business environment between the EU and Vietnam, the EU authorities said. The Commission would consult with member states and the European Parliament before the European Commission and Vietnam begin work on a framework for the future launch of negotiations.

Commissioner De Gucht said: "I am very pleased that my first visit to the region has led to such concrete developments, especially a deal between the EU and Vietnam to launch future bilateral trade negotiations. This will mean more jobs and greater business opportunities for both sides. At the same time, I hope the launch of trade negotiations in Singapore will encourage other countries in South-East Asia to do the same. Vietnam, Singapore, India and many other Asian countries offer enormous growth potential for Europe's exporters and I want to tap into these opportunities which are so vital to our economic recovery."

Annual textile export growth of 20% desired: study says

The Federation of India Export Organization (FIEO) this May stated that a leap forward of the Indian textile exports by 20% is needed if the country is to strengthen its global market share.
"If we are able to achieve a 20% growth in our textile exports per annum and 15% growth per annum in domestic production, then our domestic textile market size would be US$ 213 billion by 2020 and exports would be around US$164 billion," said A Sakthivel, FIEO President.

Given the long-term growth of 7% in world trade in textiles, India's share would be around 14% in 2020 at a growth of 20% per annum, which would be almost four times of India's current share of 3.4%, the organisation explained.

The manufacture of value-added apparel should be promoted in India, FIEO pointed out, considering that India does not have a significant share (~3%) in this segment of the global trade.

An expansion of domestic apparel consumption is also desirable, the FIEO stated, given that the average world per capita fibre consumption is around 10.8 kg while that of India is approximately 5.5 kg. In addition, the use of man-made fibre to natural fibre in consumption of India is currently around 40:60, whereas the world average is 60:40.

Pakistan

Training assistance from Korea

Korea planned to set up a garment technology training centre in Pakistan and its government had sanctioned US$100 million for this project, according to the Consul General of South Korea in Karachi. The consul general said that Pakistan, with the fourth largest cotton production in the world, is an important cotton supplier.

He explained that Korean textile professionals are knowledgeable in textile manufacturing and related technology, as well as talent development. In response to the request of the Pakistani government, the Korean government agreed to offer help to the Pakistani textile industry.

The Korea International Cooperation Agency (KOICA) would provide assistance for the establishment of this training centre in Karachi. The project aims for enhancing competitiveness of textile and apparel industry by providing skilled work force. The center on completion will provide vocational training in five areas namely garment technology, knitwear technology, apparel marketing, line supervisor and sewing machine operator.

For easy accessibility, the training center would be located near an industrial area in Karachi, the KOICA said. Pakistan's Ministry of Textile & Industry would employ personnel to operate the training centre and train teachers for educational purposes.

Might not meet export targets

Pakistan's textile export target of US$10.5 billion, set for 2009-10 (July 1-June 30), is likely to be missed by US$1.5 billion, following yarn shortage, increase in electricity and gas tariff and more. Textile industry observers said that an estimated target of US$3.8 billion for apparels export, which is likely to reach US$3 billion, registering a shortfall of US$0.8 billion.

Similarly, other value-added sectors including fabrics, home textiles, towels and more were anticipated to reach an export target of US$5.2 billion whilst the actual value was likely to be US$4.2 billion. The estimated export target of US$1.5 billion was set for other raw material associated with the cotton sector.

Due to a shortage and high prices of yarns in the local market, coupled with an increase in electricity and gas prices, it was difficult to achieve the desired targets, said Dr Shahzad Arshad, Chairman of Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association.

The initial total export target was US$22 billion, which was later reduced by the government to US$18 billion, of which the textile sector was estimated to contribute more than 60%.

Bangladesh

Large orders coming from Japan

Two large Japanese companies planned to buy made-in-Bangladesh apparel merchandises.

Marubeni Corporation, one of the largest general trading companies in Japan, said it would purchase apparel worth US$100 million this year. In the meantime, Shimamura, the second largest textile retailer in Japan, mentioned it would consider placing orders with Bangladeshi apparel producers. Shimamura's president led a six-member team to Bangladesh and visited two factories in Savar in February.

Fazlul Hoque, President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), believed that these orders reflect growing Japanese confidence in Bangladeshi apparel.

"Marubeni Corporation informed us that it would buy Bangladeshi apparels worth US$100 million in 2010." He continued: "It's a very good news for us as it shows that our apparels have wooed top Japanese firms." The Marubeni order alone was twice the amount Bangladeshi garment manufacturers exported to Japan in the financial year 2008-09.

The country shipped apparel of US$12.3 billion abroad in 2009, and over 90% of the exports headed for the US and the EU. Japan accounted for 0.005% of the export last year.
Japan is the world's fourth largest textile and apparel market importing apparel valued over US$10 billion a year and a large number of the shipments came from Southeast Asian countries such as China, Vietnam, Indonesia and the Philippines.
Since late last year, Mr Hoque led three delegations to Japan in the hope to promote Bangladeshi products in the Eastern Asian country.

In the sixth edition of the Knit Expo held in April, more than 50 Japanese retailers and textile manufacturers showed up and some of them had serious talks on joint venture with Bangladeshi players in the industry while others placed orders for a range of textile products.

Besides, Mitsui Co from Japan also showed eagerness to buy Bangladeshi goods, Mr Hoque added.

Korean investor to produce more in Dhaka

Korea-owned DhongMi Textiles Company Ltd planned to set up a composite textile factory at Dhaka Export Processing Zone (DEPZ) area in Bangladesh.

Under the agreement signed between Bangladesh Export Processing Zones Authority and DongMi Textile, the Korean firm would invest about US$19.038 million and produce dyed and finished knit and woven fabrics and knit apparel. An employment opportunity for over 3,300 Bangladeshi workers and 24 foreign nationals would be created.

Sri Lanka

GSP+ with EU discussion this May

Sri Lankan government sent a high-level delegation to Brussels, Belgium, to hold discussions with the European Union on the Generalized System of Preference plus (GSP+) facility late this May.

The European Union temporarily withdrew the preferential tariff benefits given to Sri Lanka under the GSP+ this February after the European Commission had an investigatetion on the South Asian island state in relation to human rights issues. The EU allowed six months of time for Sri Lanka to take measures to meet the requirements of the EU for granting the GSP+.

Speaking at the 17th AGM of the Sri Lanka Garment Buying Offices Association this March, the EU Ambassador to Sri Lanka Bernard Savage maintained that EU was a friend of Sri Lanka and that the EU also hoped the friendship of both sides would grow further in the future.

Europe

Demanding more hemp fibres

The European Industrial Hemp Association (EIHA) observed a growing demand for hemp fibres in Europe.

In 2005 — more recent data is not available — 30,000 tons of natural fibre composites (EU: 40,000-50,000 tons), wood not included, were used in the automotive industry, requiring 19,000 tons of natural fibres (EU: 30,000 t). European flax (about 65%) and hemp (about 10%) were used, with the remaining 25% covered by imports from Asia (jute, kenaf, coir, abaca). Natural fibre compression moulding is the dominant processing technique (share of > 95%), and it is an established and proven technique for the production of extensive, lightweight and high-class interior parts in medium and luxury class cars, according to EIHA.

Between 2005 and 2009, the use of natural fibres in the European automotive industry did not expand, and in Germany even slightly decreased, after it had grown in double-digit figures each year between 2000 and 2005. Since 2009, however, there has been an increasing demand again: new models from almost all automotive companies that will be released on the market this or next year do have considerably more interior parts, made once again with natural fibre reinforcement.

With demand increasing again, new concepts and the support of bio-based products by politics, sales of 40,000 to 50,000 tons of natural fibres could be achieved in Europe by 2015, at least 10-20% of which could be supplied by European hemp, EIHA mentioned.

Germany & Italy

Textile machinery sectors see signs of recovery

Good signs were witnessed by European textile machinery sectors in 2010. "2009 was a very difficult year for our sector. 2010 can still provide a turnaround," said Sandro Salmoiraghi, President of ACIMIT (the Association of Italian Textile Machinery Manufacturers), whereas Fritz P. Mayer, Chairman of the Textile Machinery Association at VDMA (the German Engineering Federation) and Managing Partner of Karl Mayer said: "After two extremely difficult years, the German textile machinery manufacturers are guardedly optimistic for the future."

Mr Salmoiraghi mentioned some signs of a recovery were seen in early 2010, as confirmed by increased orders for the second half of 2009, and renewed investments in key markets such as China, India and Brazil. However, it takes time to wait for consumer spending to pick up again in order to see textile manufacturers return to investing with some continuity, he said, adding that macroeconomic figures have not provided a one-way indicator of the rising trend. Mixed figures and observations were witnessed these months.

Italy's textile machinery industry experienced a 21% drop in production compared to the previous year (amounting to 1,931 million euros), ACIMIT found. Exports diminished 21% to 1,506 million euros. In Italy, demand for textile machinery fell 27% in 2009 compared to the previous year. The weak internal market was also evident in a drop of imports (-32%), amounting to 359 million euros.

China, India and Turkey are the primary export markets for Italian machinery builders, albeit sales to these countries remain well lower than 2008 levels. Global demand on the whole for textile machinery has been affected by the economic crisis, as well as by a halt in investments. "These figures confirm a general crisis situation: our manufacturers have certainly not been immune, but they have reacted better," said Mr Salmoiraghi.

In Germany, the textile machinery builders also sold mainly to Asia in 2009. About 55% of the overall exports in 2009 representing 1.8 billion euros were delivered to Asia. The two big volume markets alone, China and India, imported German textile machinery and accessories of roundabout 628 and 161 million euros respectively. In January and February 2010, the exports to China rose 37% to 83 million euros compared to the same period the year before. Besides China also the exports to other Asian countries showed a clear stimulation of the market: Iran 6.8 million euros (+50%), Thailand 4.1 million euros (+42%), Vietnam 1.7 million euros (+35%), Bangladesh 2.7 million euros (+8%), according to the VDMA textile machinery association.