In a meeting with the Commerce and Industry Ministry, textile manufacturers and exporters on Thursday reiterated caution against opening up the domestic market for China under the proposed Regional Comprehensive Economic Partnership (RCEP) agreement. Sources present at the meeting said they pointed out added competition from Chinese cheaper goods may put pressure on domestic sales at a time international business has been under threat from Bangladesh and Vietnam. However, the government has assured them their interests will be protected. RCEP is India’s most ambitious trade pact, currently under negotiation. Based on India’s existing free trade agreement (FTA) with the 10-nation Asean bloc, the RCEP will include all the nations with which the Asean has trade deals — New Zealand, Australia, China, India, Japan and South Korea. At the last such meeting on RCEP, the Confederation of Indian Textile Industry (CITI) had cautioned the government to tread carefully while ceding space to China in the global textiles and clothing (T&C) sector. Half of India’s T&C trade in RCEP is with China, with which it had a big trade deficit of almost $1 billion in 2018, it had said. Export of readymade garments, in which India’s export competitiveness has fallen over the past fiscal year, contracted by 2.44 per cent in August. The sector had shown signs of steady recovery in July with 7.66 per cent growth, after months of continuous contraction. However, CITI said that while the ongoing US-China trade war presents an opportunity to Indian textile manufacturers to enhance their exports to the US, China too would be looking for new markets for its products. This is true for the fabrics sector, which has seen a division in opinion on RCEP. China, South Korea and major Asean markets may become large destinations for fabric industry. "The RCEP accounts for nearly 30% (USD 50 Bn.) of global trade in Man-made fibre textiles and this share is growing rapidly.The shifting of production of textile products from the west to the east is increasing both intra and inter-national textiles trade in this region," the Synthetics and Rayon Textiles Export Promotion Council said. "We have suggested some caution be exercised during the talks on reducing tariffs for textile products. Accordingly, we have asked that some items be kept in the negative list when it comes to China," a senior functionary of Apparel Exports Promotion Council, said. So far, RCEP talks have seen 28 rounds of negotiations, apart from seven minister-level meets. New Delhi has apparently made it clear that significant tariff concessions have already been made and further talks would be based only after an equal push by China. However, significant changes are expected before November 4, the deadline decided on by all negotiating countries, including India. “As long as India’s domestic industry and our national interests is protected, the faster it (the RCEP) is done, the better it is for India,” Commerce and Industry Minister Piyush Goyal, had said last week. He had added that cotton textile exporters have also requested a speedy conclusion to the negotiations, citing an 8 per cent duty that hinders their chances of exporting to China. In the meantime, India is preparing a final list of products on which it may retain import tariffs for China, painfully aware of a huge trade deficit. Such a list is based on its plan of a “differential tariff reduction” for various nations. Also under consideration is a mechanism to fix an import ceiling, again particularly for China. This is the first time New Delhi will fix such a ceiling in any trade deal. Goyal also met representatives of the pharmaceutical and chemical industries on Thursday. Pharma players have been relatively favorable to the deal. A senior official said they have argued for greater access to Chinese markets. China imports about $25 billion worth of medicines, of which India's share is currently only $200 million.
Source: DFS News
Gujarat has an installed capacity of nearly 47 lakh spindles, which is too high compared to overall demand for yarn, said Parikh, adding that already 20% of them are closed and others are functioning at 60% capacity. Notwithstanding expectations of a bumper cotton crop following good rains , hundreds of closed ginning and spinning units in Gujarat will not get a much-needed boost. To make matters worse, those functioning at lower capacities are likely to suffer double whammy of depressed international cotton prices and higher minimum support price (MSP) of Rs 5,550 per quintal. Almost 40% of 1,200 ginning mills and 20% of spinning units across Gujarat are closed due to issues related to shortage of raw material. Even after adequate fresh arrivals of raw material in the markets on account of bumper cotton crop, their plight is less likely to change. Industry sources fear even worse situation in coming days if their competitiveness in international market does not improve. With almost 30% of the country’s total production, Gujarat is considered as the largest cotton producer in the country. Compared to last year’s around 320 lakh bales (a bale consists of 170 kg) cotton crop, this year bumper crop of 380-400 lakh bales is being projected across the nation, said All Gujarat Spinners Association president Saurin Parikh. Sowing area of cotton in Gujarat has gone up from last year’s 23 lakh hectare to 26 lakh hectare following good rain. Against last year’s 92 lakh bales, cotton production in Gujarat may cross 120 lakh bales, adds Parikh. Saurashtra region of the state alone accounts for almost 70% of Gujarat’s total cotton crop. Gujarat has an installed capacity of nearly 47 lakh spindles, which is too high compared to overall demand for yarn, said Parikh, adding that already 20% of them are closed and others are functioning at 60% capacity. Spinners are not optimistic about export market, but they are expecting domestic demands to increase in the wake of impending Diwali festivities. “It is difficult to run ginning mill in current scenario. Going by the MSP, per candy (355.62 kg) price is around Rs 42,000, which is Rs 3,500 higher than the prevailing international cotton price. Higher domestic prices are a major handicap for Gujarat based ginning mills as they are losing competitiveness in export market. Now, we are banking upon domestic demand,” said Arvind Patel, vice-president of Saurashtra Ginners Association.
Source: Financial Express
India hopes to export more generic drugs and textiles to Chile while the South American country wants to increase its exports of fish, oats, fruits, industrial products and chemicals, as the two have formally exchanged the terms of reference for expanding the bilateral preferential trade agreement (PTA). New Delhi has also sought cooperation in sourcing of Lithium from Chile to support its drive to popularise the use of e-vehicles in the country, in a recent meeting between Commerce Secretary Anup Wadhawan and Special Envoy of Chile for Asia Pacific Eduardo Frez Ruiz-Tagle, a government official told BusinessLine. “India-Chile bilateral trade has a huge potential to expand as it is currently at a low level mostly because of the distance separating the countries. Both governments are hopeful that once the expansion of the existing PTA takes place, there will be greater incentive for exporters in both countries to explore the markets,” the official said. Ways to increase investments between the two countries was also discussed. “Once the expanded PTA is in place, the two countries will also explore a possible full-fledged Comprehensive Economic Partnership Agreement including goods, services and investments,” the official added. India-Chile bilateral trade is around $2.5 billion annually. Under the expanded PTA, Chile has offered concessions to India on 1,798 tariff lines (products) with margin of preference (MoP) ranging from 30-100 per cent. This means that once the expanded PTA is implemented, Chile will impose lower duties on 1,798 products imported from India compared to what it imposes on its other trading partners under normal trade. The duties will be lower by 30-100 per cent (margin of preference) depending on the item. India, on its part has offered concessions to Chile on 1,031 tariff lines with the margin of preference ranging from 10-100 per cent. Although India’s concessions cover a number of farm and food items including meat and meat products, fish and fishery products and vegetable oils, it has not agreed to reduce import duties on Chilean wine as it is a sensitive sector, the official added. Chile has offered concessions to India in sectors such as agricultural products, organic and inorganic chemicals, pharmaceuticals, plastic and rubber articles, textiles, apparel, articles of iron/steel and copper, machinery and equipments. India hopes that once the PTA is expanded, the export of pharmaceuticals will increase significantly especially in the light of a recent MoU signed between India’s STC and Chilean agency CENABAST for sourcing of high standard generics. New Delhi’s increased engagement with Chile is part of its broader approach of increasing engagement with Latin America so as to expand the countries trade interests beyond the traditional markets of the EU and the US.
Source: The Hindu Business Line
NEW DELHI: India and the US are trying to take the bilateral talks forward and thrash out a trade package before commerce and industry minister Piyush Goyal returns from the US later this week. While the two sides seem to have reached a mutually satisfactory resolution of pricing of medical devices, India may have to accommodate the US’ demands on market access for its almonds, nuts and berries to arrive at a trade package before they work on a larger bilateral trade deal. Goyal will participate in a roundtable discussion organised by the US-India Strategic and Partnership Forum in New York on Thursday before he travels to Washington for trade negotiations with American trade officials. He flew to New York on Monday from Dubai. “Both sides are ironing out the issues to take the talks forward by harvesting low hanging fruit like market access to agricultural products,” said an official. Market access to American agricultural and dairy commodities, restoration of Generalized System of Preferences (GSP), price controls on medical devices, duty cuts on Harley Davidson bikes and information and communication technology (ICT) products are the key areas of negotiations among a plethora of trade spats that the two sides have been embroiled in. Market access to American agricultural and dairy commodities, restoration of Generalized System of Preferences (GSP), price controls on medical devices, duty cuts on Harley Davidson bikes and information and communication technology (ICT) products are the key areas of negotiations among a plethora of trade spats that the two sides have been embroiled in. The US wants India to do away with price controls on medical devices such as coronary stents and knee implants with innovative features and keep them separate from mass products. It had asked India to scrap the 20% tariffs that exist on ICT goods for which New Delhi had considered fixing a threshold price for imported smart phones beyond which it can levy customs duty on mobile phones, smart watches and telecom network equipment. Moreover, to accommodate the US’ demand on market access for its dairy products, New Delhi was also willing to allow such imports if Washington can guarantee that these do not violate religious beliefs with veterinary officials certifying that the source animal was not raised on feed made of bovine extracts. “There could be a last-minute deal. It seems India may have to give more concessions to the US in order to arrive at some kind of a trade package. These could be in any sector,” said an expert on trade issues. However, the USTR has also sought data-related relaxations, including those in India’s ecommerce policy, which Indian officials said are non-trade issues and will be handled separately by the ministry of electronics and information technology.
Source: Economic Times
Demand is back in the system, Finance Minister Nirmala Sitharaman said on Thursday, expressing hope that it, along with increased lending, would perk up the economy in the second half of the current financial year. The finance minister’s statement came amid growing concerns about a slowing economy. The economic growth plunged to an over six-year low of 5 per cent in the first quarter. “Things are looking forward and upward from here, and we hope to take this message across,” Sitharaman said after holding a meeting with top executives of private sector banks, housing finance companies, and micro finance institutions (MFIs). Last week, she had met heads of public sector banks and asked them to go for an outreach programme to step up lending. None of the bankers in the meeting on Thursday said they faced any liquidity issues. They, however, admitted there were some glitches, such as those related to know-your-customer (KYC) norms and co-origination of loans by non-banking financial companies (NBFCs) and others. They also said there was enough demand for loans, she added. “On the whole, it was a very tonic-like meeting where I heard good things, positive things," she said, adding that “the message I got is that consumption is happening and there are no liquidity issues".Finance Secretary Rajiv Kumar invited private sector banks to join the outreach programme in 400 districts for potential lending. The first phase of the programme will start in 250 districts from October 3-7, he said. The next phase will begin around Diwali. Maintaining that there was no liquidity issue, Kumar said the outreach programme was being organised to take advantage of the festival season. “We see a huge opportunity in the outreach programme announced by the government. We feel that this is an opportunity for us to do our dharma,” Kotak Bank Vice Chairman and Managing Director Uday Kotak said. The finance minister indicated that the economic slowdown seemed to have bottomed out and the coming festive season would help the economy start looking up. Bandhan Bank CEO Chandra Shekhar Ghosh said demand for credit was comparatively slow in the first two quarters of the year, but might pick up during Durga Puja. Sitharaman said private sector bankers told her that problems related to commercial vehicles were cyclical and would be over in a couple of quarters. So far as passenger vehicles were concerned, these were largely driven by sentiment and lending to the segment would gather pace in the near future, the FM was told. “If there was a problem in liquidity, it was related to wholesale financing and not retail,” Sitharaman said. She said affordable housing had really taken off, but some of the bankers demanded that the upper limit for loans in the segment be raised to Rs 50 lakh from Rs 45 lakh. Sitharaman said MFIs were there in remote areas of the country and they told her there was still demand and that they were growing at 10-20 per cent. Bankers also told the FM the services sector, which dominates the economy, showed a high appetite for credit. IDFC First Bank CEO V Vaidyanathan said the finance minister gave two hours of patient hearing to the lenders. He said demand was strong at the lower end of the ecosystem and there was “no slowdown at all”.
Source: Business Standard
Confident about the Indian growth story getting a big boost from the recent corporate tax rate cuts, eminent banker Deepak Parekh has said profit-making companies should pass on a part of the benefits to consumers by lowering their product prices as that would also help increase their sales. He also dismissed concerns about any major impact on fiscal deficit side due to the government foregoing a big chunk of their estimated tax revenues and said a strong disinvestment pipeline, starting with Air India, should help fill the gap. "Our tax rates have become very competitive now and the government's move to lower corporate tax rates should help the country attract manufacturing units which we were losing to countries like Vietnam, Cambodia, Thailand, Indonesia and the Philippines," Parekh told PTI in an interview. "We were losing manufacturing units in sectors like textiles to these countries and fresh investments can now come to India with lower tax rates," he said. Parekh, chairman of financial sector conglomerate HDFC Ltd, said the government move has been taken well by foreign investors as well. "The sentiments and confidence level have got a big boost. Profitable companies can pass on part of benefits to consumers by reducing product prices. The companies can reduce their margins a little bit, so that their sales pick up. "If a company wants to be competitive in the market and if it wants to sell its product more, it should share the tax cut benefits by lowering the product prices," he said. He said the reduction of GST rates on hotels and catering etc would also give these sectors a boost. Last Friday, the government slashed corporate tax by almost 10 percentage points as part of efforts to pull the economy out of a six-year low growth rate with a Rs 1.45-lakh crore tax break. Base corporate tax for existing companies has been reduced to 22 per cent from the current 30 per cent; and for new manufacturing firms, incorporated after October 1, 2019 and starting operations before March 31, 2023, to 15 per cent from the current 25 per cent. Several experts have, however, warned that India's fiscal deficit will widen as a result of the corporate tax reduction by the government. According to Moody's Investors Service, the tax rate cut is credit positive for companies, but it is credit negative for the sovereign, as it aggravates mounting risks for the government in meeting its fiscal deficit target. Asked about the possible widening of fiscal deficit, Parekh said the government has clearly said there are 7-8 central public sector enterprises where they have already got Cabinet approval for divestment. Expecting Air India to go first off the block, Parekh said a part of the national carrier's debt has already been transferred to another company to make its sale viable. "Air India may be the first company to be sold to private sector. Similarly, there would be other PSUs," he said, while sounding confident that the airline would definitely get sold despite failure in the previous attempts. "Disinvestment should take care of the concerns on fiscal deficit side. All of these may not happen in this fiscal, but six months is a long time and 3-4 companies can get sold and generate necessary funds for the government," he said. Asked whether the steps were needed to give a push on the demand side too by lowering individual tax rates, Parekh said, "I think it would be difficult to bring down the rates for individuals as the tax for higher earning people has been just increased." "What the government has done is a much neater way of doing it," he said. Economic growth hit over six-year low of 5 per cent for the first quarter ended June 2019 and many economists have attributed it to a demand slowdown. Parekh expressed confidence that the demand would pick up too as macro fundamentals are strong for India and at least half a dozen factors are going well. "Inflation is at all-time low, interest rates are all-time low and dropping, dollar and rupee are stable and forex reserves are all-time high at over USD 430 billion, which covers around 11 months of imports," he said. He said India never had this type of cushion in terms of forex reserves and it is a huge achievement as there was a time when the country had just 15 days of cushion. "Oil price, barring a few days when it went up by around 15 per cent due to attack in Saudi Arabia, has settled down back at 60-65 (US) dollars and it is not near 100 dollars as feared. "What we have heard from Prime Minister Narendra Modi from his US visit, the US has become the largest supplier of oil and commitment has been made by American energy companies that they will do more. "This means we have a well covered insurance plan for our massive oil imports. Some experts have even said the oil prices could come down to 20 dollars. While all of that is speculation, oil prices going up is less possibility, unless there is a war or something in the Middle East," he said. Asked whether the interest rates can go down further, Parekh said, "They can, but they are already low." "Besides, chances of rates going up are not there for sure. A marginal drop may be there next time," he said. The RBI has reduced its benchmark rate by 110 basis points in the past four consecutive policies and the next review is due next week, with some experts anticipating a further cut of about 25 basis points. Parekh said that even a little larger fiscal deficit should not be a concern if GDP growth was good. He said the fiscal deficit target of 3.3 per cent was a self-imposed one and it was our own commitment. "It is an internally decided number and marginally going up to 3.4 or 3.5 per cent should not be a problem. I am not talking about going up by say 1 per cent, which would mean over Rs 2 lakh crore," he said.
Source: Free Press Journal
Suchita Jain has taken her family business, Vardhman Textiles, to new geographies and new heights. She emphasises that providing enough opportunities for women is at the core of the group’s vision. When Suchita Oswal Jain, Vice Chairman and Joint Managing Director of the Vardhman Textiles Ltd, joined the family business at the age of 22, around 20 years ago, there weren’t many women at the helm of companies. But she says she never felt awkward as it “came from within”. “There is just one key to success in any field, and that is passion. You must have junoon for whatever you do,” she says. It is this junoon that has seen Suchita through as she set up the woven fabric division for the group, a unit that is spinning profits.
Weaving a passion
Born in Ludhiana, Punjab, she completed her master’s in commerce from Panjab University. She also completed the Accelerated Development Programme from London School of Business, and the Special Programme on Project Management from IIM-Ahmedabad. Suchita knew there were enough opportunities within the Vardhman Group where she could contribute. However, it still was not a given that Suchita would join the family business. She remembers visiting the factories as a teenager and in course of time, Suchita felt naturally inclined to the business of weaving and fabrics that she says, “requires a lot of attention to detail and a good sense and appreciation for colours, patterns, and fashion trends. I was able to identify a lot of areas where I could contribute significantly in bringing economies and efficiencies”. “I could have joined any other company or started something of my own. However, when I was growing up, I realised there were opportunities in the group itself where I could contribute in bringing efficiencies, taking the company to new geographies and to new heights. Thus, there was natural synergy between my attitude, skill set, and the opportunities.” Suchita set up the Woven Fabric Division of the group that has a capacity of more than 180 million metres per annum. The company exports yarn to around 40 countries, and the production is spread out in Punjab, Himachal Pradesh, and Madhya Pradesh, and employs more than 28,000 people. She has woven connections between Vardhman and global brands such as GAP, Benetton, and Esprit. She also actively participates across different functions and departments and engages herself in various CSR initiatives. Suchita has been instrumental in the group adopting a number of environment-friendly practices in manufacturing as well. “I can say with a little bit of pride that I have been instrumental in making Vardhman Group country’s largest textiles conglomerate engaged in manufacturing of yarns, fabric, threads, fibre, and garments with a total turnover of nearly $1.1 billion today.” The CSR initiatives are really close to her heart. “We have been able to augment or set up physical infrastructure in many schools, including setting up of classrooms, toilets, desks, water purifiers, and other such arrangements that ensure children and teachers can focus on education and not worry about health issues. We are also helping Sri Aurobindo College of Commerce in Ludhiana to construct ‘Mother Auditorium’ in the college. I am also involved in a new CSR project, which is called ‘Nandini’. It’s an initiative to help rural women and young girls break the silence on menstrual hygiene and health.” In fact, the group has employed 1,000 women at its location in Madhya Pradesh, where they are also provided with hostel facilities. Apart from those mandated by law, Suchita emphasises that ample opportunities for women are at the core of the group’s vision. This includes continuous training sessions so women can take up leadership positions and bigger responsibilities.
Traversing the highs and lows
Suchita speaks of the period between 1992-99 when the fabric business was in its nascent stages, and she had to face some major challenges. These included achieving operational excellence, human resource training, skill enhancement, marketing, and profitability. “The decision to serve the toughest quality conscious market of Europe within a year of inception shortened the gestation period. We achieved what we set out to do, despite the quota regime and anti-dumping duties,” she adds. According to Suchita, the highs have “not been coming in bits and pieces, but in a continuous flow forming a beautiful stream”. “Ever since I joined the Woven Fabric Division of the group back in 1990s, it has become one of the growth engines, and is still expanding and growing. Because it is still growing and we, as a group, are able to add to new foreign destinations for exports every now and then, I think the highest high is still to come!” Suchita is married to Sachit Jain, and has two daughters, Saumya and Sagarika. Both were very young when she joined the business. “I would juggle between work and family, but got adequate support from my husband and family members. My husband always encouraged me. Now my girls are grown up so I can dedicate more time to the business.” Is it still difficult to be a woman entrepreneur in India? The entrepreneur believes things have changed now, and women are not only leading many businesses, but are also mentoring men in their businesses and in various other capacities. “They have outlived the stigma or the mindset that they are good only for managing homes and bringing up children. They have broken many of the notions that are attached to them by the society. Women are transforming the business culture, and I am happy to be part of the change,” she says. Though the Vardhman Group currently has a turnover of nearly $1.1 billion, Suchita believes they have only just scratched the surface. “We want to grow this manifold, and export to even more countries, thereby establishing the finesse of Indian workers and entrepreneurs. India has tremendous potential and Indian companies can really do well in the international arena,” Suchita says.
Source: Yourstory
Tukatech has opened its new TUKAcentre in Bengaluru, India. TUKAcentres offer a complete array of services for fashion design and development, and the most-advanced fashion technology and industry knowledge for any type of apparel customer. Tukatech is the garment and apparel industry’s leading provider of end-to-end fashion technology solutions. In collaboration with Jagdish Chawla, founder of Design Wolf Studio, this unique centre goes beyond a full-service facility. Patrons now have a creative workspace to bring their concepts to life. Fashion professionals can take advantage of apparel CAD, 3D virtual sampling, sample cutting, and sewing. A communal micro-factory concept will assist in the production of small runs, according to a media statement by the company. The Bengaluru TUKAcentre will help start-up companies, e-commerce companies, brands, and supply chains to come onto the same platform. The one-stop centre offers services such as plotting, pattern making, grading, marker making, and sample making, and through to cut and sew and supply chain guidance. The five-story building designed for collaboration or private meetings offers desks and private meeting spaces. “This is our 54th TUKAcentre opened in a city known as Indian Silicon Valley. Bengaluru is where most of the e-commerce companies and major US and European apparel brands are headquartered. These services will help almost all these companies that need technical services without the need for hiring specialists and purchasing equipment. The TUKAcentre is a dream come true for a lot of start-up companies who could not afford the technology, lack the technical know-how, or simply need guidance. The centre provides so many people so many services that it should just create more legendary followers,” Ram Sareen, chairman and CEO of Tukatech said.
Source: Fibre2Fashion
Prevention of smuggling in five key industries - textiles, readymade garments, cigarettes, machinery & parts, and consumer electronics - can increase employment in India by up to 16.36 lakh jobs, says a new Ficci study released here on Thursday. This is because of backward linkage and multiplier effects of these industries, said the report, adding that total direct livelihood opportunities lost in these five industries was around 5 lakh in 2017-18. Speaking at an event to release the report titled "Invisible Enemy - Impact of Smuggling on Indian Economy and Employment", Union Minister of State for Finance Anurag Singh Thakur said that Indians needs more awareness to understand the difference between fake and original goods. He urged people to leverage technology to stop this growing menace. The government along with organisations like Ficci must fight against counterfeit, smuggling and piracy, he stressed at the sixth edition of the "MASCRADE 2019" event organised by Ficci CASCADE (Committee Against Smuggling and Counterfeiting Activities Destroying the Economy). Stating that counterfeiting and smuggling directly impact health, economy, education and society, Union Minister of State for Home Nityanand Rai expressed the hope that the country will soon overcome this problem which triggers criminal activity. Highlighting the several initiatives taken by the government to fight the menace of smuggling and counterfeiting, P. K Das, Chairman, Central Board of Indirect Taxes and Customs said that "CBIC India is equipped with all advance technological wherewithal to detect counterfeit and smuggled products." "Money generated through illicit trade funds organised crime and nurtures illegal drugs trade," he said. Trade in smuggling, contraband, counterfeit and pirated goods has risen steadily in the last few years and now stands at 3.3 per cent of global trade, said the report.
Source: Free Press Journal
Egypt’s ministry of trade and industry and Switzerland recently announced scaling up collaboration to strengthen the competitiveness of Egyptian textiles and clothing producers. The aim is to boost exports, create jobs and raise incomes. The new initiative forms part of the three-year Global Textiles and Clothing (GTEX) programme. The partnership for the initiative, ‘Egypt: Improving the International Competitiveness of the Textile and Clothing Sector’, was formalised by Egypt’s minister for trade and industry Amr Nassar and ambassador of Switzerland to Egypt Paul Garnier in Cairo on September 22. GTEX programme is funded by the Swiss State Secretariat for Economic Affairs (SECO) and is being implemented by the International Trade Centre (ITC), a joint agency of the World Trade Organisation and the United Nations. The initiative will also be aligned with the Textiles and Clothing Programme for Selected Middle East and North African countries (MENATEX), which is funded by the Swedish International Development Agency (SIDA), an ITC press release said. The new project aims to support Egypt to build a sustainable export-oriented sector with increased sales to traditional and new markets, with a focus on creating long-term and sustainable employment, particularly for women and young people. ITC will implement the project in close partnership with the Egyptian Textiles, Apparel & Home Textiles (TA&HT) Export Council. The project is aligned with several of the UN Sustainable Development Goals, in particular, Goal 5 of achieving gender equality and empowering all women and girls and Goal 9 of building resilient infrastructure, promoting inclusive and sustainable industrialisation and fostering innovation.
Source: Fibre2Fashion
Geopolitical uncertainties such as Brexit, the China-U.S. trade war, and the trade conflict between Japan-Korea all impact today’s shipping market. A lot of C.H. Robinson’s coverage of these and other disruptions has focused on what it means for companies shipping into North America. But these same disruptions are also causing serious challenges to the transportation industry in China and Asia at large.
The immediate effects in China
As you might imagine, the high tariffs imposed in the China-U.S. trade war have negatively impacted China’s economy. Several trends are already apparent.
Consumption is weakening and retail sales are down
According to The World Bank, this downward path could end up reducing China’s domestic consumption of imported products by 6% before the end of 2019.
Production is leaving China
While once China may have been on track to becoming “the world’s factory for goods” that trajectory has changed. Now China is quickly becoming a consumption country. The South China Morning Post reports that China’s annual GDP growth has already fallen 6.2% in 2019—a downward trend that indicates what’s in store for the future. Labor- intensive products such as textiles, apparels, footwear, and furniture are the first industries whose production will leave China.
China is offering incentives for factories moving west
In an effort to keep production within China, the government has offered many incentives for companies who agree to move production into China’s western region. Areas like Sichuan, Guizhou, Yunnan, Shaanxi, Gansu, and Qinghai come with cheaper labor and lower expenses compared to China’s coastal cities. Unfortunately, moving factories west also creates extra expenses for inland freight as well as added transit time from the port terminal.
China’s semiconductor market is expected to show eventual grow
On a positive note, the Nikkei Asian Review estimates that the semiconductor market in China will grow in the medium term. After all, many fabricators are still in the establishment phase and can take recent changes into account when planning.
Ongoing impact in Southeast Asia countries
Of course, China is not the only country affected by the many disruptions we’ve seen in 2019. In fact, almost all Southeast Asia countries have seen some change:
Singapore as the most competitive country
Bloomberg states that Singapore has the world’s best airport. Add in the fact that the country ranks second for the world’s busiest ocean port terminal—36.6 million TEUs in 2018—and it would seem that Singapore is thriving. However, Singapore has also suffered an economic downturn since June 2019, due in part to the China-U.S. trade war wreaking havoc on many Asia export hubs. With growth only at 0.1% in Q2 2019, Singapore suffered their lowest Q2 growth in a decade.
Indonesia expected to maintain growth
Unlike other Asia Pacific countries, many experts expect Indonesia to maintain their economic growth in 2019 given its more domestically driven economy. This may help the country reduce the impact of trade conflicts better than their regional neighbors have.
Vietnam to become world’s factory?
Vietnam may just come out on top of the trade disruptions. With a strong infrastructure, including a deep-sea port that serves mega-vessels, Vietnam could be on track to replace China as the world’s factory. Already, many retailers have shifted production and manufacturing to Vietnam to avoid costly tariffs and maintain their competitiveness in the market.
Top inbound shipping challenges into China
In addition to the recent market disruptions, there are certain policies that are causing even more direct challenges to companies looking to import their goods into China.
Industrial policies favor domestic commodities
China often pursues industrial policies that limit market access for imported commodities from foreign manufacturers and foreign service providers. Instead, they promote business for domestic companies, which often limit the benefits of foreign companies and service providers.
Depreciation of China’s renminbi
China strategically keeps the value of the renminbi (RMB) weak to keep exports from China inexpensive and competitive. The BBC estimates China’s RMB will weaken even further than expected in the rest of the year and into 2020.
Extradition bill unrest in Hong Kong
The ongoing unrest in Hong Kong of the extradition bill is also affecting the economy. In fact, the South China Morning Post reported the latest numbers from the Chinese government. The article states that Q2 retail sales in Hong Kong dropped 6.7%–quite a significant difference from the 0.6% in Q1. The article also forecasts the import volumes via Hong Kong to China will also be affected.
Conclusion
The import market into Asia is significantly out of sorts to what we’ve come to expect. Leveraging your resources and the right expertise can help deal with these ongoing changes. It’s critical to work with a company and people you can trust in times of uncertainty. Turn to C.H. Robinson’s local experts in offices around the globe to help manage your freight and ensure any problems are resolved in real time.
Source: Chrobinson
The European Union, the United States and Japan continue to be the largest buyers of apparel on the planet, while South Korea and China speed up in the ranking. Despite the current trade uncertainty, the fashion industry continues a clear globalization course. In 2005, the ten largest importers of clothing represented 90.8% of the total purchases in the sector. Thirteen years later, its share has fallen to 71.3%, according to the latest data from the World Trade Organization (WTO). The share of the ten largest importers of apparel on the planet has shrinked despite they have continued to increase their imports. Europe, for example, continues to be the largest buyer of clothing after raising its imports by 3% in 2018, up to 204 billion dollars. The United States, the second largest importer of clothing in the world, increased its purchases by 1% last year, to 92 billion dollars. Japan completes the top three. Last year it raised its imports of apparel by 8%, up to 30 billion dollars. Despite continuing to increase its imports, Europe has shrunk its global share from 47.3% in 2005 to 38.4% in 2018; The United States, meanwhile, has increased it from 28.7% to 17.4%, while Japan has gone from 8.1% to 5.7%. Beyond the major global buyers, South Korea, China and Switzerland have been the countries that have increased their imports the most in 2018, registering double-digit advances. South Korea, which takes the fifth position in this classification, raised its purchases by 16% in the last year, placing them at 11 billion dollars, the same amount as Canada. China, on the other hand, increased its purchases by 14%, to 8 billion dollars, similar to Russia and Switzerland, which increased 13%. Top ten world importers of clothing put their purchases of clothing at 378 billion euros. Its weight in all global imports also increased. In the case of South Korea, the country has gone from having 1% in 2005 to 2% in 2018; China, from 0.6% to 1.6%, and Russia, from 0.3% to 1.5%. Switzerland, on the other hand, has contracted it, from 1.6% thirteen years ago to 1.4% the previous year. Also, in textile imports, the ten largest players have been losing prominence, going from generating 62.2% of global purchases in 2005 to 54.6% in 2018. The European Union, which continues to be the world's largest importer, reduced its purchases in 2018 2%, up to 77 billion dollars. In this regard, the common market has increased from 33.6% of total textile imports in 2005 to 23.1% last year. Vietnam and Bangladesh are already the fourth and fifth largest world importer of textilesOn the contrary, new productive poles, such as Vietnam, Bangladesh and Indonesia, have gained prominence, which only in the last year increased textile purchases by 10%, 17% and 21%, respectively. Vietnam and Bangladesh are now the fourth and fifth largest world importer of textile items. Their purchases have gone from representing 1.6% and 1.1% of the total in 2005 to 5.3%. Indonesia’s jump has been much greater, from 0.4% thirteen years ago to the current 2.1%.
Source: The MDS
