MARKET WATCH 20 JUNE, 2020

NATIONAL

INTERNATIONAL

India needs to boost exports as investors shift their focus from China to India: Nitin Gadkari

Union Minister of Micro, Small & Medium Enterprises, Nitin Gadkari attended a webinar on ‘Regenerative Economic Transformation', Catalyst 2030 via video conferencing. “Whole world is now not very much interested to deal with China, it's a blessing in disguise for Indian economy. A lot of people from different parts of the world want to deal with India, in this situation, we need to increase our export and reduce the import,” Gadkari said in the webinar.

Source: Economic Times

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Comm min shares list of 1,500 products with Indian missions to explore export opportunities

The commerce ministry has shared a list of over 1,500 products such as leather and textiles with Indian missions to explore export opportunities in their respective countries for domestic firms, an official has said.  Different export promotion councils are in touch with about 15 missions that have responded for organising digital B2B meetings due to travel restrictions on account of COVID-19 pandemic, the official added. The move is aimed at involving Indian overseas missions in securing alternate supply chains and market opportunities for domestic exporters, the official said, adding the chain has been disrupted due to coronavirus outbreak. These products include leather, textiles, agro-chemicals, electrical equipment like static converters, spices, and marine goods.  The ministry has analysed 1,054 major products of import from China and has identified 168 items where India has critical dependence on the neighbouring country. Similarly, 550 products were identified where both India and China are significant exporters, and where India could help fill gaps in global supply chain. "Identified products - both 1,054 and 550 - have been shared with overseas missions to explore sourcing and export opportunities in their respective countries, and guide our exporters," the official added. Last month, Commerce and Industry Minister Piyush Goyal has called upon Indian missions to play an important role in identifying business opportunities for domestic companies, exporters and make India a preferred investment destination. The minister, along with External Affairs Minister S Jaishankar, has interacted with 131 missions from different geographies through video conferencing. Goyal has stated that Indian missions should help in identification of business opportunities that exist in their countries.

Source: Outlook India

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Govt likely to unveil measures to revive demand: CEA Krishnamurthy Subramanian

The government is likely to unveil specific measures to revive demand when the uncertainties in relation to Covid-19 would no longer be there, chief economic advisor Krishnamurthy Subramanian said. “We are keen to take demand side measures. A right time to increase demand is the time when uncertainty goes,” he said on Friday while he was interacting with Kolkata-based businessmen. The economy is suffering from a demand meltdown ever since the country went on a lockdown to curb the spread of the pandemic. The severe lack of discretionary spending gripped the system as consumers look to conserve cash amid job losses and salary cuts across levels. Even the Jan Dhan account holders, for whom the marginal propensity to consume is relatively very high, have merely withdrawn 50 percent of the money transferred to them through various government schemes, State Bank of India chairman Rajnish Kumar had earlier said.Subramanian said that the discretionary spending may not rise till the world gets a coronavirus vaccine. He was speaking through a video-call organised by Bharat Chamber of Commerce. The third largest Asian economy has been facing a slowdown since 2018 and Covid-19 has added to the woes with issues like reverse migration of labour, job losses  and severe pressure on the healthcare system hitting hard. India's gross domestic product is likely to squeeze in FY21 for the first time in four decades.  “The employment scenario is going to be the pain point for this year. Rural economy is incapable of absorbing the huge exodus of migrant labour”, Soumya Kanti Ghosh, group chief economic advisor at SBI, said in another webinar arranged by Indian Chamber of Commerce. Several top economists are of the opinion that the government needs to spend more to revive demand and sustain it. Some even are suggesting extreme steps such as monetising the deficits through printing currency notes.

Source:   Economic Times

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US keen to restore GSP benefits as trade talks begin

US Trade Representative Robert Lighthizer said on Wednesday the US is in the process of restoring the benefits of low or zero duty to certain Indian exports under GSP “if we can get an adequate counterbalancing proposal from them.”….

Source:   Economic Times

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Rules of origin: Govt steps up scrutiny of Chinese dumping

Customs officials have long suspected that China may be diverting its supplies to India via Asean nations, abusing rules of origin.Amid India’s border clash with China, customs officials are set to further step up the scrutiny of the place of the origin of imported products to prevent unscrupulous elements from illegally taking advantage of the country’s free trade agreement (FTA) with any partner. Customs officials have long suspected that China may be diverting its supplies to India via Asean nations, abusing rules of origin. Given the latest skirmish and the frosty political ties, the diversion may surge, they fear. So inflows from certain Asean members, especially Singapore and Vietnam, may see a closer scrutiny now. Of course, given the Covid-19 outbreak, it will be a tough job but the intent is very much there, a senior customs official told FE. India has an FTA with Asean members and a separate one with Singapore as well. Already, an unusual 118% spurt in India’s merchandise imports from Singapore to a record $16.3 billion in FY19 had alarmed customs officials. The surge coincided with the peak of a trade war between Beijing and Washington. “The diversion basically serves two purposes: the essentially Chinese products enjoy duty-free access and it also doesn’t reflect in China’s overall massive trade surplus with India. We have been monitoring any potential violation of the rules of origin of imported products. But now, the scrutiny has to be even tighter,” said the customs official. Tighter scrutiny will also benefit genuine suppliers from Asean members, as they won’t have to face unscrupolous competitors, he added. There is a greater chance that China will divert supplies through Asean members like Singapore and Vietnam, where its companies have invested heavily, he said. In fact, the 118% spike in imports from Singapore in FY19 was unheard of despite the existence of the FTA for 15 years now. At 64%, the highest annual surge in imports from Singapore in recent memory was witnessed in FY07, a year after the FTA — formally called the Comprehensive Economic Co-operation Agreement — was signed on June 29, 2005. Consequently, India’s trade balance with Singapore exacerbated dramatically, from a surplus of $2.7 billion in FY18 to a deficit of $4.7 billion last fiscal, showed the DGCIS data. It also helped drive up India’s trade deficit with all Asean members substantially to $21.8 billion in 2018-19 from just $12.9 billion a year before.   Although the imports from Singapore dropped 6.9% year-on-year in the April-February period of FY20 to $13.8 billion, they were still more than a double of what India imported from the city-state in the same period in FY18 and way above the usual trend in the earlier years. Interestingly, in addition to Singapore, India’s trade balance with Hong Kong — widely considered a proxy for Beijing — went haywire in FY19 and turned negative for the first time in at least two decades even as its trade deficit with China eased by $9.5 billion to $53.6 billion. This had raised questions about the actual reduction in India’s effective trade deficit with China. In November 2019, India pulled out of the China-backed Regional Comprehensive Economic Partnership (RCEP) deal, as it feared, among other things, massive dumping by China and some others. So it wanted effective safeguard mechanisms and strict rules of origin to protect its industry but couldn’t get others to agree to. In fact, New Delhi was pushing for “sufficient value addition” of at least 35% in the country of exports for a product to be eligible for its tariff concession under RCEP pact, while others wanted to settle for just minimal value addition.  Sources had earlier told FE that what had reinforced suspicion of a potential diversion of some Chinese supplies was the fact that, among the high-value segments, the maximum jump in imports from Singapore in FY19 was noticed in electrical machinery and parts, sound recorders and TV images etc (158% rise year-on-year to $3.1 billion), followed by a 142% surge in certain capital goods (nuclear reactors, boilers, machinery and mechanical appliances and parts) to $2.7 billion. China is the dominant exporter of most of these products. Although such goods used to be imported from Singapore earlier as well, what raised eyebrows was the unusual spike in such inflows in one year (FY19), when there was an escalating trade war between China and the US.

Source:   Financial Express

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Industry told to submit list of Chinese imports

The Centre has asked industry to prepare a detailed list of all purchases from China and flag those critical to operations so that the government can identify nonessential imports that can be substituted with local products, said people with knowledge of the matter. This is among the many measures under consideration as the government steps up efforts to reduce the country’s dependence on China in the wake of the border crisis. “In line with decision taken at the highest levels of the government to reduce our dependence on China, the DPIIT (Department for Promotion of Industry and Internal Trade) has reached out to trade associations, seeking a list of items imported from China ranging from automobiles, pharmaceuticals, toys, plastics, furniture etc by Monday,” a senior government official told ET.  The focus has shifted to private sector after moves to bar Chinese companies from participating in central government contracts.

Source:   Economic Times

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Don't boycott China, say MSMEs! Input cost will shoot 40%

MSMEs don't want the government to impose tariffs that will make buying raw materials from China difficult - all other countries sell lot more expensive.Coronavirus-hit MSMEs have urged the government to avoid knee-jerk policy measures in response to China's military aggression on the border as they can have devastating impact on businesses. The MSMEs say a hike in import duty or placing of non-tariff barrier on items can make input cost expensive by 10-40%. Since the small companies are already reeling under coronavirus impact, any further blow will be a death knell. The MSMEs have made the call after the government identified over 300 items to impose higher duty or trade barriers in a bid to reduce import from China and other countries. The MSMEs instead suggest the government to chart out a medium to long-term plan to support local industry so that they can eventually replace Chinese imports. Leading small industry bodies such as Federation of Indian Micro and Small & Medium Enterprises, SME Chamber of India and All India Manufacturers Organisation (AIMO) have recommended a long-term import substitution plan apart from making local industry competitive. They advise the government to not take steps based on public sentiment against China. Several small manufacturers told BusinessToday.In that their input cost will go up substantially if import from China stops. According to them, importing the same raw materials from South Korea, Japan and Europe is far costlier. Firms importing chemicals, dyes, electronic items and pharma raw inputs will be the worst hit from any such measures that target China. "I think we need to think very rationally. When we are talking about raising duty or boycotting a product it should be done very smartly," says FISME President Animesh Saxena.  He cites the example of pharmaceutical ingredients, saying that nearly 70% of the APIs are imported from China. If these imports are stopped, the cost of medicine will go up. This will eventually hit the poorer section of the society, he says. Similarly, there are other items which are imported from China and any increase in their cost will have a ripple effect - the burden will eventually be on end users. SME Chamber of India Founder and President Chandrakant Salunkhe echoes the view saying the country has to first empower local manufacturers which are currently facing myriad problems due to coronavirus. Any supply disruption at this juncture would impact local manufacturers to meet export demand. "In case we import various products from other countries instead of China the rate would go up in the range of 25-40%. If we decided to import the same products from South Korea, Japan or other countries we will end up paying more. Moreover, we will have to find new suppliers and negotiate with them which will take time," Salunkhe said. Trade experts also endorse the view saying the best way to respond will be to make the economy stronger and go for long-haul measures.  "The response I think should be taken keeping medium and long term in mind rather than a short-term knee-jerk reaction. If we react immediately on the economic front, we might end up hurting ourselves more than we hurt China. So, we have to be careful that we don't cut our nose to spite our face," said Ananth Narayan, former banker and Professor at SP Jain Institute of Management and Research (SPJIMR). Former All India Manufacturers Organisation (AIMO) National President K.E. Raghunathan also advises against ad-hoc measures of raising import duty and suggests the government to form committees to draw five-year plans for gradual substitution of imports. "Today, 35% of our MSMEs are going to wind up. Our concern must be to give oxygen and a ventilator to them for survival. First nurture the local industry to survive. Once they survive, nurture them to healthiness. After that focus should be on revival and then to prosperity and eventually wealth creation. That should be the steps," says Raghunathan. The industry captains seem to be echoing the sentiments on the ground. Surat-based Prashant Industries Director Prashant Patel says that some of the chemical items which he currently imports from China used to be shipped from Europe but the cost was 10-15% more, which forced him to shift to a cheaper market. Chakradhar Chemicals Chairman Neeraj Kedia also says that many chemicals which if sourced locally will be 10-15% more expensive than China. He also added there were also quality issues with sourcing of raw materials from the domestic market.

Source:   Business Today

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Centre may ask states to go for local purchases

The Centre will soon ask states to amend their procurement contracts to include provisions ensuring that local suppliers get preference and Chinese companies or goods do not gain access. The government, which has reserved government contracts up to 200 crore for locally manufactured goods, is keen that states also adopt such a policy. “A video conference will be held with states shortly to discuss the operational details of imposing a local preference clause,” a government official told ET. The idea is to ensure that their contracts are in sync with national policy.  States could be asked to expeditiously adopt the 2017 Department for Industrial Policy and Internal Trade’s Public Procurement (Preference to Make in India) Order and follow the latest central government measures on procurement contracts. No policy can be effective unless it percolates down to the state level, the official said.

Domestic Manufacturing Push

The exercise that was initiated as part of the larger government plan to encourage local manufacturing has gained urgency after the hostilities at the border with China. Only two or three states have aligned their contracts with the central policy so far on giving preference to local products. Governments have to issue global tenders for projects in which multilateral funding is involved. But such a clause can be introduced in the multiple contracts that state governments and their public sector units hand out.  Quality clauses could also be included to bar goods from China in supply contracts and to discourage local suppliers from supplying imported goods, another official said, adding Indian service providers could be discouraged from taking on Chinese partners. The focus is on encouraging states to undertake policies to encourage local businesses.

Source: Economic Times

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'Indian textiles-apparel industry needs circular roadmap'

The circular economy is not just a goal; it is in fact a means towards a better world. The means need a roadmap, and the Indian textiles and apparel industry surely needs one, according to Naresh Tyagi, chief sustainability officer at Aditya Birla Fashion and Retail Limited. In India, circular economy is not new, as the practice of donating, exchanging or using pre-owned clothes has been a common age-old activity. "Clothes are either handed down from older to younger siblings or re-used as kitchen wipes and mops," mentions Tyagi in an article in the hard bound fifth edition of the Sustainability Compendium - ‘Going Circularbrought out by Fibre2Fashion. However, "with rising globalisation, we are at risk of not only oppressing our invisible humans of circularity but also forgetting age-old approaches to sustainability that have long existed in India," he writes in the article 'Charting a roadmap'.

Source: Fibre2Fashion

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Birla Cellulose launches new antimicrobial fibre

Birla Cellulose, the pulp and fibre business of Aditya Birla group, has launched a new innovative fibre which imparts antimicrobial properties to textiles. Fabrics made from the new fibre kill 99 per cent of bacteria and viruses and stops them from re-producing. This makes apparel and home textiles safe without compromising on performance and fashion.  The antimicrobial property is achieved by adding an active ingredient (antimicrobial additive) during the finishing stage of the fibre manufacturing process. The ingredient stays with the fibre and does not leach out during the various downstream stages until it is woven or knitted into a fabric. The fabric made up of using the innovative fibre retains fluidity, inhibits odour, has long lasting freshness and is non-irritant to the skin. It can last multiple washes (around 50). The applications of the fibre are limitless – from apparel, athleisure, kidswear, suitings, accessories, intimate wear to even home textiles. “Antimicrobial fibre by Birla Cellulose is another success which blends functionality with fashion,” said Dr. Ravinder Tuteja, GM & head-Product Development, at Birla Cellulose. “Thanks to our 3-step fortification process which we have adopted in manufacturing this fibre, the finishes at the fibre level will last through garment level while it passes through stringent conditions of temperature, pressure and chemicals.” The antimicrobial fibre has been tested under ISO standards and authenticated by international labs with standards like AATCC 100, JIS L 1902, ASTM E 2149. Another important feature of the special kind of fibre is that its antimicrobial property helps to kill all kinds of enveloped viruses including the coronavirus. A physical tracer has been embedded into the fibre which can be traced and tested at any later stage—be it yarn, fabric or garment, to see whether it is made up of antimicrobial fibre by Birla Cellulose or not. Also, the Green Track platform, which is blockchain enabled, helps the end brand to have the entire visibility of the value chain – from forest to fashion. It also allows the value chain to see information one level up and one level down. For example, a spinner can see information of the fibre supplier and also the fabric manufacturer to whom he sells his yarn.

Source: Fibre2Fashion

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IHGF Textiles Virtual Fair concludes; business enquiries worth Rs 270 cr generated

Business enquiries worth Rs 270 crore were generated in the second virtual fair on IHGF Textiles which concluded on Friday. Over 1500 overseas buyers, buying agents, wholesalers and retailers were a part of the fair. Buyers from 80 countries visited the online fair with countries like Australia, Argentina, Peru, Colombia, Brazil, USA, UK, Spain, New Zealand, Canada, UAE, Turkey, Japan, Israel, Germany and France showing the maximum participation. Ravi K. Passi, Chairman – Export Promotion Council for Handicrafts (EPCH) said in a statement, "Back to back organisation of virtual fairs was a result of the pandemic thus enabling the Council to provide an alternative platform for exporters to do business since physical fairs are currently not possible." Webinars, craft demonstration and theme setting on trends were the highlights of the IHGF-Textiles virtual fair. R K Verma, Executive Director – EPCH stated that the participants of home furnishing, floor coverings and textiles found the virtual platform to be helpful in offering viable opportunities to survive in the business. "The exports of home furnishing, floor coverings and textiles account for 25% in the total exports of handicrafts from the country which was around Rs. 6200 crores in 2019-20," he added. EPCH has been involved in extensive publicity to invite buyers from across the world to visit the show through e-blast, tele-calling and involving Indian missions and embassies abroad.

Source: Economic Times

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Global Textile Raw Material Price 19-06-2020

Item

Price

Unit

Fluctuation

Date

PSF

830.61

USD/Ton

0%

20-06-2020

VSF

1243.09

USD/Ton

0%

20-06-2020

ASF

1640.03

USD/Ton

0%

20-06-2020

Polyester    POY

791.06

USD/Ton

0%

20-06-2020

Nylon    FDY

2048.27

USD/Ton

0%

20-06-2020

40D    Spandex

3997.66

USD/Ton

0%

20-06-2020

Nylon    POY

5198.37

USD/Ton

0%

20-06-2020

Acrylic    Top 3D

1024.14

USD/Ton

0%

20-06-2020

Polyester    FDY

1928.20

USD/Ton

0%

20-06-2020

Nylon    DTY

1779.88

USD/Ton

0%

20-06-2020

Viscose    Long Filament

988.82

USD/Ton

0%

20-06-2020

Polyester    DTY

2330.79

USD/Ton

0%

20-06-2020

30S    Spun Rayon Yarn

1727.61

USD/Ton

-0.08%

20-06-2020

32S    Polyester Yarn

1412.60

USD/Ton

0%

20-06-2020

45S    T/C Yarn

2182.47

USD/Ton

0%

20-06-2020

40S    Rayon Yarn

1907.01

USD/Ton

0%

20-06-2020

T/R    Yarn 65/35 32S

1652.74

USD/Ton

-0.85%

20-06-2020

45S    Polyester Yarn

1582.11

USD/Ton

-0.88%

20-06-2020

T/C    Yarn 65/35 32S

2020.02

USD/Ton

0%

20-06-2020

10S    Denim Fabric

1.12

USD/Meter

0%

20-06-2020

32S    Twill Fabric

0.64

USD/Meter

0%

20-06-2020

40S    Combed Poplin

0.93

USD/Meter

-0.30%

20-06-2020

30S    Rayon Fabric

0.48

USD/Meter

0%

20-06-2020

45S    T/C Fabric

0.64

USD/Meter

0%

20-06-2020

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14109 USD dtd. 19/06/2020). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

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China’s New Digital Industrial Transformation

China’s post-COVID rebuild will position the country to weather future pandemics. China’s economy has taken a serious beating from the COVID-19 pandemic in recent months. After 6 percent annual growth in the last quarter of 2019, the economy contracted by 6.8 percent in the first three months of this year. It was a humbling lesson for China’s policymakers, used to guiding high levels of growth steadily downwards over many years. In response to the pandemic’s impact, Beijing has positioned the coronavirus crisis as a platform for launching an ambitious and wide-scale digital transformation of its industrial power.

China’s Demand for Tech Flourishes as the Economy Contracts

The severe decline in China’s gross domestic product (GDP) in 2020 has been largely due to weak domestic consumption. Following the COVID-induced lockdown, China’s households have opted to save rather than spend. Retail sales hit their lowest point, a 20.5 percent year-on-year drop, in January, during the lockdowns. The sector has only gradually improved over recent months, with May registering a year-on-year decline of 2.8 percent. The trade sector has been even more depressed. Imports plunged by 16.7 percent in May, the worst monthly performance this year, on the back of contracting investment in both private and state sectors. Notably, not all trade sectors reflected this dismal picture. Crude oil imports rose by an annual 19.2 percent in May, which was a monthly all-time high, although that followed an even greater drop of 50.2 percent in prior months. The standout sector displaying consistently robust import growth since the beginning of the year has been technology. Purchases of overseas-made electronic components, from January to April, were up by 10.1 percent. With a value of $115 billion, electronics imports reached a record high over the period. Some of the more advanced tech subsectors have performed even better. Integrated circuits gained 11.2 percent with a value of $99 billion. Imported audio and visual equipment surged by 30 percent, also reaching a periodic record high value of $4.5 billion. Other subsectors to report robust import demand have been lithium batteries, insulated cables, and electrical equipment.  

Launching a New Digital Era for the Economy

The sharp rises in technology imports at a time of overall depressed import demand begs the question as to what accounts for such starkly contradictory sets of economic data. In part, it’s because China’s demand for foreign technology has been relatively strong for years. The government has initiated a string of policies on technological advancement to boost a process of catch-up with more advanced economies. However, shortly following the lifting of coronavirus-induced shutdowns across the country, and the consequent steep declines in economic output, China’s policymakers decided to change course and significantly deepen their technological upgrading. In early March, President Xi Jinping delivered a keynote speech on the deployment of prevention and control measures for COVID-19 pandemic. This included major initiatives in the development of the “industrial internet,” including policies for the construction of a new digital industrial infrastructure. Accordingly, China’s large telecoms operators were called on to build high-quality communications networks covering all the country’s regions and cities. As a starting point, Xi announced the creation of 20 showcase examples of digital networks available for connecting industrial enterprises. The policy speech also invoked a digital upgrade of China’s top 100 industrial companies and required up to 1,000 leading services enterprises to enable industrial internet and intranet transformation. 5G networking would become the cutting-edge technology applied in transforming China’s industrial internet across large vertically-integrated industrial enterprises. In line with Xi’s policy direction, one of China’s leading internet operators, Alibaba Cloud, has been constructing 10 industrial internet platforms for various industry sectors, including textiles, clothing, food and beverage, processing, home appliances, electronics, and textile printing and dyeing. According to Wei Wei, head of Alibaba’s Cloud Industrial Internet Platform, the newly-applied technology provides for integrated product development, manufacturing, sales, logistics, warehousing, and energy management – essentially creating a singular digital service ecosystem. For instance, Wei says, the dyed-spinning industry “can now realize lean sales, procurement, and warehousing management, so that goods and services across the supply chain are standardized and online, while transaction data is transparent and open.” By mid-May, China’s National Development and Reform Commission (NDRC) went a few steps further in progressing Xi’s proposed digital transformation by launching the “Digital Transformation Partnership Action Plan 2020” (hereafter, the Partnership program).  Alongside accelerating digital transformation across various industries and sectors, it’s been designed to help small and medium sized enterprises (SMEs) overcome difficulties in adapting to digital transformation. As a result, the Partnership program has promoted inclusive “cloud-based intelligence” involving large numbers of SMEs, including support in the provision of information integration, open resource networking, software and hardware support, supply chain management, and professional training. The NDRC’s efforts have been coordinated with multiple stakeholders including government ministries, regulatory agencies, and provincial and city governments. In combination with the latter, Alibaba Cloud’s Industrial Internet Platform has been rolled out in the Waxing district of Huizhou City. The prefecture, commonly referred to as “Chinese kid’s town,” became the country’s main center for children’s wear production in the early 1980s. It currently hosts about 20,000 small-scale apparel makers, accounting for half of China’s sales revenue in the sector. “A new digital model for cluster manufacturing will be introduced to support children’s wear companies by reformulating the sector’s traditional production and sales models, through intelligent production, collaborative networking, product automation and services extension,” explained Wei Yun, who heads up Alibaba’s Internet Platform in the local venture. With the industrial platform now in place, the goal is for the the city’s annual average sales of 63 billion Chinese renminbi ($8.8 billion) to rise to 100 billion RMB ($14.1 billion) by the end of 2020. Aside from cooperating with government bodies, the Partnership program goes further than any previous Chinese government industrial upgrading programs, to include a broad array of private commercial enterprises, ranging from high-tech to financial institutions to utilities and energy companies. Among some of the better-known tech-related participants are Alibaba, Xiaomi, Hikvision, Huawei, Foxconn, Didi Chuxing, Meituan Dianping, Tencent, ZTE, Dot Life, China Telecom, China Power, and Lenovo.

From Ground-Based Industrial Platforms to Space Orbiting Networks

China’s Ministry of Industry and Information has been the main government body charged with the national coordination and lay out of 5G networks and Industrial Internet integration. According to its spokesman, Xie Shafeng, the new generation of information technologies such as internet of things, big data, artificial intelligence (AI) and blockchain have all played a crucial role in both epidemic control and prevention, alongside the resumption of industrial production. On account of these changes, Xie claims that society’s understanding of information technology has expanded. “The next step will be to quicken the pace of digital transformation,” he says. “This would involve nurturing new formats of development involving a ‘shared global platform economy’ through the creation of a ‘cloud’ multi-industry chain.” Hede Aerospace, China’s largest commercial satellite communications provider, has taken up the international cloud services platform aspect of digital transformation. In May, the company launched the Hede 4 satellite. Once operationally linked with three other satellites earlier launched into orbit, Hede 4 will provide global marine and aviation big data application services. Zhou Dachuang, Hede’s Chief Executive, said that “satellite application services will be integrated into the era of the Internet of Everything, AI and big data.” Hede Aerospace therefore plans to ramp up investment in research and development of satellite networking and upgrading intelligent information networking power, on a global level.

China’s International Tech Collaborations Face Growing Challenges

Xi’s keynote address on developing the Industrial Internet also touched on encouraging enterprises “from all over the world” to engage in in-depth cooperation with China’s industrial enterprises and big data providers. Dongfang Guoxin, a big data production and solutions provider for industry users, recently introduced a big data platform for ultra-large-scale data storage and online analysis. To improve the performance of its platform, the company uses second-generation Intel scaleable processors to speed up cache performance and enable cost-savings. Wang Hu, general manager at Dongfang’s Technology Center, emphasises that the company “will further strengthen cooperation with Intel and other partners to improve big data cloud computing technology.” The extent of Chinese technology companies’ international partnerships and capacities to access foreign-made advanced technologies has come under elevated uncertainty in recent months. In early June, a further round of U.S. sanctions was imposed on 33 Chinese entities, several of which included Chinese tech firms in the AI and cloud services sectors, for their part in alleged surveillance and human rights abuses in the Xinjiang Uyghur Autonomous Region of western China. These sanctions came on top of 28 Chinese entities that were blacklisted in late-2019. The U.S. Commerce Department has also recently blocked access of American semiconductor chipmakers’ products for Huawei Technology, which is one of the Chinese tech companies participating in Beijing’s Partnership program. The restrictions also prohibit Huawei’s access to non-U.S. manufactured semiconductors where the product is based on American-designate technology or software. Consequently, Taiwan’s largest chipmaker, Taiwan Semiconductor, has been reportedly restricting sales of such products to the Chinese tech giant. In turn, several Chinese media outlets have warned of the possibility of placing U.S. companies on an “unreliable entities list.” Details of the list and applicable countermeasures have yet to be made known. Even so, the immediate impact of the current set of U.S. actions is likely to be limited. China’s purchases of foreign technology are generally diversified with the bulk of high tech purchases, outside the United States, being relatively evenly sourced from South Korea, Japan, and Taiwan or their affiliates in Vietnam, Malaysia, and Thailand.

The Future Implications of China’s Digital Transformation

The longer-term ramifications of mounting U.S. sanctions on the development of China’s technology sector may raise more significant barriers in its striving for world-leading industrial connectivity. On the other hand, the new digital transformation of China’s vast industrial sector could prove an unstoppable force. Xi’s digital policy drive has certainly been given further impetus by the sudden appearance of new coronavirus cases in Beijing, requiring parts of the capital to be put under lockdown with numerous flights into and out of the city being cancelled. Somewhat ironically, this newly-reported outbreak only reinforces the government’s stated justification for the digital transformation, as industrial remote connectivity may be the key to avoiding serious disruptions in the sector’s output from ongoing coronavirus risks. Indeed, the policy raises questions over whether Beijing anticipates COVID-19 to be only the latest – and not the last — in a long line of virus-driven pandemics. These stretch back to the SARS contagion — which, like the coronavirus, also originated in China — during the early 2000s, followed by an almost regular occurrence of globally-mobile new viruses since that time. The upshot of it all may be that China’s policymakers now consider global virus risks to have become the norm, perhaps due in part to accelerated climate change. If so, China’s latest government-directed and large-scale industrial digital transformation, harnessing the resources of multiple sectors of society, may be a lesson for all policymakers around the world to take on board.

Source: The Diplomat

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More collaboration is the need of the hour: Han Bekke

 Although there is a remarkable move from social compliance issues to environmental issues, companies in the textiles and clothing supply chain more than ever have to take their responsibility in making the sector more sustainable, according to Han Bekke, president of the International Apparel Federation (IAF). Since the textiles industry is seen as one of the most polluting industries, pressure is coming from governments, parliaments, NGOs and consumers to act on environmental issues, Bekke writes in an article in the hard bound fifth edition of the Sustainability Compendium - ‘Going Circular’ brought out by Fibre2Fashion. In the article 'There's work to be done', he says while discussing the role of IAF, “IAF's mission is to unite the entire industry to create stronger, smarter and more sustainable supply chains. Dealing with supply chains, asymmetrical work is not effective. All parts of the chain must collaborate: buyers, clothing manufacturers and textile suppliers. Focusing only on sustainability is also asymmetrical. Improved sustainability depends on improvements in the business operation."

Source: Fibre2Fashion

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COVID-19’s impact on global supply chains will cause a recession like we’ve never seen before

For nearly three decades, global supply chains were the quiet engines of economic globalization. From 1990 to 2008, they drove the rapid expansion of trade, accounting for 60-70% of its growth. More than a decade later, however, they have stalled – and may in some areas be going into reverse. The strain on global supply chains partly reflects the turn by many governments toward protectionist policies since the openness of the world economy peaked in 2011. And now, the COVID-19 pandemic has caused a supply-shock recession. The related uncertainty may slow the expansion of global value chains by at least 35%. Indeed, world trade is no longer expanding faster than world GDP. If this continues, companies will reshore manufacturing from Asia and elsewhere. It’s clear that shrinking production at firms worldwide will create a recession – and a recovery – unlike any we have seen. In outlooks for next year, the International Monetary Fund, the OECD, and other international organizations assumed a V-shaped recovery. But this narrative was likely influenced by the rapid recovery of global value chains after the 2008-10 Great Recession, a downturn that originated in the financial system, not the real economy worldwide. Given the importance of broken supply relationships in the current downturn, this recession is likely to be unique. Firms are vulnerable in other ways. For example, suppliers affected by a lockdown impose substantial output losses on their customers when the input they produce is specific to the customer and embodies a high level of research and development and intellectual property. In such cases, switching to another supplier is costly and slow. It’s not surprising that pandemic-related disruptions are unique. After researching three decades of major natural disasters in the United States, Jean-Noël Barrot and Julien Sauvagnat of MIT found that suppliers hit by a flood, earthquake, or similar event impose large output losses on customers. Indeed, when a disaster hit one supplier, firms’ sales growth suffered an average drop of 2-3 percentage points. The impact spilled over to other suppliers, magnifying the original shock. It is also likely that this recession will generate lower trend GDP growth. After all, global supply chains were a major driver of productivity growth in many countries in the 1990s and for most the aughts. The integration of Eastern Europe into the global economy after the fall of the Berlin Wall contributed not only to Germany’s recovery from being the “sick man of Europe,” but also to rapid growth in the Czech Republic, Hungary, Poland, Slovakia, and other countries in the region. If the slowdown in the growth of global value chains since 2011 was already contributing to anemic productivity growth in developed countries, an accelerated slowdown, or even contraction, owing to pandemic-related disruptions, does not bode well. In these circumstances, the only option for policymakers is to spur growth in specific sectors, which is exactly what stimulus programs are designed to do. In Germany, Volkswagen and other companies have pushed for a “cash for clunkers” stimulus package similar to the one that was enacted in 2009, but Chancellor Angela Merkel’s government has decided not to pursue such a policy. It’s worth rethinking that decision. New macro models of the pandemic suggest that sector-specific stimulus may generate the largest fiscal stimulus per dollar spent. An economy in which 50% of the economy is fully shut down, as in a pandemic, is not the same as one in which all economic activity collapses by 50%, as in a depression. In a pandemic, a sector’s relationship to the rest of the economy determines the outcome. That means the best way to maximize the impact of fiscal stimulus is to identify sectors that are not substitutive. In Germany, like elsewhere, autos have a complementary relationship to the rest of the economy. The more cars are consumed, the larger the demand for auto inputs. The industry imports only 29% of its inputs, compared to 76% in textiles. This is why schemes to stimulate the purchase of autos are better than, say, restaurant vouchers. In fact, dining out reduces supermarket shopping, generating less aggregate demand.  The pandemic poses a huge challenge to economic policymakers. Like it or not, engineering any recovery, much less a V-shaped one, will require governments to set aside issues that would be of utmost importance in ordinary times. Their credo should be Hippocratic: First, do no further harm.

Dalia Marin, Chair in International Economics

Source: World Economic Forum

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We come to the end on fast fashion and seasonal products

Transformation signals are coming in the fast fashion and seasonal product concept that has inuenced the whole world for the last 10-15 years. Particularly, what happened during the Covid-19 pandemic prompted both consumers and producers to rethink. While the uncertainty about the future of the sector continues due to the outbreak, brands having a voice in the sector are trying to draw a new road map with some inferences and forecasts. Fahri Şahin, Vice Chairman of the Board of Bordo Group, one of the leading brands in the textile industry, evaluated the latest situation of the garment industry and forecasts about the sector in the “new normal” period that started after the coronavirus (Covid-19) pandemic. Saying “A very serious paradigm shift towards sustainable fashion in the ready-to-wear industry is expected”, Şahin continued his words as follows; “Now it is seen that fast fashion and fast consumption have come to an end. We will witness more environmentally sensitive, human-oriented and natureconscious production processes”. Emphasizing that the paradigm shift in the industry started to show itself before the pandemic, Şahin stated that the pandemic accelerated this process. Natural bres and sustainable production stand out Expressing that a return to natural bres is expected, Fahri Şahin emphasized that environmentalist and humanitarian approaches stand out in the production stages. Stating that issues such as social compliance management in working conditions in the sector have also started to come front in the agenda, Şahin argued that quality products and natural products will be preferred instead of cheap products. Noting that these developments will change consumption habits in ready-to-wear clothing, Şahin said; “So we can witness the process of returning to our ancient tradition. For example; if a person buys 10 products at affordable prices; he will now buy 2 quality but environmentally friendly and healthy products instead. As these will also bring cost; they will be a little more timeless (long-lasting) and classic products rather than fast-going products. Safe colours, safe patterns, safe graphics will come to the fore. However, this niche will take place in the higher segment of the market. Perhaps due to the inuence of the purchasing  power, fast mode may continue; but there is a return to nature and transformable fashion theme in general. Şahin stated that after the virus, the supply chain in the world is moving towards “managing risk instead of low cost”. Saying that there will be more orientation to local resources, Şahin explained the effects of this as follows; “For example, instead of merely getting bres from China; local staple bres from Turkey will be preferred, local workers will be employed, other possibilities will be considered local. In other words, many brands in the sector will turn to local resources and will produce under local conditions. This situation will bring two things together. The rst will increase the quality and the second will naturally increase the costs. Thus, people’s fast consumption habits will decrease. So they will dress longer, not seasonal. This means that we will return to our old habits in our culture.

Customers order more organic and recyclable fabrics

Fahri Şahin also gave information about new orders received by the Bordo Group. Şahin announced that the world-renowned textile companies they serve recently started to order more organic and recyclable fabrics rather than normal fabrics. Stating that the demand for antibacterial products has increased, Şahin said; “There is a trend towards sustainable and transformable fashion as a whole. Turkey has an important position in this eld. We have the capacity and quality to meet new demands with regard to textile products such as; organic, antibacterial, no-sweat and non-ammable”.  Saying that the fashion sector is in the middle of a rapid transformation; Şahin stated that the business habits in the sector are experiencing a rapid transformation as well. Şahin pointed out that with the change of customer preferences, the demands, design and business processes of big and small brands have also changed. Disclosing that e-commerce and e-export are more spoken in the ready-to-wear and fashion sector, Şahin; “When we consider all these, we should be able to evaluate the opportunities that arise for us. Both industry and state authorities have their duties. If we stay behind change and transformation; we face the risk of losing our strength in the industry to other countries”.

Source:  Textilegence

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