ASIAN GARMENT INDUSTRY RATTLED BY MARKET SITUATION

ASIAN GARMENT INDUSTRY RATTLED BY				There is a gradual deterioration in the growth of
MARKET SITUATION				readymade garments sector said Mr. Sigh in a letter
				to joint secretary at the ministry of commerce P.K.
				Dash in response to queries on the impact of global
*N. L.				recession on Indian exports.
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**Dr.T.S.DEVARAJA				Retailers like Steve & Barry and Mervyns filed
				for bankruptcy, while a number of stores scaled
As American countries to head towards a recession,				down their operation, including GapInc, Macy and JC
many will begin to question exactly how the garment				Penney. As a result some Indian exports closed their
industry affected by global trade in near future. The				manufacturing facilities. This also adversely affected
US has recently found itself approaching what some				suppliers in upper stream as generally about 80% of
economics fear could be the next recession and its				inputs required for the Indian apparel industry were
impacting many industries negatively in terms of				sourced domestically compared to 50% in China. India
profit and human capital. Among the industries that				readymade garment export reached US $ 9.69 billion,
would hit by the recession in the US. Garment				in 2007-08 according to the Indian authorities. The
industries as they out source manufacturing and as				recent US trade data confirmed to the weak market
well as import raw material and other product from				sentiment. While textile exports to the US declined
foreign countries. An America continues to head				0.95% in terms for the 12 months ending August
towards a recession many will begin question				2008, apparel exports were down 4.47% to US $
exceatly how the garment industry is affects by the				3.05 billion, Data from the office of Textiles and
global trade in coming years.				Apparel (OTEXA) and US Department of Commerce
				Showed. In the first eight months of 2008, apparel
				exports to the US declined 4.8% to US$ 2.2 billion.
So far so good				Against this background, Rakesh Vaid AEPC
				Chairman, expected that India will miss the export
With financial turmoil affecting the business of				target for the current fiscal year ended March 2009.
Garment manufactories and trades, a less optimistic				President of Tirupur Export Association, Mr. Sakthivel,
mood was felt among both importers and exporters				estimated a 5% decline in export. Tirupur city
at the same time recent apparel show in Asia,				account for 56% of India’s total knitwear
including the ITMA Asia + CITME 2008, Intertexture				exports.
Shanghai Apparel Fabric, and Cinte Tec textile China in
Shanghai. At the latest apparel show in Hong Kong,				Others remained positive with their competitive
the inters off Asia Essential – Autumn 2008 held				advantages. Even though the end market is in
in October, visitors showed concerns over the				recession, the rapid inflation in China and other
adversely affected global apparel traffic. US –				market has brought business to India, said Arvind
based importers, including chain stores, slashed import				Chief Financial Officer, Jayesh Shah. Arvind ships
of garments from Asia since October 2008, although				fabric to garment making centers like Bangladesh, Sri
some of this was discernible even before the global				Lanka and Egypt, as well as exporting finished
financial crisis blew up.				garments to the US. Top buyers like Wal- mart and
___________________________________				Tesco who purchased apparel at around US $ 1 billion
*Research Student, Department of Studies in				in 2007 recently demanded up to 2% rebate on their
Commerce, Post Graduate Center, UNIVERSITY OF				existing orders, exporters said. Some players in
MYSORE, Hassan-573220, Karnataka				Bangladesh were also worried, Anisur Rahman Sinha,
**Reader, Department of Studies in Commerce, Post				the owner of Bangladesh biggest garment
Graduate Center, UNIVERSITY OF MYSORE,				manufacturer group, and Opex believed that cheap
Hassan-573220, Karnataka				prices would help Bangladesh ride out the turmoil.
Bernd Muller, project manager (Brand apparel fabric
and fashion) he said we are presently not felling the				Nonetheless, some Bangladeshi players, with the US
pressure very much, but we may get to fell it in the				and Europe being major clients, found difficulties
future. If the crisis continues to persist, than the				apparent. They were asked to cut orders process
problem will be of a long-term nature.				and orders were also delayed for spring/ summer
				season in 2009. Things are very bad. Some of the
On the supply side, there has been an over- capacity				buyers have made us give rebates on the existing
in the world for years. Small Asian countries lacking				orders said Salim Rahman manageing director of KDS
dominant industries other than the apparel				garments a large apparel manufactures of Bangladesh.
manufacturing might find it hard to bargain in the				Some were asking rebates for future orders on the
international supply chain. With the abundant global				ground that they were hit hard by the global financial
supply, they (Asian textile and apparel manufacturers)				crisis, according to Mr. Rahman whose company
may be squeezed in the next 12-18 month Mr Huang				annually exported apparel worth US$ 150 million. The
told ATA journal in October 2008. Market segment				Bangladesh Knitwear Manufactures Association
such as general sportswear, outer wear and				(BKMEA) in October 2008 reported a 10% drop in
outdoors sportswear have paid extreme attention to				knitted items such as T-shirts and pullovers, and
the latest development and also getting more				some manufacturers said things have been worsening
acceptance in more developed countries. In this				since then. Moreover a number of orders for the
increasingly globalize world, Asian suppliers found they				spring and summer season were delayed as the
were affected by the US financial crisis.				retailers were unsure how the economic crisis would
				play out in the near future.
Some Chinese’s textile experts, who predicted
that the industry was in deep fear in view of rising				Former Chairman of the Pakistan Readymade
costs and weakening global demand, depicted a				Garment Manufacturer and exporters Association
gloomy picture. Some even said the industry could				(PRGMEA), Ijal Khokhar commented that in the
face a large quantity of bankruptcy, especially among				present economic scenario, it was challenging for
export- oriented enterprises by the end of 2008 or				Pakistan to meet its exports target and up to 40%
nearly 2009. Further efforts to rationalize the				shortfall was expected, given that the US and
international supply chain may be done by banks,				European consumers market become quit Exports
which is no longer finance companies easily. Suppliers				from Pakistan in 2008 could decrease by half from
operate on a high level of financial leverage (i.e. heavy				the previous years. On the other hand Sri Lanka tried
loans) rather than trying to earn through their own				to survive by concentrating on the south- south co-
manufacturing activities might suffer severely.				operation. Being members- state of SAARC (South
				Asian Association for Regional Cooperation) Sri Lanka
The latest data released by the Apparel Export				derived the duty- free route accessible under the
Promotion Council (AEPC) of India (in November				SAFTA (Soth Asian Free Trade Area) agreement to
2008) showed that India is exports of readymade				ship garments to India duty -free. Under this
garments plunged 6.59% in September 2008 over				agreement Sri Lanka, Sri Lanka exported to India
the same month in the previous year as a				eight million Pieces of garments in 2008.
consequence of global economic slowdown. The				Although challenges are ahead, industry experts in
market sentiment is very week said AEPC secretary				Asia commented that those who are able to survive
general. Vimal Kirti Singh he explained that there was				or even expand smartly in this adverse environment
a drop of 20%-25% in the business of winter				will find their future brighter when the international
apparels from India. Orders were deferred or				market revives.
cancelled as stores faced weak sales in the US.

Global Trade

ASIAN GARMENT INDUSTRY RATTLED BY MARKET SITUATION