PHMA Newsletter Pakistan Hosiery Manufacturers and Exporters Association Vol. No. 024
March, 2012
It is more than two years now that the PHMA Newsletter had been reaching you every month in
EDITORIAL
print form. Now that everything is going to be converted into e-style, PHMA has converted the shape of its Newsletter in electronic form so that it is readily available at your Desktop or Laptop with electronic speed. We shall try our best to make it useful in the light of your suggestions, which will be awaited from readers. Association is thankful to Institute of Research Promotion for taking the major responsibility of contributing towards matter presented in the e. version of the PHMA Newsletter.
Mohammad Ayub Secretary PHMA (North Zone)
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Apparel Industry of Pakistan and Alternative Markets for Growth Can apparel industry of Pakistan find new customers? Can apparel industry of Pakistan find new markets? Can apparel industry of Pakistan diversify its sale portfolio in world market?
This article provides answer in YES. Read second article in next issue to know HOW.
Apparel Industry is one of the major export potentials of Pakistan. Fortunately industry has capacity to export in a sufficient quantity and with high quality to earn billions of revenues for Pakistan. The industry of Pakistan is not growing as fast as other countries like China, Hong Kong, Bangladesh, India, Sri Lanka, Malaysia, Indonesia, etc inspite of similar capacities. Pakistan share is decreasing in total world market. There may be number of reasons for slow growth but number of opportunities still existing for us. High level of concentration in one market of USA is one of causes and need to be addressed. Currently, the main market for apparel export of Pakistan is USA. Pakistani apparel and clothing industry generate at least 70% revenue form this single country. A universal wisdom says that rely on 1-2 sources can not be profitable for the long term. Back in 90s Pakistan textile and clothing was ranked the best in Asian players. Now situation is opposite and we are suffering 20% share lose annually. We must explore other markets before it’s too late. We have to explore opportunities to increase our market share in the world. The countries like Japan, Germany, France, Hong Kong, and Middle East also present significantly growing demand for clothing imports. The increased consumption level of clothing is backed by raise in per capita income, improved life style and clothing trends in new generations. We can export to growing markets for the sake of sustained growth, diversified portfolio and mitigating the competition risks. 2
United States Austria Belgium-Luxembourg Canada France Germany Fed. Rep., former Hong Kong, China Italy Japan Netherlands Spain Sweden Switzerland United Kingdom
1989
1993
1997
2001
2005
2009
26026
35605
50297
66391
80071
72059
1727 2693
2524 4095
2923 4912
2856 5013
4658 7706
5367 8912
2179 6406
2510 8678
3017 10673
3930 11769
5975 18000
7559 21216
14639 5700
21775 11806
22850 15019
19330 16098
25155 18437
30615 15508
2027 8972
3511 12588
5367 16727
6697 19186
12198 22541
15513 25510
3700 1039
4660 2015
5382 2708
5220 4279
6905 9471
8778 12893
2076 2800
1924 3326
2124 3403
1941 3229
2983 4451
3291 5242
5799
6625
10896
13169
20227
21235
Source: World Trade Organization In summary, the above graph shows that; - France, Japan, Germany, Hong Kong and United Kingdom have grown to great extent in clothing import and would continue as second choice of clothing exporters after USA. - Spain, Netherlands, Italy Belgium also present good potential for exporters, emerging as import market. - Third category of countries with import potential includes Austria, and Switzerland. Apparel industry of Pakistan must be backed by tax incentives and regulatory support with lobbying in emerging importing countries. This is the right time to enter into newly growing markets to gain high share and make the industry competitive in global market. The alternative markets not only bring more revenues, but also generate employment in the country and enhance investment.
World Trade of Clothing and Textile
A World Review 1981-2009 A comprehensive report is developed by Institute of Research Promotion (IRP) and published by Apparel Research Institute– A project of PHMA. The Report is designed on the basis of statistics taken from WTO. The data of this report shares the progress of top 25 countries. Clothing and Textile import and export varies according to different time periods.
COMING SOON‌.. 3
Fashion and Fad S.M Qutab - Textile Weaving Consultant The apparel industry is the gate of choice for most developing countries in their quest to step into industrialization. The ease of entry into this field and abnormally high wages in developed countries has created favorable conditions for the manufacturing and exportation of textile and apparel derived products. At the same time, this unique situation has effected a cut throat competition among the many actors while fueling an intense protectionism in many developed countries where the export markets are found. However, paradoxically, it is the U.S. trade policies that have been the common factor in flourishing of textile and apparel industry in many countries and regions around the world. Local capabilities are shown to be major ingredient for the development of apparel sector in score of developing countries. The apparel complex is on of the most labor intensive of all manufacturing industries. It is particularly suitable for low skilled workers, with one of the lowest investment level required per worker. Many countries endowed with abundant cheap labor have thus used this industry to access the industrialization era. However it is still under utilizes in scores of developing countries. Apparel to Fashion Consumer in the Global Market Place Radical developments in fashion production and consumption have occurred over the past few decades. Far reaching changes have dramatically transformed fashion, supply chain management and distribution at both national and international levels. Particularly, radical innovations in communication and information technology have contributed to the globalization of market and to change in the nature of consumer demand. National and international fashion events are no longer the prerogative of just a small number of leading manufacturers and key representatives of fashion press but rather are regarded as essential indicator to ensure future commercial success. Large retail organizations are active representative participant and through the willing involvement of people national media, consumer are conversant with the dominant stylish theme of a given fashion season. Fashion designer and catwalk model have become household names, and de-
signer and retailer brand names have become familiar status symbol for consumers internationally. Fashion as a subject has become more firmly established in academic literature and in recent years many useful insights have been offered and more penetrating explanations of the process of diffusion have become apparent with the above consideration in mind. Style and Fashion In order to build a conceptual frame work to aid the understanding of phenomena of fashion, it is important to appreciate the relationship between style and fashion. Confusion in the usage of such term as typified by the statement “that is no longer in style “ , when what is meant is that a particular style is no longer in fashion . A style has been defined as a type of product that has one more specific feature that distinguished it and makes it different from other products of the same type. For example, caftan, chemise, sarong and short waist are style of dress. A widely recognized fashion authority. Paul .H Nystrom defined fashion as the prevailing style at given point in time, and style as distinctive mode or method of expression, presentation or conception. A worthwhile distinction between the concepts is that individual style has a tendency to continual change. Only a small number of styles of any product category are acceptable to fashion conscious consumer at any given time. These acceptable are demand to be fashion. A style does not become a fashion until it achieves some degree of consumer’s acceptance and will only remain a fashion for the duration of popularity. Social acceptance is the very essence of fashion. Apparel Design An apparel design is defined as a unique combination of variables within a given class of product or style e.g. shirts, dresses or hats , distinguishes it from other items in the same class, silhouette construction, fabric color , structure and texture are typical variable. Many designs with same basic outline and construc4
tions for instance, may make up a single style. For example, a particular style of dress may be fabricated in various colors, textures, trimming and detail. Each of these individual versions or interpretations of same style constitute a separate design. Examples of today fashion practices in Pakistan i.e. Stylish details (as ascribed above ) may be used to refer to elements of clothing such as labels , necklines, pockets, belts, buttons and other ornamentation such as frill and laces . Fad Fashions are determined by both the longevity of their popularity and particular segment of population that adopt them. For example term fad to denote the extremely brief extravagant popularity of a specific style or a very short time.
The characteristics of these details may determine whether or not a style is considered to be fashionable at a particular point in time.
How Fad is different from Fashion? Following four basic features distinguish the Fad from Fashion; 1. Fads are often revolutionary, or extreme in design when compared with current fashion. 2. Fads are born overnight and grow very quickly in popularity 3. Fads receive limited rather massive adoption and are accepted only in some particular social subcultural groups and 4. Fads decline rapidly in popularity, and their demise is more often than not permanent.
Institute of Research Promotion A leading institute in Pakistan working for the promotion of R&D culture in Pakistan . We serve in the followings ;
Trainings in Research Methods Promotion of Indigenous R&D Research Writing, Editing & Publishing Surveys and Data Management
www.irp.edu.pk +92-42-35846988 5
The textile and apparel export is based on local production of cotton. The high yield leads to low cost and easy access making positive impact on price of apparels. The statistics show production volume of last five years of major five countries. The apparel sector can gauge its growing competition in terms of price with the countries having increased cotton production. Therefore, Pakistan may face fierce competition from India as growing apparel exporters. China production is decreasing which may increase their clothing prices in future as well. Brazil is making significant growth in cotton production and may cross Pakistan in coming years. Apparel industry may develop their planning for price and production keeping in view the production in counterparts’ countries.
Cotton Production by Top Five The Analysis Cotton Production by Country (1000 480 lb. Bales) 2006
2007
2008
2009
2010
2011
China
35500
37000
36700
32000
30500
33500
India
21800
24000
22600
23000
25400
27500
USA
21588
19207
12815
12188
18104
15827
Pakistan
9600
8600
8700
9600
8800
10000
Brazil
7000
7360
5480
5450
9000
9000
Source : Indux Mundi
The analysis, tabulation and graph is produced by taking statistics form www.Indexmundi.com. 6
The Clothing Counterparts Analysis of Asian Apparel Players The Asia is known as a region of important clothing players with common strength of agricultural base. The export share of Asia in clothing is largely contributed by few countries. These countries include China, India, Bangladesh, Sri Lanka and Pakistan. For the interest of apparel stakeholders, a comparative analysis of these countries is presented. The analysis of opportunities and threats of these countries in apparel and textile sector is useful for export planning.
CHINA
INDIA
PAKISTAN
OPPORTUNITIES THREATS
- High productivity of available labor - Reliable and diversified production - High investment on logistics and innovative technologies - Positive and doers management - Supportive government and Sufficient access to raw material
- High number of labor with less - Low Labor Cost: $0.56 per cost of labor at $0.50/hour. hour. - Domesticated/household mar- - Government support and libkets eral FDI policies with incen- High quality of garments with tives. flexibility and speed - Cu r r enc y Dep r ec iat io n ; - Product diversity, as being the against the U.S. Dollar and most diversified exporter of other western currencies. textile and clothing products in This has raised exports and South Asia. also raised the cost of imported inputs. - Fairly large domestic market. Availability of raw material especially cotton. - Trade concession proposal by United States - Duty free access to 60 products of textile and clothing to EU market.
- Inflation (increases producer prices), and labor competition from higher paying, non -apparel sector industries. - Labor costs and labor laws: Rising domestic wages are expected to increase further as a result of new labor laws. Labor Rate $1.44/1.88 per hour. - Currency appreciation, energy costs are increasing. - Shipping Cost: Major increases. - Product Safety issues.
- Procedural hurdles to international trade. - Lack of scale economies, as 80% of textile and clothing units are small, cottage like typically employing less than 50 employees. - Currency appreciation (rupee). - Inflation in raw material costscompared to competitors, as well as increase in manufacturing costs, such as power, operating and transactions costs are higher in comparison to competitors.
- Energy access and reliability. National instability and security. - Quality and color consistency of textiles and clothing. - Lack of design skills and global market knowledge. Lack of supporting resources, such as research & training.
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OPPORTUNITIES
BANGLADESH
SRI LANKA
VIETNAM
- Lower costs of production and firms willingness to keep margins low; while investing in new technology to improve productivity and to reinforce relationships with buyers. - Improvement in terminal handling and customs, for example handling and customers have gone from 12-13 days as recently as last year to clear goods within 3 days. - Labor costs and availability: $0.31/hour. - Energy costs and currency depreciation coincided with post-ATC period offering more advantage to knit exports. - Growing investment from Taiwanese and Korean investors for setting up fabric/fiber operations.
- Diversification of exports as well as focus on niche apparel. The enterprising nature of the private sector to position country in niche markets. - Quality, on-time deliveries & service. - Compliance & emphasis on international labor and environmental standards. - Low labor costs: $ 0.46 per hour
- Alternate to China: FDI & Sourcing. - Growing textile industries: Taiwanese and Korean investors are setting up operations. - Growing exports to Japan and domestic market. ASEAN trade pacts. - Relatively stable business environment and Government support. - Labor cost-$0.38 per hour.
THREATS
- Design, soft skills and technol- - Loss of EU-GSP+Status. - Lack of skilled workers with ogy. - Lack of indigenous raw material experience in technology, - Currency fluctuation (mainly supply. fashion and management. euro). - Dependence on apparel ex- - Dependent on imported tex- Shortage of skilled workers ports. Lower productivity, detiles. and middle management; Husign capabilities. man Capital (poor) and worker unrest and strikes over poor pay and conditions. - Energy Reliability; power interruptions in the national power grid are common, and stand-alone generators are often needed, which are more expensive. - Inefficient Infrastructure: port and transportation.
Source acknowledged with thanks : www.ptj.com 8
WRITE FOR PHMA NEWSLETTER
Pakistan Hosiery Manufactures & Exporters Association (PHMA) publishes a monthly magazine for members and stakeholders of apparel industry. PHMA magazine is unique in nature and shares development perspectives about Clothing & Apparel Industry of Pakistan and international scenario. The magazine is circulated regularly to above one thousand readers of apparel industry and allied sector. You are kindly requested to share your experiences and thoughts in the form of write up to be published in PHMA magazine. Kindly write about issues in the following areas of Clothing & Apparel Industry;
Management practices in apparel industry of Pakistan Innovation and technical issues in apparel industry of Pakistan International developments affecting apparel industry of Pakistan Other related issues of apparel industry of Pakistan Production improvements in apparel industry of Pakistan Supply chain developments in apparel industry of Pakistan Marketing development in apparel industry of Pakistan
PAKISTAN HOSIERY MANUFACTURERS & EXPORTERS ASSOCIATION (NORTH ZONE) 33-D, NEW MUSLIM TOWN, LAHORE-PAKISTAN TEL: 92-42-35830694, 35833868 FAX: 92-42-35832213 E-MAIL: phmalhr@gmail.com – research@irp.edu.pk
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