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The EU clothing market in 2008: Opportunities for Colombian
manufacturersSam Anson
Economist and editorTextiles Intelligence
April 21-22, 2008
Textiles Intelligence
Contents• About Textiles Intelligence and the IAF – 5 mins• Map of the EU and list of member states – 5 mins• Key EU imports of clothing –buyers’ preferences, import trends, markets for
lingerie and swimwear – 35 mins• Key competitive factors when supplying the EU market: demand driven
factors – 30 mins• Coffee break – 15 mins• Key competitive factors when supplying the EU market: supply driven factors
– 15 mins• Case study: H&M – 5 mins• Emerging sectors: Performance fabrics and apparel and home textiles – 10
mins• Recommendations – 10 mins• Q&A – 20 mins
Textiles Intelligence
About Textiles Intelligence• International provider of independently
researched reports on the international fibre, textile and clothing markets
• Formed as a spin off from the Economist Intelligence Unit (EIU), part of the Economist Group
• Publishes four subscription-based publications– Textile Outlook International– Global Apparel Markets– Technical Textiles Markets– Performance Apparel Markets Textiles
Intelligence
Subscription reportsTextile Outlook
InternationalTechnical Textile
MarketsPerformanceApparel Markets
Global ApparelMarkets
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The International Apparel Federation and Global Apparel Markets
Textiles Intelligence
• The IAF is a worldwide knowledge network that collects and disseminates information, statistical, benchmarking and otherwise, on developments in apparel design, manufacturing, distribution, sourcing, trade and technology.
• politically neutral global association• open to entrepreneurs and executives from the apparel chain
worldwide. • Members include national clothing associations and companies
whose core business is sourcing, designing, development, manufacturing, distribution, and retailing of apparel products.
• Associate members include educational institutions and companies that supply textiles, accessories, equipment, technology, and services to the apparel industry.
The International Apparel Federation and Global Apparel Markets
Textiles Intelligence
• The mission of the IAF is to develop business contacts which foster dialogue, and knowledge exchange between individuals active in the world apparel value chain:
• for the betterment of business practices • for the promotion of the international image of the apparel business • for the advancement of technology and the promotion of its' use • for the encouragement of innovation and new ways of thinking • for the growth of apparel trade worldwide • for the improvement of social, health and safety, and environmental
conditions relating to the apparel chain worldwide, and • for the advancement of apparel related education and training. • Annual conference. 2008 conference is in Mastricht, Netherlands
The International Apparel Federation
Textiles Intelligence
The International Apparel Federation
Textiles Intelligence
• If you have any questions regarding the IAF, please contact
Mrs. Nadia van StadenPR & CommunicationsP.O.Box 428, 3700 AK ZEIST, The NetherlandsE_ [email protected]_ +31 30 - 232 09 08F_ +31 30 - 232 09 99
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Map of the EU
15. Latvia16. Lithuania17. Luxemberg18. Malta19. Netherlands20. Poland21. Portugal22. Romania23. Solvakia24. Slovenia25. Spain26. Sweden27. United Kingdom
EU member states1. Austria2. Belgium3. Bulgaria4. Cyprus5. Czech Republic6. Denmark7. Estonia8. Finland9. France10. Germany11. Greece12. Hungary13. Ireland14. Italy
The EU market in 2006
• EU clothing imports were worth US$141 bn, or 45% of world trade in 2006
• Almost half of the EU’s clothing come from inside the EU
• More than 200 countries supplied the EU in 2006• Countries in N and S America produced just 1.3% of
the EU’s clothing in 2006• Many EU firms are outsourcing manufacturing
operations to lower cost locations abroadTextiles Intelligence
Preferences for large retailers• 20-50 large retailers dominate• They prefer producers who are:
– flexible;– quick to respond;– reliable (communications, production, delivery);– strength in design skills;– quality production;– able to demonstrate strong influence over 3rd party suppliers;– open minded;– and can show evidence of willingness to collaborate with competitors if
required– can show evidence of social responsibility;– ecologically aware;
Brief history of EU trade:2000-07
Textiles Intelligence
Brief history of trade: Timeline
• Ten new members joined the EU in May 2004• EU quotas eliminated on December 31, 2004• Temporary “safeguard” quotas on certain
clothing imports from China imposed on January 1, 2006
• Two more new members joined the EU on January 1, 2007
• Temporary quotas on imports from China removed on December 31, 2007 Textiles
Intelligence
EU25 before quota elimination
Textiles Intelligence
EU: growth rates, imports from leading suppliers, by volume, 1990-2004
Source: Euratex
Bangladesh Romania China Turkey India0
5
10
15
20
25
30
22.6
16.915.1
10.4 9.4
% per annum, EU apparel imports
Growth shared evenly between suppliersTextiles Intelligence
EU25 imports in 2005 (after quota elimination)
Textiles Intelligence
EU: growth rates, imports from leading suppliers, by volume, 2005
Source: Euratex
China India Turkey Bangladesh Romania
-20
0
20
40
60
44.7
18.9
0.8
-0.7
-12.4
% per annum,
Textiles IntelligenceChina and India gain market share
How did China cope with safeguard quotas introduced in EU in 2006?
Textiles Intelligence
Let’s look at the six clothing categories covered by China
safeguard quotas
Textiles Intelligence
Impact of safeguard quotas on Chinese exports to the EU, 2006/05
Source: Textile Outlook International based on Euratex data
Blouses Brassieres Dresses Trousers T-shirts Pullovers
-60
-40
-20
0
20
40
-30.2 -31.4
-41.0-47.7 -48.2 -50.8
% change
Volume
Big VOLUME drops from China in every category subject to
safeguards!
Textiles Intelligence
Impact of safeguard quotas on Chinese exports to the EU, 2006/05
Source: Textile Outlook International based on Euratex data
Blouses Brassieres Dresses Trousers T-shirts Pullovers
-50
0
50
100
150
56.043.9
135.6
68.184.9
64.0
% change
Price
Big price rises from China!
Textiles Intelligence
How did Vietnam, a competing country, respond to China’s
quotas?
Textiles Intelligence
EU imports from Vietnam in six clothing categoriessubject to China quotas
Source: Textile Outlook International based on Euratex data
Blouses Brassieres Dresses Trousers T-shirts Pullovers
0
200
400
600
250.8 257.7
561.3
360.2 336.3
239.2
% change
Volume
Big VOLUME rises from Vietnam in every category subject to China safeguards!
Increases in volume
Textiles Intelligence
EU imports from Vietnam in six clothing categoriessubject to China quotas
Source: Textile Outlook International based on Euratex data
Blouses Brassieres Dresses Trousers T-shirts Pullovers
-100
-80
-60
-40
-20
0
20
40
-53.0
-67.6-60.9
-51.9
-72.8
-44.2
% change
Price
Steep price falls from VietnamTextiles Intelligence
Nearby suppliers
Textiles Intelligence
Key movers: 2005-2007
• Egypt: +8% value, +10% volume• Macedonia: +17% value, +20% volume• Serbia: +38% value, +43% volumePrice increases from• Turkey: +3% value, no change in volume• Morocco: +4% value, -1% volume• Madegascar: +11% value, +6% volume• Albania: +14% value, +4% volume• Moldova: +16% value, +10% volume• Intra EU: +2% value, -11% volume*• Switzerland: +5% value, +1% volume* Textiles
Intelligence
High volume Asian suppliers
Textiles Intelligence
Key movers: 2005-2007
• Vietnam: +17% value, +42% volume• Cambodia: +3% value, +5% volume• Malaysia: -3% value, +3% volume• Taiwan: -3% value, +1% volume• China: +9% value, +6% volume• Bangladesh: +7% value, +6% volume• Sri Lanka: +9% value, +8% volume• India: +6% value, +4% volume• Pakistan: +5% value, +4% volume Textiles
Intelligence
Asian suppliers which are cutting prices in order to compete
Textiles Intelligence
Key movers: 2005-2007
Less successful Asian suppliers have cut prices in an attempt to remain competitive:
• Indonesia: 0% value, -2% volume• Thailand: 0% value, -3% volume• Macau: -5% value, -8% volume• South Korea: -7% value, -9% volume• Myanmar: -6% value, -9% volume
Textiles Intelligence
Key suppliers to the EU market in 2007
Textiles Intelligence
Top 10 EU suppliers: 2007
1. Intra EU: 46% of value, 23% of volume2. China: 20% of value, 34% of volume3. Turkey: 8% of value, 8% of volume4. Bangladesh: 4% of value, 9% of volume5. India: 4% of value, 4% of volume6. Tunisia: 2% of value, 2% of volume7. Morocco: 2% of value, 2% of volume8. Hong Kong: 2% of value, 2% of volume9. Indonesia: 1% of value, 1% of volume10. Vietnam: 1% of value, 1% of volumeSource: Textile Outlook International and Euratex Textiles
Intelligence
Key suppliers of T-shirts and cotton trousers in 2006
Textiles Intelligence
Top 10 T-shirt suppliers
1. Turkey 27%2. Bangladesh 17%3. China 12%4. India 10%5. Mauritius 3%6. Morocco 3%7. Hong Kong 3%8. Tunisia 2%9. Thailand 2%10. Romania (now EU) 2% Textiles
Intelligence
Top 10 suppliers of cotton trousers
1. Turkey 15%2. China 15%3. Bangladesh 12%4. Tunisia 9%5. Romania (now EU) 9%6. Hong Kong 7%7. Morocco 7%8. Pakistan 4%9. India 3%10. Indonesia 2% Textiles
Intelligence
For more information:
For more information on international trade in textiles and clothing, please see:
• “Trends in EU imports of textiles and clothing”, once a year in Textile Outlook International,
• “Trends in US imports of textiles and clothing” - once a year in Textile Outlook International,
• “World trade in textiles and clothing” - once a year in Textile Outlook International,
• “World textile and apparel trade and production trends” – twice a year in Textile Outlook International.
• “Clothing Trade and Trade Policy” – four times aYear in Global Apparel Markets Textiles
Intelligence
EU lingerie market
Textiles Intelligence
European markets for lingerieLow end basic products
Source: Marks & Spencer
Key facts• Worth US$11.3 bn in 2005 (56% bras, 29% briefs)• Germany is the largest market, followed by Italy, the
UK, France, and Spain.• Consumption of items of lingerie per woman rose by
12-13% during 1994-2005 • Average price of bras was US$17.58 per item in 2005.• Italy has highest average prices, followed by Spain,
France, Germany and the UK.
Textiles Intelligence
Key facts• Flurry of merger and acquisition activity, culminating with the
divestment by Sara Lee of its European branded intimate apparel business to Dim Branded Apparel (DBA) in February 2006 and its UK-based Courtaulds private label apparel business in May 2006.
• Future prospects for brands in the bra business appear reasonable.• Briefs market is becoming intensely competitive as sales of
multipacks in supermarkets exert downward price pressure on suppliers and other retailers.
• Nightwear is an important part of the lingerie market• Source: Textile Outlook International – European market for
lingerie
EU swimwear market
Textiles Intelligence
European markets for swimwear
One-piece swimsuit Two-piece bikini
Key facts• Worth US$3.11 bn in 2005.• Forecast to reach US$3.16 bn by 2012. • Innovative and unique designs are very important factors• Italy had the highest sales and highest prices in 2005 and it was
the only country in Europe to experience price increases in swimwear during the year
• Prices are expected to fall in all countries except Italy, Germany and Spain.
• Major differences in cultures between countries –the all in one swimsuit is more popular than the 2-piece bikini.
• Italy is the largest market, followed by Germany, France, the UK and Spain.
Textiles Intelligence
Key factsMain Trends:• Many different styles and designs including
functional designs to help improve wearer’s figure - tummy tuck, cover up – as well as different lines for different body shapes.
• Source: Textile Outlook International – European market for swimwear
Textiles Intelligence
Designs by body shape
Small bust
Larger bust
Larger bottomLarger thighs
Larger tummy
Narrow hipsSource: www.miodestino.co.uk
Key factors when supplying the EU clothing market
Textiles Intelligence
Key competitive factors in supplying the EU market
Market driven factors:• Knowledge of the market
– EU trade policy: under heavy pressure to constant reform from many lobbying groups
– Target customers: largest and fastest growing retailers – keep abreast of their financial performance and sourcing strategy
– Understanding that the EU market is the fastest changing market in the world, mainly driven by oversupply from Asia, extreme fashion trends and increasingly celebrity activity - “gossip” and “styles”
– Understanding sizing, pricing and seasonality is a very important asset
Key competitive factors in supplying the EU market
Market driven factors:• Current socio-economic trends:
– Eco-friendly production– Corporate social responsibility
• Emerging high value sectors: Home textiles and Performance Apparel
Textiles Intelligence www.textilesintelligence.com
EU Market: Key political and commecial lobbying groups
• Key decision-making bodies in EU:– The European Commission– The Council of Ministers– The European Parliament– The European Committee for Standardisation
• Brussels-based industry associations– Euratex– Eurocoton– IWTO (wool) Textiles
Intelligence
EU Market: Key political and commecial lobbying groups
• Key commerce based associations:– AEDT–The European Association of Fashion
Retailers;– Eurocommerce– The Foreign Trade Association (FTA)
• Workers’ representations– European Trade Union Federation
Textiles Intelligence
Sizing
Textiles Intelligence
Sizing– Sizing varies from one EU country to another. All are very
different from USA and LatAm.– EU initiative to standardise sizing but it’s a long way off.
PricingPricing• Prices have fallen for clothing across the board.• Low and Mid priced clothing is very popular and comes from
Asia. However, weak in flair and creativity for design. Quality is generally acceptable, however.
• Low and Mid priced clothing is sold mainly by supermarkets and large high street retailers and basic department stores.
• Much high priced clothing is still produced within the EU but retailers are looking for new suppliers abroad as there is pressure on margins due to high cost of labour, rising energy costs and slow EU economic growth.
• High priced clothing is sold by luxury department stores,independent boutiques, own brand stores and via the internet.
EU markets are traditionally very seasonal.Temperatures and climates vary massively from one country to
another.Southern med countries – hot dry summers, cool but not cold
winters. Sometimes flash rain and thunder storms throughout the year.
North European countries are characterised by cold and wet winters, variable springs, hot summers with unpredictable rain and pleasant autumns.
High end retailers focus on the 2 traditional collections a year.Mid and low end retailers are blurring collections with many
having 6 or more collections a year to encourage a new and fresh attitude to clothing.
Seasonality
Selling via the internet
Textiles Intelligence
Selling via the internet
Textiles Intelligence
• Volume and value of clothing sales via the internet is growing fast.
• Time-poor cash-rich consumers are shopping from home for convenience.
• Established retailers also sell online.• Most established catalogue sales channels are now
done online• The biggest retailers have exclusive websites while
resellers and agents collaborate.• Some stores offer free delivery.
Selling via the internet
Textiles Intelligence
• Internet sales is characterised by:• High % of returns which can be resold as shoppers
cannot try the clothes on before they buy• Lower prices due to lower overheads for retail
space, advertising, staff etc• High levels of cooperation between competitors.• Very low margins for agents and resellers.
Target customers: largest EU retailersCompany Country Turnover Turnover Profit Stores
2007 2006 2007Inditex Spain 11,181 9,196 1,850 3,131H&M Sweden 10,166 9,105 2,274 1,420C&A Belgium 7,640 na na 1,100M&S UK 7,193 6,586 na >500Next UK 6,615 6,256 1,023 1,095Arcadia Group UK NA 3,565 606 >2,500Asda UK 3,525Esprit Holdings Hong Kong 2,993 2,645 611 >500Primark UK 2,637 2,026 373 160Benetton Italy NA 2,408 246 5,100Mango Spain NA 1,000The Peacock Group UK 1,104 987 na 540Monsoon UK 7,100 977 na naFrench Connection UK 485 495 na naCortefiel Spain 1,100New Look UK na na na 315
Target customers: selected fast growing retailers
Rank Company Y/Y growth%
1 Primark UK 30.14 The Peacock Group UK 30.15 H&M Sweden 11.76 Mango Spain 10.07 Monsoon UK 626.88 M&S UK 9.29 Benetton Italy NA10 Next UK 5.711 Arcadia Group UK n/s12 French Connection UK -2.013 C&A Belgium NA14 New Look UK NA15 Cortefiel Spain na16 Asda UK na
Textiles Intelligence
Fast growing retailers: The importance of supermarkets in EU clothing retailing
• Supermarkets growing share of UK and EU clothing market
• In UK, Asda and Tesco are in the top 10 largest clothing retailers
• Supermarkets are using convenience, existing distribution, large customer base – online delivery within 24 hours
• Supermarkets are looking to expand range of clothing to higher value added goods
• Reward cards create loyalty Textiles IntelligenceFor more information see “Apparel business update”, Global
Apparel Markets every 3 months
Fast growing retailers: The importance of supermarkets in EU clothing retailing
Textiles IntelligenceFor more information see “Apparel business update”, Global
Apparel Markets every 3 months
Fast growing retailers: The importance of supermarkets in EU clothing retailing
Textiles IntelligenceFor more information see “Apparel business update”, Global
Apparel Markets every 3 months
Tesco’s home page
For more information see “Apparel business update”, GlobalApparel Markets every 3 months
Asda’s clothing range, George, has its own dedicated website
For more information see “Apparel business update”, GlobalApparel Markets every 3 months
Understanding the speed of change of fashion trends
• Good sources of information include:– Global Apparel Markets (a one-stop shop);– The International Apparel Federation;– Just style;– www.iamfashion.blogspot.com– Fashion trade press;– Financial Times;– Fashion supplements to EU tabloid papers;– Major retailer’s websites. Textiles
Intelligence
Spring/Summer collections 2007 vs 2008
2007
Textiles Intelligence
2008
www.iamfashion.blogspot.com
Spring/Summer collections 2007 vs 2008
2007
Textiles Intelligence
2008
www.iamfashion.blogspot.com
Spring/Summer collections 2007 vs 2008
2007
Textiles Intelligence
2008
www.iamfashion.blogspot.com
Major EU fabric fairs
• EU fabric fairs remain important events for high quality fabrics for suppliers to the EU
• Spinners and fabric manufactures have met Asian competition with innovative designs, high quality, fast turnaround times and superior customer service (see later)
• Demand is growing fastest for eco-friendly products – organic cotton and natural dyes
• However, in recent times, Chinese trade fairs have become more important for buyers Textiles
Intelligence
Major EU fabric fairs
• Munich Fabric Start, Germany• Tissu Premier, Lille, France• Milano Unica, Milan, Italy• Texworld, for non-European Textile
Producers, Paris, France• Première Vision Pluriel, Paris, FranceFor more information see “Fabric and Apparel trends and fairs”
in Textile Outlook International twice a year and in GlobalApparel Markets once a year Textiles
Intelligence
Socio-economic trends: Green textiles and clothing
• Green textiles and clothing is becoming an increasingly important factor in the EU market in terms of production and consumers
• Eco labels and official certification– EU Eco label– Organic Cotton
• Retailers’ initiativesFor more information see “Green textiles and clothing” in Textile Outlook
International and “Organic cotton” in Global Apparel Markets
Textiles Intelligence
Socio-economic trends:Corporate social responsibility
• Social responsibility – “giving back to society”:– Worker incentives– Schools– Child care– Charitable donations– Facilities for workers (exercise, restaurants) – Environmental responsibility– Charity donations– Local civil projects – schools, water supply, hospitals,
orphanages Textiles Intelligence
Home textiles
Source: John Lewis Partnership
Emerging sectors: Home textiles• Home textiles include:
– Bathroom textiles– Bedding– Cushions and cushion covers– Table linen– Window dressings (curtains, drapes etc)
• Bedding and window dressings are largest sub sectors – 72% of UK market and 75% of German market
• EU import market was worth Euro5.3 bn in 2006. UK is by far largest market in EU.
• Key suppliers were Turkey (15%), Pakistan (12%), China (11%), India (9%), Portugal (8%), Germany (5%), Belgium (4%), France (3%), Poland (3%), Czech Republic (3%), Italy (2%)
Textiles Intelligence
Emerging sectors: Home textiles
• Common fibres include: Cotton, linen, silk, wool, modacrylic, nylon, acetate, acrylic, polyester, rayon
• Key growth areas:– Innovative functional fabrics
• temperature regulation, odour management, antibacterial coatings, phase change materials, easy care, stain resistance, flame retardancy, fragrance encapsulation, cosmeo textiles, anti-static
– Eco friendly fibres and fabric,– Simple designs are popular in EU market
For more information please see report on “Developments inHome textiles” in Textile Outlook International Sep-Oct 2006 Textiles
Intelligence
Emerging sectors: Performance apparel
• Performance apparel:– Waterproof breathable fabrics;– Temperature regulating fabrics;– Compression clothing;– Antimicrobial technology;– Ultra violet protection;– Insect repellent;– Flame retardent;– Personal protective equipment;– Anti odour;– Anti-static technology
Textiles Intelligence
Compression clothing made from elastane and polyester in Guatemala
Trends in sourcing strategies: a case study on H&M
H&M has reacted to:• Highly competitive market• Removal of quotas has meant there’s a situation of
over supply• Fast changing consumer tastes• Heavy influence by media• Large retailers with strong brands have the best
knowledge of the market and the majority of control
Textiles Intelligence
Trends in sourcing strategies: a case study on H&M
• H&M is one of the world’s largest and fastest growing clothing retailers
• Pioneer of fast fashion– Fast fashion refers to the speed at which a retailer
is able to spot a trend on the catwalk and have it available, at an affordable price in the shops
• Achieves this with efficiency and flexibility throughout its supply chain
Textiles Intelligence
Trends in sourcing strategies: a case study on H&M
• H&M has strong knowledge of fashion and is adept at anticipating trends
• This makes it popular with consumers, , especially women, who want to have the most up-to-date fashion items
• It has grown at a formidable rate, despite challenging economic conditions
Textiles Intelligence
Trends in sourcing strategies: a case study on H&M
• H&M’s strategy:– Centralised key functions of design, buying and
logistics;– Decentralised decision making for all other
aspects;– Third party manufacturers;– Regional distribution centres, or “hubs”; – Celebrity endorsement; and– Hi-tech communication technology. Textiles
Intelligence
Trends in sourcing strategies: a case study on H&M
• H&M aims to produce “fashion and quality at the best price” through:– creative designers – Strict quality control– Few middlemen– Buying in large volumes– Comprehensive market knowledge– An extensive supplier portfolio– Efficient distribution Textiles
Intelligence
Trends in sourcing strategies: a case study on H&M
• Corporate social and environmental responsibility– H&M has established a reputation for social and
environmental awareness– All suppliers must adhere to the company’s code
of conduct• Forced and child labour• Full Audit Programme• Environmental legislation on handling of chemicals,
waste management and water treatment Textiles Intelligence
Trends in sourcing strategies: a case study on H&M
• Outlook:– Store expansion will be focused on USA, Europe
and Japan – 1,500 stores at end 2007;– Product diversification – household textiles and
men’s shoes and maybe performance apparel
For more info please see Profile of H&M: pioneer of fast fashion in Textile Outlook International Jul-Aug 2007
Textiles Intelligence
Key competitive supply factorsSupply driven factors to enhance competitiveness in a fast
changing and unpredictable market:• Low labour cost• Relative value of exporting currency• Manufacturing efficiency and quality• Collaboration with local competitors and third parties• Short lead times vs distance to market• Flexibility and responsiveness to clients’ needs• Building of long term relationships with customers• Competitive investment climate with competing countries
(including trade policy and investment incentives)
Textiles Intelligence
Labour costs in competing countries
Textiles Intelligence
Hourly labour costs in the textile industry, 2007
Source: Textile Outlook International from Werner data
SwitzerlandBelgium
GermanyAustria
UKJapan
FranceItaly
IrelandAustralia
USASpain
GreeceIsrael
South KoreaTaiwan
PortugalHong Kong
Czech RepublicPolandEstonia
LatviaLithuaniaSlovakia
BrazilArgentina
TurkeySouth Africa
MoroccoMexico
ColombiaPeru
TunisiaThailandBulgariaMalaysia
EgyptChina, coastal
IndiaIndonesia
China, mainlandVietnamPakistan
Bangladesh
0 10 20 30 40
33.6731.65
28.1725.24
23.4222.69
21.6120.05
18.0117.63
16.9215.81
13.099.89
7.777.64
7.156.21
4.904.62
4.144.053.703.533.273.102.962.782.622.452.322.022.011.751.551.341.020.850.690.650.550.460.420.28
US$/hour
Relative value of exporting currency
Textiles Intelligence
China's declining competitiveness: exchange ratesJan-Sep 17, 2007
Source: Emerging Textiles
Sri LankaIndonesia
VietnamDominion Republic
MexicoEl Salvador
HondurasCambodia
TaiwanSouth KoreaBangladesh
USAPakistan
-10 -5 0 5 10
-8.5
-7.6
-7.4
-6.7
-6.5
-6.3
-6.1
-5.4
-5.2
-4.8
-4.7
-3.8
-3.2
% change in currency versus Rmb
China’s currency has risen against
all these countries
China’s weak spot: the value of the renminbi is risingTextiles Intelligence
Manufacturing efficiency and quality
Buyers look for:• Low operating costs;• Implementation of total quality management systems;• Investment in good quality machinery, perhaps on a modular
basis;• Removal of expensive and unnecessary gadgetry• Machinery which has been designed for low labour costs• Worker incentive schemes for efficiency and quality• Efficient strategy for fabric sourcing and 3rd party services
Textiles Intelligence
Collaboration with local competitors and third party suppliers
Buyers are also impressed with:• Evidence of collaboration with competitors • Evidence of development of specialist production “hubs” or
“clusters”• Evidence of influence over third party suppliers (accessories,
finishing, labels etc)• Efficient capital markets in country • Efficient logistics and communication methods• Strong knowledge of foreign markets
Textiles Intelligence
Other factors
• Short lead times: Speed to market and up-to-date fashion items allows retailers to keep a competitive edge
• Modern Information Technology methods which is compatible with buyers encourages EU customers to do business:– Product Lifecycle Management (PLM);– Three dimensional design and visualisation software;– Virtual fabric samples and catwalk technology;– Radio Frequency Identification labels;
• Collaboration and relationship building with local logistics companies and those in EU can help optimise shipping times
Textiles Intelligence
Flexibility and responsiveness to customer needs
• EU market is changing very fast• Retailers want manufacturers who are flexible and quick to
respond• No sooner has one trend, fashion or “social phase” been
implemented in a product range, a new one is on its way• Flexibility is key to win business in terms of:
– Order size – small versus large;– Quick response – turn around a design in days;– Blurring of conventional seasons;– Integration of emerging products at short notice – lifestyle products,
performance coatings, garment decoration– Incorporation of celebrity “fads” can make a quick buck Textiles
Intelligence
Building long term relationships with suppliers and customers
• EU customers have knowledge of market and knowledge of clothing manufacture
• EU customers don’t have knowledge of suppliers and third parties in less developed countries
• EU customers can keep abreast of changes in trends and have exceptional ability in design and innovation
• EU customers need help from suppliers in terms of producing clothing at low cost quickly and with minimum returns
• Out of a portfolio of 130+ suppliers, retailers have a focus on three or four producers which they have a long term win-win relationship with
For more information, see “Strategies for manufacturers in The post quota era to 2015” in Textile Outlook International Textiles
Intelligence
Recommendations• Use Colombia’s political and social situation to your advantage• If capacity is underutilised, consider collaborating with competitors to
streamline operations and improve efficiency• Create a databook containing key operational performance statistics in
english to put on your website and give to EU customers (see ACI – Agencia de cooperacion y inversion- for template)
• “Shout” about your competitive advantages and achievements through the international textile and clothing press
• Consider establishing a full time press representative to generate and receive press releases
• Collect impressive statistics about your company’s achievements and send the information via press releases to the international community
Textiles Intelligence
Recommendations• Read the textile and clothing business-to-business press every
day to learn what’s going on and to decide your target countries and customers.
• Use internationally-recognised terminology• Update websites in English • List company’s strengths (technology, quality, social
responsibility) in an obvious place. • Update marketing and sales brochures regularly and make sure
the English is well translated• Many large retailers have strict requirements for safety, ecology
and treatment of employees. EU certification in these aspects can be a business winning advantage
Textiles Intelligence
Thank you
Questions and Answers?
Textiles Intelligence