Today’s TextileFuture Newsletter offers two differeent features. The first “Collapse of TPP Deal fails to knock Vietnam Textile Sector off Track” is based upon a status quo of the Research arm of Hong Kong Trade Development Counsel and a perspective on the SaigonTex show. SaigonTex 2018 took place from 11-April 11 – 14 at the Saigon Exhibition and Convention Center in Ho Chi Minh City. The second feature by guest author Chantal Fernandez at Business of Fashion shows “How can Fashion embrace the Circular Economy?”
Please note that the next Newsletter will be published on September 4, 2018
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Today’s TextileFuture Newsletter:
Collapse of TPP Deal fails to knock Vietnam Textile Sector off Track
Many at this year’s SaigonTex show – Vietnam’s premier event for the textile industries – welcomed the failure of the TPP initiative, confident that the country’s ascent to the top of the exported apparel sector would continue regardless.
SaigonTex now bills itself as Vietnam’s leading textile show, with the 2018 event featuring about 1000 exhibitors, a slight decrease on last year. While many at the show commented that it was noticeably quieter than its predecessor, there remained an underlying confidence that the sector was continuing to grow.
Among those attending the show was Christoph Peters, General Director of German- based machinery manufacturing firm Illies Engineering. The company has a well- established textiles division, which specialises in high-tech fabric finishing and fibre / yarn production systems.
Acknowledging that the show was not as busy as last year, he said: “In terms of visitor numbers, it feels a bit quieter than 2017, but business is still good. There was a lot of over-optimistic hype about the market at last year’s show, largely based on the anticipated TPP [Trans-Pacific Partnership] trade deal. That has now obviously dissipated.
“This year, people seem more focused and more ready to do deals, rather than just waiting to engage in idle speculation. I don’t expect to see any deceleration in the rate of growth here over the next five years and it could be sustained for far longer.”
Peters’ optimism appears well-founded. In 2016, according to a report by Dhaka-based industry magazine, TextileToday, apparel exports accounted for 16 % of Vietnam’s total outbound trade. This made the country the world’s third-largest exporter of garments, with clothing accounting for 70% of the output of the overall textile sector.
As well as a booming export trade, the prospects in Vietnam’s domestic market also look healthy. With a population of 90 million – and a disproportionately large younger generation – the recent increases in disposable-income levels have resulted in retail growth of about 20 % per annum. The country’s apparel and textiles sector employs more than 2.5 million people in about 6,000 companies, with the industry forecast to grow by up to 14 % a year, taking it to a total value of USD 50 billion by 2020.
For many exhibitors, Vietnam is now a major-league player in the Asian textiles market. Clearly a subscriber to this view was Roy Chandra, an Account Manager with Hong Kong- based Artrend, a manufacturer of specialist printing machines for garment factories.
Estimating the worth of the country to his business, he said: “Vietnam makes up between 30-40% of our Asian market, with business particularly good for at the moment. We’ve already made several sales at this show, for instance.
“We are finding that the big players in the garment industry are increasingly opting for Vietnam. In many respects, Vietnam is now where China was 10 years ago, although most of the growth is coming from private-sector initiatives. While the Vietnamese government is not being particularly proactive in supporting the textile industry, critically, it is not getting in the way of private enterprise.”
To say that foreign companies are now investing heavily in Vietnam would be something of an understatement. The first 11 months of 2017 saw foreign direct investment (FDI) in the country’s manufacturing sector soar by 11.9 %, with the lion’s share going to the apparel / textiles sector.
Lured by the country’s surging level of apparel exports, Germany’s Malho – a provider of a wide range of textile quality-control solutions – was making its Vietnamese debut at this year’s event. Commenting on the response he has received to date, Stephan Kehry, the company’s Area Sales Manager, said: “This show has been really good for building relationships and meeting new clients and for getting a feel for what is happening in Vietnam. Although we are finding that there is considerable demand in the Vietnamese market, 60 % of that interest is actually from foreign-owned companies.”
In terms of FDI sources, much of the investment has actually come from within the Asian bloc, with Japan and South Korea taking point. One key investor is Union Industry, a Hyogo prefecture-based market leader in the socks, stockings and pantyhose sector, as well as a manufacturer of clothing production equipment. Bullish about the opportunities now available locally, Giovanni Lamberti, the company’s International Sales Co-ordinator, said: “Vietnam is emerging as a leading producer of socks and we see the potential for a USD 50 billion market here – one made up of developing micro-niches, as well as wholesale garment production.
“In recognition of the market’s importance, we are displaying our new ground-breaking shoe-making machine at this show for the first time. The machine can create the fabric of a shoe, mould it into shape and have it ready to simply stick on the sole all within eight minutes. It is difficult to measure exactly how much time this will save, but it does streamline the overall manufacturing process.”
Another Asian incomer doing well in the Vietnam market was Phenitex, a Bangkok- headquartered distributor of Japanese and Taiwanese knitting machines. Noting the ascendance of the local textiles industry, Managing Director Tangsiripornkul Kitti said: “Over the past seven years, I have seen a steady growth in demand for textile machines here. In that time, the Vietnamese market has grown from being a bit player to taking a leading role in the region.
“In terms of this particular show, although visitor numbers appear to be a bit down on last year, the quality of attendees is very good. It has already provided us with a number of potential leads.”
It wasn’t just foreign players enthused by the buoyant attitude at the event, however, with many local companies seemingly equally positive. Far from immune from this upbeat sentiment was CSP, a manufacturer of garment-cutting machines operating out of both Ho Chi Minh City and Hanoi. Clearly satisfied with its maiden appearance at the event, Software Support Representative Tran Thi Tuyet Dung said: “The show has been great in terms of meeting contacts and providing leads. We’ll definitely be back next year.”
Collapse of the TPP
Although a number of exhibitors felt that the collapse of the TPP deal may have dented attendance at the show, they were also largely convinced it had done little to stop Vietnam emerging as one of the world’s leading garment exporters. In fact, some actually welcomed the failure of the TPP, seeing it as likely to thin out the more marginal players in the sector, while leaving it clear for the more serious players to secure market share and consolidate.
Adamant that the US withdrawal from the TPP will not damage Vietnam’s prospects in the long-term, Peters said: “The collapse of the TPP has reduced the number of hangers-on in the sector. If you’re looking to get into the market now, you’re going to find that that boat has well and truly sailed.”
How can Fashion embrace the Circular Economy?
By guest author Chantal Fernandez at Business of Fashion
When industry leaders have an unusually frank and anonymous conversation about sustainability, what does it reveal? Uncomfortable questions about class, control, hypocrisy and anxiety over jobs, to name a few.
Despite the wealth of reports finding that millennials and members of Generation Z say they prefer fashion made in a more ethical and less environmentally destructive way, they can’t seem to get enough of ultra-fast fashion brands like Boohoo and low-price private-label basics from retailers like Amazon. Clearly, for many, price and speed trump conscience.
The dilemma — and how a shift to a circular fashion system could help — was just one of many issues discussed at VOICES, BoF’s annual gathering for big thinkers in partnership with QIC Global Real Estate, in December last year. Speakers and guests gathered in five salons designed to spark debate and explore resolutions for some of the most important issues facing the industry today. Each VOICES salon addressed a central question. Among them: “How Can Fashion Embrace the Circular Economy?” Held under the Chatham House Rule, the salon ensured anonymity while creating an intimate, candid environment.
At today’s pace, the textiles economy is projected to release over 20 million tonnes of plastic micro-fibres into the ocean by 2050, according to the Ellen MacArthur Foundation, an organisation dedicated to accelerating the adoption of a circular economy. The term describes a restorative and regenerative system that uses innovation to cut waste and minimise negative impact, replacing the traditional linear model in which products are cheaply made, consumed and then disposed.
“Just using less is not a solution [though]; it just buys you time,” says fashion consultant Julie Gilhart, one of the passionate pioneers who introduced many in the fashion industry to sustainability issues in the early years. “It’s like a crisis situation right now. The way we do things has to change and it isn’t going to be comfortable.”
Where does this leave fashion? Business leaders from the biggest luxury conglomerates, department stores and ready-to-wear brands joined the salon’s facilitators — fashion consultant Julie Gilhart and Andrew Morlet, chief executive of the Ellen MacArthur Foundation — to discuss fashion’s belated embrace of the circular economy.
To kick off the proceedings, Morlet explained how the Ellen MacArthur Foundation’s research has shown that progress towards such a system is possible without regulatory change or a shift in consumer behaviour thanks to its profit generating potential. New business models based on reusable or recycled raw materials can pay off in long-term revenue by reducing the costs of production or creating new revenue streams, such as rentals or other new forms of ownership. Such a shift is, of course, challenging to implement, and has long concerned business leaders.
Executives from fashion sectors as diverse as manufacturing, retail, design and the media then chimed into the debate. Seven key points emerged from the discussion:
- Don’t count on consumers to lead the charge. The industry is still in service to consumers, many of whom value price, novelty, quality and design more than they value the ethical considerations of their purchasing decisions. Therefore, the industry cannot take direction from consumers or wait for them to shift their purchasing habits. “Consumers aren’t right on this one, it’s going to have to be up to businesses that understand that and if they want to reduce and reuse,” said one participant. “If the consumer doesn’t care, does that suddenly give you permission to pollute?” said another guest. “Of course it doesn’t.”
- Some consumers are still confused about what sustainability means. Everyone in the industry — particularly the media — has an important role to play in educating consumers better. “If someone understands the difference of a dollar to a cotton farmer… then we start to change them,” said one participant. “Some people who say they care about those values don’t understand what they are doing when they are voting for cheap products [with their wallets].” At the same time, some believe that it is important to avoid making consumers feel overly guilty, because their choices do not include any single brand or company that is truly sustainable. “There is not a single fashion company in the world that can make that claim,” said a guest.
- Consider reframing what consumption means. Several participants advocated for “reframing the way people participate in the [fashion] system.” The growing rental market is one way to achieve that, especially for uniforms and more basic or timeless daywear. “There are items that have value no matter what the season,” said one participant. As for trend-driven or seasonal pieces, one option is a “tiered system for borrowing,” as one guest described it, where in-season pieces get filtered either through rentals or through the resale market from luxury shoppers to “fashion followers” who are content to pick up on trends after they debut on the runways. “We know that there are people that look for ‘now and next’ and we know they are willing to pay a premium,” the participant explained.
- Concerns about job elimination. How does the circular economy create jobs in new areas? This was a point of concern at the salon for several participants who are worried about the impact of automation or decreased consumption on the industry. Automation will make production more efficient, but at what cost to the workforce? Or will increased recycling processes offset some of the potential job loss?
- Not every consumer can afford to be conscious. Is caring about sustainable fashion only something that the wealthy can afford? To what degree ethically responsible purchases — typically more expensive than mass market selections — are feasible options for shoppers of lower socioeconomic backgrounds than higher net worth consumers is unclear. While many argue that sustainability — from organic food to hybrid cars — is a luxury reserved for the rich, others say it is in fact the middle classes who are becoming better to reducing and reusing in effective, practical ways.
- Finding a way to get started is sometimes the hardest part. What are the steps that even a small brand can take to reboot its approach to materials, waste and recycling without negatively affecting the bottom line? This question was a key concern for most participants who felt isolated in trying to begin tackling sustainability in a way that would not endanger their businesses. Some felt it was up to the industry’s largest players to take large public steps that “start to shake the economics of the system” and “bring others along.” Others took matters into their own hands, taking small but meaningful steps to reduce packaging or recycle hangers by shipping them to other countries or donating them to community organisations.
- Collaboration is key. There is no silver bullet to sustainability and, “because no single actor can actually shift the system, collaboration becomes essential,” said one participant. “We need to find ways of creating new forms of cross-industry coordination that just doesn’t exist today,” said another. Finally, transparency with industry peers and consumers was called out as an essential point. “[The industry] better do something now or you are going to get caught with your pants down in five years or less,” said one guest.