In This Edition ...
Worker shortage and credit squeeze stokes worries about Chinese costs
Hong Kong businesses expressed their annual fears over imminent crisis in China, as worries grew over migrant workers' reluctance to return to jobs in the coastal provinces. The problem is partly the result of China's continuing economic growth, more jobs in the western provinces and the growing attraction of agriculture. But, as traditional sources of migrant labour are themselves running short of workers, the problem may be the first sign of China's imminent demographic crunch.
The worries emerged as Chinese garment suppliers began having their bank loans withdrawn.
Falling prices replace sales decline in suppliers' worries
The volume of US garment imports in February 2010 from countries other than China grew over the previous year for the first time since the recession started. But, with average prices continuing to tumble, and US retailer margins soaring, supplier incomes continued falling. Though many countries' garment industries are now exporting more clothes than a year ago, their income is lower.
Asian sourcing likely to be transformed by EU FTA's
The EU made a range of announcements about new Free Trade Areas. If they materialise, they offer the likelihood of duty-free imports from Korea, India and Vietnam. Together, the three could see a substantial improvement in competitiveness against China, and undermine Bangladesh's position as Asia's major duty-free supplier to Europe
Bangladesh threatened by quadruple whammy
The currently buoyant Bangladesh garment industry was hit during February by demands from its major customers for higher wages in garment factories. A new wave of violence, some of it apparently carried out by officials of the ruling party demanding kickbacks, affected operations at dozens of garment factories, and the fatal fire at an H&M supplier raised more questions about safety standards and about buyers' liabilities. And EU proposals for more Free Trade Areas with major Asian garment producing countries raised the likelihood of the country losing its status as the only substantial duty-free supplier to Europe - just as Sri Lanka looks certain to lose its duty-free access. The country has even started to hit a labour shortage
Strikes return as food inflation overtakes job loss worries
Strikes hit the garment industry in Egypt and Burma, both of which have till recently violently repressed them. Though in Egypt's case, the strikes are partly the result of botched privatisations, both the Egyptian and Burmese governments seem to have moved to tolerating strikes, while intimidating them. As in Vietnam, the strikes are associated with food prices rising faster than wages, and with weak unions making conventional negotiations lacks worker credibility
Retailers take opposite stances in eco-race
Wal-Mart "will be the first to take a look at the supply chain on a global scale" as it committed to take 20 million tons of greenhouse gas (GHG) emissions out of the products it sells, and revealing apparel is a priority category. M&S announced it would become " the world's most sustainable retailer by 2015"
Both have published detailed and wide-ranging apparel plans, based on widely differing philosophies. Wal-Mart concentrates on working with fabric, garment, detergent and washing machine suppliers to reduce the energy requirement in cleaning and drying, which generate most garment GHG emission. M&S's dozens of detailed commitments for how its apparel should be made at present merely encourage customers to wash at lower temperatures.
