November 2011

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In This Edition ...

"China flight" disappears as industry concerns switch to collapsing market

China's market share of US apparel imports advanced to almost its highest ever in September, as the average price of Chinese apparel imported into the US grew more slowly than the price of apparel imported from the rest of the world.

The apparel trade's problem is no longer the growing uncompetitiveness of China, difficulty in finding factories or rising cotton prices. It is that European and US demand has suddenly collapsed, apparel sales in developing countries are just too small to provide alternative outlets, and the helter-skelter cotton prices of 2010/2011 have left suppliers - especially in India and Pakistan - seriously short of cash

 

Gloom grows in Central America.

In spite of much hype about growing interest in Latin America, Mexico's garment trade association claimed 300 garment and textile plants will close this year, the head of the Honduras maquila association said hundreds of thousands of jobs will be lost as 16 plants more to Nicaragua and El Salvador, and Korean Sae-A's ambitious plans for 20,000 new jobs in Haiti will be partly at the cost of at least one of its Guatemalan factories closing.

 

 

New things to worry about in China

The US government has added "growing state capitalism" to its list of ways it claims the Chinese cheat. China seems more worried about garment worker militancy, and has mandated faster wage rises and prompt action by employers to settle disputes. But cargo rates between China and Europe are plummeting

 

 

Bangladesh leading protectionist as South Asia struggles with free trade

Bangladeshi garment factory owners refuse to allow foreign factories to open - so Pakistani and Indian owners' threats to relocate are meaningless. The same owners have now added a campaign against EU programme to offer Pakistan GSP+ to their protectionism programme. India and Pakistan struggle to make much headway in their attempt to reduce barriers between freer apparel and textile trade between their countries. India decides it wants foreign retail chains. Then it decides it doesn't. Finally: it does, but only if they just sell one brand. Meanwhile, everyone in South Asia is devaluing.

 

 

Koreans lead in worldwide new factory programme

Though Korea finally ratified its FTA with the US, its garment manufacturers have concentrated on opening factories in countries with preference advantages when exporting to the US, Europe or China. With a 10% increase in new factories this year, Cambodia seems to have the fastest growing manufacturing infrastructure. Indians are worried about their businesses' reluctance to upgrade - and we are worried about the slow uptake of India's lavishly promoted textile parks. Bangladesh has stopped building new factories, unless they're locally owned.

 

 

Owners' growing fears of minimum wage hikes

Factories in Thailand think the country's minimum wage rise will undermine them. Vietnamese employers are uncomfortable. In Honduras, they're blaming wage hikes for factory closures. Laos delays its rise: Indonesians wish they could and Cambodian unions publicly accept that 8.2% is about as good as they'll get

 

 

Other signs of protectionism

Brazilian manufacturers push for more protection against Chinese imports. Mexico blames Chinese "contraband" for 200 factory closures. Egypt increases duties on textile imports - as its government comes under pressure from protesters wanting even more protection from foreign business ways. Jordan offers to subsidise the hiring for a year - but only if the jobs go to Jordanians

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State of Trade
Bangladesh and Central America hit hardest as US apparel imports fall
Maersk forecasts full-year loss as Asia-Europe freight prices fall 26%
VF names Tom Glaser to top supply chain post
"Competition for capacity" behind Tom Tailor sourcing joint venture
Sourcing start-up sells stake to India's Fifth Avenue
Cotton production set to decline in 2012/2013

China/East Asia
China's exports continue to slow in Oct
Korea textile export strategy makes FTAs irrelevant to EU/US garment trade?
China's 12th Five Year Plan light on apparel detail
Now US worried about "China drifting toward more state control"
China's multiple reaction to Guangdong garment/footwear strikes

South Asia general
Devaluation hits throughout South Asia
Companies and US government take firmer line on South Asian child labour
South Asians get worried over free trade
Indian and Pakistani businesses hit serious credit crunch

South Asia: individual countries
Indian government ambitions not matched by companies' investment plans
But some expansion on the Indian horizon
Arvind sells VF stake
Dhaka factory explosion kills two
The great Sri Lankan apparel export mystery.

South East Asia
Cambodia sees 51 garment factories open In Jan-Oct
Rights activists and government at odds over Cambodian prison work
Cambodian 8.2% minimum wage increase announced
Indonesian businesses worry about new minimum wages
Local trade association rates Indonesia "most competitive in SE Asia"
Laos delays new minimum wage
Thais divided over suggested delay in minimum wage rise
Korean investors heroes and villains in Vietnam
Doximex launches $16 mn knitwear factory

Euromed/Americas
Egypt adds further import restrictions as revolution complicates trade
Chinese believe Prato's garment industry is collapsing
Brazilian industry pushes for more measures against Chinese textile
Russia WTO membership offers more opportunities to sell than buy
Benetton hopes for Serbia
Jordan agrees to hire more Jordanians
Haiti investment at Guatemala's cost as Koreans expand Americas investment
Uncertainty over Honduras job loss claims
Mexico blames "contraband" for 200 factories closing