The production of many major textile exporting countries has been affected by the pandemic, coupled with the market opportunities brought by the holiday consumption season, the flow of apparel orders has become the focus of attention at home and abroad. What is the situation in major apparel exporting countries such as India, Vietnam, and Bangladesh, and how much power does the order flow exert on China’s textile and apparel industry?

 

India: “No group” may accelerate the outflow of textile and apparel orders

 

Among the 15 countries that signed the RCEP this time, India, one of the founding countries, did not join. A spokesperson from India stated that “there are important issues that have not yet been resolved”, so they are not considering joining for the time being.

 

Previously, due to the impact of the pandemic, many textile orders of Indian factories returned to China, which solved the urgent needs of some domestic apparel and textile foreign trade factories in a short time. With the signing of the RCEP and the reduction of tariffs, the trade exchanges between the 15 countries that have signed the agreement will be closer than before. This will also further promote intra-regional trade, of which textiles and apparel will benefit most.

 

Industry insiders said that on the basis of mutual benefit, some textile factories in India will lose orders from the agreed countries. With this agreement, more overseas textile orders may flow to factories in China in the future.

 

Vietnam: Restricted by imported fabrics, the annual export target is hopeless

 

Vietnam Investment Review recently reported that the latest report submitted by Vietnam Ministry of Industry and Trade to the National Assembly showed that the textile and apparel industry’s annual export value is nearly USD 40 billion and requires 10 billion meters of fabric. However, the Vietnam domestic fabric production capacity is only 2.3 billion meters, and the self-sufficiency rate is about 25%, most of the fabrics are imported from China mainland, China Taiwan and South Korea. The domestic apparel processing industry only stays in the sewing link of the industrial chain. The added value is low and it is difficult to meet the origin standard stipulated by the Vietnam-EU Free Trade Agreement, so it cannot fully enjoy the benefits brought by the Vietnam-EU Free Trade Agreement.

 

Since South Korea has signed a free trade agreement with the European Union, apparel companies can only import fabrics from South Korea if they want to benefit from the Vietnam-Europe Free Trade Agreement. However, currently only 15.2% of fabrics are imported from South Korea, 54.9% are imported from China mainland, and 12.1% are imported from China Taiwan.

 

The main reason that affects the production capacity of Vietnam domestic fabrics is that supporting industries such as cotton, yarn, dyeing and finishing cannot keep up with the demand for apparel processing, especially the environmental protection department’s restrictions on the development of dyeing and finishing industries, which severely restrict fabric production. At the same time, the development of fabric production requires huge investment. To solve the 8 billion meters of fabric production gap, an investment of USD 30 billion is required, which is a bottleneck restricting fabric production.

 

According to a report from Vietnam Industry and Trade Electronic News on November 2, Vietnam’s textile and apparel exports in the first 10 months are expected to be USD 24.76 billion, a year-on-year decrease of 9.3%. The annual export is expected to be USD 33-35 billion, a year-on-year decrease of 10%. Even if the textile and apparel export market is recovering, it is still difficult to achieve the target set at the beginning of the year.

 

The textile and apparel industry is the industry that has been hit hardest by the COVID-19 pandemic in Vietnam. The Vietnam Textile and Apparel Association stated that the COVID-19 pandemic has caused the Vietnamese textile industry to cause export difficulties and the suspension of imports of raw materials from China.

 

Since March this year, demand in the European and American markets has dropped sharply, leading to a decline in Vietnam’s textile and apparel exports. The export value in the first quarter fell by 2%, and the export value in the second quarter fell sharply by 27%. Although it improved slightly in the third quarter, it is still facing difficulties. It is expected that Vietnam’s textile and apparel exports will reach USD 35 billion this year, a sharp drop of 10% year-on-year.

 

The Ministry of Industry and Trade of Vietnam stated that due to the shrinking consumer market, textile and apparel companies have adjusted their product structure, shifting from producing traditional products to rapidly adapting products, such as changing from high-end suits and high-grade shirts to work clothes, knitted garments and traditional shirts, so as to maintain production and business activities.

 

Bangladesh: The second wave of pandemics in Europe and the United States intensifies the order crisis

 

According to Bangladesh’s The Daily Star report, due to the decline in domestic and foreign demand during the pandemic, the profits of most listed apparel companies in Bangladesh fell from July to September. Of the 56 textile and apparel companies listed on the Dhaka Stock Exchange, 39 companies have released their first quarter financial reports. Among them, 15 companies reported lower profits than the same period last year. According to data from the Bangladesh Export Promotion Bureau, from July to September, the export revenue of the Bangladesh textile industry fell 5.78% year-on-year to USD 3.88 billion.

 

Sri Lanka: exports fell by 20% year-on-year

 

Sri Lanka’s Daily Financial Times reported that Sri Lanka’s apparel industry was affected by the COVID-19 pandemic. In the first nine months of this year, Sri Lanka’s textile and apparel exports fell 21.97% year-on-year to USD 3.1 billion, which was the lowest level in five years. The previous record was USD 3.9 billion in 2019.

 

According to news from the Sri Lanka Joint Apparel Association Forum (JAAF), in the first nine months of this year, Sri Lanka’s exports of textile and apparel to the United States fell by 22.15% year-on-year to USD 1.4 billion; exports to the EU fell by 21.36% year-on-year to USD 1.3 billion; exports to other countries/regions fell 23.25% year-on-year to USD 400 million.

 

Myanmar: insufficient supply of raw materials

 

The New Light of Myanmar reported that, according to statistics from the Myanmar Ministry of Commerce, the apparel industry’s exports in the 2019/20 fiscal year reached USD 4.28 billion, a decline of 6.95% from the USD 4.6 billion in the same period last year.

 

The Myanmar apparel industry enjoys preferential tariffs when exporting to EU countries, so it is the main traditional export item, accounting for about 30% of the total export value. Due to the impact of the pandemic this year, the import of apparel raw materials was blocked, the international market demand slowed down and the elimination of orders and other negative factors. As a result, some apparel factories were closed, and thousands of employees were unemployed.

 

In order to avoid the shortage of raw materials caused by the pandemic’s impact on international transportation, experts suggest that the government and private units cooperate to establish a complete supply chain of spinning, weaving, dyeing and finishing, sewing and manufacturing in the apparel industry.

 

Jordan: partially converted

 

Petra News Agency recently reported that the Jordan Industry Association stated that the export value of Jordanian apparel and leather in the first nine months of this year was approximately JOD 899 million (approximately USD 1.27 billion), down 15% year-on-year. It is expected that the decline in industry exports in the fourth quarter of this year may reach 25%, and is expected to gradually return to normal in early 2021. At present, some apparel and leather companies in Jordan have turned to the production of masks, protective clothing, and protective shoes to meet local needs and create jobs. The export scale of this industry reaches USD 550 million, creating 33,000 jobs.

 

Jordan Times reported that weekend sales accounted for 50% of total Jordanian apparel sales. Preparations for winter sales began in September, but 90% of products are currently piled up in warehouses. The apparel retail industry has stagnated and businesses have suffered serious losses. Actions should be taken to change this uncertain situation.

 

In order to increase cash flow and make up for employee salaries, utilities and costs, it is expected that merchants will offer discounted prices this season, leading to fierce market competition. There are currently about 11,000 stores in Jordan’s apparel retail industry, accounting for 60% of stores in major commercial centers. The apparel importing countries are mainly China (accounting for more than 50%), Turkey, India, Bangladesh, Egypt and European countries.