2) Textile Value Chain
ATEXCON 2012 Mumbai/India March 5/6, 2012 Business Session III
International Trade in T & C Impact of Economic Slowdown, FTA & Regional Cooperation
Presentation by Bashir Ali Mohammad ITMF-President
Contents 1) World Economy 2) Textile Value Chain 3) Textile & Clothing Trade 4) Textile Machinery Shipments 5) Regional Integration 6) Outlook
1) World Economy
07.03.2012
Source: ITMF Shipments Statistics
3
1) World Economy
Risks for the Global Economy 1) Euro-Crisis 2) Oil Price 3) US-Economy 4) Protectionism (Tariffs, Non-tariffs Barriers and Currency Manipulations) 5) Emerging Economies 07.03.2012
4 4
1) World Economy
Risks for the Global Economy 1) Euro-Crisis: Aftern granting Greece a second rescue package a financial and economic implosion like the one triggered by the bankcruptcy of Lehman Brothers in 2008 is less likely. But the Euro-Crisis is far from over. Various austerity measures will lead to a recession in Europe in 2012 with negative effects for global demand.
07.03.2012
5 5
1) World Economy
Risks for the Global Economy 2) Oil Price: Brent Crude stood at $122.90 on Feb. 23, 2012 The risk for an even higher oil price is given due to rising political and military tensions between Iran on the one hand and Israel and the West on the other on Iran‘s nuclear program.
07.03.2012
6 6
1) World Economy
Risks for the Global Economy 3) US-Economy: * Unemployment remains relative high * Saving rate is relative high * Housing market is still down * Sovereign debt level is higher than in Europe * Budget deficit remains high * Trade deficit remains high
07.03.2012
7 7
1) World Economy
Risks for the Global Economy 4) Protectionism: * Tariffs barriers are on the rise. Brazil introduced in December 2011 a 30-percentage-point tax increase on cars with less than 65% local content, taking the tax on some imported models to a punitive 55% - on top of import tariffs. * Non-tariff barriers are still in place. Exports to China are made difficult/expensive through obstructive state purchasing agents. * Currency manipulations are taking place in a variety of countries with the objective to boost competitiveness. 07.03.2012
8 8
1) World Economy
Risks for the Global Economy 5) Emerging Economies: * China: Negative effects on its export industries as a result of economic slowdown in Europe and weak growth in the US. China needs to strengthen private consumption. * All emerging economies are still dependent on economic growth and thus demand from industrialised economies. * While domestic demand has become more important in most emerging economies there cannot be a decoupling of economies in a globalized world.
07.03.2012
9 9
1) World Economy
10
Contents 1) World Economy 2) Textile Value Chain 3) Textile & Clothing Trade 4) Textile Machinery Shipments 5) Regional Integration 6) Outlook
2) Textile Value Chain
Textile Value Chain 1) High Cotton Price Volatility: The entire cotton textile value chain is under pressure 2) Input costs rise across the board and are difficult to pass on 3) Many textile mills lack sufficient working capital and/or cotton
07.03.2012
12 12
2) Textile Value Chain
Ad 1) Cotton Textile Industry Under Pressure 1) Buyer-driven industry dominated by retailers, brands or sourcing companies. 2) Buyers demand more and more full-package service from their suppliers but are reluctant to pay for it. 3) Rising input costs are a huge challenge. 4) Bigger and/or integrated textile mills are often stronger and/or more flexible to absorb cost increases and/or to pass them on.
07.03.2012
13 13
2) Textile Value Chain
Ad 2) Passing on of Input Costs 1) Cotton prices have been very volatile. The Cotlook A Index (monthly average) was ranging for many years between USD 0.50 and 0.75 before soaring up to more than USD 2.25 until March 2011 before falling back to around USD 1.00.
2) In most countries labor costs (i.e. China +20%/year), energy costs (i.e. oil approx. + 50%), environmental costs (i.e. legislation), etc. are constantly on the rise. 07.03.2012
14 14
2) Textile Value Chain
Ad 2) Passing on of Input Costs
07.03.2012
Source: Cotlook
15
2) Textile Value Chain
16
2) Textile Value Chain
17
2) Textile Value Chain
18
2) Textile Value Chain
Ad 2) Passing on of Input Costs Cotton Supply and Demand Production: 2010/2011: 25.1 million tons 2011/2012: 26.8 million tons Consumption: 2010/2011: 24.5 million tons 2011/2012: 23.7 million tons Net Result: 2010/2011: Oversupply of 0.6 million tons 2011/2012: Oversupply of 3.1 million tons Source: ICAC 07.03.2012
19 19
2) Textile Value Chain
Ad 2) Passing on of Input Costs Cotton Supply and Demand – China‘s Role In the current season China has been the decisive factor for cotton prices to stabilze at around USD 1.00 by absorbing around 16-17 million bales of domestic and imported cotton into its strategic reserves. Once China has replenished its strategic reserves the pressure on cotton prices will increase if global consumption does not pick up.
07.03.2012
20 20
2) Textile Value Chain
Consequences
1) Overcapacity in textile production Textile mills around the world are closing. In India 555 textile mills operating in non-small scale industries with 290‘000 workers were closed in 2011 (Source: HBL, December 2011). Also in other countries like Pakistan or China textile mills had to lower production or close down entirely as a result of lower export volumes.
07.03.2012
21 21
2) Textile Value Chain
New Paradigm in the Global Textile Industry Until 2010 1) In the past 10-20 years retailers were used to falling prices for textiles and apparel. 2) The bargaining power of retailers was considerable and negotiations were focused more on prices than on quality.
07.03.2012
22 22
2) Textile Value Chain
23
2) Textile Value Chain
New Paradigm in the Global Textile Industry During 2010/2011 1) Retailers realize that their suppliers cannot and did not provide them with goods for their shelves unless they could also make a profit. 2) Many manufacturers, especially in China, India and Brazil were better off supplying the local instead of the international markets. 3) Bigger retailers were trying to reduce the number of suppliers. 4) Smaller retailers had a stronger interest in strengthening their partnership with their suppliers in order to have reliable partners and reliable supply. 07.03.2012
24 24
2) Textile Value Chain
New Paradigm in the Global Textile Industry Since 2011/2012 1) Many retailers were cancelling orders, renegotiating prices or delaying shipments arguing that cotton and other fiber prices have come down considerably. 2) This behaviour forces the entire upstream textile value chain to behave similarily. The ones who try to fullfil their contractual obligations suffer heavy losses or risk bankcrupcy.
07.03.2012
25 25
Contents 1) World Economy 2) Textile Value Chain 3) Textile & Clothing Trade 4) Textile Machinery Shipments 5) Regional Integration 6) Outlook
3) Textile & Clothing Trade
Global Textile & Clothing Trade According to WTO-data Asia has become the dominant exporter of textiles and clothing. Within Asia it is China that has become the dominant player.
07.03.2012
27 27
3) Textile & Clothing Trade Export Textiles 2000 – 2010 - top ten countries-
Billion USD
90 80 70 60 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
07.03.2012
Source: WTO, International Trade Statistics
China Extra-EEU Hong Kong USA Korea India Taiwan Pakistan Turkey Indonesia Vietnam Mexico Bangladesh
28
3) Textile & Clothing Trade Export Textiles 2000 – 2010 - top ten countries-
Billion USD
2010
30
Extra-EEU USA
25
Korea
20
India Taiwan
15
Pakistan
10
Turkey Indonesia
5
Vietnam
0
Mexico 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
07.03.2012
Source: WTO, International Trade Statistics
Bangladesh
20.7 12.2 11.0 12.9 9.8 7.5 9.0 4.2 2.7 1.9 1.3 29
3) Textile & Clothing Trade Export Textiles 2000 – 2010 - world & top ten countriesTextiles
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
World
158.000
147.000
152.000
169.000
195.000
203.000
219.000
238.000
250.000
211.000
251.000
China
16.135
16.826
20.563
26.901
33.428
41.050
48.683
56.025
65.361
59.824
76.900
Extra-EEU
17.272
22.140
23.143
26.371
24.334
23.651
24.602
23.785
24.190
18.854
20.748
Hong Kong
13.441
12.214
12.374
13.084
14.296
13.830
13.910
13.417
12.256
9.976
11.307
USA
10.952
10.491
10.698
10.917
11.989
12.379
12.665
12.426
12.496
9.931
12.168
Korea
12.710
10.941
10.713
10.122
10.839
10.391
10.110
10.373
10.371
9.155
10.968
India
5.570
5.375
6.028
6.510
7.009
8.462
9.330
9.812
10.447
9.105
12.872
11.891
9.904
9.532
9.321
10.038
9.706
9.763
9.720
9.253
7.891
9.753
Pakistan
4.532
4.525
4.790
5.811
6.125
7.087
7.469
7.371
7.186
6.510
7.484
Turkey
3.672
3.943
4.244
5.244
6.428
7.076
7.593
8.940
9.396
7.723
8.964
Indonesia
3.505
3.202
2.896
2.923
2.961
3.353
3.605
3.829
3.675
3.208
4.150
Vietnam
0.299
0.350
0.420
0.470
0.534
0.700
1.000
1.321
1.563
1.815
2.660
Mexico
2.571
2.091
2.212
2.102
2.071
2.138
2.192
2.216
1.993
1.624
1.928
Bangladesh
0.393
0.469
0.490
0.505
0.597
0.696
0.750
0.844
1.090
1.071
1.263
Taiwan
Source: WTO, International Trade Statistics
3) Textile & Clothing Trade Export Clothing 2000 – 2010 Billion USD
07.03.2012
- top ten countries -
Source: WTO, International Trade Statistics
31
3) Textile & Clothing Trade Export Clothing 2000 – 2010 Billion USD
- top ten countries -
30
2010 Extra-EEU Turkey
25
India
20
Bangladesh Vietnam
15
Indonesia
10
USA Mexico
5
Pakistan
0
Korea 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
07.03.2012
Source: WTO, International Trade Statistics
Taiwan
22.3 12.8 11.2 15.7 10.8 6.8 4.7 4.4 3.9 1.6 1.0
32
3) Textile & Clothing Trade Export Clothing 2000 – 2010 - world & top ten countriesClothing
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
World
199.000
195.000
201.000
226.000
258.000
276.000
311.000
345.000
362.000
316.000
351.000
China
36.071
36.650
41.302
52.061
61.856
74.163
95.388
115.516
120.399
107.261
129.838
Extra-EEU
13.544
15.742
16.590
19.044
19.130
20.018
21.895
24.795
27.699
21.809
22.305
Hong Kong
24.214
23.446
22.343
23.152
25.097
27.292
28.391
28.765
27.908
22.826
24.049
Turkey
6.533
6.661
8.057
9.937
11.193
11.833
11.882
13.886
13.590
11.555
12.760
India
5.960
5.483
6.037
6.459
6.632
9.212
10.192
9.932
11.495
11.454
11.246
Bangladesh
5.067
4.261
4.005
4.326
6.296
7.751
8.211
8.855
10.920
12.520
15.660
Vietnam
1.821
1.867
2.633
3.555
5.059
4.998
4.876
7.400
8.724
8.629
10.839
Indonesia
4.734
4.531
3.945
4.105
4.285
4.959
5.699
5.870
6.285
5.915
6.820
USA
8.629
7.012
6.032
5.537
5.059
4.998
4.876
4.320
4.449
4.186
4.694
Mexico
8.631
8.012
7.751
7.343
7.490
7.306
6.325
5.139
4.911
4.165
4.363
Pakistan
2.144
2.136
2.228
2.710
3.026
3.604
3.907
3.806
3.906
3.357
3.930
Korea
5.027
4.306
3.915
3.605
3.391
2.581
2.183
1.914
1.741
1.396
1.610
Taiwan
3.015
2.484
2.187
2.113
1.950
1.951
1.561
1.393
1.194
0.904
0.963
Source: WTO, International Trade Statistics
3) Textile & Clothing Trade Export Textiles & Clothing 2000 – 2010 Billion USD
07.03.2012
- top ten countries -
Source: WTO, International Trade Statistics
34
3) Textile & Clothing Trade Export Textiles & Clothing 2000 – 2010 Billion USD
- top ten countries -
60
2010 Extra-EEU India
50
Turkey
40
Bangladesh USA
30
Vietnam
20
Korea Pakistan
10
Indonesia Taiwan
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
07.03.2012
Source: WTO, International Trade Statistics
Mexico
43.0 24.1 21.7 16.9 16.9 13.5 12.6 11.4 11.0 10.7 6.3 35
3) Textile & Clothing Trade Export Textiles & Clothing 2000 – 2010 - world & top ten countriesText. & Cloth.
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
World
357.000
342.000
353.000
395.000
453.000
479.000
530.000
583.000
612.000
527.000
602.000
China
52.206
53.476
61.865
78.962
95.284
115.213
144.071
171.541
185.760
167.085
206.738
Extra-EEU
30.816
37.882
39.733
45.415
43.464
43.669
46.497
48.580
51.889
40.663
43.053
Hong Kong
37.655
35.660
34.717
36.236
39.393
41.122
42.301
42.182
40.164
32.802
35.356
India
11.530
10.858
12.065
12.969
13.641
17.674
19.522
19.744
21.942
20.559
24.118
Turkey
10.205
10.604
12.301
15.181
17.621
18.909
19.475
22.826
22.986
19.278
21.724
5.460
4.730
4.495
4.831
6.893
8.447
8.961
9.699
12.010
13.591
16.923
19.581
17.503
16.730
16.454
17.048
17.377
17.541
16.746
16.945
14.117
16.862
2.120
2.217
3.053
4.025
5.593
5.698
5.876
8.721
10.287
10.444
13.499
17.737
15.247
14.628
13.727
14.230
12.972
12.293
12.287
12.112
10.551
12.578
Pakistan
6.676
6.661
7.018
8.521
9.151
10.691
11.376
11.177
11.092
9.867
11.414
Indonesia
8.239
7.733
6.841
7.028
7.246
8.312
9.304
9.699
9.960
9.123
10.970
Taiwan
14.906
12.388
11.719
11.434
11.988
11.657
11.324
11.113
10.447
8.795
10.716
Mexico
11.202
10.103
9.963
9.445
9.561
9.444
8.517
7.355
6.904
5.789
6.291
Bangladesh USA Vietnam Korea
Source: WTO, International Trade Statistics
3) Textile & Clothing Trade Export Textiles & Clothing 2000 – 2010 Billion USD
07.03.2012
- India, Bangladesh, Pakistan, Sri Lanka -
Source: WTO, International Trade Statistics
37
Contents 1) World Economy 2) Textile Value Chain 3) Textile & Clothing Trade 4) Textile Machinery Shipments 5) Regional Integration 6) Outlook
4) Textile Machinery Shipments
Global Textile Machinery Shipments
The trade data in textiles and clothing are a reflection of the enormous investments in new textile machinery in Asia in general and in China in particular.
07.03.2012
39 39
4) Textile Machinery Shipments
How is the Textile Machinery Industry Affected? 1) The textile machinery industry was hit hard by the Global Financial and Economic Crisis in 2008 and 2009 but recovered well in 2010. 2) A look at ITMF‘s International Textile Machinery Shipment Statistics shows the extent to which investments in new machines were reduced during the crisis and how they picked up again afterwards.
07.03.2012
40 40
4) Textile Machinery Shipments
Shipped Short-staple Spindles 2000 - 2010 - World & Regions million spindles
07.03.2012
+ 75%
41
4) Textile Machinery Shipments
Shipped Short-staple Spindles 2000 - 2010 million spindles
07.03.2012
- China‘s Share -
Chinese Investments
+ 56%
42
4) Textile Machinery Shipments
Investments in Short-staple Spindles 2010 million spindles
07.03.2012
- 5 Biggest Investors -
43
4) Textile Machinery Shipments
Investments in Short-staple Spindles 2000 - 2010 million spindles
07.03.2012
- China vs. India -
44
4) Textile Machinery Shipments
Shipped Shuttle-less Looms 2000 - 2010 - World & Regions looms
+ 146%
2010: 5 more participating Chinese producers
07.03.2012
45
4) Textile Machinery Shipments
Shipped Shuttle-less Looms 2000 - 2010 looms
Chinese Investments
- China‘s Share -
+ 249 %
2010: 5 more participating Chinese producers
07.03.2012
46
4) Textile Machinery Shipments
Shipped Water-Jet Looms 2000 - 2010 looms
Chinese Investments
- China‘s Share -
+ 537 %
2010: 5 more participating Chinese producers
07.03.2012
47
4) Textile Machinery Shipments
Investments in Shuttle-less Looms 2010 looms
07.03.2012
- 5 Biggest Investors -
48
4) Textile Machinery Shipments
Shipments Short Staple Spindles 2000 – 2010 spindles
07.03.2012
- South Asia -
Source: ITMF Shipments Statistics
49
4) Textile Machinery Shipments Shipments Shuttleless Weaving Machines 2000 – 2010 - South Asia units
07.03.2012
Source: ITMF Shipments Statistics
50
Contents 1) World Economy 2) Textile Value Chain 3) Textile & Clothing Trade 4) Textile Machinery Shipments 5) Regional Integration 6) Outlook
5) Regional Integration
Intraregional Trade - South Asia Despite efforts at the regional integration through South Asia Association for Regional Cooperation (SAARC) and the South Asia Free Trade Agreement (SAFTA), trade in the region as a percentage of global trade volume has stagnated at an estimated 5% since the 1950s, lagging far behind other trading blocks, like the Association of Souteast Asian Nations (ASEAN) or South Americ‘s Southern Common Market (MERCOSUR). Source: The Asia Foundation
5) Regional Integration
Intraregional Trade - South Asia A study commissioned by The Asia Foundation on the „Cost of Economic Non-Cooperation to Consumers in South Asia“ analysed that by reducing tariff barriers on products from the so-called „sensitive lists“ there would be a consumer welfare gain of approx. USD 2 billion per year to the region. Source: The Asia Foundation
5) Regional Integration
Intraregional Trade - South Asia The potential returns for India and Pakistan by offering to each other Most Favored-Nation (MFN) trading status are big. „India‘s exports to Pakistan are surging, by over 30% a year, but from a minuscule base. … The Confederation of Indian Industries in Delhi says that if basic tariffs are cut, bilateral trade, now just $2.7 billion a year, could easily reach $10 billion by 2015. If all barriers were removed, trade in cars, chemicals, cotton and other goods could be worth $25 billion a year.“ Source: The Economist, February 18, 2012
5) Regional Integration
Intraregional Trade - South Asia „South Asia is about the least integrated part of the world. Neighbours supply just 0.5% of India‘s imports, and consume less than 4% of its exports. India and Pakistan … account for a fifth of all living humans, yet their trade is puny, at less than $3 billion a year. … Lack of integration helps to keep South Asians poor. By one estimate, without barriers trade between India and Pakistan would grow nearly tenfold.“ Source: The Economist, February 18, 2012
Contents 1) World Economy 2) Textile Value Chain 3) Textile & Clothing Trade 4) Textile Machinery Shipments 5) Regional Integration 6) Outlook
6) Outlook
Short-term aspects: 1) Global economy is fragile 2) Many risks and thus uncertainties remain
6) Outlook
Long-term aspects: 1) Growing world population (million) 2010
6,896
2020
7,657
2030
8,321
2040
8,874
2050
9,306
Source: Wikipedia 58
6) Outlook
Long-term fundamental aspects: 2) Growing global GDP, current prices (billion USD) Year
World
USA
China
India
2010
61,943
14,624
5,745
1,430
2015
81,922
18,029
9,982
2,411
3) GDP per capita, current prices (USD) Year
World
USA
China
India
2010
14,568
47,120
4,280
1,176
2015
18,060
55,409
7,258
1,857
Growth %
+24.0
+17.6
+69.6
+57.9
Source: IMF 59
6) Outlook
Long-term fundamental aspects: 3) Higher per capita fiber consumption (in kg) West North Turkey Europe America
Year
World
China
India
2007
11.7
23.7
18.0
37.8
16.0
4.6
2009
11.0
21.9
14.6
30.2
17.2
4.8
2011
12.2
23.6
16.6
34.5
19.9
5.1
2013
13.0
24.0
16.9
36.2
21.1
5.5
Source: PCI-Fibres, The Fiber Year, ITMF
4) New applications for textiles (i.e. technical textiles) 60
THANK YOU FOR YOUR ATTENTION! www.itmf.org
61
International Trade in T & C Impact of Economic Slowdown, FTA & Regional Cooperation
Presentation by Bashir Ali Mohammad ITMF-President
Contents 1) World Economy 2) Textile Value Chain 3) Textile & Clothing Trade 4) Textile Machinery Shipments 5) Regional Integration 6) Outlook
1) World Economy
07.03.2012
Source: ITMF Shipments Statistics
3
1) World Economy
Risks for the Global Economy 1) Euro-Crisis 2) Oil Price 3) US-Economy 4) Protectionism (Tariffs, Non-tariffs Barriers and Currency Manipulations) 5) Emerging Economies 07.03.2012
4 4
1) World Economy
Risks for the Global Economy 1) Euro-Crisis: Aftern granting Greece a second rescue package a financial and economic implosion like the one triggered by the bankcruptcy of Lehman Brothers in 2008 is less likely. But the Euro-Crisis is far from over. Various austerity measures will lead to a recession in Europe in 2012 with negative effects for global demand.
07.03.2012
5 5
1) World Economy
Risks for the Global Economy 2) Oil Price: Brent Crude stood at $122.90 on Feb. 23, 2012 The risk for an even higher oil price is given due to rising political and military tensions between Iran on the one hand and Israel and the West on the other on Iran‘s nuclear program.
07.03.2012
6 6
1) World Economy
Risks for the Global Economy 3) US-Economy: * Unemployment remains relative high * Saving rate is relative high * Housing market is still down * Sovereign debt level is higher than in Europe * Budget deficit remains high * Trade deficit remains high
07.03.2012
7 7
1) World Economy
Risks for the Global Economy 4) Protectionism: * Tariffs barriers are on the rise. Brazil introduced in December 2011 a 30-percentage-point tax increase on cars with less than 65% local content, taking the tax on some imported models to a punitive 55% - on top of import tariffs. * Non-tariff barriers are still in place. Exports to China are made difficult/expensive through obstructive state purchasing agents. * Currency manipulations are taking place in a variety of countries with the objective to boost competitiveness. 07.03.2012
8 8
1) World Economy
Risks for the Global Economy 5) Emerging Economies: * China: Negative effects on its export industries as a result of economic slowdown in Europe and weak growth in the US. China needs to strengthen private consumption. * All emerging economies are still dependent on economic growth and thus demand from industrialised economies. * While domestic demand has become more important in most emerging economies there cannot be a decoupling of economies in a globalized world.
07.03.2012
9 9
1) World Economy
10
Contents 1) World Economy 2) Textile Value Chain 3) Textile & Clothing Trade 4) Textile Machinery Shipments 5) Regional Integration 6) Outlook
2) Textile Value Chain
Textile Value Chain 1) High Cotton Price Volatility: The entire cotton textile value chain is under pressure 2) Input costs rise across the board and are difficult to pass on 3) Many textile mills lack sufficient working capital and/or cotton
07.03.2012
12 12
2) Textile Value Chain
Ad 1) Cotton Textile Industry Under Pressure 1) Buyer-driven industry dominated by retailers, brands or sourcing companies. 2) Buyers demand more and more full-package service from their suppliers but are reluctant to pay for it. 3) Rising input costs are a huge challenge. 4) Bigger and/or integrated textile mills are often stronger and/or more flexible to absorb cost increases and/or to pass them on.
07.03.2012
13 13
2) Textile Value Chain
Ad 2) Passing on of Input Costs 1) Cotton prices have been very volatile. The Cotlook A Index (monthly average) was ranging for many years between USD 0.50 and 0.75 before soaring up to more than USD 2.25 until March 2011 before falling back to around USD 1.00.
2) In most countries labor costs (i.e. China +20%/year), energy costs (i.e. oil approx. + 50%), environmental costs (i.e. legislation), etc. are constantly on the rise. 07.03.2012
14 14
2) Textile Value Chain
Ad 2) Passing on of Input Costs
07.03.2012
Source: Cotlook
15
2) Textile Value Chain
16
2) Textile Value Chain
17
2) Textile Value Chain
18
2) Textile Value Chain
Ad 2) Passing on of Input Costs Cotton Supply and Demand Production: 2010/2011: 25.1 million tons 2011/2012: 26.8 million tons Consumption: 2010/2011: 24.5 million tons 2011/2012: 23.7 million tons Net Result: 2010/2011: Oversupply of 0.6 million tons 2011/2012: Oversupply of 3.1 million tons Source: ICAC 07.03.2012
19 19
2) Textile Value Chain
Ad 2) Passing on of Input Costs Cotton Supply and Demand – China‘s Role In the current season China has been the decisive factor for cotton prices to stabilze at around USD 1.00 by absorbing around 16-17 million bales of domestic and imported cotton into its strategic reserves. Once China has replenished its strategic reserves the pressure on cotton prices will increase if global consumption does not pick up.
07.03.2012
20 20
2) Textile Value Chain
Consequences
1) Overcapacity in textile production Textile mills around the world are closing. In India 555 textile mills operating in non-small scale industries with 290‘000 workers were closed in 2011 (Source: HBL, December 2011). Also in other countries like Pakistan or China textile mills had to lower production or close down entirely as a result of lower export volumes.
07.03.2012
21 21
2) Textile Value Chain
New Paradigm in the Global Textile Industry Until 2010 1) In the past 10-20 years retailers were used to falling prices for textiles and apparel. 2) The bargaining power of retailers was considerable and negotiations were focused more on prices than on quality.
07.03.2012
22 22
2) Textile Value Chain
23
2) Textile Value Chain
New Paradigm in the Global Textile Industry During 2010/2011 1) Retailers realize that their suppliers cannot and did not provide them with goods for their shelves unless they could also make a profit. 2) Many manufacturers, especially in China, India and Brazil were better off supplying the local instead of the international markets. 3) Bigger retailers were trying to reduce the number of suppliers. 4) Smaller retailers had a stronger interest in strengthening their partnership with their suppliers in order to have reliable partners and reliable supply. 07.03.2012
24 24
2) Textile Value Chain
New Paradigm in the Global Textile Industry Since 2011/2012 1) Many retailers were cancelling orders, renegotiating prices or delaying shipments arguing that cotton and other fiber prices have come down considerably. 2) This behaviour forces the entire upstream textile value chain to behave similarily. The ones who try to fullfil their contractual obligations suffer heavy losses or risk bankcrupcy.
07.03.2012
25 25
Contents 1) World Economy 2) Textile Value Chain 3) Textile & Clothing Trade 4) Textile Machinery Shipments 5) Regional Integration 6) Outlook
3) Textile & Clothing Trade
Global Textile & Clothing Trade According to WTO-data Asia has become the dominant exporter of textiles and clothing. Within Asia it is China that has become the dominant player.
07.03.2012
27 27
3) Textile & Clothing Trade Export Textiles 2000 – 2010 - top ten countries-
Billion USD
90 80 70 60 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
07.03.2012
Source: WTO, International Trade Statistics
China Extra-EEU Hong Kong USA Korea India Taiwan Pakistan Turkey Indonesia Vietnam Mexico Bangladesh
28
3) Textile & Clothing Trade Export Textiles 2000 – 2010 - top ten countries-
Billion USD
2010
30
Extra-EEU USA
25
Korea
20
India Taiwan
15
Pakistan
10
Turkey Indonesia
5
Vietnam
0
Mexico 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
07.03.2012
Source: WTO, International Trade Statistics
Bangladesh
20.7 12.2 11.0 12.9 9.8 7.5 9.0 4.2 2.7 1.9 1.3 29
3) Textile & Clothing Trade Export Textiles 2000 – 2010 - world & top ten countriesTextiles
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
World
158.000
147.000
152.000
169.000
195.000
203.000
219.000
238.000
250.000
211.000
251.000
China
16.135
16.826
20.563
26.901
33.428
41.050
48.683
56.025
65.361
59.824
76.900
Extra-EEU
17.272
22.140
23.143
26.371
24.334
23.651
24.602
23.785
24.190
18.854
20.748
Hong Kong
13.441
12.214
12.374
13.084
14.296
13.830
13.910
13.417
12.256
9.976
11.307
USA
10.952
10.491
10.698
10.917
11.989
12.379
12.665
12.426
12.496
9.931
12.168
Korea
12.710
10.941
10.713
10.122
10.839
10.391
10.110
10.373
10.371
9.155
10.968
India
5.570
5.375
6.028
6.510
7.009
8.462
9.330
9.812
10.447
9.105
12.872
11.891
9.904
9.532
9.321
10.038
9.706
9.763
9.720
9.253
7.891
9.753
Pakistan
4.532
4.525
4.790
5.811
6.125
7.087
7.469
7.371
7.186
6.510
7.484
Turkey
3.672
3.943
4.244
5.244
6.428
7.076
7.593
8.940
9.396
7.723
8.964
Indonesia
3.505
3.202
2.896
2.923
2.961
3.353
3.605
3.829
3.675
3.208
4.150
Vietnam
0.299
0.350
0.420
0.470
0.534
0.700
1.000
1.321
1.563
1.815
2.660
Mexico
2.571
2.091
2.212
2.102
2.071
2.138
2.192
2.216
1.993
1.624
1.928
Bangladesh
0.393
0.469
0.490
0.505
0.597
0.696
0.750
0.844
1.090
1.071
1.263
Taiwan
Source: WTO, International Trade Statistics
3) Textile & Clothing Trade Export Clothing 2000 – 2010 Billion USD
07.03.2012
- top ten countries -
Source: WTO, International Trade Statistics
31
3) Textile & Clothing Trade Export Clothing 2000 – 2010 Billion USD
- top ten countries -
30
2010 Extra-EEU Turkey
25
India
20
Bangladesh Vietnam
15
Indonesia
10
USA Mexico
5
Pakistan
0
Korea 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
07.03.2012
Source: WTO, International Trade Statistics
Taiwan
22.3 12.8 11.2 15.7 10.8 6.8 4.7 4.4 3.9 1.6 1.0
32
3) Textile & Clothing Trade Export Clothing 2000 – 2010 - world & top ten countriesClothing
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
World
199.000
195.000
201.000
226.000
258.000
276.000
311.000
345.000
362.000
316.000
351.000
China
36.071
36.650
41.302
52.061
61.856
74.163
95.388
115.516
120.399
107.261
129.838
Extra-EEU
13.544
15.742
16.590
19.044
19.130
20.018
21.895
24.795
27.699
21.809
22.305
Hong Kong
24.214
23.446
22.343
23.152
25.097
27.292
28.391
28.765
27.908
22.826
24.049
Turkey
6.533
6.661
8.057
9.937
11.193
11.833
11.882
13.886
13.590
11.555
12.760
India
5.960
5.483
6.037
6.459
6.632
9.212
10.192
9.932
11.495
11.454
11.246
Bangladesh
5.067
4.261
4.005
4.326
6.296
7.751
8.211
8.855
10.920
12.520
15.660
Vietnam
1.821
1.867
2.633
3.555
5.059
4.998
4.876
7.400
8.724
8.629
10.839
Indonesia
4.734
4.531
3.945
4.105
4.285
4.959
5.699
5.870
6.285
5.915
6.820
USA
8.629
7.012
6.032
5.537
5.059
4.998
4.876
4.320
4.449
4.186
4.694
Mexico
8.631
8.012
7.751
7.343
7.490
7.306
6.325
5.139
4.911
4.165
4.363
Pakistan
2.144
2.136
2.228
2.710
3.026
3.604
3.907
3.806
3.906
3.357
3.930
Korea
5.027
4.306
3.915
3.605
3.391
2.581
2.183
1.914
1.741
1.396
1.610
Taiwan
3.015
2.484
2.187
2.113
1.950
1.951
1.561
1.393
1.194
0.904
0.963
Source: WTO, International Trade Statistics
3) Textile & Clothing Trade Export Textiles & Clothing 2000 – 2010 Billion USD
07.03.2012
- top ten countries -
Source: WTO, International Trade Statistics
34
3) Textile & Clothing Trade Export Textiles & Clothing 2000 – 2010 Billion USD
- top ten countries -
60
2010 Extra-EEU India
50
Turkey
40
Bangladesh USA
30
Vietnam
20
Korea Pakistan
10
Indonesia Taiwan
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
07.03.2012
Source: WTO, International Trade Statistics
Mexico
43.0 24.1 21.7 16.9 16.9 13.5 12.6 11.4 11.0 10.7 6.3 35
3) Textile & Clothing Trade Export Textiles & Clothing 2000 – 2010 - world & top ten countriesText. & Cloth.
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
World
357.000
342.000
353.000
395.000
453.000
479.000
530.000
583.000
612.000
527.000
602.000
China
52.206
53.476
61.865
78.962
95.284
115.213
144.071
171.541
185.760
167.085
206.738
Extra-EEU
30.816
37.882
39.733
45.415
43.464
43.669
46.497
48.580
51.889
40.663
43.053
Hong Kong
37.655
35.660
34.717
36.236
39.393
41.122
42.301
42.182
40.164
32.802
35.356
India
11.530
10.858
12.065
12.969
13.641
17.674
19.522
19.744
21.942
20.559
24.118
Turkey
10.205
10.604
12.301
15.181
17.621
18.909
19.475
22.826
22.986
19.278
21.724
5.460
4.730
4.495
4.831
6.893
8.447
8.961
9.699
12.010
13.591
16.923
19.581
17.503
16.730
16.454
17.048
17.377
17.541
16.746
16.945
14.117
16.862
2.120
2.217
3.053
4.025
5.593
5.698
5.876
8.721
10.287
10.444
13.499
17.737
15.247
14.628
13.727
14.230
12.972
12.293
12.287
12.112
10.551
12.578
Pakistan
6.676
6.661
7.018
8.521
9.151
10.691
11.376
11.177
11.092
9.867
11.414
Indonesia
8.239
7.733
6.841
7.028
7.246
8.312
9.304
9.699
9.960
9.123
10.970
Taiwan
14.906
12.388
11.719
11.434
11.988
11.657
11.324
11.113
10.447
8.795
10.716
Mexico
11.202
10.103
9.963
9.445
9.561
9.444
8.517
7.355
6.904
5.789
6.291
Bangladesh USA Vietnam Korea
Source: WTO, International Trade Statistics
3) Textile & Clothing Trade Export Textiles & Clothing 2000 – 2010 Billion USD
07.03.2012
- India, Bangladesh, Pakistan, Sri Lanka -
Source: WTO, International Trade Statistics
37
Contents 1) World Economy 2) Textile Value Chain 3) Textile & Clothing Trade 4) Textile Machinery Shipments 5) Regional Integration 6) Outlook
4) Textile Machinery Shipments
Global Textile Machinery Shipments
The trade data in textiles and clothing are a reflection of the enormous investments in new textile machinery in Asia in general and in China in particular.
07.03.2012
39 39
4) Textile Machinery Shipments
How is the Textile Machinery Industry Affected? 1) The textile machinery industry was hit hard by the Global Financial and Economic Crisis in 2008 and 2009 but recovered well in 2010. 2) A look at ITMF‘s International Textile Machinery Shipment Statistics shows the extent to which investments in new machines were reduced during the crisis and how they picked up again afterwards.
07.03.2012
40 40
4) Textile Machinery Shipments
Shipped Short-staple Spindles 2000 - 2010 - World & Regions million spindles
07.03.2012
+ 75%
41
4) Textile Machinery Shipments
Shipped Short-staple Spindles 2000 - 2010 million spindles
07.03.2012
- China‘s Share -
Chinese Investments
+ 56%
42
4) Textile Machinery Shipments
Investments in Short-staple Spindles 2010 million spindles
07.03.2012
- 5 Biggest Investors -
43
4) Textile Machinery Shipments
Investments in Short-staple Spindles 2000 - 2010 million spindles
07.03.2012
- China vs. India -
44
4) Textile Machinery Shipments
Shipped Shuttle-less Looms 2000 - 2010 - World & Regions looms
+ 146%
2010: 5 more participating Chinese producers
07.03.2012
45
4) Textile Machinery Shipments
Shipped Shuttle-less Looms 2000 - 2010 looms
Chinese Investments
- China‘s Share -
+ 249 %
2010: 5 more participating Chinese producers
07.03.2012
46
4) Textile Machinery Shipments
Shipped Water-Jet Looms 2000 - 2010 looms
Chinese Investments
- China‘s Share -
+ 537 %
2010: 5 more participating Chinese producers
07.03.2012
47
4) Textile Machinery Shipments
Investments in Shuttle-less Looms 2010 looms
07.03.2012
- 5 Biggest Investors -
48
4) Textile Machinery Shipments
Shipments Short Staple Spindles 2000 – 2010 spindles
07.03.2012
- South Asia -
Source: ITMF Shipments Statistics
49
4) Textile Machinery Shipments Shipments Shuttleless Weaving Machines 2000 – 2010 - South Asia units
07.03.2012
Source: ITMF Shipments Statistics
50
Contents 1) World Economy 2) Textile Value Chain 3) Textile & Clothing Trade 4) Textile Machinery Shipments 5) Regional Integration 6) Outlook
5) Regional Integration
Intraregional Trade - South Asia Despite efforts at the regional integration through South Asia Association for Regional Cooperation (SAARC) and the South Asia Free Trade Agreement (SAFTA), trade in the region as a percentage of global trade volume has stagnated at an estimated 5% since the 1950s, lagging far behind other trading blocks, like the Association of Souteast Asian Nations (ASEAN) or South Americ‘s Southern Common Market (MERCOSUR). Source: The Asia Foundation
5) Regional Integration
Intraregional Trade - South Asia A study commissioned by The Asia Foundation on the „Cost of Economic Non-Cooperation to Consumers in South Asia“ analysed that by reducing tariff barriers on products from the so-called „sensitive lists“ there would be a consumer welfare gain of approx. USD 2 billion per year to the region. Source: The Asia Foundation
5) Regional Integration
Intraregional Trade - South Asia The potential returns for India and Pakistan by offering to each other Most Favored-Nation (MFN) trading status are big. „India‘s exports to Pakistan are surging, by over 30% a year, but from a minuscule base. … The Confederation of Indian Industries in Delhi says that if basic tariffs are cut, bilateral trade, now just $2.7 billion a year, could easily reach $10 billion by 2015. If all barriers were removed, trade in cars, chemicals, cotton and other goods could be worth $25 billion a year.“ Source: The Economist, February 18, 2012
5) Regional Integration
Intraregional Trade - South Asia „South Asia is about the least integrated part of the world. Neighbours supply just 0.5% of India‘s imports, and consume less than 4% of its exports. India and Pakistan … account for a fifth of all living humans, yet their trade is puny, at less than $3 billion a year. … Lack of integration helps to keep South Asians poor. By one estimate, without barriers trade between India and Pakistan would grow nearly tenfold.“ Source: The Economist, February 18, 2012
Contents 1) World Economy 2) Textile Value Chain 3) Textile & Clothing Trade 4) Textile Machinery Shipments 5) Regional Integration 6) Outlook
6) Outlook
Short-term aspects: 1) Global economy is fragile 2) Many risks and thus uncertainties remain
6) Outlook
Long-term aspects: 1) Growing world population (million) 2010
6,896
2020
7,657
2030
8,321
2040
8,874
2050
9,306
Source: Wikipedia 58
6) Outlook
Long-term fundamental aspects: 2) Growing global GDP, current prices (billion USD) Year
World
USA
China
India
2010
61,943
14,624
5,745
1,430
2015
81,922
18,029
9,982
2,411
3) GDP per capita, current prices (USD) Year
World
USA
China
India
2010
14,568
47,120
4,280
1,176
2015
18,060
55,409
7,258
1,857
Growth %
+24.0
+17.6
+69.6
+57.9
Source: IMF 59
6) Outlook
Long-term fundamental aspects: 3) Higher per capita fiber consumption (in kg) West North Turkey Europe America
Year
World
China
India
2007
11.7
23.7
18.0
37.8
16.0
4.6
2009
11.0
21.9
14.6
30.2
17.2
4.8
2011
12.2
23.6
16.6
34.5
19.9
5.1
2013
13.0
24.0
16.9
36.2
21.1
5.5
Source: PCI-Fibres, The Fiber Year, ITMF
4) New applications for textiles (i.e. technical textiles) 60
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