Post Quota Era and Textiles Industry Outlook

Transcription

1 Post Quota Era and Textiles Industry Outlook Dr Gordon YEN Executive Director Fountain Set (Holdings) Limited 15 February

2 Presentation Overview Major Export Markets Overview US EU Recent Trends in Textile and Apparel Trade Industry Trends and Competitive Landscape Opportunities Competitive Strategy 2

3 US Retail Market Overview 2005 Dec 2005 Same-Store-Sales Before quotas era, textile production 33.8% from its height in Dec 97 Apparel prices 10.5% since the end of 97, as cheaper imports replaced US-made clothing After anti-surge quota, US production of textile 2.1% and apparel 0.9% in 05 vs 04 Dec 05 chain stores sales 3.2% y-o-y. Same-store sales of the 66 chains for the holiday season 3.5% in 05 vs 04 Expect 1Q06 retail sales 5% vs 4Q05 Source: CNNMoney.com 3

4 Retailers same store sales figures Wal-Mart Stores Inc. 4

5 Retailers same store sales figures (continued) Target 5

6 Retailers same store sales figures (continued) Kohl s Department Stores 6

7 Retailers same store sales figures (continued) Abercrombie & Fitch Co. 7

8 Retailers same store sales figures (continued) American Eagle Outfitters, Inc. 8

9 Retailers same store sales figures (continued) Federated Department Stores, Inc. 9

10 Retailers same store sales figures (continued) Gap Inc. 10

11 EU Retail Market Overview 2005 actual vs principal Eurozone economies registered growth of monthly retail sales in Dec Italian post solid sales 53.7% for the 4th straight month German retail sales 51.7% following a 3-month period of contraction French retail sales expanded for the 7th time in the past 8 months 51.5% 11

12 US Imports of Textiles and Apparel by Region Volume (Source: US Department of Commerce International Trade Administration, OTEXA) Group Jan Nov 04 vs Jan Nov 05 Import (Volume) Jan Nov 04 vs Jan Nov 05 Import (Value) Taiwan, Korea, HK % % PRC, Taiwan, Korea, HK % % OECD (excl Japan) -9.34% % South Asia % % ASEAN -0.86% +4.53% CBI +1.33% -2.46% 12

13 US Imports of Textiles and Apparel by Region Volume (Source: US Department of Commerce International Trade Administration, OTEXA) Country Jan Nov 04 vs Jan Nov 05 Import (Volume) Country Jan Nov 04 vs Jan Nov 05 Import (Volume) World +11% Russia % China % Fiji % Haiti % South Africa % India % Nepal % Bangladesh % Jamaica % Nicaragua % Macao % Jordan % Ukraine % Peru % Taiwan % Cambodia +8.12% Hong Kong % Sri Lanka +6.52% Korea % Indonesia +5.86% Philippines % Honduras +5.20% Thailand -5.73% 13

14 US Textiles and Apparel Imports from China (Restricted categories) (Source: US Department of Commerce International Trade Administration, OTEXA) * Preliminary import data Cat No Category Unit Jan 2006 * (in mil) Jan 06 vs Jan 05 Import 2005 (in mil) 2004 (in mil) 05 vs 04 Import 222 Knit fabric Kg % % 338 M/B knit shirts, cotton % % 339 W/G knit shirts/blouses % % 347 M/B cotton trousers/breeches/shorts % % 348 W/G cotton trousers/slacks/shorts % % 349 Brassieres and other body supporting garments % % 649 Man-made fiber brassieres and other body supporting garments % % 638 M/B man-made fiber knit shirts % % 639 W/G man-made fiber knit shirts % % 647 M/B man-made fiber trousers/breeches/shorts % % W/G man-made fiber trousers/breeches/shorts % %

15 US Textiles and Apparel Imports from China (Quota-free categories) (Source: National Council of Textile Organizations and US Department of Commerce Int l Trade Administration, OTEXA) * Preliminary import data Category No Category Unit Jan 2005 (in mil) Jan 2006 *(in mil) (Y-o-Y) 239 Baby garment/ accessories Cotton skirts Dress gown Cotton nightwear/ pajama Man-made fiber dresses Man-made fiber skirts Man-made fiber dress gown, robe Man-made fiber nightwear/ pajama Man-made fiber underwear

16 Cat No US Apparel Imports from China, India and ASEAN Volume and Volume (Restricted categories) (Source: US Department of Commerce International Trade Administration, OTEXA; Volume in million units; + Data for Jan-Nov 2005 only) Category Knit fabric M/B knit shirts, cotton W/G knit shirts/blouses M/B cotton trousers/breeches/shorts Unit Kg China Volume 69.76% % 793.1% % India Volume % 83.85% % % ASEAN Volume 23.77% 42.79% 33.86% 29.53% 348 W/G cotton trousers/slacks/shorts % % % 349 Brassieres and other body supporting garments % % % 649 Man-made fiber brassieres and other body supporting garments % % % 638 M/B man-made fiber knit shirts % % % 639 W/G man-made fiber knit shirts % % % 647 M/B man-made fiber trousers/breeches/shorts % % % W/G man-made fiber trousers/breeches/shorts % % %

17 US Apparel Imports from China, India and ASEAN Volume and Volume (Quotafree categories) (Source: US Department of Commerce International Trade Administration, OTEXA; Volume in million units; + Preliminary data only) Cat No Category Unit China 2005 Volume India 2005 Volume ASEAN 2005 Volume 239 Baby garment/ accessories % % % 342 Cotton skirts % % % 350 Dress gown % % % 351 Cotton nightwear/ pajama % % % 636 Man-made fiber dresses % % % 642 Man-made fiber skirts % % % 650 Man-made fiber dress gown, robe % % % 651 Man-made fiber nightwear/ pajama % % % 652 Man-made fiber underwear % % % 17

18 US Apparel Imports from China, India and ASEAN Volume Shares and Share (Restricted categories) (Source: US Department of Commerce Int l Trade Administration, OTEXA; Volume in units; + Data for Jan-Nov 2005 only) Cat No Category Unit China 2005 Volume Share Share India 2005 Volume Share Share ASEAN 2005 Volume Share Share 222 Knit fabric Kg 13.42% 5.54% 2.51% 1.65% 1.82% 0.35% 338 M/B knit shirts, cotton 4.59% 3.69% 4.79% 1.87% 10.51% 2.26% 339 W/G knit shirts/blouses 6.43% 5.58% 2.54% 1.48% 17.47% 2.09% 347 M/B cotton trousers/breeches/shorts 9.39% 7.9% 2.40% 1.12% 12.14% 1.62% 348 W/G cotton trousers/slacks/shorts 12.16% 10.72% 2.22% 1.32% 20.80% 4.00% 349 Brassieres and other body supporting garments 45.58% 11.7% 0.29% % 22.26% 1.69% 649 Man-made fiber brassieres and other body supporting garments 41.21% 35.50% 1.13% 0.36% 23.93% 0.26% 638 M/B man-made fiber knit shirts 4.26% 3.13% 1.06% -1.47% 10.20% -2.46% 639 W/G man-made fiber knit shirts 17.49% 11.91% 1.21% % 15.84% 1.31% 647 M/B man-made fiber trousers/breeches/shorts 13.04% 7.97% 2.45% 2.64% 24.31% 2.44% W/G man-made fiber trousers/breeches/shorts 11.55% 7.4% 1.00% -1.15% 24.98% 3.13%

19 US Apparel Imports from China, India and ASEAN Volume Shares and Share (Quota-free categories) (Source: US Department of Commerce Int l Trade Administration, OTEXA; Volume in units; + Preliminary data only) Cat No Category Unit China 2005 Volume Share Share India 2005 Volume Share Share ASEAN 2005 Volume Share Share 239 Baby garment/ accessories 62.84% 4.25% 3.21% 0.31% 17.85% -1.50% 342 Cotton skirts 26.28% 2.54% 21.89% 11.02% 19.41% % 350 Dress gown 41.45% 7.68% 2.46% -2.97% 19.04% 2.16% 351 Cotton nightwear/ pajama 34.40% 29.62% 5.06% 1.78% 27.13% % 636 Man-made fiber dresses 29.43% 21.70% 7.12% -1.16% 30.70% -4.31% 642 Man-made fiber skirts 29.57% 24.05% 9.96% 3.46% 21.75% -5.12% 650 Man-made fiber dress gown, robe 56.47% 16.80% 0.20% -0.14% 28.92% 16.01% 651 Man-made fiber nightwear/ pajama 34.18% 24.70% 0.15% 0.03% 37.51% 1.77% 652 Man-made fiber underwear 19.16% 12.17% 0.85% 0.44% 16.68% 1.67% 19

20 US Apparel Imports from China and India Unit Value and Unit Value (Source: US Department of Commerce International Trade Administration, OTEXA; Unit Values in US$/unit) Cat No Category Unit China Jan-Nov 05 Unit Value Unit Value (Jan-Nov 05 vs Jan-Nov 04) India Jan-Nov 05 Unit Value Unit Value (Jan-Nov 05 vs Jan- Nov04) 338 M/B knit shirts, cotton % % 339 W/G knit shirts/blouses % % 347 M/B cotton trousers/breeches/shorts % % 348 W/G cotton trousers/slacks/shorts % % 349 Brassieres and other body supporting garments % % 649 Man-made fiber brassieres and other body supporting garments % % 638 M/B man-made fiber knit shirts % % 639 W/G man-made fiber knit shirts % % 478 M/B man-made fiber trousers/breeches/shorts % % 648 W/G man-made fiber trousers/breeches/shorts % % 20

21 EU-China Quota Fill Rates and Prices (Source: EU 8 Feb 06) Cat No Category Unit 2006 Quota (in mil) 8 Feb 06 Quota Use 8 Feb 06 Weekly Fill Rate Growth 8 Feb 06 Licenses issued in China Use 8 Feb 06 Weekly Licensed Growth 2 Cotton fabrics Kg % 1.74% 10.41% 0.06% 4 Knit shirts/ T-shirts % 1.52% 9.65% 0.12% 5 Pullovers % 0.60% 4.94% 0.03% 6 Trousers % 1.12% 7.91% 0.07% 7 W/G Shirts % 1.25% 8.74% 0.09% 26 W/G Dresses % 1.17% 8.64% 0.15% 31 Brassieres % 1.47% 9.88% 0.07% 115 Flax Yarns Kg % 3.25% 12.01% 0.00% 21

22 US-China Quota Fill Rates and Prices (Source: US 9 Feb 06) Cat No Category Unit 2006 Quota (in mil) 8 Feb 06 Quota Use 8 Feb 06 Weekly Fill Rate Growth 200/301 Sewing thread/ Combed cotton yarn Kg % 0.12% 222 Knit fabrics Kg % 0.91% 338/339 Cotton knit shirts % 0.97% 347/348 M/B cotton trousers % 1.51% 349/649 Brassieres % 0.83% 359S/659 S Swimwear Kg % 1.02% 638/639 Man-made fiber knit shirts % 0.87% 647/648 Man-made fiber trousers % 1.66% 22

23 3 Phases of Development in Post-Quota Era Phase 1: 2005 Chaotic, unpredictable, irrational Phase 2: Anti-surge on China ( /08) Controlled but definite growth of China export on 11 product categories Accelerated growth for other non-quota products for China, India Growth in certain countries as alternatives to China Phase 3: 2008/09 and beyond still subject to changes China and India should have majority share of US market Specialization of products by other countries 23 Local / Regional markets in Asia increase in importance

24 The Trillion Dollar Question What makes some countries more competitive than others? 24

25 Industry Trends Increasing emphasis on corporate social responsibility Protection of intellectual property Consolidation in US retail sector Fewer and larger customers Streamlining of supply base Fewer companies / countries Reduction of lead-time Focus on innovation, quality and cost-effectiveness Innovation on technology, design, materials used 25

26 The Competitive Advantages of The Chinese Textile Industry Labor: huge supply, productive, educated, flexible and motivated Economies of scale with large production base Large domestic market and proximity to sizeable foreign markets: Japan, Korea Large, diverse and increasingly integrated industrial base: one-stop-shop availability of nearly all materials required Geographical proximity to advanced equipment, raw material and expertise from Japan, Korea, Taiwan and Hong Kong Well developed infrastructure 26

27 Legislative s Affecting US and EU Sourcing For US CAFTA-DR gives Central America s manufacturers time to adjust Peru and Colombia benefit from Andean Pact enhancements The Trade bill gives duty-free access to Bangladesh, Cambodia and Laos The implementation of Free Trade Area (FTA) could benefit Morocco, Thailand and the UAE For EU Unrestricted access from Eastern Europe or the Mediterranean Romania and Bulgaria may join the EU in 2007 or 2008 Possible amendments of the rules of origin may benefit garment makers in Sri Lanka, Bangladesh, Cambodia and Vietnam 27

28 Factors for Manufacturing Countries to Stay Competitive Geographical proximity: to final markets benefit from short turnaround times and quick replenishments Low wage rates: China, Vietnam, Cambodia, Bangladesh, India, Sri Lanka and Indonesia Social Compliance: gradually improving in many countries lead by large US/EU buyers and their manufacturers Trade Agreements: NAFTA, CAFTA, Singapore-FTA; Sri Lanka-EU tax treaty 28

29 Future Opportunity What are customers doing to develop new opportunities? 29

30 Retailers expanding into Asia Wal-mart Stores Inc. international sales 5.7% to $8.3 B in Dec 05 Continued store expansion into China Plan to open 230 new international stores Gap Inc. The first Gap store will open autumn 2006 in Singapore with the Banana Republic s first non-japanese Asian outlet opening there in 2007 Expanding Banana Republic into Japan 30

31 Retailers expanding into Asia Marks & Spencer Expected to open a store in Taiwan by 2006 year-end under a JV with a local partner Nike Inc. Aggressive marketing in China in preparation of the 2008 Olympics 31

32 China Retail Market Development Fashion Brands entering China market Wal-Mart has expanded in second-tier cities in China, including Hangzhou in the Zhejiang province, Yuxi City in southwest China s Yunnan Province, Jinyang City in north China s Shanxi Province, Wuhu city in east China s Anhui Province Italian menswear maker Piombo plans to open 100 flagship stores in China by 2010 Hong Kong s Lane Crawford is stepping up its development in China as the retails sector has opened up to foreign investors French retail giant Carrefour will buyouts its joint venture in Chinese retailer and become one of the first foreign retailers in China to take full ownership of a mainland firm Giorgio Armani will open a store in Wenzhou, Zhejiang Province, before the Beijing Olympic Games in 2008 plans to establish more than 30 stores in mainland China 32

33 China approved 1,027 foreign retailers (Source: Dow Jones Newswire, February 12, 2006) 1,027 foreign retailers approved to operate in China since Dec 04 more than 3x higher than that in the 12 years between 1992 and 2004 In 2005, 625 (61%) of the retailers are wholly foreign-owned In 2005, China's retail sales grew 12.9% to approx. US$840 B China s retail sales would likely exceed US$1,250 B by 2010 (average annual growth of 11%) 33

34 What Manufacturing Countries Can Do to Improve Long-term Competitiveness? Invest in infrastructure: communications, transportation, power Enhance training to develop skillful workers and industry experts Fair but commercial labor law allowing improvement in labor productivity Lower trade barriers to imported components Attract international investors to strengthen production facilities Focus on building product or technology specialization based on resources Develop linkages to global buyers and cultivate local/regional market Government & private commitment required 34

35 35 Q & A