Changing Scenario of Global Fashion Industry

By J.N.Vohra, B.Text., M.Tech (Text.), F.I.E., C.Eng (I), M.I.M.A.

Global trade in textiles and apparel is projected to be US$ 980 Billion by 2015 from its
current level of US$ 577 Billion. At current level, the industry represents about 6 % of
the entire world exports. The apparel trade is growing at @ 8% and textiles @ 5%.
Worldwide, designer wear is estimated to be a $35-billion industry with a 9% growth
rate. Development in textile and clothing industry has direct impact on apparel based
fashion.

Global T & C Market

2008 2015
Growing @ 5%

Textile Market Textile Market

US$ 232 US$ 340
Billion (40%) Billion (35%)

Total Global Total Global

Textile and Textile and
Clothing Market Clothing Market
Growing @ 8%

US$ 577 Billion Apparel Apparel US$ 980

Market US$ Market US$ Billion
345 Billion 640 Billion
(60%) (65%)

United States and European Union markets dominate the global textile and clothing trade
accounting for 64% of clothing and 39% of textile market, and imports about 30% of
garments, mainly from developing countries.

Changing Global Scenario

Over a period of time, many changes have taken place in the world scenario, which
influenced to a great extent the fashion scenario of the globe. Some of these significant
changes are varying preferences of use of fibre types, innovative trends in fibre
production, shift of production bases from developed countries to developing countries,
and quota abolition.

For example share of synthetic fibres in global fibre consumption increased from less
than 1% in 1950 to more than 50% by 2009 and had its impact on production trend of
clothing and fashions. The projected production of polyester fibres, the main constituent
of synthetic fibres is projected to be 36 Million Tons by 2010.

Even though production of polyester fibre increased, the consumption of cotton,

particularly in US & EU, the main importing countries also increased as stand alone
cotton products; apparel and home textiles. Long-term projections suggest that world
cotton consumption will reach 125 million bales (170 Kg each) in 2010 from its present
level of 112 million bales and the consumption of cotton will continue to expand at an
annual rate of 2.4%.

Trade liberalization (quota elimination) for textiles and clothing had larger than average
impact on cotton products because 40 percent of net apparel imports in US and EU are
made of cotton rather than polyester, wool or other fibers. The share of cotton
consumption in these major importing countries will increase in coming years. This will
be to the advantage of developing countries since they have traditionally been more
competitive in cotton-based products. However, in order to have competitive edge
continuously, Asian developing economies, particularly China and India, would need to
design cotton products to add value.

Innovative trends

Over the years, scientists have researched new methods to incorporate some of the good
features of man-made fibres into natural fibres. Now, shrink-proof, wrinkle-free, soil-
resistant, stain-resistant, and flame-resistant cotton apparel are making inroads in the
domain of fashion.

On the other hand, fibre producers have successfully engineered man-made fibre products
comparable to natural textiles in its core properties, such as breath ability and moisture
transportation. For example, some newly developed polyester fibres provide comfort
equivalent to natural fibre.

Innovative Trends

Cotton Synthetic
Products Products

Moisture Wrinkle
absorbancy Free

Beathabiity Shrink
Proof

To the fashion world, man-made fibres are now available with antibacterial properties
that inhibit the growth of a broad spectrum of bacteria, fungi and yeast. End uses include
fashion sportswear, children wear, active wear, inner wear and home furnishings.

Innovative trends in both natural and man-made fibres are now routinely penetrating the
global fashion industry.

Shift of Production Bases

Like many other sectors, the textile and clothing industry has been greatly affected by the
phenomenon of globalisation. Historically, even before globalisation dawned in, the
development of textiles and apparel manufacturing has been an important step for
industrialization of many countries.

The labour intensive clothing industry have been shifting its businesses from western
countries to Japan in the 1950s, to Korea and Taiwan in the 60s/70s, to ASEAN countries
in the 80s/90s and currently to China and India and the trend continues.
Despite trade restrictions, the textile and apparel businesses responded to competitive
pressures in terms of relocation of manufacturing capacities to low cost producing
countries also restructuring e.g. increased mergers and acquisitions to face the global
competition,.

Recently, two of the largest ‘home textile’ players; Pillowtex and Westpoint Stevens in
US closed down their manufacturing facilities. After the closure of these two giants,
Indian based Welspun and Abhishek Industries, manufacturing terry towels almost
doubled their capacities and more projects are being put up in India. Similarly, top US
producers of denim fabrics in the global market, and many International brands of Jeans
shifted their businesses to developing countries.

Simultaneously, the textile & clothing trade has been growing at a faster rate than its
production in the developed countries. In order to meet their ever increasing requirement
for home consumption, developed countries have been relocating their production bases
or resorted to outsourcing from developing countries.

A significant proportion of this relocation of business has been to Asia due to its
significant labour cost advantage. This also influenced the consumption pattern and
fashion scenario in the developing countries.
The economics of comparative advantage favors production of clothing in lower income
countries. Market forces will continue to influence decisions about location that will
undoubtedly reshape the landscape of textile based apparel fashion in coming years.

Thus the success of exporting countries would now depend on their domestic policies,
quality of infrastructure, efficiency level of production and delivery systems, and how
fast these countries restructure the textile & clothing sector to meet the Global standards.

Impact of Quota phase out

After complete phase out of quotas, the developing countries are experiencing increase in
business, including, Bangladesh, China, Hong Kong, India, Indonesia, Korea, Pakistan,
Philippines, Sri Lanka and Thailand.

Most analysts conclude that China and India will come to dominate world trade in textiles
and clothing; market shares for China alone has been estimated at 50 per cent or more.

Although China is likely to become the 'supplier of choice', experts feel that other
developing economies, particularly, India would also benefit as the overseas importers
would try to mitigate their risk of sourcing from only one country.

The removal of MFA quotas has and will continue to affect the geographic distribution of
businesses and industrial production. The most important point for countries to be able to
reap post quota elimination benefits is that they should fully understand the changes that
occurred in the global context, mainly advancements made in the production technologies
and the new paradigm of production, based on short delivery time, and regional
strategies.

Asian Scenario

Developing economies of South Asia has been growing by 7.0 percent in 2006, more than
twice as fast as high-income countries (3.1 percent), with all developing regions growing
by about 5 percent or more.
Demographic trends will be a major driver of future events in Asian countries. The
Earth’s current population of some 6.5 billion is expected to rise to 8.0 billion by 2030.
About 60 percent of the world’s population lives in Asian countries

The largest populated country in the world, China, will see its population continue to
grow, but at a slower pace than the rest of the developing world. Various studies by
expert groups suggest that with more rapid population growth, India is likely to surpass
China as the world’s most populous country by 2030. Thus the largest contribution to the
nearly 1.5 billion increases in the developing regions will be attributed to India,
representing 320 million additional persons.

By 2008, Asia’s economy is expected to grow 30 percent faster than the rest of the world.
Asia’s potential is underlined by the fact that many global businesses based in
industrialized economies are now supported by the Asian region’s flourishing software
and service industries and are reliant on products and components manufactured in Asia.
Many developing economies in Asia are re-emerging and will overtake developed nations
by 2025.

Therefore, Asia’s consumption trend will drive fashion trend and world’s consumption of
fibres. India has also seen above-average economic growth in recent years, driving higher
clothing consumption. India’s economy and consumer spending are expected to rise
continuously. So, to be truly global for setting up businesses, Asian developing
economies are the destination, and India is one of the fast developing economies.