ITAC Report 2007

Global Textile & Apparel Industry : Vision 2015
About Technopak
Technopak Advisors Pvt. Ltd. is a unique organization focused entirely on providing knowledge based
services and solutions to leading companies in the Consumer Products industry. Technopak’s services
are built around offering integrated strategy, process and technology deployment solutions to its clients.
Our key sectors of focus include Fashion (Textiles & Clothing), Food and Grocery, Consumer Durables,
Fast Moving Consumer Goods and Consumer Electronics.
Founded in 1991, the Management Consulting Division is the flagship business unit of Technopak. As
the leading Management Consulting firm to manufacturers, brand owners and retailers across various
consumer product categories, Technopak has had far reaching impact with its clients. Founded on a
practice of implementation projects, we continue to be strong “implementation” consultants, with over 70%
of our business involving implementation work with clients. Our team comprises 200+ skilled professionals
in our four offices in India at Gurgaon, Bangalore, Hyderabad and Mumbai. From these offices, we consult
with clients all over South Asia, South East Asia, the Gulf, Africa and Europe.
Technopak has been a Joint Venture partner of Kurt Salmon Associates, USA from 1995 to 2005 for the
Indian sub continent. This relation with KSA has now evolved into a Strategic Partnership. KSA is the
premier global management consulting firm to the retail, consumer products and healthcare industries,
with over 70 years of deep sector experience and an international foot-print through 26 offices around the
world.
Technopak’s consulting services traverse from strategy to implementation, from fibre to retail, from farm to
the plate and from concept to the consumer. Technopak has an impressive track record of helping clients
improve their performance consistent with their mission, values, objectives, and market the realities of
their industries. In textiles and apparel Technopak’s core competence includes strategy & planning, textile
and apparel business implementation services and business process re-engineering. Our clients are
leaders in their market sectors. New business initiatives created by Technopak to meet client needs
include:
The Knowledge Company: Cutting edge market intelligence and consumer insights through research
and events to enable speedy and accurate business decision making.
The People Company: Human Resource advisory services, training and induction for select clients for
senior positions and profiles.
The Brand Company: Assisting Indian and international brand owners and managers in the areas of
branding, brand strategy and brand management.
The Design Company: Range of services for the world of design – with a special focus on retail, product
and packaging design.
Healthcare Practice: A whole gamut of services from strategy to implementation in the healthcare
industry.
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About the Authors
Prashant Agarwal is an Associate Vice President with Technopak. Prashant possesses over 14 years of
experience in the textile and apparel sector working in Senior Management positions in various reputed
companies in India. At Technopak, Prashant has been involved in planning and implementation of large
textile projects and has led and delivered projects on textile and apparel strategy for many leading firms.
Prashant can be contacted at prashant.agarwal@technopak.com
Ashish Dhir is an Associate Director with Technopak. Ashish has 10 years of diverse international
experience in the textile and apparel industry in consulting, marketing, trading and business development.
At Technopak, Ashish has managed and successfully delivered strategy projects for textile and apparel
clients. Ashish has also successfully managed the “Generic Cotton Promotion Campaign in India”. Ashish
can be contacted at ashish.dhir@technopak.com
Rohit Bhatiani is a Senior Consultant with Technopak and has worked on various strategy projects in
retail and textile sector with some of the leading companies of the world. Rohit has also been a part of
earlier initiatives by Technopak “Quota Free World- Initial Trends” and “Indian Textile and Apparel
Industry – Changing Gears”. Rohit can be contacted at rohit.bhatiani@technopak.com
B.Prakash is a Consultant with Technopak and has worked on various projects in the textile sector
involving strategy formulation, market study for trend analysis and feasibility study & location analysis for
setting up of textile plants. Prakash can be contacted at b.prakash@technopak.com
Published and released during International Textile and Apparel Congress (ITAC) held in Hong Kong in April,2007
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Contents
Page No.
Executive Summary 7
1. Historical Overview of World Textile & Apparel Trade (till 1994) 11
2. The ATC Period : 1995 – 2004
2.1 Introduction 16
2.2 The ATC Regime 17
2.3 Emergence of New Textile Regions 18
2.4 Trade Trend 19
2.5 Region Wise Shares 20
2.6 Top Textile and Apparel Importers 21
2.7 Top Textile Exporters 22
2.8 Top Apparel Exporters 23
2.9 Overall Textile and Apparel Exporters’ Position 24
2.10 Reasons for Trade Shifts 25
2.11 Rise of China – Case Study 26
3. The Post Quota Era : 2005 – 2006
3.1 Introduction 28
3.2 Post Quota Trade Scenario 29
3.3 Post Quota - Winners & Losers 31
4. Trends in the Post Quota Era
4.1 Growing Imports but Falling Prices 34
4.2 Increasing Investment in Asian Countries 36
4.3 New Sourcing Rules for The Global World 38
4.4 Suppliers Building Capabilities 39
4.5 Treaties, FTA/PTA’s and Safeguards 40
5. Vision 2015 : Projections and Trends
5.1 Introduction 42
5.2 Projections for Future 43
5.3 Key Trends of Future 47
Conclusion 58
Annexure 59
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List of Tables
Page No.
Table 1 : % Share of Major Suppliers in World T&A Trade– 1980 vs. 1995 13
Table 2 : Top 20 Global Textile Exporters 22
Table 3 : Top 20 Global Apparel Exporters 23
Table 4 : Installed Capacities of Textile Machineries 36
Table 5 : Major Apparel Markets of the World in 2015 53
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List of Figures
Page No.
Fig 1 : Major Textile and Apparel Regions Prior to 1990 14
Fig 2 : Global Textile and Apparel Trade Shift 14
Fig 3 : Major Textile and Apparel Regions After 1990 18
Fig 4 : Annual % Change in World Textile and Apparel Trade During the ATC Period 19
Fig 5 : World Region Wise Export Share 20
Fig 6 : Asia’s Export Breakup- Region Wise 20
Fig 7 : Top Textile Importers – 2004 21
Fig 8 : Top Apparel Importers – 2004 21
Fig 9 : T&A Import CAGR (1995- 2004) 21
Fig 10 : Top Exporters in T&A – Market Share (2004) 24
Fig 11 : Competition Matrix 24
Fig 12 : Factors Affecting Sourcing Decision 25
Fig 13 : China’s Market Share Increase 26
Fig 14 : Post Quota - US Import % Share 29
Fig 15 : Post Quota - EU Import % Share 30
Fig 16 : Post Quota CAGR of Exporting Countries to US Market 31
Fig 17 : Post Quota CAGR of Exporting Countries to EU Market 32
Fig 18 : % Change in Growth and Prices of Top Categories Imported into US 34
Fig 19 : % Change in Growth and Prices of Top Categories Imported (Extra-EU) Into EU 35
Fig 20 : % Share of World Shipments of Textile Machineries in Year 2005 37
Fig 21 : Major Trade Agreements that would have Impact on Textile and Apparel Trade 40
Fig 22 : Future Projections of World Textile and Apparel Trade 43
Fig 23 : Key Textile and Apparel Regions in Future 44
Fig 24 : Expected % Shares of Major T&A Regions in the US Market by 2015 45
Fig 25 : Expected % Shares of Major T&A Regions in the EU Market by 2015 46
Fig 26 : Increasing Role of Suppliers in the Supply Chain 49
Fig 27 : Li & Fung Supply Chain Model 50
Fig 28 : Li & Fung Turnover Growth 50
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Abbreviations and Acronyms Used
AGOA : African Growth and Opportunity Act

ASEAN : Association of South East Asian Nations
ATC : Agreement on Textiles and Clothing
CAFTA : Central America Free Trade Agreement
CAGR : Compound Annual Growth Rate
CBERA : Caribbean Basin Economic Recovery Act
CBI : Caribbean Basin Initiative
EDI : Electronic Data Interchange
EU : European Union
EU MEFTA : Euro Mediterranean Free Trade Agreement
FDI : Foreign Direct Investment
FTA : Free Trade Agreement
GSP : Generalized System of Preferences
IPA : Investment Promotion Agencies
IT : Information Technology
ITMF : International Textile Manufacturers Federation
LTA : Long Term Arrangement
M/B : Men’s & Boys’
MFA : Multi Fibre Arrangement
MMF : Man Made Fibre
NAFTA : North American Free Trade Agreement
NIE : Newly Industrialized Economies
PTA : Preferential Trade Agreement
RTA : Regional Trade Agreement
SSA : Sub-Saharan Africa
STA : Short Term Arrangement
T&A : Textile and Apparel
UNCTAD : United Nations Conference on Trade and Development
US : United States (of America)
W/G : Women’s & Girls’
WTO : World Trade Organization
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Global
Global Textile
Textile && Apparel
Apparel Industry
Industry: :Vision
Vision 2015
2015
Executive Summary
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Executive Summary
Global textile and apparel industry has come a long way since the days
when manufacturing used to primarily happen in the consumption centres of
US, Europe and Japan. With the development of economies in US and
Europe, textile and apparel manufacturing increasingly became
uncompetitive in these countries. The Newly Industrialized Economies
(NIE’s) of Asia viz. Hong Kong, Taiwan and Korea were the first to take
advantage of this opportunity by setting up textile and apparel bases in their
countries. However, declining domestic industry led to protests in US and
Europe leading to the emergence of Multi Fibre Arrangement (MFA) regime.
MFA was designed to provide time to the textile and clothing industry in
developed countries to adjust to more competition from developing nations,
resulting in quota restrictions and bilateral agreements. During the late
1980’s, the developing countries protested against growing quota
restrictions and asked for lowering of trade restraints. The Uruguay round of
trade discussions in 1986 focusing on this issue lasted for 8 years and
culminated with the end of quota restrictions and the formation of the World
Trade Organization (WTO) in 1995. Under the WTO, MFA was replaced by
the Agreement on Textiles and Clothing (ATC). The ATC envisaged the
elimination of quotas over a four-step transition phase in a period of 10
years so that all the textile and apparel products stand quota free at the end
of the 10 year period.
A large number of countries started to emerge as prominent exporters
during the ATC period as trade started to shift to less developed countries.
World trade during the ATC period (1995-2004) increased by 4.3% from
US$ 310 Billion to US$ 450 Billion. Trade in apparel increased at a much
faster rate than the textile trade as more and more production was
outsourced to low cost countries. The major development of the ATC was
the emergence of China. As a result of low labour cost, government
incentives and increasing investment in textile and apparel, share of China
in world trade increased from 12% in 1995 to 24% in 2005. Other countries
like India, Bangladesh, Sri Lanka, Indonesia and NAFTA countries also
emerged as major textile and apparel bases during the ATC regime.
Availability of quotas followed by labour cost and raw material availability
were the main criteria of apparel sourcing during the ATC period. A large
number of countries also entered into FTA/PTA’s to enhance the
competitiveness of their textile and apparel industry. Some of the key
agreements that had an influence on global textile and apparel trade
included NAFTA, CBI, AGOA, EU MEFTA and GSP.
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Executive Summary
The final stage of integration of all textile products into WTO occurred on 1st
January, 2005. Quota restrictions were eliminated from all textile and
apparel products imported by the developed countries. The elimination of
quota was expected to trigger huge impact on the sourcing patterns of
buyers, since the products integrated in the last stage contributed to a major
share of imports. China was the major gainer despite safeguards being
applied against some of its key products in EU and US markets. South
Asian countries also gained due to their lower costs compared to African,
European and South American countries. The first year of quota elimination
saw an increase in imports of US, EU and Japan by 7%, 1% and 4%
respectively. Buyer-supplier relationship also underwent a number of
changes. Buyers who sourced primarily on cost and quota availability during
the quota period started to look for more competencies from their suppliers.
Suppliers also looked at building capabilities in order to compete better.
The changes expected in the next 6-8 years would be far more than the
changes that happened in the last 2 decades. Technopak expects that
World textile and apparel trade is expected to reach US$ 805 Billion by
2015. It is expected that trade in apparel would grow at a faster rate than
textile trade. Other than South Asia and China, Technopak estimates that
ASEAN countries especially Vietnam and Cambodia would be the major
gainer in the next 10 years. Technopak estimates that growing domestic
markets within China and India would slow down their rate of export growth.
Companies would need to undergo a number of changes to thrive in the
next decade and for that they would not only have to improve themselves
but also look outwards towards companies in other industries which have
reinvented themselves and are doing things differently. Some of the key
changes/ trends for future include:-
1. Consolidation, collaboration and relocation
2. Redefinition of the traditional roles
3. Emergence of heavyweights: multi-billion dollar textile
conglomerates
4. Emergence of China and India as consumption bases
5. Speed and reliability: key to success
6. Scarcity of resources would lead to development of new
technologies
7. Migration of skilled manpower from buying to supplying countries
This report provides an in-depth analysis of changes in World textile and
apparel trade and tries to create a vision for the future. The report analyses
the key trends impacting the textile and apparel industry and competencies
that suppliers must build in order to be successful in the competitive world.
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Global
Global Textile
Textile && Apparel
Apparel Industry
Industry: :Vision
Vision 2015
2015
technopak 10
Global
Global Textile
Textile && Apparel
Apparel Industry
Industry: :Vision
Vision 2015
2015
1. Historical Overview of World Textile and Apparel Trade
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1. Historical Overview
Pre quota period (Till 1974)

Trade shift from western countries to Japan
Textile and apparel In the early 20th century Textile & Apparel (T&A) production was dominated
production in the first
by US and the Western European countries. With the emergence of Japan
half of the 20th century
as an economic power, global T&A production shifted towards Japan in the
was mainly confined to
mid 20th century. To protect its domestic industry, US placed limited quotas
the consumption centres
on Japanese cotton textiles in 1956 .However, with other developing nations
viz. US and European
countries increasing their exports to US, there was considerable employment loss in
the US. With this background, US decided to take multilateral action and
invoked the Short Term Arrangement (STA) in 1961. This arrangement
limited specific import categories to protect the domestic industry from any
disruptions. This was soon replaced by the Long Term Arrangement (LTA)
in 1962. LTA allowed for temporary bilateral agreements if domestic
By the mid 20th century , markets were disrupted significantly through any rapid increase in imports of
trade shifted to Japan
specific product categories. Between 1961 and 1972, the US signed 30
with the emergence of
bilateral agreements under LTA. However LTA did not include synthetic
Japan as a major
economic power materials as a result of which trade in these articles grew significantly in the
1960’s.
Shift from Japan to the “Asian Big Three”

During 1960’s and early 1970’s, Japan saw an increase in domestic
Increasing production production costs and labour shortages. As a remedy, Japanese firms started
costs forced Japan to looking towards the additional Newly Industrialized Economies (NIE) viz.
move to lower cost Newly Hong Kong, Korea and Taiwan for outsourcing their production set up in the
Industrialized Economies 1970s. The major advantage of the NIE’s was cheap labour along with
of Asia viz. Korea, Taiwan improved quality level and flexibility of production. In 1975, the average
and Hong Kong in the
1970s wages of workers in the US apparel industry was US$3.8 per hour. In
comparison the NIE countries Korea (US$0.22), Taiwan (US$0.29) and
Hong Kong (US$0.75) had much lower labour wages which encouraged
firms to shift towards these countries for their sourcing needs.
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Quota period : MFA regime (1974 – 1994)

To protect its domestic industry, the developed countries came up with a
Multi Fibre Arrangement more comprehensive trade restriction in 1974, known as the Multi Fibre
(MFA) envisaged quota Arrangement (MFA). MFA was designed to provide the textile and clothing
restrictions on imports industries in developed countries time to adjust to more competition from
into developed countries developing nations. Essentially, member nations could maintain quotas
from 1974 to 1994
established prior to the agreement, but were constrained from expanding
those quotas by complicated restrictions. During the MFA regime, the
developed countries had signed about 81 bilateral agreements and imposed
over 1000 individual quotas on various importing countries.
With the imposing of quotas and rising labour costs, the NIE's (Hong Kong,
During MFA period trade Taiwan and Korea) started looking towards the neighboring less developed
shift occurred from NIE countries viz. China, Indonesia, Thailand, Pakistan, Sri Lanka, Vietnam etc.
countries (Hong Kong, for accessing more quota holdings. The opening up of the Chinese economy
Taiwan , Korea) to less in 1979 served as an additional boost for Hong Kong’s overseas production
developed Asian countries shift. The major advantages of these less developed countries were their
extremely low labour wages and production costs.
The protectionist measure of the developed countries backfired as the less
developed Asian countries including China were slowly developing a good
competitive textile and apparel production base due to the relocation of
many textile firms of NIE towards the less developed countries.
China emerged as a The government policies of these individual Asian countries also helped the
major force with its development of textile industry in these countries. The appreciation of
economy opening up for Japanese, Korean and Taiwanese currencies furthered the cause of these
foreign investments in less developed Asian countries as the global textile and apparel production
1979
slowly shifted towards them by the late 1980s.
1980 1995
China 4.3% 12.2%
Hong Kong 7.0% 11.3%
Italy 9.1% 8.7%
Germany 9.6% 7.1%
Korea 5.4% 5.6%
Taiwan 4.4% 4.9%
France 6.0% 4.2%
UK 5.2% 3.2%
Turkey 0.5% 2.8%
Source: WTO Trade Statistics
Table 1 : % Share of Major Suppliers in World T&A Trade– 1980 vs. 1995
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China
Turkey Mexico
US, Canada Europe Hong Kong
East Asia India US Thailand
Europe Japan
Taiwan Korea
Pakistan Till 1974 Indonesia
Sri Lanka 1974 - 1990 Vietnam
Bangladesh Singapore
1990 onwards
Source: Technopak Analysis Source: Technopak Analysis
Fig 1 : Major Textile and Apparel Regions Prior to 1990 Fig 2 : Global Textile and Apparel Trade Shift
During the late 1980s, the developing countries protested against growing
Developing countries quota restrictions and asked for lowering of trade restraints. The Uruguay
protested against quota round of trade negotiations in 1986 focusing on this issue lasted for 8 years
restrictions and
and culminated with the end of quota restrictions and the formation of the
subsequently MFA was
WTO in 1995. Under the WTO, MFA was replaced by the Agreement on
replaced by ATC in 1995
for phasing out quotas Textiles and Clothing (ATC).
Quota phase out period : ATC Regime (1995 to 2004)

The ATC envisaged the elimination of quotas in a four-step transition phase
over a period of 10 years so that all the textile and apparel products stand
quota free at the end of the 10 year period.
ATC envisaged
elimination of all textile The ATC regime resulted in the beginning of liberalization and the opening
and apparel quotas by up of global textile and apparel trade, as more and more countries like
2005 Mexico, Turkey and the South Asian countries got into the textile and
apparel producers’ league.
A detailed analysis of the trade scenario during the quota phase out period
and the reasons behind them is done in further sections.
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Global
Global Textile
Textile && Apparel
Apparel Industry
Industry: :Vision
Vision 2015
2015
2. The ATC Period : 1995 - 2004
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2.1 Introduction
The ATC period started in 1995 with the replacement of MFA with ATC. The
ATC period was a 10 year transitional period at the end of which textile and
apparel trade was expected to be quota free. A large number of countries
started to emerge as prominent exporters during the ATC period as trade
started to shift to less developed countries. World trade during the ATC
period increased by 4.3% from US$ 310 Billion to US$ 450 Billion. Trade in
apparel increased at a much faster rate than the textile trade as more and
more production was outsourced to low cost countries. The major
development of the ATC was the emergence of China. Share of China in
world trade increased from 12% in 1995 to 20% in 2005.
This chapter gives in detail the key developments during the ATC regime,
trade shifts, reason for trade shifts and the emergence of China.
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2.2 The ATC Regime
In 1995, the Multi Fibre Arrangement (MFA) was replaced by the WTO
Agreement on Textiles and Clothing (ATC).
The ATC was based on a 10-year transitional programme for the gradual
Quota on textile and
removal of all quotas by 1st January 2005. Under the agreement products
apparel products were
phased out in four steps covered were integrated into WTO trade regime in four stages. In each of
over 10 years under ATC the four stages quota restrictions were removed on products covering a
certain percentage of imports in to the member countries in 1990
(considered as base year). The four stages are explained below :
ATC Quota Phase Out Procedure

Stage 1 : 1995 to 1997
16 % of the total volume of each member’s imports of textile and clothing
products in 1990 (minimum, taking 1990 imports as base) is released from
quota restrictions and integrated into WTO trade regime.
Stage 2 : 1998 to 2001
Further 17 % of products was integrated in the WTO regime.
Stage 3 : 2002 to 2004
Additional 18% integrated.
Stage 4 : 2005 onwards
Full integration in WTO : (remaining 49% also integrated with elimination of
quotas on all products).
China joined WTO only in 2001, hence quotas / safeguards continue to exist
on certain categories of China’s exports till 2008.
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2.3 Emergence of New Textile Regions
Separation of Consumption and Production Bases
US, EU and Japan were Due to the various trade shifts in the pre-WTO period and the liberalization
the major consumers of of global textile trade, many less developed countries slowly developed a
textiles and apparel good textile and apparel industry base and the global textile and apparel
industry shaped up into clusters or regions, with separate consumption
centres and production centres.
Major producing clusters The developed countries viz. North America, European Union and Japan
formed were South slowly increased their imports and shifted their manufacturing set-ups to the
America, Euro Med, Sub developing and least developed countries where the labour cost was low
Saharan Africa, South and raw materials were available in abundance. China, with a growing
Asia, East Asia and economy also slowly emerged as a major importer of textiles.
ASEAN.
New producing regions like Sub Sahara African region, ASEAN, Andean
and CBI Countries also developed substantial textile base riding on the free
trade agreements signed with US and the shift of textile firms from the NIE's
and developed countries to these countries during the MFA period.
The key textile and apparel production and consumption centres are shown
in the figure below.
US, Canada EU
East Asia
Euro Med
Japan
CBERA, South Asia
Andean ASEAN
Countries
SSA
Consumption Centres a
Production Centres b
Source: Technopak Analysis
Fig 3 : Major Textile and Apparel Regions after 1990
a. North America: US , Canada, European Union (EU), Japan

b. South /Central America: Mexico, CBERA: Dominic Republic, Honduras, Guatemala, El Salvador;
Andean Countries: Costa Rica, Peru, Bolivia, Ecuador; South Asia: India, Pakistan, Sri Lanka, Bangladesh ;
East Asia: China, Japan, Taiwan, Hong Kong, Korea; ASEAN: Indonesia, Philippines, Malaysia , Thailand,
Cambodia, Vietnam; SSA: Kenya, Lesotho, Madagascar, Mauritius, South Africa etc.
The above list constitute the major countries only. Further List of countries in major trade blocs are
provided in the annexure.
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2.4 Trade Trend
Growing Trade in Apparel

World textile and apparel trade grew @ 4.3% annually to reach US $453
Billion in 2004 from US $310 Billion in 1995.
World textile trade grew
at 4.3% during the ATC The growth of overall trade in textiles and apparel showed a fluctuating
regime. Apparel trade trend throughout the ten year period due to many economic and political
grew at a faster rate events that happened across the world. Trade primarily grew due to growing
during the ATC period
markets and increased level of outsourcing by developed countries. Overall
growth fluctuation in apparel trade was much less as compared to textiles
which saw significant fluctuations with even negative growth in certain time
periods. This can be seen in the graph below:
ATC Regime
20%
15%
YoY % Change
10%
5%
0%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
-5%
-10%
Textiles Apparel
Source: WTO Trade Statistics & Technopak Analysis
Fig 4 : Annual % Change in World Textile and Apparel Trade During the ATC Period
There was significant decline in trade between 1997 and 1998, which was
Textile trade showed partly due to the Asian economic crisis, and in 2001 due to recession in US
greater growth
and EU economy.
fluctuation compared to
apparel China’s entry into WTO also helped in significant growth in trade from 2001
onwards.
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2.5 Region Wise Shares
100% 100%
o thers
80% Rest 80%
Nort h America A frica
% Share
% Share
60% Europe
60% Latin A merica
Asia
M iddle East
40% 40%
No rth A merica
20% 20%
Euro pe
0% A sia
0%
1995
2000
2002
2004
2005
1995
2000
2002
2004
2005
2000 2004 2005 2000 2004 2005
Textiles Apparel Textiles Apparel
Source: WTO Trade Statistics & Technopak Analysis Source: WTO Trade Statistics & Technopak Analysis
Fig 5 : World Region Wise Export Share Fig 6 : Asia’s Export Breakup- Region Wise
Increasing Share of Asia

Share of Asia rose to almost 50% of the world textile market during the ATC
Asia accounts for half the period. Key regions in Asia are East Asia, ASEAN and South Asia.
world textile and apparel
trade Europe continued to retain significant share although almost 50% of it was
Intra EU trade.
Share of North America in apparel trade decreased primarily because of
shift of apparel imports to low cost Asian countries. Although textile trade of
North America still holds significant share mainly because of the free trade
Asian countries export agreements in the region which need textile inputs from US.
most of apparel to North
Intra-Asia trade decreased significantly for both textile and apparel during
America , while almost
the ATC regime with subsequent increase in exports to North America
50% intra-Asia trade
(Primarily US) and Europe. Asian textile exports to Africa also increased
accounts for textile
exports significantly during this period.
Intra-Asia trade is much higher for textiles whilst North America takes the
major share of apparel exports from Asia.
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2.6 Top Textile and Apparel Importers
The biggest textile 40%
importers were EU,US and

35%
% Share of World Imports

China and the biggest
30%
25%
apparel importers were
EU,US and Japan 20%
15%
10%
Russia and Turkey also 5%
emerged as significant
0%
g
EU
EU
a
n
S
o
on ina
ea
ey
on
ad
pa
import locations of
ic
U
or
rk
a-
ex
K
an
Ja
tr
K
Tu
M
g
ex
C
textiles
H
Fig 7 : Top Textile Importers - 2004

50%
45%
% Share of World Imports
40%
US & EU Remain Largest Consumers
35%
30% The major Importers more or less remained the same i.e.
25%
20% US and EU. They import more than 75% of total apparel
15%
trade, although they have a much lesser share in textile
10%
5% imports (approx. 45%) as intra-Asia trade accounts for
0%
much of the textile imports. In this regard, China has
g
EU
EU
a
an
ea
s
ia
a
nd
on
ad
te
si
al
or
p
a-
us
la
ta
emerged as a significant import destination for textiles.

K
tr
an
Ja
tr
K
er
S
us
R
g
ex
C
on
itz
d
A
te
Sw
H
ni
U
Intra-EU trade accounts for almost 75% of EU textile

Fig 8 : Top Apparel Importers - 2004

imports and about 50% of EU apparel imports .
Russia emerged as a fast growing importer of both textile
and apparel with the liberalization of the Russian economy
Me xico
in 1998. Russian apparel imports grew significantly by
Rus s ia
Turk e y
26.1% CAGR during the ATC period and put Russia as
Unite d State s the fifth largest importing region in the world.
China
Appare l Mexico and Turkey also emerged as a major destination
Canada Te xtile s
for textiles, with Turkey showing maximum growth in
World
apparel imports (approx. 36%) amongst all countries
EU
e xtra-EU
during the ATC regime.
UAE
Japan
Kore a
Hong Kong
-10.00% 0.00% 10.00% 20.00% 30.00% 40.00%
Fig 9 : T&A Import CAGR (1995- 2004)
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2.7 Top Textile Exporters

Figures in US $ Billion
Data 1995 1998 2001 2004 CAGR

World 152.00 151.00 147.00 195.00 2.8%
China 13.92 12.82 16.83 33.43 10.2%
Italy 12.79 13.03 12.30 15.80 2.4%
Germany 14.38 13.67 12.20 15.60 0.9%
Hong Kong 13.82 13.04 12.21 14.30 0.4%
United States 7.37 9.22 10.49 11.99 5.6%
China emerged as the Korea 12.30 11.28 10.94 10.84 -1.4%
single largest exporter of Taiwan 11.88 11.16 9.92 10.04 -1.9%
textiles France 7.46 7.57 6.50 7.70 0.4%
Belgium 7.88 7.50 NA 7.40 -0.7%
Japan 7.17 5.97 6.19 7.14 -0.1%
India 4.35 4.56 5.90 6.85 5.2%
Turkey 2.52 3.55 3.91 6.43 11.0%
Pakistan 4.25 4.30 4.53 6.12 4.1%
United Kingdom 5.16 5.43 4.70 5.90 1.5%
Indonesia 2.71 2.36 3.20 3.15 1.7%
Turkey and Romania Thailand 1.93 1.76 1.89 2.63 3.5%
showed highest export Canada 1.38 1.92 2.16 2.43 6.5%
growth rates Mexico 1.28 2.03 2.09 2.24 6.4%
Switzerland 2.26 1.81 1.44 1.60 -3.7%
Romania 0.18 0.20 0.20 0.60 14.5%

Table 2 : Top 20 Global Textile Exporters
Rise of Asian Countries

Exports of Korea, Taiwan
and Hong Kong declined During the ATC regime, the textile trade shift occurred mainly towards the
Asian countries. China continued its growth story growing @ 10.2%
annually. However, Hong Kong showed negligible growth mainly because a
major portion of Hong Kong exports constituted re-exports from China, with
most of domestic Hong Kong manufacturers shifting to China.
The other two East Asian biggies, Korea and Taiwan, also continued the
India and Pakistan downward trend of exports with relocation of its manufacturers to lower cost
consolidated their global countries (mainly to leverage quota advantages and lower factor costs).
export position
The countries that emerged during this era were the South Asian countries
viz. India and Pakistan with 5.2% and 4.1% CAGR respectively.
US, Canada and Mexico rode on the NAFTA bandwagon with significant
intra trade helping high CAGR of around 6%.
The EU countries viz. Germany, Italy, France, UK and Belgium sustained
their exports with majority exports through Intra EU trade.
technopak 22
2.8 Top Apparel Exporters

Figures in US $ Billion
Data 1995 1998 2001 2004 CAGR
World 158.00 183.00 195.00 258.00 5.6%
China 24.05 30.05 36.65 61.86 11.1%
Hong Kong 21.30 22.16 23.45 25.10 1.8%
Italy 14.18 14.70 13.10 17.30 2.2%
Turkey 6.12 7.10 6.63 11.19 6.9%
Germany 7.50 8.00 7.00 11.20 4.6%
India 4.10 4.80 6.03 6.62 5.5%
France 5.60 5.70 5.10 7.40 3.1%
Mexico 2.70 6.60 8.01 7.20 11.5%
Bangladesh 1.96 3.80 5.11 4.44 9.5%
Belgium 2.72 4.00 NA 6.20 9.6%
Apparel trade grew at Indonesia 3.37 2.60 4.53 4.45 3.1%
twice the rate of textiles United States 6.65 8.80 7.01 5.06 -3.0%
trade during the ATC Vietnam 1.40 NA 1.90 3.98 12.3%
regime. Romania 1.36 2.00 2.77 4.72 14.8%
United Kingdom 4.65 4.90 3.50 4.70 0.1%
Thailand 5.01 3.5 3.58 4.05 -2.3%
Pakistan 1.61 1.8 2.1 3.03 7.3%
Tunisia 2.32 2.5 2.6 3.27 3.9%
Sri Lanka 1.75 NA 2.4 2.8 5.4%
Korea 4.95 4.6 4.31 3.39 -4.1%
China emerged as the Source: WTO Trade Statistics & Technopak Analysis
biggest apparel exporter Table 3 : Top 20 Global Apparel Exporters

in the world
Rise of Asian Countries
Apparel trade grew at twice the rate of textile trade during the ATC regime.
Most of the top countries showed positive growth trends in apparel exports
during the ATC regime. China retained its top slot over the years increasing
its exports at a CAGR of 11.1%.
Mexico, Bangladesh and European countries showed moderate growth with the exception of Belgium
Vietnam showed
maximum export growth and Romania which showed significant CAGR of 9.6% and 14.8%
respectively.
Mexico , Bangladesh and Vietnam were the three most significant emerging
sourcing destinations. Mexico leveraged its lead time advantage and free
trade agreement with US to develop a strong garment assembly set up of
mass merchandise garments. Bangladesh and Vietnam used the EU import
concessions and their low labour costs to increase their exports.
technopak 23
2.9 Overall Textile and Apparel Exporters’ Position

High Share Low Share
Intra EU 22.7% Turkey Turkey
High Growth
China China Mexico Mexico
China 21.0%
US India India
Extra EU 9.6% Pakistan Pakistan
Tunisia Morocco
Hong Kong 8.7%
Canada Bangladesh
Turkey 3.9% Thailand Vietnam
CRÈME DE LA CREME HIGH FLIERS
Korea 3.1%
India 3.0%
Low Growth
EU EU Indonesia Indonesia
Taiwan 2.7%
Hong Kong Hong Kong Japan US
Mexico 2.1% Korea Bangladesh Korea
Taiwan Switzerland Taiwan
Pakistan 2.0%
Indonesia 1.7%
SUSTAINERS DECLINERS
Source: WTO Trade Statistics & Technopak Analysis Source: WTO Trade Statistics & Technopak Analysis
Fig 10 : Top Exporters in T&A–Market Share (2004) Fig 11 : Competition Matrix
China Leads Overall

Overall EU accounted for maximum share of world exports with significant
Overall China was the intra-EU exports. Amongst individual countries China was the top exporter of
biggest exporter with T&A in the world. The competition matrix (fig.11) explained below identifies
highest share and high the major T&A exporters that emerged during the ATC period.
growth rate
Crème de la crème : High growth - High share
China emerged as the single biggest exporter of textiles and apparel. US
showed decent growth in textile exports mainly due to numerous FTA’s with
Turkey , Mexico, India its neighboring countries, although apparel exports of US declined. EU &
and Pakistan also Hong Kong sustained their market share albeit with low growth.
emerged as significant
exporting nations High Fliers : High growth - Low share
In textile exports Turkey, Mexico, Tunisia, Thailand and Canada are the
countries which showed high annual growth during the ATC regime ,while in
apparel exports Morocco, Bangladesh, Switzerland, Sri Lanka and Vietnam
Korea and Taiwan grew significantly. India and Pakistan showed substantial growth both in
declined as exporting textile and apparel exports.
nations
Decliners : Low growth –Low share
Korea and Taiwan declined significantly both in textiles and apparel exports,
While US declined in apparel exports. Also, Switzerland and Bangladesh
declined in textile exports while Thailand and Philippines reduced their
apparel exports during the ATC period.
technopak 24
2.10 Reasons for Trade Shifts
Sourcing decision of buyers are affected at two levels, at the macro level
(country level) and at the micro level (firm level). The major macro level
Sourcing decisions are factors include factor costs, trade agreements, raw material base (or
affected at the macro presence of domestic market), economic policy and stability, political policy
level as well as the micro and stability and proximity / transportation infrastructure. The major firm
level level / micro level factors include production capacity, product specialization,
quality, delivery reliability and services provided.
Macro level factors
Trade Agreements
Ra
y
lic
w
m
po
at
The major factors Capacity Quality
ic
er
om
ia
influencing trade shifts
lb
on
prior to 2004 were factor
as
Ec
Micro level factors
e
costs, quota availability,
trade agreements, raw Services Reliability
Go
material competency and

ve
t
s
r
political factors
nm
Co
Specialization
en
tP
ol
icy
Proximity
Fig 12 : Factors Affecting Sourcing Decision
The key factors that affected the textile and apparel trade landscape are
more at the macro level than at the micro level. Some factors played a
bigger role than others. The key macro level factors are:
Factor cost – especially labour costs
Availability of Quotas
Regional and bilateral trade agreements
Raw material competency
Proximity / transportation infrastructure
Government policy / Political factors like import tariffs.
technopak 25
2.11 Rise of China – Case Study
One of the significant development of the ATC period was the emergence of
China as a dominating force in the world of textile and apparel. China has
seen a sharp rise in their export share in the global textile and apparel trade.
China’s share of global trade has increased from 12% in 1995 to 21% in
2004. The main reasons for the phenomenal growth of China are discussed
below:
25.0%
21% Government Incentives
20.0%
15.0% In 1979, China decided to promote textiles as a leading economic priority.

As a result of this decision, the Chinese textile industry received special
10.0%
loans from the central government; greater allocations of resources from the
5.0%
4.3% provinces, municipalities, and autonomous regions; and was given priority
0.0% with respect to raw materials, transport, and electric power.
1980 1995 2001 2004
Development of Free Trade Zones
Fig 13 : China’s % Share Increase

New textile facilities were concentrated in special economic zones and
received special tax and regulatory treatment as incentives for exports.
Encouragement of FDI
The development of Special Economic Zones triggered large scale FDI into
Chinese economy, especially from neighboring countries like Hong Kong,
Taiwan and Japan, which were relocating their textile base in 1980’s and
China proved to be the ideal location.
48 new FDI projects
were initiated in China Large Scale Capital Investment
between the period Large scale capital investment financed by foreign investors and domestic
2002-04
savings (resulting due to decentralization of economic production) built up
the infrastructure for large scale production activity.
Productivity Improvement
Productivity improvement was a major factor in China’s rapid rise.
Improvement in efficiency was achieved due to decentralization of
production to non-state enterprises and increase in competition. FDI further
enhanced the efficiency through improved technology inputs.
Fixed Exchange Rate
China’s currency policy of maintaining a fixed exchange rate vis-à-vis US
dollar boosted its exports significantly and increased its competitiveness in
the US market. Fixed exchange rate played a major role in the growth of
China as a major textile and apparel base.
technopak 26
Global
Global Textile
Textile && Apparel
Apparel Industry
Industry: :Vision
Vision 2015
2015
3. The Post Quota Era : 2005 - 2006
technopak 27
3.1 Introduction
The final stage of integration of all textile products into WTO occurred on 1st
January, 2005. With this quota restrictions were eliminated from all the
textile and apparel products imported by the developed countries. The
elimination of quota was expected to trigger huge impacts on sourcing
patterns of buyers, since the products integrated in the last stage
contributed to major share of imports. Quota restrictions forced buyers to
source from sub-optimal locations but with the removal of quotas buyers
were expected to shift sourcing to lower cost Asian countries.
China was the major gainer despite safeguards applied against some of its
key products in EU and US markets. South Asian countries were also
gained due to their lower costs compared to African, European and South
American countries.
The first year of quota elimination saw an increase in imports of US, EU and
Japan by 7%, 1% and 4% respectively. As expected China, South Asian
countries were the major gainers. Higher cost countries like Mexico, Turkey
lost out in the US market although continued to gain preference in EU due to
its proximity and high fashion product capabilities.
Contrary to expectations Bangladesh continued to rise despite competition
from China and India mainly on account of its low cost and access in the
European market.
Second year of quota elimination has seen further consolidation amongst
buyers as US and EU imports increased further by 4.5% and 8.3%.Imports
from the developing countries increased further. Share of China, South
Asian countries increased substantially both in US and EU market.
Bangladesh, Vietnam and Cambodia are amongst the fastest growing
countries.
A detailed analysis of the trade scenario since quota elimination is provided
further in this section.
technopak 28
3.2 Post Quota Trade Scenario
US Imports
US imports have grown by 5.6% CAGR since quota elimination to reach US
Trade shift towards low $ 93 Billion in 2006. The sourcing shift of US buyers towards low cost Asian
cost Asian countries countries is apparent as share of China, South Asia and ASEAN countries in
intensified in post quota US imports increased from 45% in 2004 to 59% in 2006 of all US imports.
era
Despite safeguard quotas in place, China’s share of US imports has
increased significantly by 11% after quota elimination. South Asia and
ASEAN countries also increased their exports to US. The major
beneficiaries being India, Pakistan, Indonesia and Vietnam increasing their
China, South Asia and share by 1%, 0.4%, 1.1% and 0.3% respectively.
ASEAN countries’ % share
Share of CAFTA, Mexico and Andean Countries has decreased by 5%, with
of US imports increased
from 45% to 59% in the Mexico’s share coming down from 9% in 2004 to 7% in 2006 indicating that
first two years of quota despite proximity advantages and free trade agreements the south
elimination American countries are not as cost affective as the Asian countries.
Share of Taiwan, Korea & Hong Kong (T,K,HK) has also further decreased
since quota elimination.
Asia’s % share of US 100% Rest

imports increased from 90% 18% 16% 14%
China
44% to 59% after quota
elimination 80% ASEAN
18% 25%
70% 29% South Asia
60% CAFTA
% Share
15%
50% 14% Mexico
16%
Share of South America 40%
12%
T,K,HK
13%
decreased as US retailers 14%
30% 12% Andean
preferred low priced 10% Countries
clothing from Asia 20% 9% 9% SSA
8%
7%
10% 10% Turkey
8% 7%
0%
2004 2005 2006
Source: OTEXA Trade data & Technopak Analysis
Fig 14 : Post Quota - US Import % Share
technopak 29
3.2 Post Quota Trade Scenario
EU Imports
EU imports grew by 3% CAGR since quota elimination to reach an
estimated US $ 196 Billion in 2006. Trade share of Intra-EU imports
Overall EU imports grew decreased marginally. Amongst the top exporting countries, China
by 3% to reach an increased its share almost by 5%. Turkey’s export share of EU market
estimated US$ 196 Billion
increased marginally even though the overall exports of the Euro Med
countries (Turkey, Tunisia, Morocco and Egypt) came down to 11% in 2006
from 13% in 2004.
India and Bangladesh showed further growth even though there was a small
dip in exports from Pakistan.
India and Bangladesh also
increased their trade
share by 0.9% and 0.5%
respectively while China
was the major gainer
100%
12% 8%
13%
90%
15%
80% 10% 14% Rest
7% 7% China
70% 7% Turkey
3% 4%
Combined share of major 4% India
Euro-Med countries viz. 60%
Bangladesh
% Share
Turkey, Tunisia, Morocco 50%

Romania
and Egypt came down by Hong Kong
2% 40% Tunisia
Morocco
30% Pakistan
53% 51% 52% Indonesia
20% Intra EU
10%
0%
2004 2005 2006 *(E)
Source: European Commission External Trade Database & Technopak Analysis
Fig 15 : Post Quota - EU Import % Share

*(E) : Estimated
technopak 30
3.3 Post Quota - Winners & Losers
US Market
In the US market, the biggest winner since quota elimination has been
China, Cambodia, China with significant increase of 36% in its exports. ASEAN and South
Indonesia, Bangladesh Asian countries grew further with Indonesia, Cambodia and Bangladesh
growing at more than 20%. Morocco’s exports grew significantly by 17%
and India were the major
winners amongst the European countries.
The East Asian biggies Korea, Taiwan and Hong Kong continued their
decline in world export market. The biggest losers were Turkey and Mexico
as their exports declined by a significant 14% and 10% respectively. CAFTA
countries also were losers with exports declining by 6%, as US buyers
Korea, Taiwan, Hong focused more towards Asia.
Kong, Turkey and Mexico
were the major losers Amongst the ASEAN countries Thailand and Malaysia declined in their
exports by 2%.
Ko rea , -2 0%
T a iwan, -16 %
H o ng Ko ng, - 15 %
T urke y, -14%
M e xico , -10 %
C a na da, -8 %
C A F T A , - 6%
T hailand, - 2%
M a la ys ia , - 2%
S ri Lank a, 4%
P hilippine s, 4%
V ie tnam , 12 %
P ak is ta n, 13 %
M o ro cc o , 17%
India, 18 %
B anglades h, 2 1%
Indo ne s ia , 2 2%
C am bo dia , 2 2 %
C hina , 3 6%
-3 0% - 20 % -10% 0% 10% 2 0% 30 % 4 0%
Source: OTEXA Trade Database & Technopak Analysis
Fig 16 : Post Quota CAGR of Exporting Countries to US Market
technopak 31
3.3 Post Quota - Winners & Losers
EU Market
China, Vietnam, India, In the EU market, China as expected gained substantially in exports.
Hong Kong, Bangladesh Vietnam was the major gainer with increase in exports at 27.9% CAGR.
and Sri Lanka were the Other ASEAN countries (except for Philippines) also increased their
biggest winners
respective export shares significantly. Amongst the South Asian countries,
India showed maximum export growth of 19% followed by Bangladesh and
Sri Lanka growing @ 14.6% and 12% respectively.
The major losers in the EU market were Korea and Philippines. Euro-Med
Korea and Philippines countries Tunisia and Morocco also declined marginally while Egypt and
were the major losers Turkey gained significantly.
Ko r ea, - 11.1%
Philip p ines, - 7%
Swit z er land , - 1.3 %
T unisia, - 1.2 %
M aur it ius, - 0 .8 %
R o mania, - 0 .8 %
Isr ael, - 0 .6 %
M o r o cco , - 0 .4 %
T aiwan, - 0 .3 %
Pakist an, 1. 5%
T hailand , 2 .5%
Ind o nesia, 5.8 %
C amb o d ia, 5.8 %
T ur key, 6 .1%
Eg yp t , 7.5%
M alaysia, 8 .9 %
U nit ed St at es, 9 .3 %
Sr i Lanka, 11.9 %
B ang lad esh, 14 .5%
Ho ng Ko ng , 17.2 %
Ind ia, 19 .1%
V iet nam, 2 7.9 %
C hina , 2 9 %
-20% - 10 % 0% 10 % 20% 30% 40%
Source: European Commission External Trade Database & Technopak Analysis
Fig 17 : Post Quota CAGR of Exporting Countries to EU Market
technopak 32
Global
Global Textile
Textile && Apparel
Apparel Industry
Industry: :Vision
Vision 2015
2015
4. Trends in the Post Quota Era
technopak 33
4.1 Growing Imports but Falling Prices
US Market
Apparel prices in US market have consistently fallen during the last few
Import prices of years more so after quota phase out even though their imports have risen.
almost all products The top imported categories cotton knit shirts and cotton woven shirts (Both
fell by 4-5% in the Women’s and Men’s) have shown high growth in imports suggesting growth
post quota period
in value apparel. Significantly high growth is seen in W/G cotton coats
(65%), cotton skirts(42%) and hometextiles items (cotton towels@26%).
On the other hand prices of all the top import categories have fallen by 4-5%
post quota suggesting that more and more buyers are looking to reduce
their sourcing cost.
8000 70%
60%
7000
50%
6000
40%
5000
US $ million
30%
4000 20%
10%
3000
0%
2000
-10%
1000
-20%
0 -30%
W/G Cotton
W/G Cotton
M/B Cotton
W/G Cotton
Cotton Pile
Other Cotton
M/B Cotton Knit
Baby Garments
Cotton Skirts
Woven Shirts
Woven Shirts
W/G Cotton
Knit Shirts
Trousers
M/B Cotton
Trousers
Towels
Apparel
Coats
Shirts
value % grow th % price change
Source: Textile Outlook International & Technopak Analysis
Fig 18 : % Change in Value Growth and Prices of Top Categories Imported into US - 2005 vs. 2004
technopak 34
4.1 Growing Imports but Falling Prices
EU Market
Customers in EU market In the EU market also there has been significant fall in prices of most of the
are also buying more at top categories imported with corresponding growth in imports. However,
cheaper prices in major prices of women’s skirts, overcoats and blouses increased post quota. Since
apparel categories like significant amount of these products are imported from European countries
trousers and shirts
hence these products present opportunity for low cost Asian countries in
future. Decline in imports of MMF woven fabrics and cotton yarn was also
seen with corresponding increase in trousers and t-shirts, suggesting the
shift in manufacturing bases of European countries from Europe to low cost
countries.
14000 40%
12000 30%
10000 20%
US $ million
8000 10%
6000 0%
4000 -10%
2000 -20%
0 -30%
Pullovers
MMF Woven
MMF SF Woven
Trousers
W Overcoats
T-Shirts
Cotton Yarn
M Shirts
W Dresses
W Blouses
W Skirts
W Suits
Fabrics
Fabrics
value % growth % price change
Source: Textile Outlook International & Technopak Analysis
Fig 19 : % Change in Value Growth and Prices of Top Categories Imported (Extra-EU) into EU -2005 vs. 2004
technopak 35
4.2 Increasing Investment in Asian Countries
Short Staple Spindles ('000) Open-end Rotors('000) Shuttle-less Looms (No.s)

Region
1995 2005 CAGR 1995 2005 CAGR 1995 2005 CAGR
Asia 117842 148217 2.3% 2156 3368 4.6% 255490 482230 6.6%
Africa 8130 6241 -2.6% 192 216 1.2% 21340 16350 -2.6%
EU 18410 11281 -4.8% 3542 3245 -0.9% 274480 187930 -3.7%
N. America 10664 6491 -4.8% 1092 730 -3.9% 85300 52750 -4.7%
S. America 12480 8921 -3.3% 309 461 4.1% 45130 56470 2.3%
World 167526 181151 0.8% 7291 8020 1.0% 681740 795730 1.6%
Source: ITMF
Table 4 : Installed Capacities of Textile Machineries
The trade shift towards the Asian countries in the last 15 years is clearly
reflected in the installed textile machinery capacities and investments in the
different regions of the world.
Investments in textile As seen from above data, there has been a significant growth in investment
machineries in Asian in textile machineries in Asian countries. A significant portion of this
countries have increased investment in Asia was contributed by China, India, Pakistan and
significantly during the
quota phase out period Bangladesh. While investments in other regions except South America have
fallen. In North American and EU countries, installed capacities have
decreased to a major extent indicating no net investment made in textile
machineries and the production shift towards the Asian countries. Amongst
African countries, except for open-end rotors investments in other
categories have declined. South American countries on the other hand have
invested substantially in open-end rotor spinning and weaving with a
Correspondingly,
corresponding decline in short staple
investments in developed
countries have declined Overall, net positive investment has been made in textile machineries since
quota phase out with majority share coming from Asian and South American
nations, with the production bases from EU and USA moving to these
places.
technopak 36
4.2 Increasing Investment in Asian Countries

Rest,
Rest,
14%
14%
Pakistan, Korea,
4% 2%
Turkey,
Turkey, 3%
5% B'desh,
3%
B'desh, China,
7% 61% India,
India, 4%
China,
9% 74%
Shuttle-less Looms Circular Knitting Machines
Turkey, Rest, 6% Rest,

3% 14%
B'desh,
USA, 4%
5%
Pakistan, Turkey,
9% 5%
India,
China, 5%
India, 64% China,
13% Brazil, 66%
6%
Short staple spindles Open-end Rotors
Fig 20 : % Share of World Shipments of Textile Machineries in Year 2005

Source: ITMF
In the year 2005, after quota elimination, most of the investments were
made in Asian countries. Apart from Brazil and USA being among top 5
destinations in open–end rotors, no country from EU, South America or
Africa appears as major investor in textile machinery categories as depicted
The top five nations as
above.
shown above are
investing more than 85% The investments are maximum in China which alone is taking more than
of the world’s 60% shipments of all the textile machinery categories in the world. India
investment in textile holds a distant second position overall. Turkey is the only other country
machineries in any which appears among top five in all the four machine categories. 75% - 80%
sector.
of the investment in textile machineries is being done in China, India and
Turkey combined. The other countries attracting significant share of
investment in textile machinery are Bangladesh and Pakistan.
technopak 37
4.3 New Sourcing Rules for the Global World
In the post quota era most of large buyers started to work differently to
adapt to the new global environment . Prior to 2005, the buyer strategies
were governed by availability of quotas and than on supplier efficiency
Buyers are consolidating parameters. Quota abolishment provided an opportunity to the buyers to
their sourcing and looking consolidate their sourcing operations and select efficient and cost
for strategic relationship competitive suppliers. The key changes that buyers are making in their
with suppliers
sourcing strategies were: -
Rationalization of Vendor Base : Quota abolishment provided an

opportunity to most of the buyers to rationalize their vendor base. Retailers
and brands started to segment their vendors for optimizing the sourcing
benefits:
The strategic partners: Close working relationship. These vendors
are not only selected on competitive cost but also on capabilities
like quality, lead time
Niche Vendors: Vendors who provide unique product, capabilities or
geographic positioning
Opportunistic Vendors: Vendors used as per need basis
Change from Transactional Relationship to Strategic Long Term

Relationship : Buyers are developing long-term relationship with their key
suppliers. Buyers and suppliers, both get benefited in developing such a
long-term relationship. While suppliers can look for constant flow of order,
buyers on the other hand can make operational efficiencies in its supply
chain through reduced times in product development, standardization of
processes, logistics routing and inventory visibility.
Change from Fragmented Sourcing to Full Package Suppliers :

Working with full package suppliers, who have capabilities from design to
development, helps suppliers reduce the lead-time for their products and
also shrink concept to store timelines.
Outsourcing of Operations to Suppliers : A large number of buyers

have started to outsource their operations like product development,
inventory management to their vendors. As more and more retailers starts
to focus on their front end to improve their competitiveness more and more
outsourcing of operations is expected to happen.
technopak 38
4.4 Suppliers Building Capabilities
Suppliers are also responding to the changed environment and to the new
requirements of the buyers. Suppliers have started to invest in building
special capabilities. Some key changes which suppliers are making are: -
Suppliers are building Focusing on building product development and design
special capabilities like
capabilities: Suppliers have started providing all under one roof facilities
design and product
to their buyers by focusing on product development and design capabilities.
development, logistics,
inventory management, A number of suppliers in India and China are investing in developing design
IT support etc. studios to provide their buyers with design options. Companies like Arvind
Mills are looking at developing new denim varieties to cater to changing
fashion trend
Developing logistics capability: Suppliers have also developed

strategic tie-ups with logistics service providers to be able to reduce lead
times.
Productivity improvement: Faced with decreasing margins a number of

suppliers are looking to improve productivities through “do it right the first
time” approach. Suppliers in South Asian countries are investing in
improving productivity and implementing systems for quality control.
Consolidating operations from a number of countries to

efficient and cost effective countries: Quota forced a number of large
suppliers to operate from various countries. With quota no longer in
consideration many of the large suppliers have started to consolidate their
operations to a fewer cost effective countries. Large companies like Crystal,
Esquel which have operations in a number of countries are now focusing on
consolidating their operations to only a few select countries which are cost
competitive.
Collaborating with buyers on forecasting and inventory

management: Suppliers are now actively collaborating with their buyers
on forecasting and management of inventory.
Investing in IT infrastructure and compliance: Most of the large

suppliers are investing in building IT infrastructure which would not only help
them in better manufacturing planning and monitoring progress but would
also assist their buyers in better visibility of their merchandise. Companies
like Welspun have implemented EDI and SAP R/3 system for better
planning.
technopak 39
4.5 Treaties, FTA/PTA’s and Safeguards
Treaties and FTA/PTA’s have emerged as a major survival tool for

uncompetitive countries. A large number of countries faced with declining
exports and increasing job losses in the Textile and Apparel industry have
Trade agreements, started to sign FTA’s/PTA’s with the major consuming countries. The
tariffs and safeguards developing countries like US and EU are also responding to increasing
are playing major role influence of countries like China, Pakistan, India by introducing tariffs,
in influencing textile and safeguards and anti- dumping measures on specific product categories.
apparel trade
Treaties and agreements are expected to play an increasingly important role
in textile and apparel trade. Not only would the buyers be looking to
sourcing from countries which are provided duty free access, suppliers
would also be relocating some of their facilities to these countries to gain
competitive advantage
CAFTA
-DR
Fig 21 : Major Trade Agreements that would have Impact on Textile and Apparel Trade
technopak 40
Global
Global Textile
Textile && Apparel
Apparel Industry
Industry: :Vision
Vision 2015
2015
5. Vision 2015- Projections and Trends
technopak 41
5.1 Introduction
A large number of factors govern the future of World textile and apparel
trade. The changing consumer preferences are not only affecting the way
retailers are positioning the merchandise and formats, but also affecting the
way retailers are dealing with their suppliers. On one hand, changing
demographic structure of US and EU is impacting the overall growth of the
market, while on the other hand increasing domestic markets of supplying
countries like China and India are opening up new avenues for the suppliers
in these countries. As per Technopak estimates, by 2015, China is expected
to become the second largest apparel market after US. In addition a large
number of other trends like growth of discounters, increasing sales of private
labels, e-tailing are expected to have a major impact on the future map of
textile and apparel trade.
Trade in textile and apparel is expected to grow and reach US$ 805 Billion
by 2015. It is expected that trade in apparel would grow at a faster rate than
textile trade. Other than South Asia and China, Technopak estimates that
ASEAN countries especially Vietnam and Cambodia would be major gainers
in the next 6-8 years. Technopak estimates that growing domestic markets
within China and India would stabilize their textile and apparel exports in
next 6-8 years. It is expected that China will have approximately 40% share
of US and approximately 30% share of EU T&A imports. Major losers will
include African countries, Mexico, Intra EU region. Countries like Uzbekistan
and Turkmenistan which have abundant raw material are expected to do
well provided they improve on their textile infrastructure, bureaucracy and
compliance record.
This chapter lists down the key projections in the world of textile and apparel
in next 6-8 years.
technopak 42
5.2 Projections for Future
World Textile and Apparel Trade 2015

World textile and World textile and apparel trade is expected to reach US$ 805 Billion by 2015
apparel trade is from US$480 Billion in 2005. The growth in trade would primarily be
expected to reach US
governed by decreased domestic production in US and EU. While apparel
$ 805 Billion by 2015
trade is expected to grow at a faster rate than textile, Technopak estimates
that home textile trade would grow at the fastest in this time period. This
would be mainly due to the fact that a large amount of home textile is still
being produced in consuming countries which by 2015 is expected to shift to
Apparel would continue
to grow faster than low cost countries like China, India, Bangladesh and Pakistan.
textiles. Home Textile
trade is expected to
grow significantly
US$ 805 Billion
750
US$ 650 Billion
US$ Billion
600
US$ 480 Billion 505
450 390
280
300
150 260 300

200
0
2005 2010 2015
Textile Apparel
Fig 22 : Future Projections of World Textile and Apparel Trade
technopak 43
Future Textile and Apparel Regions

Export growth of
China and India is While the World textile and apparel trade map would not change
expected to stabilize dramatically, Technopak estimates that other than China and India countries
after 2012 on account like Vietnam, Cambodia are expected to emerge as a major supplier in the
of growing domestic next few years. As economies of India and China grow rapidly, T&A industry
market would be replaced by services and hi tech industries. Hence, it is expected
that the growth of textile and apparel exports of China and India would
stabilize after 2012. However, these countries would continue to be a major
CBI Countries and force in World textile and apparel trade. Amongst the emerging countries
Euro Med would
Vietnam and Cambodia are expected to play a major role in World textile
continue to grow due
to proximity to market and apparel trade. Vietnam textile and apparel exports reached US$ 5.8
Billion in 2006 and with Vietnam joining WTO in 2007 it is expected that
share of Vietnam is expected to increase further. Vietnam is also attracting
large foreign investment from large companies like ITG Group, Formosa etc.
China and India would
emerge as major markets Technopak also estimates that countries like Turkmenistan and Uzbekistan
given their abundance of raw material will emerge as major force however
they would need to improve on their textile infrastructure, bureaucracy and
compliance record.
Regional hubs like
South Asia, ASEAN, Another key trend envisaged is the emergence of textile and apparel hubs. It
CBI Countries would is expected that countries in immediate vicinities would collaborate with
emerge as major each other through FTA’s/PTA’s to improve their competitiveness. Some of
forces in textile and the key emerging hubs would be South Asian Countries, ASEAN countries,
apparel trade
CBI Countries and Euro Med Region.
Europe
US, Canada
Euro Med China
South Asia ASEAN
CAFTA / CBI
Consumption Centres
Production Hubs
Dark Horses a
a : Bangladesh, Vietnam, Cambodia,
Turkmenistan and Uzbekistan
Fig 23 : Key Textile and Apparel Regions in Future
technopak 44
US Textile and Apparel Market
China is expected to be a major gainer in the US market. By 2015 it is
China, South Asia and expected that China & Hong Kong would have a market share of 40% in the
ASEAN countries US Textile and Apparel imports. Other main gainers in the US Market would
would increase their
include South Asian countries, ASEAN Countries including Vietnam and
export shares while
Cambodia. CAFTA countries are expected to retain their market share
the CAFTA countries
would sustain their subsequent to CAFTA DR. Main losers in the US Market would include
market share because Mexico and SSA countries. However, Technopak expects that with fast
of their proximity fashion gaining foothold in the US Market, countries like Mexico and CBI
advantages
countries would not be wiped out completely.
100% 4%
9% 5%
90% 12% 15%
11% Rest of the World
80%
SSA
70% 17% Asean
14% 20%
60% Taiwan & Korea
% Share
South Asia
50%
30% 38% China & HK
40% 40% Europe
30% Canada
20% CBI
12% Mexico
10% 12% 12%
9% 6% 4%
0%
2005 2010 2015
Fig 24 : Expected % Shares of Major Textile and Apparel

Regions in the US Market by 2015
technopak 45
EU Textile and Apparel Market

China, South Asia and
ASEAN countries Although Intra EU counties would remain one of the largest trade partner,
would increase their Technopak expects China would be able to catch up with Intra EU countries
export shares
by 2015. Riding on the wave of fast fashion, countries in the Euro Med
region are expected to sustain their Textile and Apparel Industry. GSP and
duty free access are expected to play a major role in EU trade. Countries
Intra EU trade would like Bangladesh and Sri Lanka and other countries which are able to get
continue to decrease
these kind of concessions from EU would be able to capture market share at
the expense of other countries.
Countries with GSP &

Duty benefits will gain
in EU market
100%
7% 6%
12%
90% 10% 9%
12%
80%
15% 18%
70% 9% Rest of the World
60% 13% Euro Med

% Share
25%
50% ASEAN
30%
40%
South Asia
30%
53% China
20% 39%
31% Intra EU Trade
10%
0%
2005 2010 2015
Fig 25 : Expected % Shares of Major Textile and Apparel

Regions in the EU Market by 2015
technopak 46
5.3 Key Trends of Future
Introduction
The abolishment of quota was expected to usher in a number of changes
both at the buyer and the supplier level. The pace of change in the first two
years have been relatively slow primarily due to fluid situation on the trade
front (safeguards and quotas on China, currency fluctuations etc.). Also a
number of buyers and suppliers were evaluating the situation and exploring
various options. As the clear picture emerges in next few years it is
expected that pace of reforms would be much faster. While some of the
changes are expected to impact the suppliers directly a large number of
changes would also impact the suppliers in an indirect manner. Suppliers
would need to prepare themselves to adapt to these changes by developing
competencies which would matter in the coming times.
Technopak analyzed the state of current trade and emerging consumer and
retail trends to arrive at some of the key changes that would impact textile
and apparel world in years ahead. Some of the key changes/ trends for
future would include:-
1. Consolidation, Collaboration and Relocation
2. Redefinition of the Traditional Roles
3. Emergence of Heavyweights: Multi Billion Dollars Textile Conglomerates
4. Emergence of China and India as consumption bases
5. Speed and Reliability: Key to Success
6. Scarcity of resources would lead to development of new technologies
7. Migration of skilled manpower from buying to supplying countries
technopak 47
1. Consolidation, Collaboration and Relocation
Large suppliers particularly in vulnerable countries would either need to

Large suppliers will look
collaborate or consolidate with other large suppliers or would need to
to consolidate and
collaborate with other relocate their capacities to low cost countries. The trend for collaboration
large suppliers to gain and consolidation has already started in the post quota era with the merger
more competencies e.g., of Spain based Tavex and Brazil based Santista textile. The merger aims to
merger of Tavex (Spain)
and Santista (Brazil) create a large entity in denim which would have a complete product portfolio
of products on offer. The new entity aims to acquire plant or build new
capacities in low cost capacities to take advantage of the opportunities
arising in the post quota era.
Another important manner of collaboration is the formation of joint ventures

Textile and Apparel
e.g. UCO Denim (Belgium) and Raymond (India). These type of JV’s help
industry will see more
and more JVs like high cost suppliers to get low cost manufacturing facilities and help low cost
Raymond (India) and suppliers get ready access to the market as well design and development
UCO (Belgium)
skills. In addition to these some of the large suppliers in high cost countries
would also have to relocate their facilities in next 2-3 years. Although
relocation of capacities would not be an easy task for most of these
suppliers however Technopak expects that some of the large suppliers
particularly in countries like Mexico, Turkey, Korea are expected to relocate
Some large suppliers
their facilities to low cost countries.
will relocate to more
competitive countries Another key form of collaboration between suppliers that is expected to
emerge in the next few years would be in the form of joint manufacturing.
With the increase in dual sourcing, it is expected that suppliers near to the
consuming countries would collaborate with suppliers in low cost countries
for complete execution of order, which at present are partly executed by
suppliers near to buyers and partly in low cost countries. Technopak
expects that suppliers would collaborate to jointly execute these kinds of
orders. The next 3-4 years would see rapid growth of this trend particularly
in the EU market.
technopak 48
2. Redefinition of the Traditional Roles
Buyers as well as suppliers would be redefining their traditional roles in the

Buying houses will
reinvent themselves and years ahead. Buyers/Retailers looking for leaner and more efficient
survive by taking up operations would like to outsource more and more responsibilities from their
more activities from
retailers suppliers. Suppliers on the other hand would look at enhancing their
competitiveness by offering more and more services to their buyers. Buying
house which till now used to play important role will see themselves
constrained in the changed environment. Hence buying houses would
reinvent themselves to survive. Buying house would take up more activities
from the retailers in order to grow in the emerging scenario. Technopak
believes that some of the key developments which are expected to happen
in next 6-8 years would include:-
Shifting of design and product development responsibilities from

buyer to supplier.
Redefinition of the structure of sourcing organization of the buyers:

number of offices, size of offices, location/countries of offices.
More sharing of processes between the buyers and suppliers
Now Future
Consumer Trends Retailer Consumer Trends Supplier
Demand Forecasting Retailer Demand Forecasting Supplier
Designing Retailer Designing Supplier
Merchandise Planning Retailer Merchandise Planning Retailer
Production / CMT Supplier Production / CMT Supplier
Warehousing Retailer Warehousing Supplier
Logistics Retailer Logistics Supplier
Retail Sales Retailer Retail Sales Retailer
Fig 26 : Increasing Role of Suppliers in the Supply Chain
technopak 49
Case Study: Li & Fung

Li & Fung is a global textile sourcing group based in Hong Kong. Its major
Consumer Consumer
customer markets are in US, Europe and Canada. The company has grown
needs from US $ 0.5 Billion sales turnover in 1992 to US $ 8.7 Billion in 2006,
Wholesaler Product through supply chain optimization and collaboration with its customers.
Design
Diversified Sourcing Operations
Local Forward Product
Consolidation Development Li & Fung has 73 offices in 41 countries with 7800 suppliers and factories
across the world. Li & Fung’s sourcing from China has decreased from
Customs Raw Material
Clearance Sourcing 100% 10 years ago to around 40%, with increased purchasing from South
Asian countries and South-East Asian countries. Diversified sourcing
Forwarder Factory
Consolidation Sourcing operations provide Li & Fung the required flexibility in fulfilling various
buyers’ demands and at the same time reducing sourcing risk.
Shipping Manufacturing
Consolidation Control Borderless Manufacturing
Fig 27 : Li & Fung Supply Li & Fung manages the manufacturing process through a process called
Chain Model “Borderless Manufacturing”. In this process it manufactures different parts of
a garment viz. fabric, linings, labels etc. in different countries, assembles the
garment in a cost effective country and for larger orders divides the
production across a number of factories to accelerate production. This gives
the following benefits to Li & Fung:
Reduction in cycle times
Greater order flexibility in terms of size and time.
Greater economies of scale
Focus on Customer Service

Li & Fung customizes the value chain to the customers’ needs and
collaborates with the customers to such an extent that many of the retailers
manage their suppliers through Li & Fung. Following are some of the
Fig 28 : Li & Fung Turnover Growth
services provided by Li & Fung to its customers:
Transportation and Logistics : through close relationships with
leading shipping and logistics companies
Product Design and development : 100 people working in design
Manufacturing and sourcing control
Inventory Management
technopak 50
Case Study: Karstadt Quelle
In 2006, Karstadt Quelle, one of the largest department store in Europe

decided to sell its worldwide procurement unit Karstadt International
Services AG to Li& Fung. Karstadt International Services used to handle all
procurement for the company's department store businesses as well as for
mail-order units Quelle and Neckermann. The main reasons for Karstadt
taking such a step were-
Reduce sourcing cost by 10% through more efficient sourcing

through Li& Fung
Focus on the higher value activities of design, assortment

and presentation of merchandise
Reduce working capital requirements as its payment cycle

increased from 20 days to 120 days
Reducing Manpower cost- Karstadt International Services

has 1100 employees which were transferred to Li & Fung
In a similar move Li& Fung has also acquired the sourcing operations of
Tommy Hilfiger.
technopak 51
3. Emergence of Heavyweights: Multi Billion Dollars Textile

Conglomerates
Technopak expects that next 6-8 years will see a number of textile
companies with turnover exceeding US $ 3-5 Billion. This will primarily
Textile conglomerates
with turnover exceeding happen due to consolidation in the sector. Currently most of the textile and
US $3 Billion will emerge apparel companies are independently operated units confined to one or two
in next 6-8 years countries. However, as the trade grows and opportunities emerge some of
the companies would be able to increase their scale of operations through
mergers and acquisitions. Technopak expects that most of these large
companies would emerge from China and Hong Kong region and a few
companies from the Euro Med region expanding their operations into South
Asian countries.
While large companies are expected to emerge, small and medium size
companies who dominate the sector will continue to be relevant in the
There will be a role for changed scenario. Medium and Small suppliers would also avail of a
small and medium size number of opportunities in the changed scenario. Some of the opportunities
companies also in textile include:-
trade.
Fashion Products which requires smaller lots but more
complexity
Niche products which have limited requirements
As an outsourcing option for large manufacturers
Smaller suppliers offer a number of advantages in terms of speed and
flexibility and thus would continue to operate in the changed environment.
However, in order to succeed smaller suppliers would need to:-
Define their Role
Develop a Business Model and Value Proposition
Create Differentiation
technopak 52
4.Emergence of China and India as Consumption Bases

Technopak expects that textile and apparel world would once again witness
China would become the the convergence of production and consumption bases. Developing
second biggest market
economies like China and India which are the major production bases are
for apparel consumption
by 2015 witnessing significant growth in their domestic apparel market as well.
Traditionally, developing countries are the major suppliers of textile and
clothing to the developed countries. Technopak expects that if the
developing countries keep growing at this rate there would be a
convergence of production and consumption bases by 2015.
Market Size Est. Size in 2015 Change

Country 2005(US$ Billion) (US$ Billion) (US$ Billion)
USA 225 275 50
UK 80 95 15
France 40 50 10
Italy 55 50 -5
Germany 90 100 10
Japan 75 55 -20
China 45 >100 >+55
India 25 >55 >+30
Table 5 : Major Apparel Markets of the World in 2015
Technopak expects that growing domestic markets of developing countries

Growing domestic would stabilize the growth of textile and apparel exports from these
markets in China & India
countries. In case the existing suppliers in the developing economies do not
will stabilize the exports
expand their capacities, retailers in the developed markets would be
of textile and these
countries affected by this development as they would have to explore new sourcing
bases for their textile and apparel requirements.
technopak 53
5.Speed and Reliability : Key to Success

Technopak expects speed/lead time would increasingly play more and more
Speed to delivery and important role in sourcing of textile and apparel. Speed, on-time delivery and
reliability will make or reliability would be the key parameters that buyers would pay great
break the business of importance to while selecting a supplier. This is primarily due to the fact
suppliers in the coming
years that more and more retailers would be looking at leaner operations and
lower inventory in the coming years. Also with the increase of fast fashion in
EU and US countries speed would increasingly gain importance in the
sourcing criterion of retailers. Not only speed but reliable delivery would also
be important for the retailers. Technopak also expects that with a number of
value retailers increasing fashion element in their offering the amount of
dual sourcing is expected to increase in the coming years. In dual sourcing
buyers prefer to source fashion sensitive products from production centers
close to the point of sale, while basic products are sourced from low cost
countries. Suppliers would need to develop skills in product development,
designing and logistics in order to shorten the overall cycle time for a
retailer. Suppliers who would be able to offer retailers these advantage of
speed, reliability would be able to enjoy premium over the other vendors. In
order to achieve this suppliers would need
Undertake better planning of their production schedule
Better Quality Control- Doing It Right the First Time
Invest in IT Tools
Invest in developing design and product development skills
Other than the shipping time, which is difficult to reduce, a large number of
processes constitute the overall cycle time for a retailer. Technopak expects
that next 3-4 years would see retailers outsourcing a number of their
operations to their vendors in order to shorten the overall cycle time and
retailers would be willing to pay premium to their suppliers in lieu of these
services provided. Hence, it becomes very important for suppliers to
develop these capabilities in order to reduce the overall cycle time for the
retailers
technopak 54
Case Study on Speed and Reliability: Scholastic Publications

Scholastic is the largest publisher and distributor of children's books in the
world. The Company is the largest operator of school-based book clubs
and school-based book fairs in the U.S., and is a leading publisher of
children's books sold through the trade channel, as well as the leading
distributor of children's books through direct-to-home continuity programs,
in the U.S., for children ages five and younger. Scholastic is the publisher
of Harry Potter books in US. Combined sales of Harry Potter books exceed
300 Million copies worldwide. Harry Potter books are widely awaited by the
readers thus ensuring huge lines in front of the book stores on the date of
release. More than 6 Million copies were released on the first day for the
last released Harry Potter and the Half Blood Prince.
In order to meet consumer expectations, maintain secrecy and also to

ensure that books reach book stores well on time for the release on the
due date, Scholastic has to plan intensively each and every step of supply
chain. In order to achieve this task Scholastic depend increasingly on its
vendors to have the requisite skills and capabilities to achieve the desired
results. The process begins around 5-6 months before the release of the
books wherein all the members of the supply chain including publishers,
binders and transporters are involved. The main task is to:-
Undertake step by step planning
Responsibility Allocation
Logistics Planning
Safety and Security Planning
With the support of the key vendors and efficient planning Scholastic has
been able to ensure timely delivery of books not only to store but also to e-
retailers over all the previously releases editions. Scholastic is now
planning to release around 12 Million copies of the last in the series Harry
Potter and Deathly Hollows
technopak 55
6.Scarcity of Resources would Lead to Development of New
Technologies
Scarcity of natural resources particularly water, oil and arable land is going
Scarcity of resources
to have tremendous bearing on the future of textile and apparel industry.
would have a
significant impact on Currently textile industry consumes large amount of natural resources in
future of textile almost all the processes like fibre production, fabric processing and
industry
finishing. As the scarcity of these natural resources intensify over the next
few years use of existing technologies would make textile production more
and more infeasible thus forcing the industry to look for new technologies
and solutions. Technopak expects that next 6-8 years will forms the basis of
development of these new technologies of the future. Some of the new
technologies which would have a significant impact in future would be:

New technologies
which use resources Development of new fibres like Sorona by DuPont- a high
efficiently are
performance fibre made from naturally occurring starch in the
expected to emerge in
next 6-8 years kernels of the corns.
Development of processes/machineries for processing and
finishing which would consume less water.
Biotechnological processing through use of bio enzymes
rather than chemicals
Nanotechnology
Technology focusing on longer lifecycle of product usage.
technopak 56
7.Migration of Skilled Manpower from Buying to Supplying

Countries
Textile and apparel industry initially developed in the industrialized countries

Migration of skilled of US, EU and Japan. These countries were the major manufacturing
manpower is expected to countries at that time and developed quality systems, processes, design and
happen in next 6-8 years
product development through investments in research and development.
from established textile
These systems and processes were developed by the skilled manpower in
nations like Italy, UK,
these countries and they have further enhanced their skills in all these areas
US, Germany etc to
on continuous basis. When the manufacturing base for T&A industry shifted
emerging textile bases
like India, Pakistan, from these developed nations to countries like Hong Kong, Taiwan, Korea
Bangladesh, Vietnam, and China; there was a need for the systems and processes developed by
China the industrialized nations. People who had such skills were in demand and
some of the skilled manpower shifted to the newer manufacturing base.
This migration trend was exemplified by the migration of skilled manpower

from Japan to China and enabling China to emerge as the textile
superpower. Migration of skilled manpower is expected to happen in next 6-
8 years from established textile nations like Italy, UK, US, Germany etc to
emerging textile bases like India, Pakistan, Bangladesh, Vietnam, China.
This migration of skilled manpower to the newly developed manufacturing
bases will again be driven by need of skills like product development and
design, best quality practices, global best practices for manufacturing etc.
The technology know how in textile and apparel industry will gradually shift
to China, India, Pakistan etc through the migration of skilled manpower. In
spite of that most of the cutting edge development in the field of textile and
apparel in next 6-8 years is expected to happen in the developed countries
like US, UK, Germany
technopak 57
Conclusion
The pace of changes in textile and apparel trade is expected to increase in

the next decade and Technopak expects that World textile and apparel trade
is expected to reach US$ 805 Billion by 2015. Technopak expects that some
new hubs for textile and apparel would appear in the next few years.
Countries like Vietnam, Cambodia are expected to emerge in next few

years. China would continue to dominate however its growth would slow
down due to increasing trade restrictions, growing domestic market and
revaluation of Yuan. It is estimated that by 2015 share of China in US and
EU imports is expected to reach near 40% and 30% respectively.
Treaties and agreements would increasingly play important role in the world
of textile and apparel as in coming years a number of countries would try to
protect their textile industry from the competition and would enter into
agreements. Technopak feels that treaties and agreements would be very
important criterion in deciding the direction of international trade.
Consolidation & collaboration is expected to pick up pace in next few years

and textile world would see emergence of multi billion dollar corporations in
the next 6-8 years.
Competency requirements for suppliers would change in the long run with a
shift from cost based transactional relationship to service based strategic
partnership.
Suppliers would need to develop a number of competencies in order to

thrive in the coming decade. Suppliers would need to be more proactive,
develop strategic relationship with buyers, collaborate with other suppliers
and constantly evaluate their operations. Technopak expects that successful
suppliers in the post quota era would be the one’s with multiple
competencies.
The competition in textile and apparel trade would intensify in the times
ahead and survivors would be the one’s who understand the direction of
change and build competencies accordingly.
technopak 58
Global
Global Textile
Textile && Apparel
Apparel Industry
Industry: :Vision
Vision 2015
2015
Annexure
technopak 59
Annexure 1: Member Countries of Different Regions
ASEAN Honduras Euro Med
Brunei Jamaica Algeria
Burma Montserrat Egypt
Cambodia Netherlands Antilles Israel
Indonesia Nicaragua Jordon
Laos Panama Lebanon
Malaysia St. Kitts-Nevis Morocco
Philippines St. Lucia Occupied Palestinian Territory
Singapore St. Vincent/ Grenadines Syrian Arab Republic
Thailand Trinidad and Tobago Tunisia
Vietnam EU 15 Turkey
CBI Belgium South Asia
Antigua Denmark Bangladesh
Aruba France Bhutan
Bahamas Germany India
Barbados Greece Nepal
Belize Ireland Pakistan
British Virgin Islands Italy Sri Lanka
Costa Rica Luxembourg SSA (Sub Saharan Africa)
Dominica Netherlands Angola
Dominican Republic Portugal Benin
El Salvador Spain Botswana
Grenada United Kingdom Burkina
Guatemala Sweden Burundi
Guyana Finland Cameroon
Haiti Austria Cape Verde
technopak 60
Annexure 1: Member Countries of Different Regions
SSA (Sub Saharan Africa)
Central African Rep. Nigeria
Chad Rwanda
Comoros Sao Tome and Principe
Congo Senegal
Djibouti Seychelles
Eritrea Sierra Leone
Ethiopia Somalia
Gabon South Africa
Gambia St Helena
Ghana Sudan
Guinea Swaziland
Ivory Coast Tanzania
Kenya Togo
Lesotho Uganda
Liberia Zambia
Madagascar Zimbabwe
Malawi
Mali
Mauritania
Mauritius
Mozambique
Namibia
Niger
technopak 61
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Global Textile & Apparel Industry : Vision 2015

Global Textile & Apparel Industry : Vision 2015

About the Authors

Abbreviations and Acronyms Used

AGOA : African Growth and Opportunity Act

1. Historical Overview of World Textile and Apparel Trade

Pre quota period (Till 1974)

Shift from Japan to the “Asian Big Three”

Quota period : MFA regime (1974 – 1994)

Source: WTO Trade Statistics

East Asia India US Thailand

Sri Lanka 1974 - 1990 Vietnam

Source: Technopak Analysis Source: Technopak Analysis

Quota phase out period : ATC Regime (1995 to 2004)

2. The ATC Period : 1995 - 2004

2.2 The ATC Regime

ATC Quota Phase Out Procedure

2.3 Emergence of New Textile Regions

Separation of Consumption and Production Bases

Source: Technopak Analysis

Fig 3 : Major Textile and Apparel Regions after 1990

a. North America: US , Canada, European Union (EU), Japan

2.4 Trade Trend

Growing Trade in Apparel

2.5 Region Wise Shares

Textiles Apparel Textiles Apparel

Increasing Share of Asia

2.6 Top Textile and Apparel Importers

The biggest textile 40%

importers were EU,US and

% Share of World Imports

Russia and Turkey also 5%

Fig 7 : Top Textile Importers - 2004

emerged as a significant import destination for textiles.

Intra-EU trade accounts for almost 75% of EU textile

Fig 8 : Top Apparel Importers - 2004

-10.00% 0.00% 10.00% 20.00% 30.00% 40.00%

Source: WTO Trade Statistics & Technopak Analysis

Fig 9 : T&A Import CAGR (1995- 2004)

2.7 Top Textile Exporters

Data 1995 1998 2001 2004 CAGR

Source: WTO Trade Statistics & Technopak Analysis

Rise of Asian Countries

2.8 Top Apparel Exporters

biggest apparel exporter Table 3 : Top 20 Global Apparel Exporters

2.9 Overall Textile and Apparel Exporters’ Position

Fig 10 : Top Exporters in T&A–Market Share (2004) Fig 11 : Competition Matrix

China Leads Overall

2.10 Reasons for Trade Shifts

Macro level factors

prior to 2004 were factor

Micro level factors

material competency and

2.11 Rise of China – Case Study

15.0% In 1979, China decided to promote textiles as a leading economic priority.

Fig 13 : China’s % Share Increase

3. The Post Quota Era : 2005 - 2006

3.2 Post Quota Trade Scenario

Asia’s % share of US 100% Rest

Source: OTEXA Trade data & Technopak Analysis

Fig 14 : Post Quota - US Import % Share

3.2 Post Quota Trade Scenario

Turkey, Tunisia, Morocco 50%

Fig 15 : Post Quota - EU Import % Share