The global economy is at a crossroads, poised to either continue its gradual comeback or once again slide backward. The key to pushing it forward in a positive direction is collaboration and jointly developing solutions that work for the entire supply chain.

The global economy stands in such a fragile state that it is poised delicately balanced between a slow recovery or a second slide. At this junction, it is important to sit collectively, analyze the current scenario, and jointly consider various future strategies. Continuous global crisis, high oil prices and turmoil & political instability is creating very huge concern to all business particularly Textiles as people when they are in crisis they indeed money on food but their expenditure on textile gets reduce to minimum as people even in the utter crisis always have clothes to wear.

Today the world population is more than 7 billion this is of course big news for textile industry but for some reason textile industry continuous to be in a slow mode and collectively everybody globally faces some problems. The fact is that we are now learning to live without the support of American market and European Market who has been big buying market for entire textile industry globally whether it is India, China, Indonesia, South Korea & Japan all value added products find ultimate destination in Europe and USA which are high value, highly fashionable and big consuming markets.

China continues to be the world leader in most of the fields and they have done it very systematically and with great planning.

China’s textile and clothing exports rose more than fourfold since 2000, compared to stagnant exports from other top exporting countries.

But China’s capacity development could be peaking. Government investment will ebb as competition weighs on the country’s mills.

More than 40% of the world’s production of clothing and textiles is in China and India. India and China are projected to become the largest GDP by 2050. Demand for global resources will create a crisis with dire consequences.

Demand for food and energy will jump 50% by 2030 and for fresh water by 30% as population tops 8.3 billion.

We expect consolidation to enter into an aggressive phase as companies pursue buying clout on the global market. The main pressure for consolidation is the price of raw material which is expected to decline as global stocks rise and competition from cotton synthetics continues to create more affordable options for mills.

However, now the good news is the BRICS Region is getting consolidated and ¾ of the world population is among the big BRIC Region including China, India, South Africa, Brazil & Russia.

All these countries together with their strength and weakness on one umbrella will do wonders collectively.

Most pressing issues in the textile industry, including capacity development, risk management, contract sanctity and trends in major and emerging markets.

Major challenges for the textile industry include:

  1. Dollar getting very strong & all Global currencies getting depressed.
  2. High oil prices
  3. Stagnant US economy
  4. National protectionist policies
  5. Greater importance of emerging economies
  6. Hunting new consumer markets
  7. Investment on product mix and research
  8. Hunting new low cost production facility

Priority challenge bringing back globalization process where we all were thinking taking advantage of each other strength and creating globe as one big market.

China’s initiative One Belt One Road is a great initiative which will change global dimensions it is ultimately 2 trillion Dollar investment over a period of 20 years will change global dimensions.

Ultimately bringing huge opportunities for hospitality industry, travel industry, medical industry and of course very large textile industry.

Very strong dollar globally upsetting financial equations and ultimately creating uncertainties and decrease in volumes. This strength is likely to continue.

US-China Trade War

The trade war between Washington and Beijing has been analyzed largely through the lens of state-to-state relations. But any attempt to fully assess how the dispute will affect China’s domestic development and foreign engagement must take into account the country’s dynamic middle class, which has suffered the brunt of the ill effects from the trade war.

The Chinese middle class’ political clout and fickle views are among the most intriguing and consequential factors affecting U.S.-Chinese relations.

Without a solid grasp of the complicated relationship between the Chinese leadership and the country’s middle class, American policymakers and analysts may have difficulty accurately gauging the efficacy of U.S. trade policy toward China.

Over the past few months, members of China’s middle class have been noticeably critical especially in online public discourse of the Chinese government’s economic and sociopolitical policies, including the way the leadership has handled relations with the United States.

Some suggest that this middle-class discontent threatens President Xi Jinping’s broader position and economic vision and indicates that the United States holds the advantage in the trade dispute with China. But the middle class’ views which are the foundation of Chinese public opinion more generally might be poised to turn in the Communist Party’s favor.

The interdependency between emerging economies and developed economies could thwart latent demand in major manufacturing centers, specifically in Southeast Asia. India will continue to be a major textile production center catering to huge domestic market. However, imports from China, Bangladesh are causing disturbance in supply chain however Government of India taking corrective steps and lot of favorable initiatives taken by Ministry of Textiles Government of India to improve production synergies and textile business model.

For more than half a century, Middle Eastern governments have used oil wealth to fund a system of economic patronage. These governments derive a substantial portion of their revenue from selling off national resources or bargaining for foreign backing rather than extracting taxes from citizens. In some countries, such as Saudi Arabia and the United Arab Emirates (UAE), the revenue has come from the sale of domestic oil resources; in others, such as Egypt and Jordan, they have come in the form of transfers from regional patrons with oil wealth. Throughout the Middle East, governments have used oil resources to fund stable jobs, education, and health care, and in return, leaders have received political submission. But as oil prices have remained low and the region’s demographics have shifted, that basic tradeoff has begun to seem unsustainable. Without the revenue necessary to continue feeding bloated, inefficient systems, governments are struggling to hold up their end of the bargain. Their primary source of political legitimacy is slipping away.

Middle East continuous to be a big consumer on textiles based on imports, major exporting countries to Middle East China, South Korea, Indonesia, Turkey, India, Pakistan etc and as the Middle East Economy is affected Textile Business also equally effected. However improving oil prices are bringing lot of relief, however it will take time as economy is adversely effected for last few years.

However, textile has to constantly do innovations and research should be the integrated part of textile industry today, investment of quality control should be every day’s assignment and new opportunity which are coming up such as Defense Textile, huge requirement of Camouflage Fabrics as size of Armed Forces increasing all over the world and for the safety of Armed Forces Personnel’s Camouflage Fabrics is must. Similarly coated fabrics, industry textiles have become very huge markets now. Application of textiles in medical sector, construction industry is getting increase every day.

The good news: Solid relationships with the entire value chain with constant communication mitigate risk on volatile prices.

The textile and apparel industry is buyer-driven and dominated by retailers, brands and sourcing companies. Retailers demand more full-package service from their suppliers, but they are reluctant to pay for additional services.

It is important in today‘s business environment to select customers who see you as partners. While prices are key in our industry, they cannot be the only criteria for a successful long-term business relationship. Reliability, expertise, quality and service are more important than prices.

Very critically if review of experiences we can very confidently say that the quality manufacturers who have followed high standard of manufacturing & innovation are still selling very well and expanding their capacities and they are very much out of any depressing situation. The Rapid pace of Economic integration among various countries has made Trade Relationship increasingly complex.

Today Global Trade has become a very complex exercise which requires tremendous study of trends, forecasting, political situation study and economical study as well before taking major business decisions.
Global Trade situations are getting more complicated every day because recession in various countries ultimately resulting in currency fluctuation. In spite of all these the business has to go on, trade has to go on and human beings will continue to wear clothes.

As one of my professor told me as long as child is born naked textile industry’s future is bright. Some of the figures down are examples, how in spite of difficult times business is going. Therefore, style of business may change, conducting effective business and trade may add Additional norms to survive and do well in critical times. Annual growth rate).

E-Commerce platform are turning out to be a big blessing for Textile Industry online sale is improving everyday this is eliminating middle man. We are observing great transformations in Amazon, Flipkart, Snapdeal, Shopclues and many other small platforms. This is also helping small manufacturers producing high quality stuffs.

Current times are tough but we have seen much harder times in the past.

Sourced & Compiled by:
Mr. Arvind Sinha
CEO & Chief Advisor
M/s. Business Advisors Group, Mumbai
Cell No. 9820062612
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