business intelligence for an interwoven world overview of the global textile industry bangladesh...

BUSINESS INTELLIGENCE FOR AN INTERWOVEN WORLD

Overview of the Overview of the Global Textile Global Textile

IndustryIndustryBangladesh Cotton & Textile Bangladesh Cotton & Textile

Convention 2007Convention 2007Dhaka, BangladeshDhaka, Bangladesh


Topics To Be Topics To Be Considered …Considered …

• Global Trends • The Trade/Sourcing Outlook• Impact of China• Market Requirements for Quality Cotton


When Viewing Topics, Keep in When Viewing Topics, Keep in Mind ...Mind ...

• The worldwide textile industry is moving into a slow-growth period

• After years of explosive growth, the industry has matured

• China and the Indian Subcontinent have had a enormous impact on the global market for textiles


First, Let’s Establish a First, Let’s Establish a Baseline …Baseline …

• Current forces affecting global textile and apparel trade– Aggregate production/consumption– International trading patterns– Tariff reductions under WTO– Free trade agreements


There’s been huge growth in There’s been huge growth in worldwide textile consumption over worldwide textile consumption over

the years …the years …

1400

1600

2200

3893

9939

53609

0 10000 20000 30000 40000 50000 60000

1770

1800

1850

1900

1950

2005

Source: ICAC, Wool Bureau, UN/FAO/Globecot Estimates

Thousand Tons


… … but the rate of growth is but the rate of growth is slowingslowing

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1770-1800

1800-1850

1850-1900

1900-1950

1950-2000

1950-1960

1960-1970

1970-1980

1980-1990

1990-2000

2000-2010

2010-2020

% G

row

th

Source: Globecot Calculations


Worldwide cotton production Worldwide cotton production is concentrated in a few is concentrated in a few

regions …regions …

Turkey4%

Uzbekistan4%

Pakistan8%

India12%

Others26%

US17%

China29%

Based on Millions of 480-lb Bales2004/5 Projected Production

Source: USDA


… … the same goes for the same goes for worldwide polyester fiber worldwide polyester fiber

production, tooproduction, too

Jap/Tai/Kor25%

China35%

Oth. Asia19%

US8%

W. Eur.5%

E. Eur/Turk4%

NAFTA/Amer.4%

2006 in Billion PoundsSource: FEB


Asian mills consume the most Asian mills consume the most fiber …fiber …

Asia64%

Western Europe12%

South America6%

North America18%

Billion Pounds, Cotton, Synthetics, Wool 2006

Source: FEB


… … with the U.S. playing a greater role as an with the U.S. playing a greater role as an exporter of cotton….and China playing a exporter of cotton….and China playing a greater role as an importer of cottongreater role as an importer of cotton


Cotton yarn is mostly made in Cotton yarn is mostly made in Asia …Asia …

Source: ICAC; 2005/2006 forecast by ICAC


… … the same is true in cotton the same is true in cotton fabric.fabric.

Source: ICAC; 2005/2006 forecast by ICAC


Asia buys the most textile Asia buys the most textile equipment globally …equipment globally …

0

50

100

150

200

250

300

350

400

450

Africa NorthAmerica

SouthAmerica

Asia &Oceania

EasternEurope

WesternEurope

OtherEurope

1,0

00

Loom

s

Source: ITMF

(Cumulative Weaving Machine Shipments 1990-(Cumulative Weaving Machine Shipments 1990-1999)1999)


The largest apparel The largest apparel importers are in the importers are in the developed world …developed world …

0 10 20 30 40 50 60 70

Billions of U.S. Dollars ($)

U.S.

E.U. (extra)

Japan

Hong Kong

Mexico

Canada

Russia

Switzerland

Korea

Australia

Singapore

Norway

China

Source: UN (Imports in (Imports in 2004)2004)


… … while the largest apparel while the largest apparel exporters are in the developing exporters are in the developing

worldworld

0 10 20 30 40 50

Billions of U.S. Dollars ($)

China

Hong Kong

E.U. (extra)

Turkey

Mexico

U.S.

Bangladesh

Indonesia

Korea

Thailand

Romania

Tunisia

Source: UN(Exports in 2004)(Exports in 2004)


The other side of the equation The other side of the equation ……

The Impact of The Impact of ChinaChina


Current State of the Current State of the Chinese IndustryChinese Industry

• Key factors affecting industry growth:– Internal advantages

• Low-cost labor• Large raw material supply• Huge export platform• Growing domestic demand

– External factors• Foreign investment and technical know-how• Expanding global market (for now)


25

75

125

175

2002 2003 2004 2005 2006

In b

illi

on

s o

f y

ua

n

FAI

$4.6 billion

$10.5 billion

$13.2 billion

$18.56 billion

$23.68 billion

FAI in Textile Industry Sets FAI in Textile Industry Sets the Stage for China’s the Stage for China’s

Future GrowthFuture Growth


China Already has a Huge Share China Already has a Huge Share of Global Textile Capacity…and of Global Textile Capacity…and

RisingRising

05

1015202530354045

RingSpindles

O-ERotors

ShuttleLooms

Shuttle-less

Looms

CottonShuttleLooms

CottonShuttle-

lessLooms

Perc

ent


Overview of China’s Overview of China’s Textile IndustryTextile Industry

• Production expanding, but varies by sector• Fibers

– Strong competition for cotton from polyester staple

• Yarns– New growth after industry rationalization

• Fabrics– Slowly improving quality, improved export sales

• Apparel and made-ups– Strong export growth drives production, but the

future may be in the hands of Chinese consumers


China: Spinning Capacity China: Spinning Capacity and Spun Yarn Outputand Spun Yarn Output

0

10

20

30

40

50

60

1996 1997 1998 1999 2000 2001 2002

Millio

ns o

f S

pin

dle

s

0

1

2

3

4

5

6

7

8

9

Millio

ns o

f To

ns o

f Ya

rn

Yr-End Spindles Total Spun Yarn Output


China:China:International Trade International Trade

SummarySummary• Despite quotas in the U.S. and EU thru 2004 and more recent safeguards, China has rapidly expanded exports– But expansion comes after a period of flat

export growth

• For imports, China remains a dominant importer of basic yarns and fabrics– In particular, China imports heavily from

other Asian suppliers


China imports more cotton yarn than it exports

10,00020,00030,00040,00050,00060,00070,00080,00090,000

100,000

in t

ons

Exports Imports


China:China: Domestic Domestic Apparel ConsumptionApparel Consumption

• Although domestic demand is weak today, strong growth is forecast for the future– Urban apparel sales drive current domestic consumption– Rural consumers may take on greater role in the future

• If they do, apparel sales will skyrocket• If they don’t, apparel sales will increase based primarily on the

buying power of urban consumers

– Home textile sales will also be important based on continued expansion of housing in rural areas


China: Per Capita Annual China: Per Capita Annual Expenditure on Expenditure on Apparel/AccessoriesApparel/Accessories


China: China: Outlook for the FutureOutlook for the Future

– Trade• Growth in apparel exports will slow between

2010-2015, in turn, impacting production• Textile exports will increase through the end of

the decade, but then decline• Market saturation will begin to occur before the

end of the decade and accelerate towards 2015

• China will become an even larger importer of textiles – but also by 2015, China will be a major importer of finished apparel


China Becomes Dominant China Becomes Dominant Supplier of U.S. Apparel Supplier of U.S. Apparel

ImportsImports

0

2

4

6

8

10

12

1995

2000

2005

2010

Bil

lion

SM

E

Domestic Mexico CBI China


China Will Have Rapid China Will Have Rapid Apparel/Made-Up Export Growth Apparel/Made-Up Export Growth

Thru 2010Thru 2010

05

101520253035404550

1992 1995 2000 2002 2005 2010 2015

Bil

lio

n U

S D

oll

ars

Apparel

Made-Up


But Will be Tempered by Rising But Will be Tempered by Rising Chinese Imports of Apparel, Chinese Imports of Apparel,

Replacing Domestic Output Over TimeReplacing Domestic Output Over Time

0

2

4

6

8

10

12

1992 1995 2000 2002 2005 2010 2015

Billio

n U

S D

olla

rs ApparelFabricFiberYarn


So what do these changes So what do these changes mean for textile producers mean for textile producers

around the world?around the world?

For one thing, textile mills For one thing, textile mills will want to run better will want to run better

cotton.cotton.

Why?Why?


Spinners Around The World Spinners Around The World Demand Better Quality Demand Better Quality

Cotton …Cotton …• Competitive advantage• Supply chain looks for it• Options can be limited

depending upon price and supply


So What Do Spinners So What Do Spinners Say About Cotton Say About Cotton

Quality?Quality?


Cotton Board SurveyCotton Board Survey• Recently conducted by Globecot with

more than 100 spinners around the world

• Survey results provide insight into those issues that will most likely affect current and future fiber processing requirements

• Also, survey results provide valuable insights for maintaining the export business


Expansion of Asian Expansion of Asian textile industry textile industry

necessitates high necessitates high quality for cotton quality for cotton

• Longer staple length• Better color, lower contamination• Improved inspection procedures• Better delivery• Transparent business interactions


Issues With U.S. CottonIssues With U.S. Cotton

• Quality cited as an important deterrent to buying more U.S. cotton– Stickiness– Small problem has much

wider influence


Issues With U.S. CottonIssues With U.S. Cotton• Staple length can be an

important deterrent to buying more U.S. cotton– U.S. Memphis/Eastern crop has

historically moved to domestic mills

– But with downsizing of domestic industry, growers forced to find new business off-shore

– However …


Issues With U.S. CottonIssues With U.S. Cotton• As overseas spinners have

upgraded their equipment, they tend to run longer staple cotton– SLM 1-1/16” had been the standard– M 1-3/32” is the new standard– Most spinners overseas know

relatively little about Memphis/Eastern

– Had to sell at big discounts


Survey Question:“What factors would prompt you to

buy more U.S. cotton?”

• Improved quality: 62.12 %

• More familiarity with U.S. growths: 56.93 %


Concluding RemarksConcluding Remarks• Global shifts in textile production … driving

shifts in cotton purchasing patterns• Requires close attention to quality, price

and varieties• In the long run, U.S. cotton export sales will

not just support global textile exports but rising domestic textile consumption in China and elsewhere


Concluding RemarksConcluding Remarks• China’s growth will be offset by

declining consumption in the developed world

• Further changes to the global textile business will be affected by changing demographics– Age– Buying power


Concluding RemarksConcluding Remarks• China will only be a textile export

juggernaut for a fixed period of time … perhaps 10 years, 15 years?

• In order to maintain market share, suppliers will be forced to evaluate their focus on quality versus quantity– Choice of production– Future viability at stake


Concluding RemarksConcluding Remarks

• Will new free trade agreements accelerate global shifts in the textile business?

• Biggest wildcard: How will China “The Consuming Nation” alter the global textile business?

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