By: Fibre2fashion.com


Traditional hand work, which rely mainly on orders from abroad, have become the latest victims of the global economic downturn, as workshops being shut down, businesses going bust, and workers losing jobs. In many villages the collapse of these crafts has become intertwined with the life of local people.


Fibre2fashion has taken initiative to highlight "Effect of Global Downturn on Handloom and Handicraft Industry" by taking views from people involve in this business and from association who are working in this industry.

 


Vietnam has a very vibrant handicraft industry and the roots of the sector are spread across the country from urban to more particularly the rural areas. In fact it is the rural areas more so, which are helping in keeping alive the age old traditions in the country. Exports of handicrafts are also doing very well, thanks to these artisans. Handicraft exports in 2007 stood at US$824 million. But the artisans are facing a very piquant situation, wherein, they are running out of raw materials for creating the exquisite handicraft products for the export markets and for which they are famous, all over the world. Added to this, is the economic crisis which is making things more difficult for the sector. There are over 2,000 small and big villages engaged in manufacturing of handicrafts; thereby providing employment to hundreds of thousands of people. The artisans are mainly involved in creating handicrafts from cloth, wood, rattan and bamboo. The main reason for the scarcity of raw materials is that the sources for sourcing the vital raw materials are drying up. Experts are suggesting sustainable exploitation of forests and its resources; otherwise they warn that in a few years time, there would not be any raw material of consequence left for the industry to survive. They suggest involving these rural artisans and teaching them the basic tenets of sustainability of these assets, so vital for their survival. The other most important speed breaker coming in the further development of the sector is the availability of credit to these handicraft units and artisans. Either the banks are not willing to provide credit to these artisans, or those who have access to funds from banks have to do with high interest rates which is one of the biggest stumbling blocks in the sector multiplying at a solid growth rate.


While speaking with fibre2fashion Mr. Le Khanh Toan - Director of Vietnam Handicrafts Export-Import told "there is no effect of recession on his business. His company have pending orders also but he also suspicious about future. At present he is exporting products to China, Singapore, Hong Kong and Europe." Even Mrs. Vu Dieu Chinh - Director of CTEX Company Limited told there no reaction till date of global recession, as she is working on order basis only, her company exports handicraft products to Europe, USA, Ireland and many other countries. Sales manager of Daiviet Handicraft Company Limited told us his company facing problem due to financial crisis. They are facing problem in getting new orders.


 

Visitors to Fiji are the main consumers of handicraft produced here. The trend is that when these tourists come to Fiji, they usually purchase small hand crafted items made of wood or something as memento. Fiji is a major stop over point for long haul ships. The main problem these days is the less number of cruising ships from Australia and New Zealand. However, the trend of yester years when Fiji was the thriving, Duty Free port selling to Australia and New Zealand is almost disappeared. The shopping festivities by the Kiwis and Aussies are no longer the craze it once used to be.


Himmat Lodhia, President, Fiji Retailers Association, told to Fibre2fashion, "This is mainly because of global recession along with high prices of products. Now these are easily available in Australia and New Zealand markets and at very competitive prices. So the thought and craving for the so called Duty Free items is all gone. The only room in such kind of shopping is general impulse buying." Thus, it is expected until and unless, more and more tourists start visiting the country, the sale of handicraft will not rise.




Kenya has been renowned for its traditional as well as innovative handicrafts that are popular in overseas markets. Tourism has also provided the necessary push to the sales as visitors take away these intricate handicrafts as small souvenirs. However, even this handicraft industry, which provides livelihood to thousands of locals, is experiencing the effects of global recession. While, the rising prices of raw-materials have sky-rocketed product rates, exporters are struggling to receive huge orders.


According to Export Promotion Council (EPC) statistics, trade in handicrafts has augmented over the years. In 2004, the export earnings were Sh556 million and in 2007, revenue surged to Sh760 million. This year, though, the council expects the income to plunge. Infact, several biggies are already expecting 30-40 percent decline in sales this year. Reportedly, the dealers have failed to attract consumers even in international trade-fairs and exhibitions. Experts say that as the purchasing power of the people in developed countries has weakened, demand for handicraft items like purses, handbags, traditional wear and home-furnishing accessories has shrunk drastically. Sources inform that EPC has been working hard to promote handicrafts by arranging participation in expos and fairs. Council is also taking other initiatives in the field. The commercial craft producers in the North Rift and Eastern region of Kenya are set to benefit from the EPC project on product development and market diversification. The project aims at expanding the base of products realized in the North Rift and Eastern Regions of Kenya and enhance their competitiveness. The venture is part of Councils scheme to enlarge exports by supporting new companies including Micro and Small Scale Enterprises. The products identified as crowd pullers under this project will then test marketed at the Ambient Trade Fair early 2009.

 


Indian Handloom industry contributes 13% of total textile production and ap proximately Rs.3000crores to Rs.3500crores per annum. The volume of Handloom Exports in monetary terms as published by Government of India up to 2007-08 (Tentative) Rs. 3353.7 crores which is reduced by 4.6% from previous year (2006- 07) export is Rs.3477.5crore. USA is main handloom export market for India as India exports approximately 37% of total production to USA only. The handicrafts industry of India, which sells 80% of its products to the US, has been hemorrhaging for sometime now. Data for the April-October period shows that handicrafts exports have slumped 66% on a year-on-year basis. Similarly, textile exports dropped 19% in 2007, against a growth of 32% in 2006


The world famous banarasi saree of India is also facing tough time. Prepared saris are not getting sold off like before and also export orders appear to have a downward trend.


Growth of cloth production by handloom sector also witness marginal slip from seven per cent in 2006-07 (April-March) to six per cent in 2007-08 (April-March). The cascading effect is that the textile mills are likely to cut production further by 20-25 per cent, while some units have been closed down with millions getting unemployed. Industry officials have estimated that 500,000 handicrafts workers would lose their jobs.


While speaking with Fibre2fashion Mr. Abid - Director of F & F Exports told "There is no demand of products in export market, companies are asking for samples only. Clients are coming on the basis of old relations only."He also told there is no pending order and its very tough to get new buyers.


Mr. Brijesh Mishra - Director of Swami Exports also facing same problem of getting new customers. He had changed payment terms, earlier his company asking 50% advance before delivery of goods but now they are giving liberty in payment terms.


To highlight Effect of Global Downturn on Nepal's Handloom and Handicraft industry, Fibre2fashion has taken a view of Handloom and Handicraft companies from Nepal.


Mr. Diwakar - Managing Director of Planet Exports shares his view by saying, "Till date no effect on business but can not predict anything about future as my main export market is USA. Apart from USA we also export handloom and handicraft products to Holland, Canada and European countries."


When asked, Mr. Bhola Nepal - Managing Director of Khushi Import & Export Company, he said "My Company is doing well in this crisis also, and we are getting order as we are getting before. There is no effect of Global crisis."

 



Fibre2fashion had talk with Mr. Dennis Orlina - Chairman of the Philippine Chamber of Handicraft Industry (PCHI) regarding Effect of Global recession on Handloom and handicraft industry of Philippines. Mr. Denis has also suggested few points to sustain in this financial crisis also.


He told "The handicraft industry in the Philippines must be one of the oldest industries and is generally community-based where network of families on a 'supply chain' relationship work together to fill in required orders. It's this nature of the industry why it remains to play an important role in the Philippine economy specifically its contribution primary and secondary employment and foreign exchange earnings, among others, as it provides livelihood opportunities to millions of Filipinos in the country side nationwide. Likewise, worth noting is its relationship to raw material (agricultural/indigenous) supply chain realities which impact on the overall (supply chain) matrix. A lot of care & sensibilities must be exercised in evaluating & forecasting effects of the global financial crises to the industry:

  • Market Realities - Essentially, as destination markets became or is in the inclination to be consumer driven, the issue of speed to market in terms of delivery (delivering products at the point of sale ... when customers are actually buying), & price becomes very relevant & compelling. Most goods are produced out of Manila (consolidation point including Cebu), such that an improved & more efficient inter-island transportation system is badly needed. Freight cost which is highest in the region exacerbates the situation as it impacts directly on increasing costs...subsequently affecting FOB sell prices. As the entire global markets generally shifts to buying less expensive products...value for money etc., with the perceived financial crisis hanging overhead, the conditions favor discounter stores. Unfortunately, Philippines' share in supplying these types of stores (market destination) is understandably minimal.

  • Moving forward directives - While design remains to be incremental in the overall product perception, using it as an excuse to market acceptance has so far failed to hit its mark. Reality even pushed famous name brands to adjust its market niching strategies to developed secondary ... less expensive product segments. Developing alternative markets can be viable outbound solution ... developing & improving supply chain infrastructure is most valuable inbound direction.


Latest GRDI analysis points to neighboring countries e.g. China, Vietnam, India, Indonesia etc. to be possible markets to tap as most of the global retailers are setting up operations in these destinations.


Agricultural/indigenous raw materials (and semi-process derivatives) abound in the country side and is continually being propagated. FIDA (Fiber Development Authority), a line agency of the Department of Agriculture, has been working heaven & earth to support industry requirements - improve fiber extraction methods & equipment, disease control & developing new areas for capacity expansion to service increasing demand for Philippine fiber variants e.g. Abaca etc.

The Philippines remain to be the number 1 abaca supplier globally (85%)... with neighboring manufacturing hubs e.g. China, Indonesia, Vietnam, Bangladesh etc needing much of these (fiber) resource for fibercraft production & other applications e.g. paper, tea bag, cigarette paper, currency, rope & cordage, textile etc including automotive composite parts.


The production of handloom abaca semi-process variants like the sinamay etc. are continually developed including improvement of looming machines, dyeing techniques & material combination. With the new areas of expansion being developed, it's with surety that Philippines can have great leverage in exports of these product lines".