Apart from the trivia of the triple catastrophe that smashed up Japan, the commercial deterioration which is an aftermath is currently major concern for the country.


The incessant disasters that struck Japan have crushed its economy, and as an aftermath is sending shock waves round the globe. The global apparel supply chain has less impact comparatively over other automotive and electronics sector. Despite the intensity, clothing firms may be caught in the fall-out of the events. Industry analysts believe, this might possibly affect the existing Government debt, shrinking labor force, and weak consumer confidence.


Though Japan is not at par with its counterparts such as India, and China, still textile manufacturers in the region are likely to get the impact. Factories remain shut, transportation is crippled, and there is more migration from the radiation zones. Ports and airports remain closed, and logistics is also affected. Impact of Japans disaster on the global supply chain; though small is likely to exist.

 

Japan was just recovering after a 20 month deflation period, and recession. Annual GDP of Japan grew positively by 4% during 2010,when the disaster struck. Euromonitor reports World Bank stating that Japans GDP for 2011 would get affected by 0.5%. Economic growth would recover by the endow 2011.


Japanese denim is preferred by companies like Diesel, for making high-end denim with woven edges, and deep indigo hues. This denim yarn also requires dipping up to30 times in indigo dye to give the deep blue shade. Some small brands that are manufactured in Japan will also have the impact of the crisis.

Japan had been a pioneer in textile manufacturing, eco friendly clothing and dyeing. The country specializes in making eco friendly garments with silk crepe fabric. Some manufacturers from the affected region manufacture eco friendly apparels which are exported to New York. Japan is a major supplier of high-tech fibres, with the exports increasing by 29% during the previous year. This will receive a blow, till the country takes time to recover. Euromonitor reports that retail apparel sales fell by 8.5% during the economic downturn from 2008-10. A further decline of 1.7% is expected for the current year.


While small brands will see a deeper impact, Japans current situation is not likely to affect store closures for big brands such as Louis Vuitton, as Japan does not have a big market for foreign luxury brands. Other brands such as Gucci, Burberry, and Coach, though have market in Japan, are not much affected as their focus is now turning towards other Asian countries such as Singapore.


The nbcnewyork reports James Lawson a director at Ledbury Research London speaking with WWD, As a marketplace, it is certainly less significant than even five years ago: Japan represents around 10 percent of global luxury good sales currently, down from closer to 18 percent in 2001. Similarly, prices of cotton, does not have the probability to increase, as a major portion has shifted to China and Pacific Rim countries.


Natural disaster results in supply disruption. Tradesmen in Japan can turn towards banks to cushion the fall. What banks can do is to print money, but cannot make up for the limited supply. The fear caused by Japans natural disasters is getting lost in the rubbles, due to the shocking aftermath of financial and trade issues. Though for a short term and small, when compared with other industries, global apparel industry, and its supply chain has received the jolt of the calamities. It is positively believed that Japan has the ability to recover from the current crisis soon, rising to the position of making textiles with innovation, quality, and style.


References:


1.      Nbcnewyork.com

2.      Euromonitor.com

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store.japan-zone.com