The global trade in textiles and clothing has been steadily increasing over the years and has witnessed a growth of 4.35 percent during the last 10 years. The demand side of trade has been highly tilted in favor of the European Union (EU) and USA. Together they contribute an import demand of over 36 percent. The share of EU imports of T&C in the world is around 18.55 percent, while the USA commands an import share of 17.53 percent. The European Union is one of the largest textiles and clothing markets in the world. In the recent past, the clothing imports of the EU are growing rapidly since the manufacturing nations of the EU have shifted their production base to produce more value-added technical textiles and non-woven. This has influenced the clothing manufacturers of the world to cater to the needs of the EU aggressively. Each and every textiles and clothing manufacturer in the world is vying for some share of this market. The EU imports of T&C are mostly met from Asian suppliers such as China, Turkey, Bangladesh, India, and Pakistan. The major products supplied are T-shirts, trousers, jerseys, brassieres, baby's garments, made-ups, and so on. Most of the products belong to the cotton and man-made category, though a small amount of products from silk and wool are also exported. About 73 percent of the EU imports of T&C are met from these five suppliers. So far as clothing is concerned, about 75.82 percent of clothing exports valued at 70.64 Bn. USD comes from these five countries. The dominance of the Asian suppliers in the EU market has been complete and stable.

The paper examines the competitive strength and sustainability of these Asian suppliers in the EU market. As the data indicates, the countries in the Asian region produce similar products and hence exports are also in similar products. The paper, therefore, analyzes the similarity of textiles and clothing exports with respect to the top 5 countries exporting to the European Union; i.e., China, Turkey, Bangladesh, India, and Pakistan and why these countries will remain sustainable in the future. Sustainability will require the availability of the resource base in the manufacturing country itself or has the facility to supplement through the supply of raw material by the partner countries in the region. The analysis of the top five countries' export performance has been examined in the perspective of their strength in the EU market in terms of export shares, competing or complementary interests among these countries, and export competitiveness as evidenced through the Export Similarity Index (ESI), Revealed Comparative Advantage (RCA), Unit Value Realization (UVR), and resource base. The study covers the period during 2003-2012 at the sector as well as product levels, and the analysis is carried out at the 6-digit Harmonized System (HS) level. The analysis is based on product-level export data from the major exporting countries to the European Union (EU) classified according to the HS 2002 nomenclature. The database of the World Integrated Trade System (WITS) has been used to analyze the performance of the top exporting countries in the EU market as well as resource availability.

The State of Play


Most of the countries in the Asian region have been producing similar products and that too from the cotton as well as the man-made fibres. It may be mentioned here that the countries like China, India, and Pakistan are the major cotton producers of the world. Similarly the raw material for the man-made produce is also produced in the Asian region. In view of the above, the countries in the region produce cotton and manmade related products. The export similarity index establishes the fact that these countries are exporting and competing in several similar products in EU. For example, Turkey faces strong competition from Bangladesh and India. More than fifty percent of the T & C product exported by Turkey has been facing competition from the similar product export of Bangladesh and India. China and Pakistan have also competed in the similar products with Turkey. The completion in Textiles has been less intense but it is significantly fierce in case of clothing. Turkey faces 61 percent similar product export from Bangladesh while it is 56 percent with India. Bangladesh and India also compete in almost 47 percent of the clothing export to EU. Turkey also faces competition with China in more than 48 percent similar product export. The major products supplied by these competing countries are T-shirts, trousers, jerseys, brassieres, babys garments, made-ups and so on. Most of the products belong to cotton and man-made category though a small amount of products from silk and wool are also exported. Top twenty imported products of T &C happen to be from clothing with an export value of $ 51.47 Bn. in 2012. The export value of China in this category stands at USD 19.5 Bn. followed by Turkey (USD 7.25 Bn), Bangladesh (USD 8.78 Bn), India (USD 3.09 Bn) and Pakistan (USD 1.19 Bn). China remains the undisputed leader in 16 of the top 20 product imports of EU followed by two products from Turkey and two from Bangladesh.


Will Asian Clothing Suppliers Sustain in EU Market?


Competition to capture a pie of the EU market has always been the dreams of the world T &C suppliers. The sustainable supply means a cheaper, quality and timely delivery of the goods to the importers. This is again plausible if countries have enough raw material resources at their disposal to produce final products at a cheaper rate. The unity value realization (UVR) of the countries compared to western country suppliers stand much lower and competitive. In order to further ascertain the sustainability of these countries, we investigated into the raw material endowment of these countries, since this will play a crucial role in the competitiveness. The top 20 clothing products exported to EU has 50 percent cotton fibre products, 30 percent man-made fibre products and 15 percent other textile material products. Except Bangladesh, the other four Asian countries produce good amount of cotton and are engaged in cotton textiles production. Besides producing a sizable amount of cotton textiles as well as the manmade textiles, India, China and Pakistan relies on the imports of some raw material so as to enhance the reach of its clothing exports. China which is known as the supplier of the world is the leader in the production of cotton textiles as well as has manmade textile producing facility at its disposal to serve the ever increasing demand for clothing products in the world. It may be noted here that in 2012, China is the importer of both cotton and manmade textiles. It imported 69.72 percent of the global imports of cotton textiles and 20.31 percent of manmade textiles. Also, Turkey is the largest importer of man-made textiles from the world and Bangladesh largest importer of cotton textiles. In other words, the raw material source is very strong in these countries.

 

The major importing partners of cotton textiles of these three countries are United States, China, India, Pakistan, etc. The major resource partner for Bangladesh is Uzbekistan which had supplied 26.68 percent of total requirement of Bangladesh from World. The other major import partners are India (16.56%) and China (16.16%). Similarly, the major import partners of cotton textiles for India are China (25.74%); United States (15.86%) and Egypt (10.23%) while for Turkey, United States, Pakistan and Greece are the major suppliers of cotton textiles with the share of 27. 55 percent, 10.35 and 8.13 percent respectively. United States with 20.66 percent share is the leading supplier of cotton textiles to China followed by India and Brazil with 14.80 percent and 13.95 percent share respectively. Similarly, India (26.98%), United States (25.48%) and Brazil (11.14%) are the major cotton textiles exporters to Pakistan. In case of manmade textiles imports of these countries, China is the major supplier. It supplies 40.36 percent of the total requirement of Bangladeshi clothing industry, 35.26 percent of Indian industry and 17.41 percent requirement of Turkish clothing industry. Taiwan with 25.29 percent share is the leading supplier of manmade textiles to China followed by Japan and Republic of Korea with 23.28 percent and 16.63 percent share respectively. Similarly, China (42.20%), Thailand (8.46%) and Taiwan (7.56%) are the major manmade textiles exporters to Pakistan.


Against the background, it is clear that these Asian countries will remain sustainable in their supply in EU. Majority of the Asian players have entered into free trade agreements/comprehensive economic co-operation agreements etc in order to maintain the resource base as well as to remain sustainable in the ever competitive environment in the world. Except China all the other countries have strategically partnered with the major resourceful nations. These FTAs will boost the competitiveness of these countries in the EU market as the partner countries are producing cotton/manmade textiles which forms major constituent of the clothing production. Besides this, Bangladesh being a Least Developed Country enjoys zero tariffs for exports, which will add to the sustainability of its clothing products in the EU market.

 

Conclusion


The clothing imports of EU are growing significantly since the manufacturing nations of the EU have shifted their production base to produce more value added technical textiles and non-woven. This status quo for the coming years will certainly boost the appetite of the clothing manufacturing nations to try to grab the larger pie of the EU clothing market. The Asian biggies will certainly benefit out of the situation in the near future. In order to be sustainable in the EU market, the Asian biggies besides having strong production base entered into free trade agreements with major cotton/manmade textile producing nations. The overall performance of these countries in EU market is likely to flourish in the near future. For Turkey, the high-tech machinery coupled with strong fabric production base, the sustainability of export share of clothing items is inevitable. Besides this, the European consumers are more inclined towards purchasing Turkish clothes due to geo-political reasons. In Indias case, with the strong raw material base along with cheap manpower will boost the competiveness of India in the EU market. In case of Bangladesh, cheap manpower and its Least Developing Country status will catapult its position as the largest exporter to EU just after China. China being the dominant player and having strong resource endowments will remain as the leading player in the market. Hence the Asian clothing exporters will remain sustainable in EU market for long.