IMPRESSIONS from a Cross-section

The biggest challenge to our industry is the failing economies of Europe and the US, which are the biggest consumers of our products. Less spending power for consumers means commodity items get rationed resulting in retailers and wholesalers wanting to reduce inventory and cut costs.

Unfortunately, this has not been off-set with the emergence of other high consumption economies. China, India, Brazil, Russia, for all their growth, still have a very limited middle class with adequate spending power. However, as domestic production prices in these countries rise, there should be a trend towards them, importing the lesser value-added goods, like commodity textiles. Having said that, the demand for hosiery products is still strong, mostly due to the consolidation of wholesalers and manufacturers globally and closing down of inefficient units.

Changing trends and greater awareness from consumers has also played its part in changing the product mix, pushing the low-end product further down and improving the specifications and quality of middle to high-end products.

Pakistan still remains the primary producer for sports socks, due to its high quality locally produced cotton. Similarly, China still remains the highest producer of synthetic yarn products and dress socks. Other noteworthy players in the dress and high end markets include India, Turkey, Korea and now Vietnam. Eastern Europe is still cost efficient and logistically viable for the European market, whereas countries like Mexico, Honduras and the other Caribbean islands serve the same purpose for North America.

(Contd.)

Though there is a demand for highly technical and fancy products, the bulk of socks purchase is still classified as a commodity. Therefore, buyers tend to shift the production wherever they feel the cost of production is lowest and they can get a reasonable level of service. With most companies now having global supply chains, sourcing raw material or product and transporting it has become easier. This has led to further squeezing of margins on the production end. Increasing costs of local production and international transport have been greatly affected by oil prices, inflation, and stricter adherence to higher quality standards. The need for social and environmental compliance from all established buyers has also increased costs as companies now have to adhere to international as well as local labor standards. With all the increasing costs globally, retailers still refuse to charge customers a higher price or reduce their margins and Wal-Mart’s ‘Always Low Prices, Always’ has put increased pressure on manufacturers. High political instability and inconsistency in policy framework and energy crisis are also some of the significant reasons of lethargic progress.

The countries in the best position to grow in this market are the ones with fewest trade restrictions to the US and European markets. The granting of duty-free import to certain countries will result in their product becoming more viable and displacing more established players.

Despite all this, the future global market for textile and apparel is expected to expand in a significant way. The reasons for such expansion include growth of new consumption markets, global expansion of modern retail business, boom of air and sea shipments, growth of textile and related production in Eastern Europe, ex-Russian block, Turkey, Middle East, South East Asia, India, China and South America.

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