Textile industry, today.
Now, in the second half of this year 2016, as a six-monthly balance, I would like to share with you the vision and expectations of professionals and businessmen of the textile industry that I was able to gather in the diverse presentations, conferences and fashion international fairs that I have attended.
Based on such information I am sharing some data that seem substantive and illustrate part of the current situation of the fashion supply and textile sector.
Fashion brands and large textile distribution chains are seeking to reorganize their supply chain.
A common goal that can be observed in most textile companies is that they are considering a range of concurrent options to improve their strategies in the supply chain in 2016.
Among those buyers looking to source from a new market, the vast majority are still searching in Asia. This is, obviously, because of the opportunities of finding lower costs than in other markets. The main prospected countries remain China, Vietnam, India and Bangladesh.
Even though Myanmar at the moment does not generate a really impelling interest for supply professionals, all indicators show evidence of an increase in imports from said country in 2015. Of course, the first to arrive, as always, are the “major industry players” and the others arrive following their steps.
Speed is the trend.
Given the success of worldwide reference companies in the textile industry, most fashion brands are trying to adopt a model of fast fashion supply chain. This is ratified in the growth of production in nearby locations at the expense of Asian origins. This situation clearly indicates that strategically the speed of response to the market if being privileged over the profit margin.
Chinese concern and versatility.
This new position of Western buyers along with the increase in textile production costs constitutes the main concern for the other side of the coin: Chinese suppliers. In general, they are pessimistic regarding the future of the textile industry in their country, highlighting the increase in wages as the most important factor for the loss of competitiveness.
In a new display of versatility and entrepreneurial ability, Chinese businessmen are expanding their investments outside the borders of their country, developing new productive structures in neighboring Asian countries. Under this new system, Chinese companies are seeking to remain competitive at a global level. Moreover, this process of production relocation generates a highly beneficial situation for the nearby developing Asian nations.
If the strategy is speed, the key to success in the fashion sector is logistics.
Currently, the most successful global companies in the textile sector are undoubtedly an excellent combination of sound commercial and production strategies plus an ultra-efficient logistics system.
Within the logistics sector consolidation is not only the trend, but it is also inevitable. It follows that sending merchandise will be easier and even faster, but may have a higher cost.
The logistics sector has changed rapidly in recent years, given that the most important companies looked for mergers o alliances in order to face adverse financial circumstances. The most recent and greatly significant merger was that of the two most important Chinese carriers: COSCO and CSCL. Other companies such as Maersk and MSC are collaborating under an alliance in order to reduce costs, instead of merging. An evident deduction is that the powerful mergers or the formation of strategic alliances are the future of the international logistics sector.
All studies and surveys in the sector agree in pointing out that, even though this trend is not new and it is becoming a usual practice, importers and exporters are worried about the mergers and alliances among companies. Despite admitting that the sending of goods would be facilitated, they also estimate that an increase in costs would accompany these mergers.
This reorganization of the logistics industry and an increase in costs are probably unavoidable given the current situation of the sector, but the impact on importers and exporters is not yet assessed.
The challenge is paramount and possible.
It is extremely easy to deduce the challenge. To be faster we must have efficient local vertical suppliers and an excellent logistics system that won’t make us waste the time gained in the productive process.
The good news is that today both goals are perfectly possible in textile sourcing.
Let’s do it and enjoy success! See you for the next article!
Article also published in the blog by Gabriel Farias in Modaes.es