The global market for home textiles
The global home textiles industry is anticipated to US$ 70 billion with US and EU together calculating to US$ 30 billion. With US markets increasing at projected 5 percent and EU growing at 9 to 10 percent, they together stood with 70 percent of the world's total home textiles imports. Amid the non-quota countries, Japan, Australia and New Zealand are the largest consumers of home textiles.
According to survey by Mckinsey, the global trade in home textile is projected to increase from the current US $ 8.6 billion to US$ 23 billion in 2010.
Home textile includes products such as blankets, bed sheets, table cloths, cleaning and kitchen cloths, drapes, bed covers, sheers, wall carpets, sleeping bags, terry towel, mattresses, quilts, pillows, tapestry etc., which are utilized in the interiors of homes, hotels, offices, etc.
Major home textiles exporting counties are China., Pakistan, India, and Turkey. Worldwide the demand growth in the home textiles sector is accounted for about 6 percent.
Asian countries: India, China and Pakistan - the leading home textiles producer
By tradition, India has been sound in the yarn segment and Pakistan has just developed their capability in the home textiles segment, and the Chinese are focusing more on the garments business. Behind the three textile privileged countries, Thailand lost substantial contribution in the market with its shipments decreasing 39 percent in volume terms after doubling in 2004.
US home textiles imports for the first eight months (January-August 2005) continue to prove China's strong performance, compared to last year its shipments are increasing. Pakistani imports in January to August 2005 are also swelled compared to last year although not so strong as during January to July 2005. India carries on to be pressurized by its two rivals. China carries on being strong on the US home textiles market with 16 percent more shipments during January to August 2005 then for the same period last year.
China obtained a 70 percent market share for home furnishings products
Imports of home furnishings products that were removed from quota control on January 1, 2002, ( the comparative study of a survey report showed for these categories) Chinese share rose from 5 percent in 2001 to 70 percent as of June 2004, corresponding Chinese dominance in apparel products also removed from quota control. Contribution gained by other supplying countries decreased from 95 percent to 30 percent. Import market share decreased harshly for all leading suppliers with the biggest losses.
The growth in China:
The central manufacturing areas are Shandong, Zhejiang and Jiangsu. Shangdong, focused with the outstanding performance of Yantai, Qingdao and Wendeng. According to the research report, 58 percent of manufacturers raised the price, 31 percent remained unchanged and 11 percent of them lowered the price. Lots of companies are expanding the manufacturing capacity for home textiles products.
The Chinese home textiles industry has witnessed considerable increment in recent years. In the first five months of 2005, home textiles exports from China increased approximately 40 percent from the previous year, to reach US$ 2.2 billion.
US imports of home textiles from China further increased in August 2005, with Chinese exporters receiving new market shares of the US market.
China home textiles export in 2004 arrived at US$ 4.07 billion dollars. The removals of quotas on particular home textiles products in January 2005 made easier to accelerate export growth even further.
There are more than 3,000 home textiles merchants and producers in China, among of 80 percent have direct export right. Amid the exporting home textiles products, bedding articles took up 48 percent, towel 25 percent, curtain 19 percent and table cloth 8 percent.
Dominated by bedding, the largest category, reported US$ 2.9 billion in exports in 2004 posting a year-on-year growth rate of 52.6 percent. Home textiles exports of China are dominated by the products by bedding, towels, table linen and drapery. These figures omitted quilted products. The second largest export category, towels increased to US$ 1.2 billion clocking a 16.5 percent growth rate, while drapery exports calculated to US$ 912 million, increasing 40 percent. Table linen raked in US$ 372 million worth of exports, increasing somewhat by 20.7 percent.
However, due to the restriction of particular products may raise an alarm for the US and the EU market, ensuing in protective steps from the two regions. While China fixed to limit exports of bed and table linen to the EU, the US has started investigating the surge in shipments of drapery. If the quotas are reinstated, the limits could be settled by the last quarter of the year. Similar action on bed linen is also likely to be done from the US, as exports in the line raised by 77.6 percent in the period January to May 2005 from a year ago. .
The pros and cons of China
The following are some of the trends for China's home textiles export industry:
. Restrictions on exports to the EU will not significantly affect the industry, as the region reports for only 14 percent of total home textiles exports from China. Though, limits on shipments to the US, China's top export market for home textiles, could sluggish the industry's growth rate.
. In recent time many suppliers will raise prices. Though, most will limit the increase to 10 percent, mostly due to stiff competition in the industry. Some companies will even decrease the export prices, although by just about 5 percent.
. Many China producers have begun to shift to alternate markets in anticipation of the export restrictions. Shipments to Japan and Australia, therefore, should increase in the next six to 12 months. Some companies have also begun to raise sales to the domestic market.
. In order to make a distinction themselves from other makers, many suppliers are thinking to improve their in-house R&D capability, with latest machineries.
Besides a large turnover and exports in home textiles, China still does not stand with any famous home textiles brands in the global market. It is due to the lack of fine designers in the home textiles field; lower the aggressive approach of many domestic textile manufacturers especially compared with their overseas regions. But, still they are trying to increase their market share worldwide in the home textiles segment and manufacturers are attempting to set up close co-operative relationships with textile institutes to develop more capable and specialized designers and also Chinese domestic home textiles industry has been undergoing great changes.
According to experts in this field, they should make communication stronger and teamwork with textile institutes to build up talented designers. Otherwise, they will not be able to compete with overseas counterparts in the near future.
The future of Indian home textiles industry
KSA Technopak presumes India's home textiles exports to increase from $ 1.2 billion now to $ 5 billion by 2010.
A recent report by leading Indian market study firm states that the biggest prospects will be in the hand of China and India: the export trade in home textiles, which is calculated to grow with a growth of as much as 10 percent annually, from US$ 9 billion in 2002, to US$ 23 billion in 2010. This rise is observed due to the increasing unavailability of local manufacturers in the US and the EU, the largest home textiles markets which is calculated to 70 percent of the world's home textiles imports.
According to the report, India, China, Pakistan will increase market contributions on the strength of their cost-advantages. Italy, Turkey and the US are expected to lose out.
Product wise growth in India
India received third rank in January-July 2005 as a supplier, evidently losing ground on the volume market. Indian traders are shifting to higher-valued products in comparison with Pakistani competitors. Average price of imports from India increased 5 percent over the period to US$ 10 per item, sharply above Pakistani and Chinese prices and not far from Portuguese prices. India stays the second largest supplier in US$ terms, with its increasing share from 43.60 percent to 52.20 percent.
In the period between January to April 2005 (first 4 months post quota), India has gained its textile exports to the US increased by 27percent yoy from US$4.9bn to US$7.4 billion, further it observed 29.5 percent in the period January and June 2005. Exports in categories like pillow cases, bed sheets have noted extraordinary growth rates of 56.2 percent and 56.3 percent in the period January and June 2005. Exports of towels and bed spreads to the US are also increased, showing growth rates of 19 percent and 12 percent in that order.
The annual exports of home textiles in the India came to about Rs. 8,000 crores, covering Rs. 2,000 crores from Karur. This is estimated to increase to Rs.15, 000 crores at the national-level in another five years, and according to industry experts it needs roughly 300 more players in this sector, each with a turnover of about Rs. 10 crores.
The domestic Home textiles market in India is increasing at a very fast pace, while the export market in home textiles is soaring in India, the Indian home textiles exports perceived a growth of more than 300 percent year on year in value terms during the second quarter of 2005. Bed linen exports have reported an increase in exports of 600 percent year on year in volume terms. Anti dumping duty forced on Pakistan by European countries has made easier India's exports.
Looking to the requirements of the US and UK market of home textiles products, many Indian companies are diversifying or expanding in home textiles and there are enormous investments ensuing in this segment, a number of existed companies are spreading into home textiles. The increasing domestic market is appealing international companies too. Among the home textiles segments home linen is experiencing very good growth and more and more companies are being involved to this sector constantly.
Over the last six months alone, many projects of home textiles plants are in the pipeline. Hanil Era, a cotton spinning company is planning to make home textiles products. KG Denim is going to make bed-sheeting. S Kumars is planning a venture into this segment. A Kolkata-based company is going to establish a green-field project in home furnishings. Gujarat Fertilisers and Chemicals Ltd (GFCL) is also planning to enter in this segment.
Shital Fibres, India's biggest producers of blankets is operating at 100 percent capacity, making 10,000 blankets per day, is planning to increase its capacity further. The company has also planned a Rs 50 crore plant for bath mats, using chromojet technology that concurrently conducts all the needed processes on the mat, such as printing, rubberising, tufting, etc and this is the best technology used in the world market today, and provides very high speed in production with good quality. There are only 6-8 producers are using this technology, worldwide. The company at present produces 10,000-15,000 square meters of mats per day, and are using at 50 percent capacity.
Golden Terry Towels, the second largest producer of mink blankets after Shital Fibres, is scheduling to double production from the present 3,000 blankets per day.
Hanil Era is in the progression of setting up its home furnishing, bed-linen and terry towels plants. For the project, the company has imported 48 airjet looms and 24 projectile looms. The total project cost is projected to Rs 50 crore.
Mumbai-based Alok Industries has been recently expanding its home textiles business. It is doubling its sheeting fabric capacity from the current 37.5 million meters to 60 million meters. In addition, the company has establishing a completely new capacity of 6700 tones per annum for terry towel for catering to the increasing demand for the US and European markets.
K G Denim is likely to commission its home textiles plant by January 2006, and has already imported continuous dyeing machines and bedding machines for this project.
Through foreign currency convertible bonds (FCCB), GHCL Ltd has just raised $ 70 million; investing approximately Rs 230 crore in to home textiles sector to increase its capacity from 73,000 spindles to 1.4 lakh spindles annually.
Indo Count Industries Ltd. is now opening the home textiles division by establishing weaving and processing facility with a capacity to process 100,000 meters of fabric per day. Its total investments in this business will be to the approximately of Rs 4 billion and this will fully integrate the company's functions from spinning to producing end products, viz. bed linen, curtains and made ups.
Abhishek Industries - a unit of the Trident group of companies-has approved for a Rs 900- crore home textiles project in Bathinda. This is in addition to the unit the company plans to establish at Barnala.
S Kumars Nationwide Ltd, officially reported to media that it plans to invest around Rs 400 crore for expansion and diversification over the next four years which includes Home Textiles segment investments of Rs 80 crore.
Welspun plans to establish 40 of its "SPACES- Home & Beyond" stores by 2006.
Need to understand global home textiles market and widespread
For Indian suppliers there is still need to understand the home textiles market trends with its various segments. There is a lack of understanding and lack of clear strategy for the Indian home textiles manufacturers as they are following.
According to the textile experts of India, there is huge scope for home textiles exports from India, but only if they can produce the right products. Many companies are going for the basic home products like bed-linen and terry towels. Other product segments like upholstery, curtains, furnishings, etc are ignored. Where some Industrialist believes that Indian home textiles exporters should focused on those product categories where China is not using. At present, Indian companies are emphasizing on two products - cotton bed-sheets and terry towels. There is polyester-cotton bed-sheets that India is completely failed to notice.
In the hassle of prices, India instead of looking at sub-sectors where China is not competitive is moving into the same sub-sectors where China has an upper hand. This is the strategy that was abided by the US, where the US producers abandon the manufacturing of difficult products, and determined the basic segments, built up extremely well-organized business models in this. Though, the US industry could not stand against the up coming low cost countries. As in contradiction this, with the appearing as low cost economies, Europe begin decreasing production of basic items, and targeted on very high value, specialized items.
Though the stage of intelligence and education is to a great extent in the Indian industry than of China, this should be utilized to the greatest level. Indian companies can recognized better the requirements of the buyers, and can strategize correspondingly. This is not observed in China. The companies there directed for a very short-term objective. This could show a weakness for the Chinese.
For Indian companies there is need to collaborate and work with design houses like Calvin Klein, etc, who are always puts their efforts with something new and different. Catering to niche sectors will need lots of R&D, and that is unnoticed by the Indian industry. Only about than 5 percent of the Indian household sector would use branded home textiles, which include Bombay Dyeing, Welspun, Creative, Harmony, Seasons, Zeba, Yamini, Shyam and Ahuja etc.
Besides the largest textile consumers in US and EU, there is a huge market in Australia, Japan, etc. and there is another 300 million consumers in the upper segment of the market in the large Asian cities. There is this whole market which can be acquired. The EU home textiles demand is more or less in slow-moving now and stressing in prices. European consumers particularly require smaller lots and large variety. Furthermore, Indian handwork and handprints are demanding globally and India can utilize this strength for further development and growth.
The segment, which has till now been recognized as unorganized, is appealing to investment from outfits that are betting big on export growth.
Also many US companies are closing down due to high operating cost and so much of demand will have to be met by foreign suppliers. With in last two years' time US textile retailers like Pillowtex, West Point Stevens and Dan River have weaken, there fore a large gap of market will exist to fill up - reported the Indian textile players. This denotes that 70,000 to 80,000 tones of the US towel market is up for seized and presents a large prospectus for Indian exporters.
There could be marketing tie-ups, like what Welspun has accomplished in the US. The Indian companies must recognize to be successful in the global market; they will require investing on marketing.
Countries like Turkey and other East European countries are turning into important sourcing hubs for Europe and US. Indian exporters have to effort in the direction of better marketing of their products. While some in the industry have started doing this by setting up warehouses in their main export markets, or establishing distribution centre, this is restricted only to some of the big exporters. There is still need to increase marketing efforts in this segment.
India, emerging as a prospective market
With increasing incomes and exposure to western lifestyles, Indian consumers are spending huge amounts (anything between US$2,000 to US$30,000) on embellishing their homes, of which nearly 20 percent is calculated for by home furnishings and home textiles, still there is a huge demand for various home furnishing products in Indian market.
To satisfy the customer demand on quality, price and delivery schedules, the manufacturers have to go in for latest technologies. A minimum investment of Rs. 150 crores is required for a home textiles unit with weaving, processing and stitching facilities.
Recently, Hong Kong merchants were evident in number at the two (Heimtextil and Intex) recent trade shows arranged in Mumbai, and Hong Kong and Chinese mainland textiles and home furnishing producers have started seriously exploring the Indian market, choosing that this could be a noteworthy source of sales if tapped in the right manner.
China is managed very strong competition to India in the export markets in the US and Europe. According to some exporters of silk furnishings China is the leader in this market, and the price differentiation here is near about 30 percent to 40 percent. Indian exporters of silk furnishings have to focus on value-additions, but the silk yarn has to arrive from China.
Retailers like Shoppers' Stop already imports a huge quantity of their home linen collections from Hong Kong, the Chinese mainland and Thailand.
Besides these advantages to Hong Kong and Chinese companies there would still to make more effort by them, because they do not have proper network to reach out to the Indian consumers, and this would further add to costs.
The Noida-based Hanung Toys and Textiles Limited is planning to invest Rs 100 cr to expand its business in both the India and abroad in the next coming 5 years. The company, which offers soft toys, bed linen and other fabrics started garment manufacturing 3 years back and exports around 90 percent of its merchandise.
In recent times the world's top designer clothing chains, the US$ 400 million Brandix group, Sri Lanka's largest exporter, is setting up India's largest integrated textile factory in the proposed special economic zone at Atchyuthapuram in Visakhapatnam district so the competition will increase in the domestic as well as international market.
Amid, this changing scenario in home textiles in India as well as International market, Indian home textiles manufacturer must have to draw proper segment / sub-segment wise strategy to succeed.
Pakistan: Home textiles' export growing
US imports of cotton bed sheets increased in the first seven months of the post-quota period with Pakistan benefiting from a superior swell in shipments than China, thanks to a sharp decrease in its export prices. India and Thailand were the main sufferers of the Pakistani accomplishment on US market.
A drastic change may now be seen on US import market for cotton sheets in category 361. After just increasing 17.50 percent in 2004, in volume terms, shipments almost doubled in the first seven months this year.
In value terms US imports also increased from US$ 324 million in January-July 2004 up to US$ 537 million in the same period of 2005.
Pakistan gained the main advantage of quotas' removal with a 539 percent jump in US imports from this country in volume terms. Pakistani manufacturers possess a 25 percent share of EU's market.
On bed linen The European Union imposed anti-dumping duties of 13.1 percent imports from Pakistan for a five-year period, effective from March 2005. With quotas being detached from next year, Pakistani exporters will face more problems in expanding their share on EU's market while Turkish competitors will have some relief.
They in fact established sharply cutting prices on the US market to resist Chinese competition. Average unit value of imported Pakistani sheets decreased from US $6.97 per item in January-July 2004 down to US $4.53 in the same period this year, a 35 percent decrement.
By comparison, Chinese prices reduced by 37percent to US$ 6.94 per piece. Pakistani prices stayed 35 percent below Chinese prices, as an outcome Chinese shipments also increased, however increasing 290 percent in volume terms over the period. China's contribution of the US import market increased from 9.36 percent to 18.83 percent while Pakistani contribution jumped from 11 percent to 36 percent.
According to government report exports of textiles and clothing have increased 10 percent since December 2005. Highest growth has been observed in Pakistan's most competitive products, with raise of 29 percent in bed linen and 20 percent in cotton cloth. Bed-linen exports last year brought foreign exchange of $ 1.2 billion.
The Pakistan's most important home textiles segment, the linen, has gain good growth, as more companies are being attracted to this sector. There is large opportunity for home textiles exports from Pakistan, many companies were expanding in basic home products such as bed-linen and terry towels.
There are about 200 textile and clothing companies listed on the Karachi Stock Exchange.
Textiles and clothing contributed 60 percent of Pakistan's exports and employs half of the industrial workforce. Pakistan was raked as the world's eighth largest exporter of textile and clothing products, behind India, Japan the EU and USA, in 2003.
All existing manufacturers and exporters were operating at full capacity and many cotton-spinning companies were also moving into home textiles as they saw opportunities and further growth. If there was no change in the situation, the companies operating at full capacity would increase their capacity.
Export of home textiles from Bangladesh in the EU market accounts to 131.75 million euros in 2005 while Pakistani exports of same product line are as high as nearly 1.21 billion euros.
Recently Bangladesh government has recommended tax-free environment to the textile manufacturers of Pakistan. In a recent meeting with the Pakistani delegate, Chairman Bangladesh Board of Investment, Mahmudur Rehman said to media that in the next five years the country required an investment of $3 billion in textile sector. He hoped $1 billion investment from home textiles sector of Pakistani manufacturers.
Turkey is importing a lot of grey fabric from Pakistan, and then processed it and converting it into home furnishings, etc and exporting them to Europe at high prices, If Pakistan can build up similar processing capacities they can also get good recognition in the market.
Recently Philippines' textiles production was attaining new records in 2005 and had recorded a remarkable growth as they imported cotton yarn from Pakistan.
Lately, in an informal meeting at the Governor House, JC Penny has decided to double its home textiles products and readymade garments imports from Pakistan in two years.
Pakistan textile manufacturers believe the noteworthy growth in fabrics and home textiles such as bed linen since the ending of the quota system has occurred due to the investments made by firms in preparation for the ending of the Multi Fiber Agreement. Its economical benefit in these categories has come from its ability to acceptance of the latest technologies faster than its competitors.
Home textiles market in Bangladesh
Fabric and home textiles exporters of Bangladesh have been realizing tough time in recent months with their exports to Europe, decreasing since the quota phased out from January 1, 2005. Latest statistics given by the European Union (EU), during January-September 2005 Bangladesh's export of fabrics, towels and bedding decreased by 8.9 percent in volume and nearly 5 percent in value. Throughout the period, Bangladeshi exporters shipped 47.25 million kg of home textiles and fabric to 28 target places in Europe, earning 32.76 million euro. Market contribution of Bangladesh that supplies low cost textiles, covering bedding and towels to European places shrunk to 1.4 percent in 2005, in opposition to 1.5 percent in the previous year.
Industry experts said European buyers were stepping up to China for sourcing such products, even though Bangladeshi exporters provide cheaper rates.
China's textile export to EU increased by 28.4 percent in volume in January-September 2005 compared to the same period of 2004, with market contribution increasing to 14.3 percent, the EU trade figures show. A large sum of 78 percent of the country's export earnings achieved from textiles and apparels. Bangladesh remained in the category of supplier of cheaper products focusing mainly on low cost segment. Bangladeshi exporters have been confronting strong price competition there from Pakistan and Indian bed sheets and more intensely from cheaper Chinese products.
Hong Kong Home textiles market
In 2003, The U.S. was Hong Kong's second largest supplier of furnishings, curtains, sun blinds, bedding, and carpets; exporting US $15 million worth of home furnishing products to Hong Kong.
Imports of textiles calculated to US$ 259 million in 2003. China was the biggest supplier, (75 percent) followed by the U.S. (6 percent), the E.U. (5.5 percent), Thailand (2.5 percent), and Japan (2.2 percent.) Bed linens, table linens, and kitchen linens were the main category imported textiles (50 percent or US$129 million) in Hong Kong in 2003. The other important categories of imported textiles were: carpets and other textile floor coverings (US$ 66 million); other furnishing products (US$ 23 million); blankets (US$ 20 million), and curtains (US$ 14 million.) Hong Kong's imports of textiles reduced 8 percent in 2003 compared with 2002 as both consumers and institutions (hotels and serviced-apartments) reduced their demand.
There was a 20 percent reduction in textile imports from the E.U. in 2003. Imports of textiles from Japan rose 15 percent to US$ 5.8 million. This upsurge achieved mainly from curtains, which grew from US$ 66 thousand to US$ 257 thousand, and from carpet tiles. Imports of textiles from Thailand increased 38 percent to US$ 6.4 million in 2004; popular brands of Thai furnishings cover Jim Thompson and Almeta.
The U.S. is the second largest resource of imports of textiles for Hong Kong, after China. Imports of textiles from the U.S. calculated to US$ 15 million in 2003. The most important categories of textiles that Hong Kong imported from the U.S. in 2003 were: carpets and other textile floor coverings (US$ 13 million); bed linens, table linens, kitchen linens (US$ 1.3 million); awnings, sun blind, tarpaulins (US$ 0.4 million); and curtains (US$ 0.3 million).
Home textiles continues its strong growth in India and the burgeoning Indian market for home textiles is attracting a number of foreign companies. A large number of Chinese companies are targeting the Indian market as the prices of the Chinese home textile products - mainly curtains, cushion covers, duvets, bedlinen, etc are all very competitive. While the Chinese products are good, and so also the prices but with the import duties the prices go much higher, and do not remain attractive. There is immense scope for home textile exports from India, but only if they can manufacture the right products. Many companies are expanding in the basic home products like bedlinen and terry towels. Other product segments like upholstery, curtains, furnishings, etc are not really getting that much attention. The going is good now, but competition from China is very strong. India should focus on high value items, where China does not operate to stay ahead in the competition.