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Articles Of Interest

EU Businesses Find a Way Around Quotas
Page 1

South Africa & China to Sign Deal
Page 1

EU & US attack Counterfeits 
Page 1

Factory Strike Threats Remain 
Page 1

API Uncovers 8 Companies Involved in Illegal Transshipments
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July 1, 2006                                                 Issue #172

23/24

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EU Businesses Find A Way
         Around Quotas
Following introduction of quotas to curb explosive Chinese textile exports to the EU last summer, European textile businesses seem to have found other ways to import cheap clothing.
The EU quotas on Chinese textiles lead to mountains of Chinese garments pilling up at ports in what became known in the press as the "bra war."
But one year later the situation is completely different with as little as just one third of the quotas used up.
Import statistics show Hong Kong is now exporting more than the whole of China of the quota-covered goods.
The figures are so high it would mean the whole of Hong Kong would be working only for the textile industry, textile analyst Henrik Isakson from Kommerskollegium, the Swedish governmental agency dealing with foreign trade and trade policy.
"The degree of utilization of Chinese quotas are very low and everybody is wondering why. My theory is that a great deal of smuggling is taking place," said Ake Weyler from the Textile Importers Association in Sweden.
Textile exports to the EU have largely moved to other Asian countries. 
South Korean textile exports to the EU have risen 140% in the past year, Bangladesh exports grew by 47%, Indian by 37% and Vietnamese by 140%. 
But second to none is Hong Kong where textile exports to the EU have risen by 234% compared to last year.
"Everybody in the business knows that textiles from Hong Kong are manufactured in China," Mr Weyler added.
But it is hard to control all sub-suppliers and EU resources to control imports are limited. 


12/24  
Eight Arrested for Producing
     Counterfeit Clothing
Eight Chinese men have been arrested for producing fake branded clothing on a farm in Honeydew, South Africa.
Clothing seized was worth more than ZAR2m and bore counterfeited labels such as Nike, Reebok and Levis, according to a police spokesperson.
The suspects did not have any legal documents with them and now face charges of illegal immigration alongside the charges of making and dealing in fake goods.
The spokesperson said the men are likely to be repatriated to China after 
appearing in court.

                 
Models during an underwear and denim fashion show organized 
          by Bench in Manila coliseum on June 30, 2006. 
Bench is one of the biggest garments industry in the Philippines.


19/24   
South Africa & China To
            Sign Deal
China and South Africa are on the threshold of signing a deal limiting Chinese textile imports into South Africa for a period of three years.
The agreement, agreed by South African President Thabo Mbeki and Chinese Premier Wen Jiabao during a visit to South Africa, is still awaiting confirmation as negotiators finalize the detail.
South Africa’s Trade and Industry Minister Mandisi Mpahlwa professed himself happy with the deal, but admitted that negotiations had been difficult.
President Mbeki’s government has been under growing pressure to act over the country’s beleaguered textiles industry, which has been hit by cheaper imports from Asia.
Industry estimates suggest that 25,000 jobs have been lost in the industry in the past two years, but analysts have been urging a liberalization of trade relations with China, rather than simple protectionism.
News of the deal provoked a mostly positive reaction from the industry, 
although some pointed out that it was only a short-term solution, and did 
little to address the underlying problems in South Africa’s textiles industry.
               

9/12 
    Factory Strike Threats 
   Remain in Bangladesh
Clothing factories in Bangladesh’s Dhaka Export Processing Zone (DEPZ) are said the be up and running again after recent violence – but the threat of further strikes remains after workers rejected an agreement signed by the government, owners and trade unions.
The situation is still perilous a week after one worker was killed and dozens injured when demonstrations over pay and working conditions exploded into violence.
Sixteen garment workers’ organizations have threatened to strike within 72 hours unless a new agreement is signed, claiming they “do not own” the ten-point, tripartite agreement that was signed.
Their threat came after an emergency meeting held to discuss the agreement, which originally appeared to have ended unrest by promising an amnesty for workers arrested in the violence, improving workers’ rights and setting up a Minimum Wage Board.
People described as “outsiders” have also been arrested by security forces for allegedly promoting unrest among workers in the zone.

            
23/24
Wacoal Buys 49% Stake
       in Peach John
Japan’s second-largest lingerie business Wacoal has bought a 49% stake in a younger rival, Peach John, and is now preparing to bring the smaller company’s operations in-house.
Wacoal hopes to reposition itself with younger buyers through the John Peach brand, which has garnered thousands of young fans since the company’s inception by a young Japanese woman, Mika Noguchi, when she started a home shopping company with her husband in 1988.
Last year Peach John registered sales of more than JPY16bn (US$137m), making it one of Japan’s most successful small companies. The company has twenty shops but does most of business through mail order. 
Wacoal sales were worth JPY160bn until May of this year. The business has been investing heavily in its own brands while indulging in a buying spree at home and abroad to bolster shareholder confidence.
Wacoal said it will continue to add to the mix by acquiring cosmetics lines, 
while expanding Peach John’s move into coats bags, shoes, fragrances and health supplements.
       

16/24
   Morgan Retail Closes 
            66 Stores
Fashion company Morgan Retail is the latest to suffer at the hands of 
high-street rivalry, collapsing into administration with the loss of about 600 
jobs.
Morgan will close all of its 19 stand-alone stores and 47 department store 
concessions after KPMG Restructuring was appointed administrators of the business.
The announcement came after French company Morgan SA axed its distribution in the UK market Administrator David Crawshaw said: "Morgan has suffered from difficult trading conditions on the high street. Trading for the first six months of the financial year to June has been poor with like-for-like sales down 19.1% to GBP11.8m ($US21.63).
"As a result of this and subsequent losses, the company faced an increased funding requirement to pay wages, landlords and creditors. The company’s shareholders were not able to raise the additional finance."
Crawshaw said the company had received expressions of interest, but said without a distribution agreement and stock it was not possible to continue trading.

              
8/12
EU & US Attack Counterfeits
The US and the EU have launched a joint action program to fight the counterfeiting of goods by international organized crime, which remains an 
acute problem for the clothing industry.
Washington and Brussels say they will set up joint-border enforcement actions focusing on fighting intellectual piracy and establish teams of diplomats in third-country embassies tasked with sharing data and intelligence on counterfeiting. 
Initially, these initiatives will focus on working with China and Russia, 
although there are plans to expand joint-work to cover the rest of Asia, Latin America and the Middle East. 
In 2003, the most recent Brussels figures, EU customs authorities seized 3.8m items of counterfeit clothing and accessory items, including 404,000 items of sportswear, 1.3m of other clothing items and 2.1m accessories, including sunglasses, hats and handbags.
                   

14/24
China's Export Tax Rebates
          May Be Cut
China’s textile companies could face a cut in their export tax rebates as the country’s government moves to protect natural resources and restrict exports from high-resource industrial sectors.
Liao Xiaoqi, vice minister of China’s Ministry of Commerce, was quoted as saying that some industrial sectors could face cuts, but "no concrete plans have been made so far".
Industries including textiles, steel and light industry could face rebate cuts 
of about 2%.
The cuts will be made as the Chinese government aims to make improvements to domestic industry and protect natural resources. Exports from sectors that are high consumers of energy and raw materials, and heavy polluters, are to be especially targeted.


 
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