Textination Newsline

• E-Commerce Market continues to grow rapidly

Russia's online retailers are entering into strategic alliances. The market is maturing and consolidating. German suppliers must prepare themselves for tougher competition.
Russia's online trade continues to record strong growth rates. In 2018, sales increased by 19 percent year-on-year to around Rubel 1.2 billion (EUR 15.5 billion; 1 EUR = 74.04
Rubles, annual average exchange rate 2018). This corresponded to about 290 million orders, according to Data Insight's analysis. By the end of 2023, the investment bank Morgan Stanley expects annual growth of 25 percent to Rubles 3.5 billion. In 2018, the cross-border Internet trade increased by 29 percent to the equivalent of EUR 4.7 billion.

¹⁾ Physical goods only; excluding cross-border trade, deliveries of ready meals, tickets for transport and events, coupons, consumer-to-consumer and multi-level marketing;
²⁾ Nominal year-on-year; variance due to rounding.
Sources: Market research institute Data Insight; Association of Online Retailers (NAMO)

The share of e-commerce in retail sales is currently still around 5 percent. With the "Strategy for the Development of Online Trade by 2025", the government wants to increase this up to 20 percent. The conditions for further growth are good, as Russian consumers are Internet-savvy and open to technical innovations. Already 76 percent of all Russians have an Internet connection. According to the national "Digital Economy" project, broadband Internet penetration is expected to reach 97 percent by 2024.
 
Growth potential far from exhausted
Russia's online retailers are following this trend by modernizing their websites and are investing in goods logistics. Electronic marketplaces are becoming increasingly popular. This is because they offer smaller Internet retailers in particular the opportunity to assert themselves against the market leaders.
In the Forbes ranking of the 20 most valuable Internet companies in Russia, online retailers Wildberries and Ozon rank fourth and fifth respectively. The Russian fashion mail order company Lamoda - a foundation of the German Rocket Internet - is in ninth place.     
The Otto Group realigned its business model in Russia in 2018 and removed its subsidiaries Quelle and Otto from the market. The Hamburg-based group relies on the online brands Bonprix and Witt as well as on the eSolutions platform, which offers B2B services in the areas of marketing, sales, logistics and IT.

Source: Data Insight (http://datainsight.ru/top100/)

Russia gets two "local Amazons" at once 
Russian online trading is already firmly in the hands of a few large players who are continuing to expand their market presence. The market leader Wildberries added electronics and household appliances to its range in 2018. AFK Sistema Holding of the oligarch Yevgeny Yevtushenkov has increased its stake in the online retailer Ozon and is investing in the construction of new logistics centers In addition, Ozon started selling medicines, jewellery and ready meals.  

In April 2018, the Russian technology group Yandex and Sberbank agreed to establish the Beru and Bringly online marketplaces. The aim is to further develop the Yandex.Market platform into a "Russian Amazon". Russia's largest bank brings in the customer data of 100 million account holders.
Beru and Bringly's range mainly includes high-priced goods such as electronics, clothing, shoes and cosmetics. Bringly cooperates with the British cosmetics chain Feelunique, among others. In September 2018, Yandex.Market also concluded a cooperation agreement with Hepsiburada, Turkey's largest online marketplace. 

Alibaba expands its market presence in Russia
In September 2018, the next major merger in Russian online trading was announced: The Mail.ru Group and Megafon (part of the company empire of the oligarch Alisher Usmanow), the Russian Fund for Direct Investments and the Chinese technology group Alibaba intend to establish a joint online marketplace by the end of the first quarter of 2019. Alibaba intends to expand its presence on the Russian market.
The Mail.ru Group provides access to the data records of around 100 million users - an enormous new customer potential for the Chinese online giant. On March 5th  2019, AliExpress, the Russian subsidiary of Alibaba, also launched a platform for the sale of passenger cars of the Chinese brand Chery.

Duty-free limit continues to fall
Two thirds of Russian online buyers also order goods from foreign traders. 90 percent of the deliveries come from China. If the price and weight of the product are within the exemption limits, no sales tax is payable. On 1 January 2019, the exemption limit for cross-border online trading was halved to EUR 500 and the weight limit was lowered from 31 to 25 kilograms. From January 1st   2020, the tax-free allowance will fall to EUR 200.  However, this measure is unlikely to generate any additional revenue for the Russian State. In 86 percent of cross-border online purchases, the maximum value of goods is at about USD 22.

Above all, capacity bottlenecks in the delivery of online orders are currently putting the brakes on sector. VTB-Bank is therefore investing around EUR 410 million in the construction of 40 logistics and distribution centers for the Russian Post Office (Potschta Rossii) by 2021. The state-owned company intends to profit from the growth in the online commerce and increase its revenue from parcel services for e-commerce to Rubel 122 billion by 2023. Since September 2018, the Russian Post has been distributing deliveries from China via hubs in Siberia and the Far East.
The logistics service provider DPD has been working with the Avito advertising portal since October 2018. In future Its customers will be able to collect their parcels at around 1,500 DPD stations. Since June 2018 DHL and eBay have been working together on logistics services in Russia.

The development of B2B platforms is becoming increasingly important in Russia's online trade. The potential is huge: the Russian B2B online market amounts to around USD 20 billion - and the trend is rising. Pioneers such as Sewerstal, Alrosa or Technonikol already rely on B2B platforms to sell directly to their end customers. In 2018, the Chinese Fosun Group acquired around 20 percent of the shares in the B2B platform Prod.Center, on which agricultural products are traded.

• Deliveries have risen sharply recently

Cheap and used technology dominates at the Dominican market for textile machinery. It is some of the country's problems that give German suppliers some hope.

The good news is that in the first eleven months of 2018 German exports of textile and clothing machinery to the Dominican Republic rose by 580 percent year-on-year, and, according to Eurostat, by 2017 German deliveries had tripled. The bad news: German sector exports reached only EUR 1.7 million in absolute terms. This is considerably less than, for example, in Guatemala with its not much larger technology market.

Representatives of German providers are not surprised about the figures. Cheap equipment from China and other Asian countries are in demand, but above all mainly used machines. Hugo Clavijo of Texquim, who represents the German suppliers Mayer & Cie. (circular knitting machines) and Groz-Beckert (needles), among others in the Dominican Republic, estimates, that just five out of every hundred machines sold are new. Around the turn of the millennium, the market thus became the residual ramp for the declining US textile industry. According to UN Comtrade, around 60 percent of the value of technology deliveries in recent years came from the USA.

The International Textile Manufacturers Federation also registered hardly any shipments of new machines: for 2010 to 2017, the ITMF shows just ten flat knitting machines and eleven (all in 2017) circular knitting machines. Also, for this period 720 Double Heaters for texturing synthetic filaments for yarn production were listed. The ITMF counts the deliveries of 200 textile machinery manufacturers worldwide and thus a large part of the market, albeit not the entire one.

Electricity and water bottlenecks as arguments for expensive machines
Hugo Clavijo currently sees no great chance of a rapid improvement in the sale of expensive German technology. But ironically, it is some of the country's problems that may transform the potential customer interest into concrete procurements: The energy supply for the textile companies is expensive and unreliable, and the companies have to treat their process water themselves. Economical and less repair-prone machines would come into a closer consideration even if the purchase prices were significantly higher. It would also be helpful to enforce environmental standards, which today are largely on paper only.

There is also a need for technology if the Dominican textile and clothing manufacturers expand their capacities due to possible changes in international trade policy, i.e. if clothing customers in the USA would place orders in the Caribbean country instead of Asia. At the moment, however, the Dominican export industry is not using its factories to capacity.

¹⁾ no data on other machines; ²⁾ spinning machines; ³⁾ weaving machines

Source: International Textile Manufacturers Federation

The Dominican textile and clothing industry, which, according to the central bank, generated 11 percent of the country's total export revenues with clothing from free zones in 2017, is not fully vertically integrated: it mainly imports yarns, which then is mainly being knitted but also woven or otherwise processed and then assembled into finished clothing. It often produces T-shirts and other knitwear with a high cotton content. And this is "the cheap stuff," as Clavijo says.

There is a limited production of synthetic yarn in the Dominican Republic which, according to Hugo Clavijo, is limited to two companies: The Korean company Youm Kwang textures filaments in the country, while the US company A&E (American & Efird) produces sewing thread from imported filaments.

Four export producers as important technology customers
The Dominican textile sector is said to consist of about two equal segments. A dozen medium-sized companies and a large number of garage companies supply the domestic market. In addition, four companies produce for export in the country's free zones: Gildan (Canada), Hanes (USA), Willbes (Korea) and the local Grupo M, which has been working in a 50/50 joint venture with Brandix from Sri Lanka since the beginning of 2017. The procurement of machines in foreign companies is not decided by the local management, but by the corporate headquarters, according to representatives.

The four export producers are said to be vertically integrated from yarn processing onwards. Grupo M supplies about one fifth of its fabrics, knitwear, etc. to processors, while the other three industry giants manufacture these preliminary products completely by themselves. According to Comtrade (SITC chapter 84), three quarters of the clothing exports go to the USA, the remainder predominantly to the neighboring Haiti.

For US clothing customers, the nearby Dominican Republic offers fast and cheap transport routes as well as the advantageous customs regime of the DR-CAFTA trade agreement. According to Hugo Clavijo, however, Dominican clothing exporters must obtain their intermediate products from the USA in order to benefit from all customs relief. Producers for the Dominican domestic market, on the other hand, are using yarns and fabrics from China, Pakistan or other third countries that offer lower production costs.

USA dominate machine deliveries
The Dominican market for textile and clothing machinery has stagnated in recent years: For 2017, UN Comtrade estimated imports - there is no significant domestic production - at USD 36 million. That was as much as 2014 and around USD 10 million more than around 2010.

According to Comtrade, Germany was ranked sixth in the import ranking with an average share of 2.0 percent between 2015 and 2017. Eurostat, whose (export) data deviate considerably in some cases, noted stagnating industry deliveries from the European Union to the Dominican Republic for the first eleven months of 2018 in addition to the high growth for Made in Germany.

^*) SITC 724 without household sewing machines (724,33), household washing machines (724,.71), machines for dry cleaning (724.72), leather processing (7248), parts of household washing machines (724.91).
Source: UN Comtrade.

More than 400 exhibitors representing 682 brands and approximately 30,000 trade visitors and key opinion leaders (KOLs) took part in ISPO Beijing and Alpitec China held at the China International Exhibition Center (CIEC) from January 16 to 19, 2019. This year, the most important sports trade fair in the Asia-Pacific region was jam-packed with numerous forums, trends and innovative products and services relating to winter sports, outdoors, health & fitness, and manufacturing & suppliers. Soccer also featured for the first time.

“The Chinese have discovered a passion for soccer and their enthusiasm for it continues to grow. European clubs and leagues in particular are a huge source of inspiration for the emerging Chinese soccer market. ISPO Beijing has found a strong new partner in Bundesliga International for continuing to drive the soccer boom in Asia over the next few years,” says a delighted Elena Jasper, Exhibition Director ISPO Beijing. The specially created Football Activation Area played host to seven German first-league teams, namely Bayer 04 Leverkusen, Borussia Dortmund, Borussia Mönchengladbach, Eintracht Frankfurt, FC Schalke 04, VfB Stuttgart and VfL Wolfsburg. They challenged visitors to take part in various activities such as Speed Goal and Goal Wall Shooting and created a thrilling soccer atmosphere for them. The program also featured the Football Forum, which was held on the opening day of the trade fair. High-profile speakers from the clubs set out their strategies for activating the market in China and presented concepts for promoting and encouraging fresh young talents as well as ideas on brand positioning.

Winter sports continue to be popular thanks to Olympics
Winter sports have proven to be hugely popular for several years now, especially in view of the upcoming 2022 Beijing Winter Olympics. As well-known brands and exhibitors in this segment, Burton and Oakley made a welcome return to ISPO Beijing. The Market Introduction Program, designed for brands keen to penetrate the Chinese market, also focused on this area. As part of the two-day seminar program, representatives of 10 brands from across Europe, Asia and the U.S. gained a solid understanding of the specific ins and outs of the Chinese market thanks to industry experts in distribution, online and offline retail and commercial law, and made preliminary contacts.

The Asia Pacific Snow Conference was held for the 11th time in collaboration with the longstanding partner event Alpitec China, the leading trade show for mountain and winter technologies. Representatives from the technology, sports and tourism industries discussed advances being made with China’s ski resorts as well as models and measures for developing, maintaining and expanding them.

Ski Resort Tour participants were given an insight into the infrastructure of the winter sports resorts and treated to a taste of what to expect from the Olympics. Three 2022 Winter Olympics training venues and sites were on the itinerary, namely the Shougang Olympic Park, Wanlong Ski Resort and Genting Ski Resort Secret Garden. “China’s professionalism in preparing for the major sporting event is very impressive. Sports venues are being designed and built in line with the very latest standards. The Olympics will be just the start of China’s development as a winter sports nation,” says Klaus Dittrich, Chairman and CEO of Messe München.

Valuable knowledge transfer throughout all segments
An extensive supporting program was also provided for the other trade fair segments. The Sports Industry Forum focused on the topic of new investment opportunities for the sports business in China, including with regard to digitalization. Sport injuries and rehabilitation options were the main focal points of the Health & Fitness Forum. The China Climbing Report was published as part of the China Rock Summit. In the ISPO Textrends Area, international consultant for textile trends, Louisa Smith, presented the textile trends relating to materials, fibers, cuts and accessories set to take the industry by storm in the next few years. At the ISPO Award Exhibition and the ISPO Startup Village, visitors gained an overview of the most important innovative products and latest ideas to be devised by young entrepreneurs.

Creation of an advisory committee for ISPO Beijing
An international advisory committee has been set up in order to further develop and bring ISPO Beijing even more in line with the needs of the market, exhibitors and trade visitors. Representatives of exhibitors’ interests, industry representatives and partners met for the first time ever on the eve of this year’s event in order to discuss the strategic direction of the trade fair. The consensus amongst all participants was that the current format of ISPO Beijing represents a solid base with plenty of potential. New segments such as Sports Fashion and Travel should be added to the event in the future and the target group of key opinion leaders (KOLs) should be further expanded. Exchanging experience with Europe is the primary focus of interest.

The next ISPO Beijing will be held from February 12 to 15, 2020 at its new location, the China International Exhibition Center (CIEC).

For more information on ISPO Beijing, please visit https://www.ispo.com/en/beijing

Cooperation and local production the new trend

Nairobi (GTAI) - China dominates infrastructure projects and the construction industry in East Africa. But now the Kingdom of the Middle is also intensifying its commitment in trade and industry.

The Chinese advance in East Africa is breathtakingly fast, focused, efficient and highly successful. The approach is simple: one makes a business proposal that meets the wishes of the decision-makers, brings everything with you, including financing, and the project will be brought out with Confucian efficiency.

Because the customer is satisfied, follow-up orders are being placed. And the more orders there are, the more Chinese activities are there that no longer have anything to do with the original project: Trade, housing construction and business start-ups. And the more the debt with Chinese financiers rises, the more their interest grows in ensuring that the debt can be serviced.

China is fast - on its terms
In Kenya, the Chinese breakthrough came with the comparatively short road from Nairobi to Thika. The international donor community was willing to finance a road construction project, but only at the usual terms, such as regular feasibility studies and tenders, but at favorable interest rates. During the term of office of the former acting President at the time, all this would not have been completed.

Meanwhile, the Chinese made a different offer: shortest construction time and commercial credit with free hand and political backing. Residence permits were issued in an urgent procedure, and work had already begun before necessary expropriations had been completed. Everything was brought along, even truck drivers and food. Deliveries were made on time for the end of the President's term of office.

If customers are satisfied, there are follow-up orders. For example, a new railway - the favorite project of the current Kenyan President Uhuru Kenyatta - is also being built, financed and operated by the Chinese. The usual donors, such as the World Bank, had previously declined because the project was unlikely to pay off economically. Thanks to Chinese commitment, the first route from Mombasa to Nairobi was completed in time for the presidential election campaign and could be marketed as a political success. The fact that, in the opinion of critics, that the section was three times as expensive as necessary, was not contested by the voters.

Chinese appearance in the ripening process
Chinese companies had learned a lot from the first road project: They now know what the Kenyan business world and industry can and can't do, what they need, how they tick, how to do business in Kenya and how to deal with bureaucracy and widespread corruption, what cartels and monopolies one has to fear and how to deal with them if necessary.

Thanks to this knowledge and preferential treatment in work permits, Chinese construction and trading companies were able to gain a foothold within a very short space of time. And the more Kenyan government orders go to Chinese companies and the more Chinese traders gain a foothold in Kenya, the more Chinese goods flood the country.

But not only that: Chinese companies have been founded to manufacture locally. In addition, hordes of Kenyan workers are employed or Kenyan goods are being purchased if they are cheaper and/or better, or, logistically speaking, can they be procured more quickly. Kenyan companies and workers have also learned what is important to the Chinese partners - a learning and maturing process on both sides. Some Chinese people have married local and want to stay.

State acquisition perfected
Meanwhile, Chinese companies have virtually "perfected" their government procurement, reports the leading Kenyan daily newspaper "The Nation" with a sarcastic undertone: Chinese acquirers use an English first name that can be remembered and pronounced and, accompanied by a politically well-connected "fixer", visit together a cabinet secretary or the head of a semi-state company and make a proposal for a major infrastructure project combined with the promise to provide the financing.

A "Memorandum of Understanding" is then signed very quickly, followed by a commercial contract with the responsible ministry. Then only the Ministry of Finance has to sign the loan agreement and the deal is perfect. Parliament, budget controllers and the state auditor are excluded. The fact that high commissions and so-called kickbacks (bribes) are being paid in these transactions is in the nature of things.

German companies that participate in Chinese projects may be familiar with this background and are therefore usually very cautious. In other words: German-Chinese business relations in East Africa are reluctantly hanged on the big bell, because the German reputation could suffer. The German-Chinese business relationships that have nevertheless become known are quite different but show a range of possibilities.

Professional cooperation without ideology
On the one hand, there are German companies which are based in China, either independently, as joint ventures or in the form of cooperation. Such companies are considered "Chinese" because they know the rules of the game, the correspondence can be conducted in Chinese and the bank account exists in China. Then there are other German companies with whom one has already worked successfully together in Germany or elsewhere in the world - so why not again? And there are German companies that have a lot of experience in Africa and are well networked, such as consulting firms that can take over construction supervision. It is often the Kenyan client who demands a neutral and professional watchdog.

Many German products are appreciated by the Chinese. If a German company in Kenya is successful with construction chemicals, a Chinese company will also like to come back on them. And if a German construction machine has the desired specifications, it is also being bought by Chinese people in Kenya.

Chinese companies are first and foremost concerned with business and not ideology. German products and services have a good reputation worldwide, even among Chinese people. If China did not used them for its first projects in East Africa, it was because of a lack of knowledge of what is locally available and what is not. In the meantime, this has changed dramatically. And like everywhere in business life, contacts count and they need time to be established.

Chinese are the new Indians
It can already be foreseen that the driving force behind new industrial projects in Kenya will no longer come from entrepreneurs of Indian origin, but from Chinese ones. Once planned Chinese-built industrial parks are completed, there will be a wave of Chinese investment. If these investors first look at Chinese technology, it is only because they are better acquainted with the Chinese market. Anyone who knows and appreciates German products, on the other hand, will know how to weigh up the commercial advantages and disadvantages. For example, one of the first Chinese industrial projects in Kenya, the building materials supplier China Wu Yi Precast, has primarily installed German technology.

Farthest in Ethiopia
What applies to Kenya also applies to Ethiopia, where the Chinese advance is already much further ahead. There, too, the Chinese have built a railway, much more modern and cheaper than in Kenya. And more importantly, they are building industrial parks throughout the country where international companies can find good conditions for low-wage production. The first textile, clothing and leather factories report successes. Food processing and pharmaceutical companies are coming in a second wave. Of course, there are many Chinese companies in it, but not only. And, of course, German companies have good sales opportunities if they make the appropriate marketing efforts.

In Uganda are Chinese traders who have been mixing up the local market. The great Chinese engagement will only come with the start of the oil production and when the Kenyan railway has reached the Ugandan border. In Tanzania, the Chinese currently have less to report because the incumbent president, who is committed to fighting corruption, wants it that way. Instead of Chinese, he gets his railroad built by Turks. Meanwhile, Djibouti has become so heavily indebted to China that its influence can no longer be stopped.

New tones from Beijing
While the Chinese progress all over East Africa - even without Tanzania - can no longer be stopped, it remains exciting to see to what extent new tones from Beijing will affect China's involvement in East Africa. The Chinese leadership has declared its intention to curb corruption in its own government. If it is serious about this, it will also have to introduce stricter rules in its East Africa business.

And then there is the "socialism with Chinese characteristics" propagated by Chinese President Xi Jinping, with which he wants to make the world happy. So far it has been Western Europe and North America that have aggressively propagated their democracy as a form of government and political ideology in Africa. It seems that Xi Jinping now wants to counter this with Chinese principles. Chinese reforms can also be expected in the areas of environmental protection and sustainability, which at some point will also affect Chinese Africa business.

Source: Research by Germany Trade & Invest

The entire study "China in Africa - Perspectives, Strategies and Cooperation Potentials for German Companies" is available free of charge: Print version under order number 21054 (32 pages) at Germany Trade & Invest, Kundencenter, Postfach 140116, 53056 Bonn, Germany, Telephone: 0228/24993-316, e-mail: vertrieb@gtai.de or as PDF document (german only) after short registration at http://www.gtai.de/china-in-afrika.

• Manufacturers rely, among others, on German Machines

Tokyo (GTAI) - When it comes to functional textiles, Taiwan belongs to the international top league. To ensure that this remains the case, industry manufacturers invest in modern equipment and innovations.

Taiwan is an important global supplier of functional textiles. The sector wants to maintain this position and expand it as much as possible. They are therefore investing in new capacities, research and development. There are good sales opportunities for suppliers of pre-products and equipment.

The demand for functional textiles is increasing in the sports, leisure and footwear industries. In other sectors, such as the automotive and medical industries, building materials and agricultural aids, these are also increasingly being used. Functional textiles are usually not recognizable as Taiwan products. Nevertheless, some of them are very visible.

For example, at least 15 out of 32 teams at the 2018 FIFA World Cup wore clothing made with textiles of Taiwanese origin for internationally renowned brand names, according to the Taiwan Industrial Development Bureau (IDB). According to the Taiwan Footwear Manufacturers Association, Taiwanese manufacturers are responsible for approximately 80 percent of all sports shoes produced worldwide.

Textile manufacturers invest
Far Eastern New Century (FENC) is one of the largest textile manufacturers on the island. Its production capacity is nowadays mainly located abroad with productions in China, Japan, the USA and Vietnam. FENC is also expanding its capacity in Taiwan. Polyester spunbonded nonwovens have been produced for the Asian market in a joint venture with Freudenberg in Germany since 1987.

Freudenberg Far Eastern Spunweb has announced that it will set up a third production line for nonwovens at the Tayuan plant, thereby increasing the existing production of 20,000 tons by 11,000 tons per year. Construction of the new production facility, which is scheduled to start operations in 2020, has now begun. The latest automated production technology is to be used. According to the company, the investments amount will approximately be at USD 43 million.

Source: CommonWealth Magazine, Taiwan Stock Exchange

Germany remains an important equipment supplier
Taiwan's textile manufacturers import their equipment mainly from China, Japan and Germany, with some of the machines produced in China coming from companies with Japanese, German, Italian or Taiwanese parent companies. German deliveries declined by 13.7 percent to USD 71.1 compared to 2016 million in 2017. However, Taiwan's imports from Germany increased by 24.3 percent in the first six months of 2018, exceeding deliveries from Japan at USD 42.5 million.

The fact that the import of equipment remains at a high level has to do with the fact that companies in the textile industry in Taiwan are modernizing existing plants and converting them to Industry 4.0. In addition, the number of textile manufacturers in Taiwan has increased in recent years. According to statistics from the Taiwan Federation of Textiles, the number of companies rose from 3,143 to 3,214 between 2014 and 2017.

*) HS-Codes 8444-8453; without 8450
Source: Customs Statistics, Ministry of Finance

Core functions remain in Taiwan
By contrast, the production value of the textile sector fell slightly. In local currency terms, it fell in 2017 compared with 2016 by 1.7 percent. Converted to US dollars, the production value of textiles was USD 9 billion, according to the statistics from the Ministry of Economic Affairs. The production of synthetic fibers stagnated at just under USD 3 billion in 2017.

Taiwan is home to the headquarters of the often family-run textile companies. Purchasing and marketing decisions are mainly made here, and, last but not least, research and development are carried out here too. For example, several manufacturers are currently developing smart textiles with integrated temperature control, heart and location functions.

Foreign activities are diversified
The textile manufacturers are investing predominantly in new capacities outside Taiwan. For example, FENC 2018 is expanding its capacity for PET (polyethylene terephthalate) and terephthalic acid (PTA), which among others are required for the production of synthetic fibers. Together with an Indonesian and a Mexican partner, FENC acquires two new plants of a bankrupt US company in West Virginia and Texas. Among other things, this reduces the risk of possible trade restrictions and, conversely, increases the opportunity to benefit from free trade agreements.

Vietnam is also a focus of investment. Here, most Taiwanese textile companies are in the process of establishing or expanding new capacities. FENC, Formosa Taffeta, Eclat, Makalot and several others invested in the southeast Asian tigerland several years ago. By contrast, new investments in China have become rare, primarily due to rising wage costs.

• Clothing exports are declining 

New Delhi (GTAI) - Structural weaknesses and fiscal reforms are affecting the Indian textile industry. Modernization and diversification are necessary. For this where support measures will come into force.

In the 2016/17 fiscal year (April 1st to March 31st), India's government initiated a number of fundamental reforms such as the introduction of the nationwide Goods and Services Tax (GST) and a partial currency devaluation. These measures are intended to advance the economy as a whole in the medium to long term, but have led to uncertainty and difficulties in individual sectors, including the textile industry. Added to this are high cotton prices. The government is now trying to help the industry with individual measures. It remains to be seen whether these will be sufficient and lead to a sustained improvement. Finally, there are structural weaknesses which are also slowing down the growth of the Industry.

"The by the introduction of GST caused dent and monetary depreciation has now been overcome. However, the structural problems remain, so that no fundamental changes in the textile industry are to be expected", according to the assessment of a German supplier with many years of experience in India in talks with Germany Trade & Invest (GTAI).

Government launches aid measures
However, some government measures should provide relief. At the beginning of August 2018, import duties on 328 textile products, especially fabrics and nonwovens, were increased from around 5 to 10 percent to up to 20 percent. Also, at the beginning of the month, the Executive Board introduced four bills to amend the general VAT Act introduced on July 1st 2017. This should make refunds, for example of taxes on intermediate products, easier and faster. The introduction of GST and the delays in reimbursement have put particular pressure on the liquidity of small and medium-sized companies, which make up the bulk of textile companies. For example, the denim industry temporarily had to take 25 to 30 percent of its capacity out of production after the tax introduction.

 Also, the Ministry of Textiles wants to strengthen the to it entrusted weakening industry. At the beginning of August 2018, for example, it added changes to the Technology Upgradation Funds Scheme (TUFS), which has been in existence since 1999. This now expanded technology promotion program allows cooperative banks to provide financing to textile companies for technological improvements. They also become accessible for liability partnerships. Of the approximately USD 1.1 billion, that the central government budget is holding for the textile industry in the fiscal year 2018/19, one third, 14 percent more than in the previous year, are intended for the TUFS. Manufacturers of synthetic fibers and the clothing industry in particular are likely to benefit from this, according to industry sources.

The existence of an own Ministry of Textiles shows how important this industry is for India, not only as a source of foreign exchange, but also as an employer. The entire sector, from spinning mills, weaving mills to clothing and other finished goods, contributed around 14 percent to value creation in the manufacturing industry and 13 percent to foreign exchange revenues in 2017, and employs directly 40 million and indirectly 60 million workers.

As one of the world's leading producers of cotton, jute and silk, India has comparative advantages in the textile sector and can look back on a long tradition in processing. Accordingly, cotton is the main raw material in yarn and fabric production. After all, 5.7 billion tons of yarn were spun in 2016/17, achieving an annual average increase of 3.1 percent between 2011 and 2017. The weaving mills processed 63.5 billion square meters of fabric in 2016/17, after 61.7 billion in 2011. The proportion of cotton fabrics rose from 51 to 61 percent in 2011 to 2017. The remaining part is accounted for approximately equally by synthetic and blended fabrics.

 
Production and export growth come to a halt Based on the previously strong growth the government is optimistic. According to forecasts by the Ministry of Textile, India's textile and clothing industry is expected to more than double its sales between 2015 and 2021. Exports are expected to increase from USD 35 billion to USD 82 billion, after doubling in the period from 2006 to 2014 from USD 17.6 billion to USD 37.6 billion. After that, however, they stagnated and, at USD 35 billion in 2017/18 and missed the by the government set target by USD 10 billion. The production of textiles and clothing declined from 2015 to 2017. It is unlikely to improve in 2018.

¹⁾ Financial years from 1 April to 31 March; ²⁾ Provisional data for 2016/17 and 2017/18
Source: Statistical Office India
     

Clothing industry needs to modernize 
India's textile industry has cost advantages over industrialized countries and advanced emerging countries such as China. Smaller developing countries, however, have become well-known competitors in the meantime and have partly surpassed India in terms of clothing. So Bangladesh and Vietnam exported more clothing than India. In addition there is growing competition from other low-wage countries such as Cambodia, Sri Lanka and Indonesia. Some of these countries have free trade agreements with the EU, while India has difficulties in negotiating them. The smaller competitors have also geared their clothing industry to exports and modernized it accordingly. After all, they do not have significant local markets. The Indian textile manufacturers are different: If there is not enough quality for export, the domestic market, which has a population of 1.3 billion inhabitants and is growing strongly, is still there, industry representatives explain to GTAI.

India's apparel industry therefore still has a considerable potential for modernization and requires new production technologies, particularly to improve operating efficiency. Other structural weaknesses include strong wage increases with insufficient productivity growth and a shortage of well-trained skilled workers. Other disadvantages are the fragmentation of the clothing industry - many companies lack size - and the lack of adaptation to global fashion trends. While the fashion world is more prone to fiber mixed fabrics, the Indian clothing is not yet following this trend. There is a lack of product diversification.

The spinning and weaving sector looks more modern. Industry experts attest to it a leading international position in terms of size, technology, productivity, quality and price. This is also evident when importing machines. India was the most important export market for German spinning machines to China in 2017 and the fifth largest market for weaving machines, according to the Textile Machinery Association of the German Engineering Federation (VDMA). In textile finishing machinery, India does not rank among the top six export markets, but its competitor Bangladesh does.

Double-digit growth in foreign direct Investment 
Foreign investments in the Indian textile industry are welcome and 100 percent foundations by foreign companies are welcome. On promotional trips to countries such as Japan, Germany, Italy and France, India is actively attracting investors and has not been unsuccessful. The inflow of foreign direct investment into the textile sector, including dyed and printed textiles, amounted to USD 2.7 billion between April 2000 and September 2017. Cumulative investments increased by an annual average of 17.3 percent between 2010 and 2017. However, the bulk of the investment is being stemmed by national Indians. Total investments in India's textile sector from June 2017 to May 2018 amounted to USD 4.2 Billion.

• Opportunity for manufacturers to star as trendsetters in the flooring industry

The redesigned DOMOTEX – with its more transparent clustering of allied products and the visually stunning  “Framing Trends” showcase – has been warmly embraced by the market and is now gearing up for its second season. DOMOTEX 2019 will run under the banner of “CREATE’N’CONNECT”, a keynote theme that puts the spotlight on innovative flooring industry developments and ideas inspired by today’s connectivity megatrend. Powered by advanced technology and digital change, being connected is a tremendously important aspect of our daily lives and interaction at home and on the job.   Connectedness is an important aspect of flooring in the sense that floors are unifying, connecting elements of room design. Floors and flooring provide the very foundation for the rooms in which we live and work. Floors inspire us, give us orientation and set the stage for human interaction.
 
“CREATE’N’CONNECT” keynote theme to be creatively staged by trend leaders
The “Framing Trends”special area in Hall 9 at DOMOTEX 2019 is a unique opportunity for manufacturers to breathe life into the “CREATE’N’CONNECT” theme and thereby demonstrate their creative genius and position themselves as trendsetters of the flooring industry. Complete with a quality supporting program of talks, lectures and discussions inspired by the keynote theme, “Framing Trends” is a vibrant networking platform and the beating heart of DOMOTEX. It is a place where creatives from all parts of the design spectrum can gather, make connections and contacts and spark new business opportunities. For manufacturers, retailers and designers, it is also a rich source of inspiration for new collections. With its out-of-the-ordinary artistic staging and groundbreaking product presentations, “Framing Trends” is an absolute magnet for fashion and lifestyle-savvy visitors, architects, interior decorators, designers and influencers.

“Framing Trends” - Apply to exhibit and start making connections  
As a major highlight of DOMOTEX, the “Framing Trends” special area is one of the main stops on the show’s special Guided Tours for architects and journalists. This premium exposure is further enhanced by the area’s strong presence in the organizer’s social media channels and on the DOMOTEX website. Furthermore, companies that give exclusive interviews at DOMOTEX are permitted to use the interviews for their own promotional purposes. As in 2018, the “Framing Trends” showcase at DOMOTEX 2019 will have a Blogger Lounge where bloggers and visitors can meet up, talk and collaborate.

The “Framing Trends” area includes the “Flooring Spaces” zone – a series of spaces where selected exhibitors and companies from the flooring industry can stage their unique, creative visions of the “CREATE’N’CONNECT” theme in the form of physical installations, interactive display circuits or workshops. Applications for participation at the “Flooring Spaces” zone are now open. Each applying organization is invited to submit a design proposal for a “Flooring Space” of any size from 20 sqm to 60 sqm. On request, the DOMOTEX organizers will arrange for designers to help applicants with their proposals. An expert jury made up of big-name designers and architects will select the participating exhibitors from among the applicants. The jury will make its decision by the fall of 2018.

Examples of creative flooring-related connections
The connectivity theme can be creatively expressed in many wonderful ways, as the following examples from the flooring and various allied industries show.
In teamwork with the studio Lotta Agaton Interiors, Austrian carpet maker Tisca Textil staged a home environment collage at DOMOTEX 2018 combining handmade woolen rugs with furniture by Vitra, Artek and Team7.

The lively graphic motifs used in the Infused Collection by Mannington Mills conjure up various aspects of five different U.S. metropolises. This LVT tile collection’s mix-and-match approach lends itself to the creation of imaginative mosaics using any combination of tiles desired.

Swedish design firm Kinnasand presents its rugs on a limited series of steel tubing “structures” created in cooperation with Berlin design studio Greiling. Draped over stylized bench, ottoman and daybed structures, the carpets take on a three-dimensional aspect.

Furniture manufacturer Walter Knoll uses the floor pillows and daybeds in its “Badawi Pillows” collection to create connections with its own sofa and carpet range. Details like the finishing on the leather headrest rolls attest to the firm’s high level of craftsmanship.

Gan, the rug and textile brand of Spanish outdoor furnishing company Gandia Blasco, includes a whole range of new products that explore the connection between rooms and their floors. For example, the “Parquet” kilim collection by Swedish designer duo Front (Sofia Lagerkvist and Anna Lindgren) reinvents the timeless aesthetic of wood parquet in soft floor coverings. Meanwhile, the “Mirage” collection by Spanish designer Patricia Urquiola comprises hand-knotted rugs made from New Zealand wool that look like they are woven from three dimensional planks whose ends protrude into the surrounding space. Her “Garden Layers” collection features layers of rugs, mats, roll pillows, cushions and even textile-covered Indian beds. The individual elements can be arranged in many different ways to create infinite inviting possibilities for outdoor living.
 
“Framing Trends” showcase well received by the market
Business decision-makers who participated in the inaugural “Framing Trends” showcase were full of praise for the enhanced DOMOTEX format. Their stories are glowing reports of successful business contacts made at DOMOTEX 2018. For instance, Jutta Werner, CEO of Nomad, an interdisciplinary design firm in Hamburg, described the “Flooring Spaces” area as a “well signposted proving ground for innovation and contemporary thinking.” She said the response to her presentation there was “overwhelming.” Benny Jensen, CEO of Denmark’s Fletco Carpets, was impressed with the Guided Tours and their ability to communicate targeted information to visitors. He said the tours enabled his company to present its new, award-winning “LockTiles” product directly to a quality, pre-qualified audience. Jensen noted that “architects, designers and planners made a special point of visiting the ‘Framing Trends’ display.” Floor coverings manufacturer Classen used the “Flooring Spaces” zone at “Framing Trends” to present a vision of a living space from the future. The flooring creation at the heart of Classen’s “Flooring Space” was developed specially for DOMOTEX at the company’s own design center, while the creative design and production of the space as a whole was undertaken on Classen’s behalf by a designer. The presentation raised Classen’s profile as an innovator. Marketing Director Heinz-Dieter Gras says the visitors showed a “great deal of interest” and described the presentation as “spectacular” and “masterfully done”.

Thomas Trenkamp, CEO of Carpet Concept, was very pleased with the “massive response” to his company’s “Framing Trends” presentation generated in the press and among industry peers and trade visitors. The kaleidoscope project which Carpet Concept realized in partnership with Schmidhuber, Munich, was a major attraction on site, in the press and across social media channels. Creative Matters, a Canadian design firm that specializes in carpets, rugs and wall coverings, staged a series of creative workshops that proved enormously popular with attendees. President and co-founder Carol Sebert described “Framing Trends” as a “vibrant, high-energy” showcase that enabled exhibitors and visitors to “experience the latest innovations and creations in the flooring world first-hand.” Jürgen Dahlmanns, the founder and creative mind behind cutting-edge German carpet label Rug Star, believes that DOMOTEX’s managers have moved the show in an “exciting new direction” with Framing Trends. “It’s a fun thing to be involved in as an exhibitor”. Textile floor coverings specialist Balta Group, of Belgium, has been exhibiting at DOMOTEX right from the early days. Marketing Director Geert Vanden Bossche said the new format has “further cemented the strong connection” his organization felt with DOMOTEX. Balta exhibits both at DOMOTEX in Hannover and at DOMOTEX asia/CHINAFLOOR in Shanghai.

DOMOTEX 2019 will be held in Hannover, Germany, from 11 to 14 January (Friday through Monday). The show is expected to feature around 1,400 exhibitors from more than 60 nations.

For most people, blockchain technology is still quite an abstract concept. We can think of it as some kind of virtual database that saves all transactions in so-called blocks. This creates transaction or block chains, which are perpetuated with every subsequent transaction. Through the high degree of transparency, the system can do without a central controlling entity, as it is permanently controlled by many. The blockchain can be changed afterwards. So far, this technology has been used mainly to materialize cryptocurrencies, but it increasingly paves its way also through the fashion industry. The following section outlines a few blockchain concepts from the fashion industry:
 
Blockchain makes fashion forgery-proof
The Berlin-based startup business Lukso has created an opportunity to take action against trademark counterfeiting and forgeries by using blockchain. A chip replaces traditional QR codes, which can be copied easily. The data stored on the chip are locked in and thus cannot be edited. Thus, the authenticity of the garment can be verified. The founder of Lukso, Fabian Vogelsteller, used his experience he had gained as a developer for the Ethereum cryptocurrency in order to develop this chip.
„The Fashion industry is the perfect industry for a blockchain-network, since it is forward thinking and eager to try out new things. Especially the interaction between users is an important factor here. Also forgery-proof is still an unsolved problem,“ explains the founder of LUKSO, Fabian Vogelsteller.    

The data stored on the chip can be analysed, but not read. Thus, the information about the products is disclosed in the blockchain in a transparent way for the customers and retailers. However, by not disclosing the system, the information can neither be changed nor copied, making the history of the garment traceable at any time. This technology provides protection against counterfei¬ting in particular with regard to brand and luxury goods. The system is also suitable for second-hand shops selling high-quality products, as the buyers are given a guarantee that they have bought a genuine product.

…and its origin transparent
SourceMap is another development using blockchain for the fashion sector. SourceMap is a kind of social network based on blockchain technology developed by the software company Provenance.
 
It allows everyone from the farmer to the textile mill to the cut-and-sew factory to communicate directly with the brand that buys from them, and it is using Provenance’s blockchain technology to verify those communications. They envision a world in which every fashion product has traceable, transparent origins. The developers promise that for example organic and Fair Trade certifications cannot be faked. The designer Martine Jarlgaard from London produced smart labels from Provenance using blockchain technology already in 2017, allowing the customers to scan these labels to track every step in the production.
 
Also, the fashion label Babyghost has launched a kind of social network. With specific chips woven into the garments, the customers are able to track the entire history of the clothes using their smartphone. The blockchain technology behind that even allows the consumers to add their own photos, videos and messages. This way, each garment gets its own story that is accessible at any time.

Berlin-based business wants to revolutionize online shopping experiences with blockchain
Wysker is an app developed by Tobias Haag and his team from Berlin to revolutionize online fashion shopping. With the blockchain system, users can decide on whether and what data they want to disclose to the retailers. Those who provide data will be rewarded with discounts. The Wysker app itself shows only photos, prices and the providers of the products. Those who find what they are looking for will be forwarded to the respective business partner. The developers expect that the bonus model will become a small revolution. Every app user is given bonus points, so-called Wys tokens. The more intensive the app is used, the more tokens are given. The tokens can be redeemed with the participating retailers. They are based on blockchain technology and connected to the Ethereum cryptocurrency. The value of the bonus points increases with the popularity of the app, as the number of tokens is limited. Thus, increased demand leads automatically to a higher value. The app is still in the initial stage. However, many users have already been generated during the first few months.
 
The fashion industry shows once again its innovative strength and uses blockchain to embark on new paths, with blockchain technology being a means to the end. It creates transparency that can reward the users and bring new shopping experiences.

Further information:
https://www.lukso.io/ 
https://www.wystoken.org/ 
http://martinejarlgaard.com/Home 
https://www.mybabyghost.com/ 
http://www.sourcemap.com/ 

• FOCUS ON DIGITIZATION AND SUSTAINABILITY

Mailand (GTAI) - The Italian fashion industry is changing. The digitalization of production and the growth in online trading are forcing a rethinking in the traditional sector. The topic of sustainability is becoming increasingly important. Against this background, Italian fashion houses are increasingly investing in their future strategies. German companies see good business opportunities as technology partners.

The Italian fashion industry is one of the core sectors of the Italian economy. In 2017, the sector increased its sales by 2.4 percent to EUR 54.1 billion, as reported the industry association Confindustria Moda. For 2018, the association expects a further increase of 2.6 percent to EUR 55.4 billion. The goal is to exceed the EUR 60 billion by 2020.

But the sector is developing inconsistently. Sales of intermediate products such as fabrics have been stagnating for years, while sales of end products such as clothing, shoes and bags are increasing. Both areas grew in 2017. End products (+2.9 percent) continue to be more successful than primary products (+2.2 percent). The main reason for the positive development of the fashion industry in recent years is the strong export demand for Italian products. In 2017 exports rose by a total of 3.5 percent and exceeded the EUR 30 billion mark for the first time.

The main export hits are clothing (one third of fashion exports), leather goods (around 20 percent) and shoes (around 18 percent), followed by fabrics (9 percent) and home textiles (9 percent). Sector representatives are concerned about developments in some important sales markets. Exports to the USA and Japan declined in 2017, the rising demand from China and Russia could not compensate these losses.

Significant rise in fashion imports
Domestic demand for fashion stagnated in 2017, while significantly more preproducts from the Far East and end products from industrialized countries were imported. Overall, imports increased by 2.2 percent to EUR 21.1 billion in 2017, Confindustria is expecting a further increase of 2.4 percent in 2018.

Germany is one of the most important markets for Italian fashion manufacturers; Italian shoes and bags are particularly popular with German customers. In return, Germany, with imports worth EUR 1.3 billion (plus 4.1 percent), ranked fourth as a supplier country in 2017, behind China, France and Spain. Clothing accounts for about half of German fashion imports and textiles for the other half. Germany is an important supplier of technical textiles, including sports goods and for the automotive industry.

Many companies strengthen their online presence  
The digitalization of the Italian industry does not stop at the fashion industry either. Thanks to the new technologies, traditional manufacturers can increasingly reach their customers directly without intermediaries.

How well this works was demonstrated by the Italian start-up company Yoox, an online luxury fashion retailer. Founded in 2000, the company merged with the French online fashion company and strong competitor Net-a-Porter in 2015. The Group is now active in 180 countries and generated sales of EUR 2.1 billion in 2017.
Many companies are strengthening their online presence and using their stores primarily as showcases to promote brands or new collections. The company Beste with the still new brand for men Monobi is an actual example. The traditional fashion houses Loro Piana and Zegna have been active in this direction already for several years.

Industry 4.0 sets impulses
Digitalization also makes new production processes possible for fashion houses. The networking of machines reduces production times, increases efficiency and reduces electricity and water consumption. In addition, manufacturers get the opportunity to offer tailormade solutions. Digitalization also ensures through just-in-time concepts that inventories and sales areas can be reduced, which leads to falling costs.

Well-known Italian fashion houses are investing heavily into the future. The luxury company Gucci has invested around EUR 100 million in a new innovation center, the so called ArtLab, in the greater Florence area. The company Beste has started two research projects in the field of Industry 4.0. The intensive research focuses on the development of new, environmentally friendly materials and the development of a digital platform for the planning, production and distribution of garments.

Sustainability is increasingly becoming a sales argument
The topic of sustainability is becoming increasingly important. The National Chamber of Italian Fashion (CNMI), for example, organizes discussion rounds on the subject. The fashion house Ferragamo has presented a sustainability plan to reduce greenhouse gas emissions and energy consumption. A new development by Ferragamo is also a sustainable fabric made from orange peels.

Gucci, Armani, Bulgari, the list of the world-famous Italian fashion companies is long. At the same time, Italy also has a large number of small and very small companies in the fashion sector. In 2017, the average number of employees in the companies was 9. Small and medium-sized com-panies also rely on sustainability.

The major Italian bank Unicredit, together with the European Investment Bank, is providing low interest loans for small and medium-sized fashion companies (up to 250 employees) for relevant investments. Similar programs are provided by the major bank Intesa Sanpaolo.

• Sudanese and Chinese investors want to secure raw material supplies

Nairobi (GTAI) - Ethiopia has further successes in attracting textile companies: One British company is planning to invest USD 100 million, one Chinese company even plans to invest USD 220 million. This means that the textile sector is increasingly becoming a self-starter, as donors increasingly want to supply domestic industry with pre-products. Meanwhile, those who invest should not only raise the financial means, but also the raw material cotton, according to market experts.

The Ethiopian textile and clothing market has two new entrants: the British Intrade Co. UK Ltd. and the Chinese Wuxi No. 1 Cotton Investment Co. Ltd, Intrade intends to build a textile and clothing factory in the Mekelle Industrial Park (Tigray Regional State), which was opened in July 2017. Initial cost estimates are around USD 100 million. Intrade is an offshore company of the Sudanese Mahgoub-Sons Group. The company has reached an agreement with the Ethiopian Investment Commission to invest USD 200 million in three projects. The textile project is to be completed in 16 months.

Security of supply for cotton is becoming an issue
The Sudanese group is not only interested in textile production, but also with lucrative supply transactions for its own cotton. They have the capacity to supply 500,000 tons of long staple quality cotton annually, Wagdi Mirghani Mahgoub, Managing Director of Intrade says. The supply of raw cotton has become an increasing problem for the emerging Ethiopian textile industry since some Asian countries ordered export stops for the raw material, including the PR China and India. The African Plantation, which cultivates 33,000 hectares of agricultural land in Sudan, also belongs to the Mahgoub-Sons Group.

However, Wuxi No. 1 Cotton Investment has announced the second and larger textile investment of 2018: a textile factory will be opened shortly in the Dire Dawa Industrial Park. In a first phase, USD 80 million are planned, followed by further investments totaling USD 140 million. The company intends to install state-of-the-art textile machines to produce and supply goods for the demanding markets in Europe, Japan, South Korea and Southeast Asia. According to their own statements, partners are leading world machinery brands. Wuxi is already pursuing a project in the Ethiopian city of Adama and also has plans to grow cotton in Ethiopia.

Ethiopia is considered the first textile address in Africa
"Clothing companies are nomads," an industry consultant knows, "they go where it is cheapest for them. If wages and ancillary costs rise too much in countries like Bangladesh or the PR China, the caravan moves on." South of the Sahara, only Mauritius has made a name for itself as a producer of high-quality clothing. Attempts to establish larger-scale textile and clothing companies in Namibia and Lesotho have so far been unsuccessful. Meanwhile, Kenya and Ghana have production conditions that are far too expensive.

Ethiopia offers several advantages at the same time: Wages and ancillary costs are extremely low and far below those in China. The US Centre for Global Development found out that a worker in Ethiopian sweatshops earns an average of USD 909 a year. In Bangladesh, however, it is US$ 835 and in Tanzania and Kenya even US$ 1,776 and US$ 2,118 respectively. Another advantage: Ethiopian seamstresses are considered to be extremely hardworking and reliable. In addition, there is a tradition in textile and clothing production as well as in leather processing and thus there is a basic pool of trained specialists.

Infrastructure is making huge progress
Meanwhile, the supply of domestic cotton and leather needs to be expanded, because in the drought years 2016 and partly 2017 the supply of cotton was insufficient. The government is cooperating and is increasingly listening to the needs of producers. The infrastructure is currently undergoing sustained improvement, in particular the transport routes to the neighboring seaport of Djibouti, from where Europe can be reached more quickly than from the Far East. And, last but not least, the Ethiopian capital Addis Ababa has a capable air traffic hub with a dozen direct flights to the EU, including Frankfurt and Vienna. In addition, there is a modern air freight center.

Just as important as the delivery routes are the comparatively modern production conditions in the newly emerging industrial centers throughout the country. Everything here is "Made in China": fences, access controls, roads, electricity and water supply, waste and sewage disposal, workers' settlements. From a European perspective, this may look like Chinese dominance, but from an Ethiopian perspective it creates jobs, feeds families and earns foreign exchange. Under better working conditions than in Bangladesh, experts mean.

According to the ideas of the Ethiopian government, the country is undergoing a transformation process: away from an agrarian-based economy and towards an industrial state. By 2025, the country is expected to reach middle-income status and to become Africa's largest industrial production hub. To achieve this, Ethiopia is investing heavily in roads, railways and power generation, health and education, urban and rural development and the creation of industrial clusters.

Customs advantages in the USA and Europe
Ethiopia has so far benefited from the African Growth and Opportunity Act (AGOA) of the USA, which, for example, allows savings of 16.8 percent in import duties on cotton trousers and 30 percent on synthetic shirts. Ethiopia also has duty-free access to the EU market under the Everything but Arms initiative. Fears that US President Donald Trump might stop AGOA have not yet come true.

Source: Comtrade

German exports can be expanded
German sales representatives of technology for the textile, clothing and leather industry are not yet well positioned in Ethiopia. According to preliminary figures from the Federal Statistical Office (SITC 724), only EUR 2.84 million of relevant technology where sent to Ethiopia in 2017, though 169 percent more than in the previous year.

Source: Comtrade