opportunity in eu market for garments...

GUATEMALA’S OPPORTUNITY IN EU market for Garments GUATEMALA CITY, GUATEMALA 3 – 4 MARCH 2014 Rupa Ganguli Clothing Connect B.V. CBI Sector Expert: Garments and Textiles

Agenda and structure – 4 March

Part 1: CBI and how to join the CBI programme Part 2: EU Market trends and requirements Understanding differences in exporting to the EU Some key certifications and standards

DEMAND AND GROWTH TRENDS IN EU MARKETS

Putting things in context – EU garments & textiles

1. EU 2012 import: EUR89.6bn, of which textiles accounted for EUR24.4bn and clothing EUR65.2bn

2. Rising costs and alternate sourcing

3. A drive towards sustainability at the global level

4. Looking at new sources … such as Myanmar

6

Want long term strategic relations

Looking for VALUE

MAIN element : Compliance and standards and partnerships!

Market intelligence on EU for garment manufacturers (CBI) based on consumers

7

• European competition - new boost - new member states in EU

• Economic downturn - a positive and negative impact

• New countries being explored for partnerships and outsourcing,

• new advanced materials will be used in clothing and new key target groups will emerge (+50, new yuppies, eco-chic, etc.)

• Distribution - a multi-channel model and new sources of influence social media (e.g. bloggers, environmental organisations)

• Major polarisation, the role of corporate responsibility (CR) is unavoidable with regard to both environmental and social impact

• The industry is trying to move towards chemical-free production, reducing the role played by transportation and having a clean and ethical production proces

Clothing expenditure in the EU27 market is expected to grow to reach €309.9bn in 5 years between 2012 -17.

8

• Poland leading the way with an increase of approximately 29% between 2012 and 2017

Several Eastern European countries show high growth potential

• Western / Central Europe, the UK shows one of the highest expected increase in spending, followed by the Scandinavian countries, Germany, BENELUX and France.

• Italy and Ireland area amongst the lowest performers.

• The poorest performers and high risk is seen in the markets of Spain, Portugal and Greece.

Buying behavior and category trends

• Menswear is key category for driving growth in EU 2014 – 19

• Germany largest market share in EU

• UK highest growing in western EU • Online buying - big trend with

consumers • More fashion conscious and

demanding consumers • COMPLIANCE IS CRITICAL!!

15

Private label manufacturer vs

brand building

With increase in value,

there is a greater complexity

Of operations & with that

more responsibilities to the

end consumer

Brands vs Manufacturers:

channel Suppliers with own brands for high end:

- Longer channel

- Producer > importer/wholesaler > agent > retailer

Suppliers wishing to work as manufacturers:

- Shorter channel

- Producer > retailer

OR

- Producer > agent > retailer

EU market requirements

Putting things in context – global garments & textiles

18

1. Legal requirements

Legal requirements set the basis for what requirements products marketed in the EU must meet. Products that fail to meet these requirements are not allowed into the EU market.

2. Non legal requirements

Additional requirements go beyond legislation, as companies can go further than legislation in their requirements. The main categories of additional requirements are environmental requirements and social (labour) requirements.

The importance of legal

requirements – example 1

The importance of legal

requirements – example 2

Non legal requirements

http://www.cbi.eu/system/files/marketintel/Buyers__requirements_Apparel.pdf

Environmental requirements

They are often covered by legal

restrictions on the use of certain

chemicals (azo dyes),

Social requirements can be found in a

number of instruments: company codes of

conduct, managements systems and

labels.

Most initiatives are based on the basic ILO

standards, covering labour rights and

occupational health and safety (OHS).

CSR Today

Ethical Fashion is growing

• Social and environmental issues

• Higher social and environmental

Awareness consumer

• Expected higher personal well-being through the absence of noxious chemicals in the end-product

Importance of NGOs and

organisations

Quotes H&M referring to Greenpeace’s Toxic expert Hartmann

Brands are collaborating with NGOs and non-profit organisations to build their own CSR programmes

H&M basic requirements for suppliers

Key certifications & standards

organisations in Europe

• BSCI • ETI • SA8000 • WRAP • Made-BY • ILO • SAC

Some of these are certifications while others are operated as standards set through organisations and foundations which have labels with base codes which several retailers and brands sign up to and recognise

Big vs small manufacturing

companies Certifications for big manufacturing companies – ILO,

SA8000, WRAP, ETI, BSCI, FLA,

Certifications also possible for small manufacturing

companies – ILO, ETI, BSCI, FLA

• CODES of CONDUCT and CSR programme compliance

required for brands with their own programmes

• Must check which companies have signed up and accept

which certifications and identify certification which is

most relevant

Source: Rajesh Bheda Consulting 27

Example : Buyer social – EU

In-factory audits will require compliance!! The next set of slides provide you with some images of DOs and DON’Ts

Social responsibilities



Wire Mesh Glove Being used while cutting Operator Not using wire mesh glove while band

knife cutting




Operator wearing mask to avoid lint and dust from machine

Table Light Being Used for High Precision work


Source: ITC textile and clothing presentation 31

Buyers would like to see…

Evolving trends

. 32

Buyer requirements – EU

SPEED TO

MARKET +

FLEXIBLE

ORDERS

COMPLIANCE

& CODES OF

CONDUCT!!

PRICE CONSISTANT

QUALITY

PRODUCT

DEVELOPMENT

CAPABILITIES !!!

What buyers want

INSPIRING BRANDS

TERRAPLANA (1)

Key features: Light, anatomic,

durable, environmentally

friendly, good design The brand name ‘Terra Plana’ means

flat earth and celebrates a

harmonious indoor and outdoor

living.

This brand name is successful

because it helps the consumer

make those associations

Selling line: Ethical Shoes that

are Good to your Feet

There are recycled elements in every TERRA PLANA shoe

INSPIRING BRANDS

TERRA PLANA Vivo Barefoot line

✓Efficiency – how many components?

Could it be less and could it be easier to make?

✓Sole – Durability, lightweight, flexible, recycled

content and minimum glue etc

✓Upper – Made from eco friendly materials

(recycled, high performance etc) ✓Function – Is it a great product to wear?

✓Looks – The worst thing we can do is release

products that don’t look good.

TERRAPLANA (2)

DESIGN FORMULA: Sustainable design through their in-house eco

matrix – where they score every product based on 5 CRITERIA

INSPIRING BRANDS

PEOPLE TREE

Their mission is to create beautiful

garments that create jobs in

developing countries.

All their products are ecologically

sound (organic, hand woven or

knitted)…

Transparency about made in….and

they have a great ability to tell the

stories of people behind the clothes

they make.

E.g.: Assisi http://bit.ly/fKtUs5

One day in the life of People Tree

(6:40) http://bit.ly/fOgX30

http://bit.ly/fKtUs5

http://bit.ly/fOgX30

ANIMANA

Combines the capacity to produce

beautiful, high end and luxury

products with pioneering production.

Works with local people from

Patagonia and the Andes,

encouraging groups of craftsmen to

create one of a kind garments and

textiles, using llama, guanaco,

alpaca, silk, cotton-wool, merino-

wool, raffia, corn, onix, alpaca metal.

http://www.animanaonline.com/

INSPIRING BRANDS

http://www.animanaonline.com/

Supply from Guatemala

Guatemala’s exports to EU

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Value in 2010 Value in 2011 Value in 2012

'6203 Men's suits, jackets, trousers etc & shorts

'6204 Women's suits, jackets,dresses skirts etc&shorts

'6105 Men's shirts, knitted or crocheted

'6106 Women's blouses & shirts, knitted or crocheted

'6202 Women's overcoats,capes,wind-jackets etc o/t those of hd 62.04

'6109 T-shirts, singlets and other vests, knitted or crocheted

Guatemala’s garment industry • Guatemala has approximately 136 garment

manufacturing factories (data from VESTEX) • Employs over 50,000 workers; over 50% are women, in

many cases, single mothers. • 75% of the factories are small (upto 500 workers), • 19% medium (from 500 – 1000 workers) • 6% big (above 1000 workers). • Even the big factories are mainly between 1000 and

1500 workers. (very few factories as big as 4000 workers)

• Large number of Korean investments • Overall good quality and compliance observed during

needs assessment in 2013

Guatemala’s main export mkt - US

China 40%

Bangladesh 9%

Vietnam 8%

Mexico 7%

Indonesia 6%

India 5%

Guatemala 1%

Italy 2%

Sri Lanka 2%

Cambodia 2%

Philippines 1%

Pakistan 1%

Egypt 1%

Honduras 1%

Thailand 1% Nicaragua

1%

Others 10%

China

Bangladesh Vietnam

Mexico

Indonesia

India

Guatemala Italy

Sri Lanka

Cambodia

Philippines Pakistan

China 37%

Viet Nam 10%

Indonesia 7% Honduras

5%

Cambodia 4%

El Salvador 4%

Mexico 3%

India 3%

Bangladesh 3%

Pakistan 2%

Nicaragua 2%

Guatemala 2%

Sri Lanka 2%

Thailand 2%

Jordan 2%

Others 12%

China

Viet Nam

Indonesia

Honduras

Cambodia

El Salvador

Mexico

India

Bangladesh Pakistan

Nicaragua

Guatemala

Sri Lanka

Thailand

Jordan

But only 1% market share in wovens (62) 2% in knits (61)

Guatemala’s opportunity in EU

• As of Dec 2013, new EU – Central America Association Agreement : strategic interest on both sides to increase trade and business between the two regions

• Current status of Guatemala exports to EU negligible (less than 1% market share) a clean image to set up a good impression

• Main exporters to EU: China, Bangladesh, Turkey, Italy, Germany, India, Spain, France, NL, Romania and Morocco

Observations needs assessment • Majority of companies were keen to

explore EU market opportunity • Were well equipped on higher value

and quality • Active, casual sportswear, bodywear

and football jerseys appeared to be prominent

• Denim very impressive offer • Almost no company exported directly

to EU buyers (little experience) • Main reason appeared lack of

awareness on both sides, order quantities, types of products, competition

MATCHING DEMAND AND SUPPLY

WHAT CBI PROGRAMME AIMS TO DO…

46

Supply Demand

• Demand Analysis: Which group of EU enterprises ARE INTERESTED AND WANT TO SOURCE FROM GUATEMALA

• Supply Analysis: Which group of GUATEMALAN enterprises are able to meet EU demand and interested to export?

Guatemala’s top product categories for export in both, knits and wovens match the key import categories of EU27

key trend for growth in menswear in EU, factories in Guatemala have been manufacturing mens casual wear and active sportswear for several years to the highest standards required by international brands mainly out of the US.

Womenswear is the key export product segment from Guatemala currently and this makes up almost 50% of the EU market for clothing currently

Over the past 10 years, Guatemala has strengthened its ability to create active sportswear product categories, football / hockey team products, fitness clothing, swimwear and other fashionable sportswear. There is a growing demand for sportswear products in EU as consumers start becoming more health conscious

Guatemala’s top product categories for export in both, knits and wovens match the key import categories of EU27

- Stylised menswear casualwear

- Womenwear body shapers, stockings, other seamless products

- Team football jerseys and merchandise for Sports league teams in EU

- Sportswear and fitness clothing for men and women (could branch into products such as yoga wear and trackpants in well designed styles)

POTENTIAL STRATEGIES FOR GUATEMALA – DIFFERENTIATION MAINSTREAM BUSINESS FOOTPRINT AND VISIBILITY WITH A FOCUS ON COMPLIANCE

THANK YOU!!

opportunity in eu market for garments...

Documents