Current Knitwear Market

Strength in the wool market The wool auctions resumed positively after the three-week Christmas/New Year recess. Close to 110,000 bales were offered over the first two complete sale weeks, with 94 per cent of offerings sold at an EMI of around 1,100 AU cents. With the current high AU: USD exchange rate (~$1.04), this means the international value is around USD11.50, which is close to the 90 % for the post-stockpile period. This positive tone reflects well on underling demand for our fiber, which is the central goal for wool marketing campaigns.

Above graph shows the average AWEX Eastern Market indicator for the poststockpile era (since July 2001) in AUD and USD terms, and shows current price percentile values for this period. Looking into the smaller volume of selection for the rest of this season, all expect a largely unchanged to stronger market. While Chinese New Year is just around the corner and could have some negative price implications, the current demand seems to be strong enough to carry our market through in a historically strong position.

And also looking beyond the current season, forecasters such as IMA-ASIA are seeing the global economy showing noticeable growth in the second half of 2013, and this should start to have a flow on effect on the global textile and clothing market. Underlying resilience in the Chinese economy While the Euro-zone and North American economic malaise has impacted Chinas export economy, it has also increased the importance of the Chinese domestic market, and prompted the Chinese government to take steps to stimulate economic growth. More than 55% of Chinas economic growth was coming from domestic consumption in 2012, up from 39.6% in 2007, and the Ministry of Commerce recently advised of its intent to keep boosting domestic demand to ensure economic growth in 2013 through the promotion of durable and semi durable consumer goods. The export slowdown may have bottomed out. In December, Chinas textile and garment exports beat expectation, climbing 10.9% year on year to USD 24.1 billion. For 2012 as a whole, textile exports up 1.2% year on year to USD 95.78 billion, and garment exports rose 3.9% to USD 159.14 billion. Together total exports amounted to USD 254.92 billion, up 2.8% on an annual basis and accounting for 12.4% of Chinas overall exports. Other Luxury fibers Globally, there is a general tightening of luxury fiber supply. The latest report from The Schneider Group outlines silk prices continue to rise. In their report silk prices rose to record high due to the lack of raw materials and strong demand for the fiber. Stocks in China were noticed low, and shortage of supply affected some top makers and some spinners throughput. Therefore prices are forecast to remain strong through till after the next harvest in June July 2013. Superfine and Ultrafine Merino is a substitute and competitor for cashmere, and so cashmere prices and supply have some relevance for wool in the luxury apparel market. Roughly 90% of the worlds supply of pure cashmere and 70% of its finished products come from China. Similar to the silk market, strong demand accompanied by limited supply are pushing up the prices. There are reports indicating one of the Chinese buyer have been building his own stockpile of greasy Cashmere, r relative strength.

Current Market Demand For Knitwear Marketing Industry Analysis: Current market demand for knitwear is involved with the quality and competitive pricing of products. There is a close competition between the manufacturers and marketers to hit the best bargain and offer promotional discounts to consumers. Cutthroat competition has made manufacturers to offer multi-pack products at inexpensive prices. Developments in knitting, and advanced treatments such as digital printing, glossy foil prints, inkjet printing, flocking, and burnouts have heated up the market. New knitting machines have opened up possibilities hitherto into unknown segments such as technical textile, for instance; products such as fishnet, fruit-net, shade net and composite products. The Smart Fabrics and Interactive Textiles market will return to growth, reaching a value of US$1.8bn by 2015, according to new research by Global Industry Analysts (GIA). (just-style.com) It seems that the revival of economic growth, a recovery of consumer confidence, product innovations and sustainability would all help to put growth back on track. On the other hand, demand for unique product offerings, served by unexplored, developing markets, will sustain growth. It can be safely assumed that the knitwear the industry lifecycle is at the mature stage as shown in the figure below.

Figure 1. Need caption specifying Source (author, name of the book, and page number)

According to GIA, the intimate apparel industry is defined by new fabric developments, including innovations in fashionable and comfortable garment designs. The report found that competition within the industry had resulted in falling prices and a shift in production, prompting manufacturers to expand their operations into South America, Central Europe and Asia (Network). Europe is identified as the single largest regional market for knitwear, although the US; they dominate global knitwear sector with a 65% market share (LTD). Asia Pacific is currently growing to be a promising market for the same. During the recession, the Asia-Pacific market was buoyed by rapid growth in China, India, Korea, Indonesia and Taiwan. The global knitwear market is competitive and fragmented. The economic crises have narrowed the gap between the upper and lower end of the market with style differentiation almost vanishing.(Ltd.) With advancements in the industry in the recent years, RadiciGroup is introducing CornLeaf, a 100% biodegradable solution-dyed continuous yarn. Produced by Noyfil SA, the yarn is made from Ingeo, a polylactic acid (PLA) polymer derived from renewable vegetable resources. Compared to traditional dyeing and finishing processes, the manufacturing of CornLeaf requires less water and energy consumption as solution dyeing technology is integrated into the spinning process. CornLeaf lighter than other natural fibers, and has tenacity comparable to other synthetic fibers. According to RadiciGroup, the yarn also has greater hygroscopicity compared to synthetic yarns and is faster drying than natural fibers. RadiciGroups yarn is available in a range of lightfast, wash-resistant colors intended for use in intimate wear, furnishings and consumer goods. (W. T. Ltd.)

Product Information: Sana Hastakala, in collaboration with local women and producers, market variety of handicraft products. Besides producing and exporting handicrafts items, SH helps entrepreneurs with financial and technical assistance; some of these business enthusiasts operate in a very small scale and usually manage their business operation from home. Such assistances usually consist of capital needed for raw materials, health checkup, product development and design, and marketing (Sana_Hastakala "About Us"). The products are beads, ceramics, hemp products, knitwear, metal crafts, silver jewelry and others. The complete list of products is provided in Appendix A. We are looking for prospect buyer(s) in Canada for knitwear products offered by SH. The knitwear products include woolen cap with earmuffs (or ear-flap woolen hats), mittens (boxer gloves and hunter mittens), woolen sock, and mufflers. Appendix B provides the images of these products.

SH uses high quality sheep wool and agora wool from Nepal, and also uses imported wool from New Zealand. The quality of yarn has to be approved by the client prior to production. SH has its own catalog for the designs, which are based on both traditional Nepalese and classic western motifs (SH_Woolen). The design catalog is provided to clients upon request. SH also provides professional to develop pattern and design in collaboration and consultation with the clients. The samples, after approval, will then be sent to producers. All the knitwear products are hand-made and will have 100% Hand-made in Nepal labels (Sana_Hastakala "Polcies and Procedures"). It is worthwhile noting that all knitwear (except for sweaters which is not in consideration because of size-requirement discrepancies between Asia and North America) products are unisex. The knitwear products are available in two different sizes: small (kid-size), and large (adult-size). Since these are hand-made, SH admits that it is hard to enforce size requirements, but will comply with clients requirements (Sana_Hastakala "Polcies and Procedures"). The knitwear products are available in a range of fashionable colors. The local woolen yarn colors are usually pale white and grey. These wools are from sheep and yak, and no animals are harmed during the production of wool. The wools are dyed based on the clients requirements. The design catalog contains the range of colors available. The hats or caps and boxer gloves can have fleece lining upon request by the clients. These linings provide extra warmth and are usually preferred by most of the clients. The requirement of linings will be decided after consultation with clients. Being a member of World Trade Organization, Fair Trade Group, and Fair Trade Group Nepal, Sana Hastakala strictly adheres to the guidance and regulations to maintain quality and standards, which are regularly checked by these organizations. Besides quality and standard, SH ensures that these ten standards are followed: Creating opportunities for economically disadvantaged producers, Transparency and accountability Trading practices Payment of a fair price Child labor and forced labor Non-discrimination, gender equity and freedom of association Working conditions Capacity building Promotion of Fair Trade Environment The details of these standards are discussed in detail by any Fair Trade organizations (FTGN_Standards). The compliance certificates can be obtained upon request by the clients. The client can request to be affiliated with Sana Hastakala to promote Fair Trade practices in Nepal. Some clients have expressed the positive outcomes

and boost in profits because of this affiliation. SH assures that the client will develop business relationship that will benefit everyone and SH will be committed once this relationship is established (Sana_Hastakala "Polcies and Procedures"). Transportation Procedures: Sana Hastakala (SH) offers two types of shipping: sea and air. If the client prefers DDP (Delivered Duty Paid), then SH will use its own freight forwarding firm, handled by third party, and the freight, insurance and cost of goods will be the landed cost. Some clients prefer EXW the products are picked up from the SH warehouse located at Kupondole, Nepal. The client will be responsible for all the charges thereafter (Sana_Hastakala "Polcies and Procedures"). Nepal is member of World Trade Organization and strictly adheres to rules and regulations of WTO. Prior to 2005, Nepal enjoyed quota free access to major global markets. Nepal does not have any restrictions in exporting knitwear as long as it maintains quality standard requirements (Shah). However, importing textiles and clothing to Canada is subjected to Export Import Permit Acts and requires import permit from Foreign Affairs and International Trade Canada (DFAIT) (DFAIT "Import Conditions"). The import also is subjected to certification fees and custom fees based on the total value of goods (DFAIT "Schedule (Paragraph 3(1)(a)): Fees for Import Permits"). SH prefers exporting through seaway for exporting goods, but this requires order in advance one year so that the product reaches the buyer in time. SH can also provide merchandise through air cargo the order is required four months in advance. The seaway shipment is cost-effective compared to air cargo. Currently, the shipping price through sea is US$ 3.00 below 500 kg and US$ 2.00 over 500 kg, whereas the air cargo cost depends upon the courier service used for transportation; on the average, air cargo costs US$ 9.50 below 500 kg and US$ 7.25 over 500 kg (Sana_Hastakala "Polcies and Procedures"). The method of transportation will depend upon after discussion with buyer and their preferences, but sea shipment will be recommended to keep the landed cost minimized. The turn-around-time depends upon the quantity of merchandise ordered. A minimum order of 1,000 units of knitwear, mix and match of any products, is required to minimize the packaging and handling charges. The seller has to keep in mind that the estimated delivery time through sea is three to four months, whereas the estimated delivery time through air cargo is five to seven business days (Sana_Hastakala "Polcies and Procedures"). The packaging will be done in weather-proof packages so that there is minimal damage to the merchandises due to weather and other natural disasters. The packaging is either in the tarp sacks or boxed, the latter being more expensive and will cost more to buyer (Sana_Hastakala "Polcies and Procedures"). Pricing Policies and Procedures: For selling any of goods or services some type of cost analysis is required. SH, according to the cost analysis, set prices, for their three merchandise (Caps, Mittens and Mufflers), as below:

Caps: $3-4/Piece Mittens: $3-4/Pair Mufflers: $2-3/Piece A part of analysis is verification of pricing. For better understanding the market situation, the table one shows comparing prices between three supplyer that are competing in the market and SH. Obviously, this is one of the best means for validating price. By asking three or more suppliers of their prices for the same product, we can determine if a particular price is reasonable. However, the lowest bid may not always represent the lowest cost. There may be cost associated with making the lower cost product perform to standards, the additional cost of early replacement or the cost of redesign and/or testing required making the lower cost product applicable. This "total cost of acquisition" is the real cost that must be compared. Its obviously shows that SH prices are higher than the other competitor in the market and it is because of their quality and being handmade of the products. Caps Mittens Mufflers SH $3-4 SH $3-4 SH $2-3 Goldmax Int'l Pvt. Ltd (India) $1.5-2.5 Wuxi X&S Knitting Factory (china) $2.5-3.5 JOO HYUN TEX INDUSTRY korea $1.5-6.5 Le Moda Magasin (Nepal) $0.90 - 1 EAGLE EYES EXPORTS Nepal 2.50-4.15 Yiwu Amanda Import & Export Co., Ltd. (china) 1.4-1.6 Kayastha Knitwear (Nepal) $2.00 Shanghai Arch Im & Export Co., Ltd. $1.3-1.8 Jiangsu Yunyuan Silk Co., Ltd. (china) $5-6 Table 1, competing price SH doesnt have any discount offer for first order but for compete with other competitors they offer discount for second and subsequent orders. They promote 12% discount for orders more than 70,000 and 20% discount for

orders more than 100,000. Furthermore they have discount for fair trade members about 25%, also these excludes VAT which is 22% in Nepal. The company use advanced order to take advance payments to cover the cost of raw materials purchase. Then SH use totally prepaid advanced payment for first order and for the second order they recommend 75% advance payment, 25% after shipping. Also they recommend 50% advance payment and 50% COD payment for third order and subsequent orders. The firms policy on extending credit to its customers is depending on the loyalty of the customers to SH and their participation in promoting fair trade globally and locally.

References

http://www.ukessays.com/essays/marketing/current-market-demand-forknitwear-marketing-essay.php#ixzz2OCOBZd2R http://www.woolmark.com/market-reports-january13