Development Trends of Garment and Apparel Manufacturing Industry
The development of Taiwan's textile industry
In the past, everyone’s impression of the textile industry was biased towards traditional industries, but since the 1950s, Taiwan’s textile industry has undergone more than 60 years of development and growth. The industry has continued to actively develop new products and update production equipment to expand the international market, making the textile industry an industrial structure in Taiwan. With the most complete production system being in China, Taiwan’s textile industry has become one of the main sources of raw materials for the world's functional textile consumer market. Many functional products and materials in major sports brands such as Nike, Under Armour, and Adidas are made in Taiwan.
Due to changes in market structure, technological progress, increased labor costs, and the migration of garment-based businesses to low-wage low-income countries to set up factories, Taiwan’s domestic textile industry has shrunk and is even regarded as a relatively stable and declining industry. In terms of the number of domestic apparel and apparel manufacturers in Taiwan, statistics from the past five years show that the number of apparel and apparel manufacturers in Taiwan in 2008 was 3,518, which was 114 fewer than in 2017, and this decline has continued for 5 consecutive years.
The overall decline in the textile industry is also reflected in the sales of manufactured garments and apparel products. The sales volume of the garment and apparel manufacturing industry has been declining year by year. In 2008, the sales volume was 60.9 billion yuan. In terms of total export value, the total export value of the apparel and apparel manufacturing industry also decreased year by year. The total export value in 2019 was about 14.8 billion yuan.
To get rid of the dilemma of recession, manufacturers of ready-made garments and apparel products first started to reduce costs. Faced with high-cost labor, existing companies have introduced smart manufacturing and built unmanned production lines, which can increase yield, improve quality, increase efficiency, and reduce labor demand. However, if the industry is to truly upgrade, improve competitiveness, and reduce costs, it is not a sustainable way, and it needs to increase product value.
In the future, the garment and apparel product manufacturing industry should break away from the foundry model, strengthen R&D and technological innovation, enhance design energy, and focus on strengthening differentiated products, launching high-value single products to increase profits, and have more opportunities to activate the overall textile industry. Take functional clothing as an example. The functional fabrics produced by Taiwanese textile manufacturers account for up to 70% of the global market, and they have a complete industrial chain. If the industry can strengthen fashion design and brand management, ready-made clothing and apparel manufacturing will be an available opportunity for growth.
In addition, the pollution caused by fast fashion's profitable business model of low-cost, disposable garments has been criticized, and the textile industry has been renamed as the second most polluting industry in the world, second only to the petrochemical industry. However, consumers’ awareness of environmental protection has gradually increased, and the demand for sustainable fashion has also increased. Fortunately, in recent years, Taiwan’s environmental protection textile technology has been continuously improved, allowing Taiwan’s textile industry to seize the opportunity. In the future, the garment and apparel manufacturing industry can also focus on eternal fashion. Continuous production of apparel products strengthens the integration of the industrial chain and enhances the competitiveness of the garment and apparel product manufacturing industry.Textile Industry Chain
Upstream of the textile industry: petrochemical raw materials, natural raw materials: The most upstream raw materials in the textile industry are divided into petrochemical raw materials and natural raw materials. Therefore, fluctuations in international crude oil prices will also affect the price trend of textile upstream raw materials. Nylon's important petrochemical raw material Caprolactam (CPL) is highly linked to crude oil prices. Ethylene Glycol (EG) and Pure Terephthalic Acid (PTA) will also be adjusted with oil prices, but in addition to the impact of oil prices, the demand for downstream polyester products will also affect the prices of PTA and EG.
The middle reaches of the textile industry: natural fibers, man-made fibers, spinning and weaving:
In the midstream, Taiwan has a limited production of natural fibers but has a complete plasticization supply chain. Therefore, the proportion of man-made fibers in production is as high as 85%, which is a leading position in the world. Because Taiwan’s textile industry has the most complete production system, after the outbreak of the Covid-19 epidemic last year, the support of the national mask team made Taiwan’s epidemic prevention stable and attracted global attention. In addition, under the efforts of the industry to transform, in recent years, it has moved towards a refined and differentiated layout and has gradually embarked on a new path. In addition, benefiting from the rise of global sports trends, functional textiles are becoming more and more important. Taiwanese manufacturers have also won the favor of internationally renowned sports brands and have become one of the important supply chains of world-renowned clothing brands.
The middle and lower reaches of the textile industry: dyeing and finishing, garments, and home textiles:
The downstream part includes dyeing and finishing and garments. Dyeing and finishing is the most energy-consuming and water-consuming part of the textile industry, but it is also a very important part of providing product differentiation and added value. With the rise of global environmental awareness, the dyeing and finishing industry has recently focused on the development of low-carbon or green products to achieve energy conservation and carbon reduction.
The garment and home textile industry are the last link in the textile industry, and it is also the one with the highest processing level and added value in the industry chain.
At present, most of Taiwan's garment manufacturers are focusing on improving their design capabilities and gradually transforming, from the previous OEM model to ODM or even their own brand OBM, a marketing-based business model.
Garment and apparel products manufacturing industry:
Industries engaged in the manufacture of garments and apparel products; the manufacture of garments and apparel products made of leather and fur is also included in this category. The apparel and apparel products manufacturing industry can be subdivided into two categories: apparel manufacturing and apparel manufacturing.
Development status of Taiwan's textile industry
- The Covid-19 epidemic has led to a substantial reduction in market supply and demand
According to data from the Bureau of Industry of the Ministry of Economic Affairs, the output value of the textile industry in 2020 decreased by 19.9%. The reason for the decline in output value is nothing more than the impact of the Covid-19 epidemic. According to the report of the Global Textile Information Network, the impact of the rapid expansion of the epidemic on the textile industry during the first wave (from February to early March 2020) as well as the second wave (from February to mid-March 2020) affectively reduced demand. Governments of various countries have promulgated anti-epidemic measures such as lockdowns and social quarantine. In addition to closing the physical outlets of brand clothing, the suspension of the Tokyo Olympics, major sports, and international events, some brands even canceled all orders for products listed in the spring and summer of 2021, resulting in rapid freezing of market demand. Downstream apparel orders have a knock-on effect, which directly affects the shipments of the upper and middle reaches of the leading industry, and its negative impact spread throughout the global textile supply chain.
- RCEP Regional Comprehensive Economic Partnership Agreement was signed and Taiwan failed to join
At the ASEAN Summit in November 2020, 15 Asia-Pacific countries signed the Regional Comprehensive Economic Partnership (RCEP). Its members include 10 ASEAN countries, and 5 other countries including China, Japan, South Korea, Australia, and New Zealand. The world’s largest free trade zone was born. The overall trade tariff abolition ratio exceeded 90%, and it covered 2.2 billion people worldwide, accounting for 30% of global gross domestic production (GDP).
Although the regional integration of RCEP members began in early 2000, according to the Global Textile Information Network, Taiwan textiles exported and sold to the15 RCEP members in 2019 reached 5.86 billion U.S. dollars, accounting for 63.8% of textile exports. The world's largest free trade agreement will draw closer economic and trade relations between member countries and affect the entire industrial chain. Therefore, failure to join RCEP will have an impact on Taiwan's textile industry. To avoid low-price competition and establish industry advantages, Taiwanese textile industry players must use methods that have long-term competitive advantages, such as efficiency improvement, product innovation, and management innovation. Taiwanese textile industry players should continue to improve their product differentiation capabilities, deepen partnerships with European and American brands, actively explore business opportunities in emerging markets, and carry out a strategic global layout.
Prospects and trends of Taiwan's textile industry
With the development of vaccines, the uncertainty of the impact of the epidemic on the market has decreased, and brand customers are expected to restore confidence in the consumer market. According to forecasts, global economic growth will reach 4 to 5% in 2021; the global apparel and footwear market will reach USD 1,630.1 billion in 2021, a growth of 13.7% from 2020. Facing the post-epidemic era, the textile industry should use methods such as improving efficiency, product innovation, and business innovation to accelerate the development of high-value products, expand into new areas, and acquire new customers for strategic deployment. The following are some of the development trends of the textile industry to help major textile companies create more business opportunities.
Redefining medical and smart apparel, developing towards fashion and lifestyle
Due to the impact of the epidemic, the demand for the medical protective clothing has greatly increased, and Taiwan has a better competitive advantage than other countries in terms of functional textiles. Therefore, it is recommended to make good use of consumers' emphasis on health management and emphasize safety protection functions to arouse consumers' resonance. On the other hand, due to the rapid development of information technology and the global Internet of Things, the demand for smart wearable apparel has grown. Therefore, how to combine biological protection, electronics, and textile industries to carry out cross-industry cooperation, fashion anti-epidemic clothing or smart clothing, and redefine such clothing will become an important issue in the next stage of Taiwan’s textile industry.
The awareness of sustainable development is on the rise, the circular economy becomes the key to development
Since the "Paris Climate Agreement", an important convention to combat climate warming, came into effect in 2016, important supply chains in the global economy have been fighting the "green economy" trend. Brands are emphasizing corporate social responsibility, and many world-renowned sports brands have successively issued green declarations, stating that they will use more sustainable and recyclable materials. At the same time, consumers' awareness of environmental protection and their emphasis on sustainable development are gradually increasing. Therefore, environmentally friendly textiles will continue to be one of the important considerations for consumers when choosing products in the future. It is recommended that the textile industry should continue to invest in environmentally sustainable technologies, including easy-to-decompose, easy-to-reuse, and biomass materials. It is also possible to integrate sustainability issues into brand operation strategies to achieve the effects of sustainable marketing and green marketing.
The digital age is coming, make good use of digital tools to create a new shopping experience
In recent years, consumers’ habits have changed, and online and mobile shopping has been increasing, which has impacted traditional retail brand retailers. Textile mills can use the D2C sales model to enable brand owners to better demonstrate the brand spirit and value positioning, create a high-quality and exclusive shopping experience, and provide more immediate, personalized, and accurate services and products. Global Textile Information Network recommends that the Taiwan textile industry should promptly transform into "smart manufacturing and digitization" and a "new service model" linking digital platforms, making good use of smart manufacturing and process data analysis, AI machine learning and other tools and applications to create new business models and enhance the shopping experience. On the one hand, it avoids the recurrence of situations like when the COVID-19 epidemic broke out last year, when major manufacturers delayed orders and cut orders and were unable to respond in time. At the same time, in response to customer orders gradually moving towards a “mass customization” model, digital tools are used to improve operational efficiency and save costs.
- De-Sinicization of the textile supply chain and accelerating the pace of transition to ASEAN
The confrontation between China and the United States has formed a long-term trend, which has brought strong future uncertainty. It has also allowed brands to examine the supplier’s financial and operational management, as well as production base dispersion, more carefully. At the same time, in response to the Sinicization, it is more actively demanding Taiwan’s fibers, yarns, and weavings. Mid-and downstream supply chains such as cloth have expanded in Vietnam and other ASEAN countries. The industry should actively expand the supply chain, strengthen response capabilities, and deploy southbound bases to cope with the regionalization, short-chain, and vertical integration of the supply chain. In the future, those who can integrate the supply chain will become the priority suppliers and receive increased orders.