INDUSTRY OVERVIEW
TEXTILE AND APPAREL GLOBAL SUPPLY CHAINS
  • The Global Apparel Market Constitutes 1.8% Of Global GDP
  • The Industry Employs Over 60 Million Mostly Female Workers
WET PROCESSING
PaCT
CHINA WATER
WRG
ASSEMBLY
BETTER WORK
BTC
EXPORTS
GTSF
The four main consumer markets (USA, China, EU, and Japan) account for over 75% of global apparel value despite having only around 30% of the world's population.
United States
$200bn
The US is currently the largest apparel market but China will overtake by 2020 through strong domestic demand.
European Union
$350bn
The EU is top textile importer. Apparel sales are mixed, with modest gains in the UK and Germany countered by losses in Greece, Italy, and France.
China
$150bn
China is the top apparel and textile exporter, with market shares rising despite higher production costs.
Japan
$140bn
Strong consumer purchasing power keeps Japan at third largest apparel importer.
The main textile and apparel production hubs account for over 60% of global population. China alone accounts for around 40% of global textile and apparel trade value.

China, the EU, and Bangladesh account for 70% of global apparel exports.

China, the EU, and India were top three textile exporters in 2014 and 2015.

Asia dominates global assembly industries, but sourcing forecasts show regional, process and productivity concerns as labor costs increase amid slower global consumption.
World textile and apparel trade growth has slowed since the 2008 economic crisis. Short-term expectations are for moderate growth, in line with world GDP growth of 2.4%.
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Asia dominates global textile and apparel trade

Roughly 60% of world textile and apparel exports come from Asia.
Asia accounts for approximately 30% of world textile and 16% of world apparel imports.
China’s textile and apparel exports will continue to grow, despite rising labor costs and slower economic growth. China’s growth rates are however expected to slow, and open production opportunities for Bangladesh, Vietnam, and other emerging markets.
Wages in Asian textile and apparel producing companies are rising, but are still far off the minimum wages in Western Europe and the US. Minimum wages across Asian producers are widely divergent, (China reaching $321/month; Bangladesh $68/month) and often within a country the highest minimum wage can be double the lowest minimum wage.
WET PROCESSING
  • Wet processing adds maximum value by improving textile comfort and range of use. The industry is water, chemical, and energy intensive, and creates significant pollution issues.

  • The challenge from the rise in textile and fiber consumption is to process greater volumes while substantially reducing effluent and harmful byproducts.
WET PROCESSING
PaCT
CHINA WATER
WRG
  • Global buyers are increasingly sensitive to market inefficiencies and sub-standard environmental practices.

  • Most processing activities are carried out by smaller-scale units in lesser developed countries that have fewer environmental safeguards and financial resources. The cost of upgrading or installing water treatment systems can be prohibitive for these small-scale operations.

  • Funding, capacity building, and government policies must align to help the industry adopt sustainable production technologies and practices.

The textile industry has long been one of China's largest polluters. With China's increasing production capacities, it is critical that environmental practices are adopted to safeguard affected communities.
70%

of shallow and deep groundwater in Northern China
(home to significant farmlands)
is severely polluted.

Washing, dyeing, and finishing factories are the second largest polluter in Bangladesh. With apparel driving export growth and formal employment, production must meet client demand for energy efficiency upgrades and greater corporate social responsibility.
1.5bn liters of groundwater consumed; heavy reliance on inadequate wastewater treatments.
250L Bangladesh factories use five times as much water than the global average of 50 liters per kilogram of fabric.
Summary of Wet Processing
IFC INVESTMENTS:
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PaCT is driving systemic change in Bangladesh's textile sector. PaCT addresses water, energy, and chemical use through the adoption of best practices. These best practices improve resource consumption and raise profits and reputation in the global apparel market. http://www.textilepact.net/
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PaCT PILLARS
EACH $1 SPENT ON PaCT ANNUALLY
DETAILED RESULTS
INVESTMENTS
  • US$10.5m in long-term financing to expand the DBL Group's (Color City) production capacity.
  • IRM approved for Epyllion for US$8.3M IS loan for business expansion.
  • Establishing the first ever 'green financing fund' globally for resource efficiency in the textile sector, in partnership with the Central Bank of Bangladesh.
  • Total investments to date: US$31m
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In China, up to 250 tons of water is used for every ton of fabric produced, and around 3 billion tons of wastewater is discharged every yeaer by textile producers. China is now facing water scarcity and environmental degradation issues that threaten further social and economic development; the water supply-demand gap has grown to 50 billion cubic metters per year.. www.ifc.org/helping_chinese_textile_firms_save_water
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PROGRAM IMPACTS

Working with global brands such as IKEA, Primark, Jones Group and domestic Chinese companies, IFC developed 50 water efficient and energy efficient projects in 24 textile dyeing and finishing mills and one textile industrial zone.

Textile City Initiative: Working with Target, Gp Levi’s and H&M, the initiative provided expert coaching for more than 100 textile mills to develop and implement their own water and energy saving projects. More than 200 projects were implemented with positive results; 33 mills went on to identify and develop their own water and energy saving projects.

Produced and distributed, ‘The Textile Industry Leaps forward with Clean by Design: Bigger Profits through Less Environmental Impact’, a report chronicling the Green Textile City Initiative’s improvement projects.

FINANCIAL SECTOR & INVESTMENTS

IFC is helping banks evaluate opportunities in the water sector and demonstrating that saving water makes good business sense.

The Bank of Beijing is the first bank in China to add a water-efficiency component under its SME energy-efficiency financing . IFC trained bank staff and introduced water efficiency interventions at project sites.

At the national level, IFC has also worked with the China Banking Regulatory Commission to encourage banks to provide loans for qualified water efficiency projects.

FIG: Work with investee banks, including Bank of Beijing and Bank of Jiangsu to build capacity in partner banks on identification, evaluation, and processing of water and energy efficiency projects. FIG has facilitated $26.8 million in Bank of Beijing loans.

MAS investment: US$20 million of equity investment for the Wasion Group.

MAS portfolio client Muyuan Food: Program to enhance sustainable water resource management via water footprint assessment and overall sustainability strategy and reporting.

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WRG is a public-private-civil society platform for water resources reform. It mobilizes stakeholders at global, national, and local levels to close the water supply and demand gap by the year 2030. WRG’s aim is to help developing countries adopt sustainable water sector transformations and reforms in order to bolster long-term development and growth plans.
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RESULTS

MoU signed between Government of Bangladesh, Government of Netherlands, World Bank and IFC/ 2030 WRG on development and implementation of BDP 2100.

Engagement with H&M and WWF on national water governance workstream of 2030 WRG.

MoU signed with Stockholm International Water Institute to support water policies, incentives, and institutions, and watershed restoration.

BTC works in partnership with the Bangladesh Central Bank to design social risk management guidelines and tools for local banks to play an active part in remediation efforts.

EXPECTED IMPACT

USD [1 billion] green finance catalyzed for Bangladesh Delta Plan 2100, covering among other areas, pollution management and wastewater treatment in priority sectors, including textiles.

Legislative and institutional improvements enacted for water governance.

Increased treatment of industrial and urban wastewater facilitated through private sector investments and PPPs in the Greater Dhaka Watershed.

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Analyze: Develop analytics that clarify the scale and urgency of the water challenge.
Convene: Bring together stakeholders at all levels to identify and agree on key priorities and activities.
Transform: Implementation of activities through long-term development partners and water sector professionals.

The ACT approach is flexible, can be non-linear and allows for tailored engagement and sequencing to meet the specific needs of each country and the stakeholders.

Maharashtra Cotton-Water Platform

The 2030 WRG Maharashtra Cotton-Water Platform seeks to deliver coordinated, multi-stakeholder solutions at scale to promote water security and de-risk livelihoods for 500,000 cotton farmers in Maharashtra, with projected impact of 1 trillion liters by 2020.

Core partners and promoters identified through ongoing discussions include the Government of Maharashtra, World Economic Forum, H&M, IKEA, C&A, IDH-Sustainable Trade, and WWF-India.

Bangladesh Delta Plan 2100 and Dhaka Watershed Restoration

The Dhaka Watershed Restoration Program of 2030 WRG is working towards integrated and holistic approach to water resources management, with a focus on wastewater treatment and close engagement with the textile industry. This engagement will be developed in partnership with international governments, donors and enablers (e.g., Government of Netherlands, SIWI, and WB), inter-ministerial agencies, industry associations (e.g., Bangladesh Garment Manufacturers and Exporters Association), leading brands (e.g., H&M), civil society partners (e.g., BRAC), and others.

ASSEMBLY
  • The textile and apparel manufacturing industries, despite the rise in automation, are among the world’s most labor-intensive manufacturing industries.

  • With low global apparel consumption forecasts, shorter product lifecycles, and increasingly sophisticated products, manufacturers are further prioritizing labor and production efficiencies.
ASSEMBLY
BETTER WORK
BTC
  • WORK ENVIRONMENT
  • FIG & MAS
  • Respect for labor standards helps factories meet the social compliance demands of global buyers.

  • An improved working environment helps factories increase productivity and create jobs despite economic uncertainty.

  • Women make up the vast majority of the world’s garment workers. These jobs are an important source of income for young women with low education levels in developing countries.

  • Creating better conditions for women can bring benefits including greater resilience, profitability and better recruitment and retention.
Technological advancements are increasing productivity while slowly transforming the nature of the work; nevertheless, the variety of materials and cuts in the assembly process is difficult to automate and skilled machine workers will remain in demand.

The split between advanced technical automated machinery and manual labor production is expanding, generally along developed and developing country lines. Production process upgrades across the globe (wider looms, robotics, and methods eliminating spinning or weaving) are reducing labor but producing similar volumes.

Bangladesh: MAS investments: Ananta US$ 6.5m and VF Corp US$ 10m corporate guarantee to improve suppliers’ electrical and safety. FIG US$ 50m credit line to improve structural, fire, electrical safety in factories.
Sri Lanka: US$ 28m to MAS Capital Ltd to support expansion and creating more jobs.
Summary of the Assembly Process
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  • Most production workers in textile and apparel manufacturing are trained on the job. A large part of the workforce in these industries has minimal formal education.

  • Factory trainings tend to focus on practical, production skills development and not on interpersonal skills. As new production processes requiring greater teamwork replace older methods and machinery, factories will value workers with greater communication and problem-solving skills and initiative.

  • Most factories run 24 hours a day and many operators work on rotating schedules and often work overtime. This can disrupt patterns of healthy living.

  • Global brands and their customers are increasingly demanding greater protection and promotion of safety and health standards in factories. Safety and working conditions can vary greatly from factory to factory and even from floor to floor within a large factory. Injury prevention should not only focus on accidents but injuries from repetitive motions or physical stress of assembly line processes.
  • Better Work is a partnership between the International Labour Organization and IFC targeting labor standards in global supply chains.

  • Better Work combines assessments of factory compliance with international labor standards and national labor laws with training and capacity building. For more information visit: http://betterwork.org
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Better Work promotes worker-management cooperation, safe working conditions, and open social dialogue.

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LIST OF BUYER PARTNERS
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Data from six countries (Bangladesh, Pakistan, Philippines, Sri Lanka, Thailand, and Zambia), show textile and clothing wages are more than double those paid to agricultural workers, but only half the overall average of manufacturing wages.

of employers provided transport for female workers who work at night to enable them to get home safely.
of recorded factories provided men and women equal pay for equal work.
increased in the number of employers who allowed women workers paid rest.
BTC plays a key role in developing local financing initiatives that encourage greater safety and work environment standards. By working with the industry association BGMEA, the ILO, and brand initiatives Accord on Fire and Building Safety and Alliance for Bangladesh Worker Safety, BTC aims to strengthen the garment industry supply chain, improve working conditions and productivity, and better the career prospects for women.
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In the wake of the 2013 In the wake of the 2013 Rana Plaza tragedy BTC expanded to help factories access financing to remedy structural, electrical, and fire hazards.

Through work with project partners Alliance and Accord, more than 1,600 factories have been inspected, more than 75% of all identified fire and safety hazards have been fixed, more than 300 factories have completed remediation, and approximately 1,330,000 workers and security guards have been trained in basic fire safety.

These achievements have been facilitated by investments from FIG and MAS totalling US$ 60m to ensure factories have access to the financing they need to cover remediation.

“IFC is honored to be part of Bangladesh’s strong growth story in recent years. In collaboration with a range of critical partners to make the country’s highest revenue-earning and employment-generating textiles sector globally competitive, IFC is helping the country address a complex development challenge,” said IFC Director Mengistu Alemayehu. “We will continue to partner Bangladesh in improving economic opportunities and creating jobs by improving logistics, connectivity, power access, and strengthening key sectors.”
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Financial institutions: BTC will train 10 FIs in social risk management in the RMG sector, enabling them to facilitate loans to the sector.

BTC works in partnership with the Bangladesh Central Bank to design social risk management guidelines and tools for local banks to play an active part in remediation efforts.

INVESTMENTS LINKS

BTC collaborates with Global Trade Supplier Finance (GTSF) to onboard factories into the program, providing access to low-cost financing for eligible factories that demonstrate good environmental and social performance.

In Bangladesh, IFC launched a US$40m credit line to improve safety in factories.

IFC partnered with VF Corp on a US$10m corporate guarantee to improve safety conditions.

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Low skill levels are noted by buyers, industry experts, and manufacturers as an impediment to factory productivity and limit the ability to move up in the value chain into higher value-added clothing items. They also contribute to extended hours and overtime.

BTC’s work on the production floor helps improve factory competitiveness and long-term prospects as well as working conditions and career prospects. BTC will develop toolkits for factories to support the progression of female workers into supervisory and managerial roles.

BTC also convenes the Buyers’ Forum, a mechanism that brings together representatives of 30+ international brands sourcing from Bangladesh. The Forums are a platform for experience sharing, dissemination of findings and strengthening dialogue between brands.

FINANCIAL INSTITUTIONS

BTC will train 10 FIs in social risk management in the RMG sector, enabling them to facilitate loans to the sector.

BTC works in partnership with the Bangladesh Central Bank to design social risk management guidelines and tools for local banks to play an active part in remediation efforts.

EXPORTS

Asia is responsible for the majority of global textile and apparel exports. China dominates in both industries and will maintain its leading position. Emerging markets and greater regional trade are expected to shape trade patterns as regional supply chains grow in popularity.

EXPORTS
GTSF
2005: 3,353
2011: 4,791
2005: 7,087
2011: 9,082
2005: 2,764
2011: 4,072
2005: 1,356
2011: 2,036
2005: 7,076
2011: 10,772
2005: 8,311
2011: 15,016
2005: 705
2011: 1,590
2005: 41,050
2011: 94,411
2005: 272
2011: 1,485
2005: 725
2011: 3,7721
In 2015, world textile and apparel export values totaled US$ 291bn and US$ 445bn, respectively - a decline of 7.2% and 8% from 2014, and well off pre-2008 crisis averages of 8.4% and 10.2%.

The ten top textile exporters saw export values decline in 2015, with EU largest (-14%) and China smallest (-2%)

In 2015, Vietnam (10%), Cambodia (8%) and Bangladesh (6%) showed strong apparel export growth.

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% of Textile and Apparel in Total Merchandise Exports

CountryCountry Type2015
BangladeshLower middle income95.8%
GambiaLow income63.1%
PakistanLower middle income59.7
CambodiaLower middle income55.8%
El SalvadorLower middle income48.3
Sri LankaLower middle income44.8
HondurasLower middle income40.6
LesothoLower middle income38.6
MauritiusLower middle income32.8
NepalLower income31.9
NicaraguaLower middle income25.7
MadagascarLow income21.2
ChinaUpper middle income12.4
VietnamLow middle income18.3
USAHigh income1.3
Established in 2010, the Global Trade Supplier Finance (GTSF) program is a $500 million multicurrency investment and advisory program that provides short-term finance to emerging market suppliers and small- and medium-sized exporters, helping to address a huge shortfall in supply chain finance. Under the program, IFC works with banks and buyers across industries that source goods in emerging markets to help reach thousands of small- and medium- sized suppliers.
MORE ABOUT GLOBAL TRADE SUPPLIER FINANCE PROGRAM (GTSF)
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$4,197,650
$6,444,785
$8,507,719
$20,137,436
$92,540,103
$78,550,574
$147,463,747
$97,516,475
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FEATURES
Facility:
  • Confidential
  • Revolving and auto-newed annually
  • No facility fee
Pricing:
  • Using Buyer’s credit rating
  • Interest rate + LIBOR
Discount rate:
  • 100% advance rate less discount fee
  • No recourse to Supplier in the event that a Buyer does not pay
  • Removes Buyer credit risk and replaces credit insurance for the Supplier
Availability:
  • Can be used ‘on demand’ when funding is needed
  • Funds arrive 2 days after Buyer approves payment
  • Available to firms of all sizes
Security:
  • Does not require collateral
  • Does not require personal guarantee from owners/director/shareholders
Platform:
  • Transactions are conducted via electronic platforms which streamline the invoice and payment processes
INVESTMENTS

The GTSF program provides post-shipment post-acceptance finance to suppliers based upon acceptance of receivables by select buyers approved by IFC.

This allows suppliers to improve working capital by converting accounts receivables into immediate cash and to access lower-cost financing based on the superior credit rating of the buyer.

Additionally, the GTSF program enables emerging market suppliers to finance open account transactions at competitive rates without collateral. These key features of the GTSF program help make suppliers more attractive to global buyers.

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Established in 2010, GTSF aims to:

  • Level the playing field for all suppliers by providing access to finance at competitive terms.
  • Develop market appetite for supplier finance in emerging markets. Maximize inclusion of small and medium enterprises in global trade.
  • Maximize inclusion of small and medium enterprises in global trade.

How GTSF works with Buyers and Suppliers:

Buyer-centric model: GTSF works directly with the buyer in determining interest rates, supplier outreach, and various other issues. (Nike, Levi’s, Puma, Inditex)

Supplier-centric model: GTSF does not have a direct relationship with the buyer, but markets and sells the product to suppliers. The automation of the platform removes the need for direct buyer intervention. (Columbia, Polo Ralph Lauren, PVH Corp.)

RESULTS

The GTSF program currently has 12 active buyers and more than 700 active suppliers across industries and regions. As of April 30, 2016, the cumulative disbursements since November 30, 2012 for Nike, Levi’s, Columbia, Polo Ralph Lauren, and PVH Corp.

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