Although the impact of COVID-19 created a remarkable degree of uncertainty for the global fashion industry, new opportunities are emerging as markets continue to adapt. HSBC hosted the second in the Textile and Garment Sector webinar series in July to explore the ways buyers and suppliers are navigating the current market conditions and preparing themselves for the future of trade.
Apparel industry reset: How buyers and suppliers can navigate uncertain times
29 Jul 2020
SpeakersLaura Galvin, Regional Head of International Markets, Commercial banking, Asia Pacific, HSBC
Claude Troussart, Regional Risk Director, Asia Pacific, Euler Hermes
Zahur Ahmed PhD, Managing Director, Apex Holdings Limited
Hasitha Premaratne, Group Finance Director, Brandix Group
[Facilitator]: Alan Ho, Senior Communications Manager, Commercial Banking, Asia Pacific, HSBC
The challenges facing the global fashion industry are acute and interrelated. Falling demand has pushed many brands and suppliers into financial distress while widespread supply chain disruption has put the spotlight on the fragility of global trade. Finding new ways to build trusted partnerships and ensure financial stability have become priorities as a result.
Key to this process is increasing the transparency and traceability of supply chains, which according to HSBC’s Navigator research is on the agenda of 54% of Asian companies. Additionally, HSBC sees adaptiveness to the trends around the adoption of digital channels among retail consumers as strategically important for firms to capture emerging opportunities.
Key takeaways from Claude Troussart, Regional Risk Director, Asia Pacific, Euler Hermes, on Risk mitigation strategies for apparel industry; and the panel discussion with Zahur Ahmed PhD, Managing Director, Apex Holdings Limited and Hasitha Premaratne, Group Finance Director, Brandix Group, on the major trends affecting the industry:
- Securing accounts receivables should be a top priority for manufacturers, as significant proportion of the total insolvencies during the pandemic have stemmed from unpaid invoices.
- Geographic diversification is a key risk mitigation strategy. For manufacturers, this means reducing customer concentration as a way of building resilience into their portfolios.
- Flexibility has become a key strategic priority for manufacturers, with greater emphasis being put on low inventory levels and quick order fulfilment.
Resumption of production:
- Export markets like Bangladesh and Sri Lanka saw significant drops in productivity during March and April, but have since recovered.
- Majority of factories are operational in Bangladesh and manufacturers in Sri Lanka have been operating at nearly 100% since June.
- 3D sampling has fast become a key capability in markets like Bangladesh and Sri Lanka and is dramatically reducing the time needed to go from initial design to finished product.
- Credit insurers are adopting digital capabilities to price and deliver policies quicker and more efficiently. Faster response times has the knock-on effect of helping insured parties avoid order and shipment delays.
Building industry relationships:
- Supplier stability should be a priority for buyers, which means honouring orders, maintaining payment terms and giving advanced notice for drops in order quantities.
- Suppliers who adopt technology like 3D sampling need to work with buyers, many of whom are still uncomfortable using it for approvals.
- Consumer preferences are causing shifts in the demand for particular product segments. Increased interest in health and wellness is giving momentum to athleisure items, while formal wear is receiving less demand due to more people working from home.
- For suppliers, demand continues to be a challenge, with large buyers from the United States and Europe still not purchasing at pre-pandemic levels.
Supply chain shifts:
- Regional supply chains are becoming a viable risk mitigation tactic as buyers and suppliers pursue sustainability and predictability in their trade relationships
This webinar has been organised to provide you with a general overview on the subject. Any examples given are for the purposes of illustration only. You should not rely on the information shared. Any information provided at or in connection with the webinar does not constitute an offer to sell, or solicitation of investment business or an offer to buy any financial services and/or products, nor is it a recommendation with respect to such investment business, financial services and/products. It does not constitute and should not be considered as investment, financial, legal, tax, accounting, regulatory, professional or other specialist advice. If you are in doubt as to your financial situation or needs, you should seek professional financial advice. Under no circumstances will The Hongkong and Shanghai Banking Corporation Limited (“HSBC") be liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this webinar.
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Record year for ASEAN Green, Social, Sustainability Debt Issuance: Report
Climate Bonds Initiative, supported by HSBC, launched the ASEAN Sustainable Finance State of the Market 2020 report.1 The report outlines regional and national developments covering three overarching debt themes based on the projects, assets and activities financed: Green, Social, and Sustainability (GSS).2 The report also highlights key policy developments that are anticipated to drive ASEAN’s sustainable finance market.
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