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The early signs of a global recovery in the industry, following the drop in textile quotas, and the return of investments were already just noticeable in 2005. Germany remains the third most important supplier country for sewing and garment equipment worldwide and is now focusing on the Indian subcontinent.
The volume of exports of German sewing and garment equipment stood at Euro 454 million in 2005. This means that exports have fallen by around five per cent compared to last year. Pure sewing technology1, which in 2005 accounted for just under 72 per cent of exports, declined compared to 2004 by 7.7 per cent.
The reasons for this decline are not least due to the outsourcing of machine production abroad. In Germany, the main focus of production is on high-end equipment. Standard products that must withstand the price pressure from Asia are barely ever made in Germany any more – instead, they are produced in Eastern Europe and Asia. For 2006, we anticipate a recovery in the statistics, i.e. a slight drop in exports (see Outlook).
The most important export markets for German sewing and garment machines also only reflects the export volume of German sewing and garment machine manufacturers who supplied from Germany to the global market. When considering the export markets of China and Hong Kong especially (despite the return of Hong Kong to the People’s Republic of China in 1997, Hong Kong continues to remain an attractive trading hub – and not just for China), production of German machines in China has to be taken into account. There is no detailed table of origin or brands for machines exported out of China, which means that clear assignment to manufacturers from Germany, Japan, China and so on is not possible. However, a general increase in exports is being seen in exports from China to the USA, India and Japan, a development which German manufacturers have certainly influenced.
In a comparison of the German export markets, the USA, with an export volume of Euro 50 million, is still in first place, representing a share of the total export volume of 11%. Second and third in the listings in 2005 were again Turkey and Italy, to where Germany sold machines worth just under Euro 35 million and Euro 26 million respectively. India rose from 6th place to 4th, thereby overtaking China, which had held fourth place in 2004. In 2005, German machines worth Euro 25 million were sold to India for the first time. China follows India in fifth place, with an export volume of Euro 22 million. If however the exports to Hong Kong are also factored into the Chinese figure, this yields a total volume of exports from Germany of just under Euro 39 million. This makes the entire People’s Republic of Germany the second-largest export market for German sewing and garment machine manufacturers in 2005.
The significance of previously interesting markets such as Romania, France, Spain or Poland is dwindling. In some places, exports have almost halved in the period between 2001 and 2005. Romania, however, continues to be an interesting production location for the Western European clothing industry.
Germany’s exports to the regions have changed very little. Exports to countries in the European Union continue to fall, with a volume of just Euro 156 million in 2005 – some seven per cent less than the previous year. Exports to Asia increased further in 2005 to Euro 107 million (approx. four per cent more compared to the previous year), although exports to the rest of Europe dropped to Euro 90 million (approx. 10 per cent less than the previous year).
In 2005, only the Asia and North America regions exhibited growth rates of four and two per cent respectively compared to the previous year.
In a close examination of Asia from a German perspective, it is clear that the continued growth of exports to India since 2003 has almost doubled. China and India, on the other hand, appear to have lost some of their significance. At this point, it is worth remembering the production of German sewing and garment machines in China, a factor which does not appear in German statistics and thus reduces the export of standard machinery from Germany to China.
This representation clearly illustrates that Singapore has grown markedly in importance for Germany as a trading platform for the South-East Asian market since 2002. Between 2004 and 2005 alone, exports to Singapore rose by 10 per cent.
If one also compares the regions of Asia, it becomes clear that exports to the Central and Southern Asia regions, which include India, Sri Lanka and Pakistan, rose between 2004 and 2005 by 29 per cent to Euro 25.4 million. In the East and South Asian markets (which include China, Hong Kong and Singapore, for example), 9.6 per cent fewer machines were exported from Germany in the same period. The entire export volume to this economic region, however, stands at a comparably high level of Euro 50 million.
The exports of German sewing and garment machines to South-East Asia illustrates the rise in exports to Singapore since 2002 of more than 60 per cent. In a year-on-year comparison between 2004 and 2005, there were also increases in exports to Indonesia, Vietnam, the Philippines and Malaysia. These exports increase indirectly even more, since the machines imported from Germany to Singapore are forwarded on to countries such as Indonesia, Bangladesh, India, Malaysia and Sri Lanka.
The countries of Eastern Europe and Turkey are shown in the exports of German sewing and garment machines to Eastern Europe (+ Turkey)”. Development remained modest between 2004 and 2005. Germany only demonstrated an increase in exports of 57% to Euro 11 million for Russia. This doubling reflects Russia’s changed economic situation very well, since the problems in terms of payments that existed at the end of the 1990s are now increasingly fading away.
Key production locations for the European clothing industry such as Turkey, Romania and Bulgaria did not fare too well in 2005. Turkey is still the most important export market for Germany in this region, however exports fell from Euro 38 million in 2004 to Euro 34 million in 2005, a drop of around 10 per cent (cf. also graphic 2). Exports to Romania fell from Euro 22 million in 2004 to Euro 14 million in 2005 (a drop of 36%). And to Bulgaria too, there was a drop in exports of around 12 per cent. In 2005, machines worth Euro 8 million were exported to Bulgaria.
The supplier countries of sewing and garment technology can be categorised into 3 groups in 2005, each of which achieved similar export volumes. Group 1 includes the front-runners and leading global exporters – Japan and China. In a year-on-year comparison, Japan has indeed fallen in terms of export volumes since 2000, but in 2005 exhibited an export increase of five per cent (Euro 941 million). In 2005, China had an export increase of 35 per cent (Euro 924 million). One reason for the striking reversal of the trend for Japan and China is the outsourcing of production of Japanese machines to China. German sewing and garment machine manufacturers have also outsourced a proportion of their production to China, in order to serve the Chinese market and the region in general with primarily standard machinery at the lower end of the price sector. As well as the slowly-increasing importance of Chinese brands on the global market, principally German, Japanese and other machines that are “Made in China" are thus reflected in China’s export statistics (see also Germany in Asia).
Group 2 in the rankings of supplier countries includes Germany and Taiwan. In 2005, Germany exported around five per cent less than the previous year, achieving an export volume of Euro 454 million. In 2005, Taiwan recorded an export volume of Euro 428 million, remaining in 4th place in the rankings of supplier countries, behind Germany.
The third group includes Italy, the USA and South Korea. Italy defended its 5th position in the rankings of supplier countries in 2005, although it had to concede a drop in exports of eight per cent to Euro 240 million compared to the previous year. The USA and South Korea were able to increase their exports slightly by eight per cent (Euro 224 million) and seven per cent (Euro 207 million) respectively.
For 2006 there awaits a significant upturn in exports of German sewing and garment machinery. The reasons for this include the industry’s willingness to invest after the drop in textile quotas in the first year had caused uncertainty. Another reason includes the IMB – World of Textile Processing 2006 trade fair, which was held in May of last year in Cologne as an initial kick-off for tangible investments in client industries. Between January and October 2006 alone, 8.7% more sewing and garment machines were exported compared to the same period in the previous year, thus achieving an export volume of Euro 409 million.