Alone among Indians
Textile exporters are still being kept away from the Indian market. The sub-continent is gaining steadily in importance as a production centre for mass market goods.
Everyone knows that all the big European and American fashion labels now have their collections made up in Asia. For textile managers, too, first and foremost Asia means China. But as the map is scoured in search of alternative production centres, and possibly even new sales markets, sights are increasingly being turned further south. For many, the new magic word is "India". Previously, quotas on exports of textiles to Europe and the US limited shipments or slapped a hefty premium on them, but as of January this year they can be dispatched to the industrial countries without restriction.
Experts are expecting liberalisation of the textile trade to generate a powerful boost for exports. Yet already, textiles are the second most important economic sector in India after agriculture: 37 million people are directly employed in production and 45 million indirectly dependent on it. The Indian textiles ministry estimates that roughly 10 million new jobs will be created in the textile industry in the coming years. Developments are driven by exports. Already, the country with a population of more than a billion people sells textiles worth some EUR 12 billion each year, with a target of 40 billion by 2010. Even now, India is the second biggest exporter of textiles and clothing to the EU, after China. It is also doing a roaring trade with Germany. Whereas in 2003 India shipped textiles worth EUR 545 million to Germany, last year textiles valued at EUR 603 million made their way over the water to Hamburg.
As always when it comes to finding a suitable exhibition platform abroad to accompany emerging industries, Messe Frankfurt was one of the first on the Indian market. Five years ago it exported an offshoot of its Heimtextil to Delhi, and last year the show debuted in Mumbai, the erstwhile city of Bombay. "Mumbai is the centre of India's textile trade," says Shammi Nagpal, Managing Director at Messe Frankfurt India: "We wanted to set up shop here, come what may." Shammi is following a pattern instrumental in China, too: Launched in Peking, many shows were gradually transplanted to the relevant business centres.
Shammi's roadmap is evidently convincing: Whereas attendance of only 8,674 was registered at the last exhibition in the capital, Mumbai notched up 10,252. The number of exhibitors also ticked up from 176 to 181, although failing to match the level at the maiden event, when 269 companies travelled to Delhi. Besides which, even after Heimtextil's departure Tex-Styles continues to be held in Delhi as the biggest exhibitor magnet of the Indian textile sector: 314 companies presented their collections this year on net space of 7,300 m2 in the Pragati Maidan exhibition halls.
Messe Frankfurt's woman in India last year even succeeded in welcoming 13 foreign exhibitors, although no German companies were among them. On board, though, was an Austrian firm - Beeline from Seewalchen - which specialises in procurement. Björn Gossmann, Beeline's marketing director, was satisfied with the event: "With Messe Frankfurt as show management company, the organisation was impeccable."
Experience has shown that words of praise for the organisation of a trade fair normally come from exhibitors when the show has been a business success for the company. Gossmann obviously has no complaints: "We spent three-quarters of our time talking with prospects, sometimes there were queues in front of our stand." With such a throng, he takes no particular exception to the fact that the drive from his hotel to the Bombay Exhibition Center led through a slum and the exhibition site was surrounded by "ruins sprouting bushes". The "beastly stench" of the little stream of sewage running alongside the halls is evidently tolerable with Austrian pragmatism: "Goodness, you just have to hold something over your mouth."
What Gossmann found far more of a nuisance were the many holes in the aisles, simply glossed over by carpeting as a makeshift. As a result, people tumbled into the neighbouring booth by the dozen. But since the exhibitor supplied cushions, they at least had a soft landing, Gossmann laughs. Wolf-Rüdiger Baumann does not consider the halls ideal either, but "Mumbai is the right location". The chief general manager of the Confederation of the German Textile and Fashion Industry is presently considering an event in the Indian trade hub himself. Every two years he organises Hightex from Germany, a platform for technical textiles by German manufacturers, embedded in Messe Frankfurt's Techtextil. It took place two years ago in Shanghai, this September it takes off in Moscow, and in 2007 Baumann would dearly like to hold it in Mumbai.
Endorsed by the German economics and labour ministry and by the Association of the German Trade Fair Industry, AUMA, the event is designed first and foremost to open up difficult markets for the roughly 40 exhibiting small and medium-sized businesses. And India, of that Baumann leaves no doubt, is a difficult market. "The Indians seal themselves off." Although basic tariffs have been lowered to 20 %, the actual burden for exporters to India is far higher than that, he says, reaching as much as 50 %. "This means that India is still unattractive as an export market," Baumann concludes. That said, he also acknowledges what India has achieved as a result of its liberalisation; after all, in 1991 importers were still having to pay customs duties of 400 %.
Michael Jänecke, in charge of Techtextil at Messe Frankfurt, is likewise aware of the problems with the Indian market, making him sceptical about whether his exhibition really should go to Mumbai in 2007. Although "the idea of doing something together in India is being considered, we don't yet have any specific plans for a Techtextil India", especially since Techtextil 2007 is already on the calendar of events for Germany, Russia and South America. Splitting the two shows would be a first: Hightex has always taken place so far as part of Techtextil. But Jänecke will be travelling to India in the coming weeks to test the waters. In the medium term, he insists, India is certainly an extremely interesting market.
Ruth Schneider, Regional Manager South Asia at the German Asia-Pacific Business Association / Ostasiatischer Verein (OAV) specialising in business issues, agrees: "The rising middle class in India represents a sales market for textile products, with the result that some well-known foreign labels are building up a distribution network in India." However, this makes considerable demands of the companies; for example, the government still bans foreign investors from handling distribution themselves. The only exceptions are for wholesalers, says Silke M. Jungbauer, foreign trade expert at the Confederation of the German Textile and Fashion Industry. Foreign retailers, however, are forced to build up franchising systems or cooperate with an Indian joint venture partner. "For many firms that means entirely reorganising their distribution policy, Jungbauer explains: "For that reason many important brands have no presence at all in India."
What is more, obscure administrative regulations take the joy out of exporting to the sub-continent and ultimately make cost calculation impossible. Jungbauer points to costly azo dye testing, for one. Certainly, use of the poisonous chemicals is banned and testing therefore quite legitimate. But exorbitantly large samples are taken: "When Indian customs officials run checks, a whole suit is often ruined." With an exclusive collection of 100 suits, that can weigh heavily on margins. So it is hardly surprising that exports of German clothing to India are, indeed, on the decline, amounting last year to a measly EUR 500,000. Markus Ridder
m+a report Nr.3 / 2005 vom 27.04.2005
m+a report vom 27. April 2005