Cotton Household Textiles - Opportunities for Exporters.
COTTON HOUSEHOLD TEXTILES - OPPORTUNITIES FOR EXPORTERS Imports are playing an increasingly important role in the largeWest European market for cotton household textiles, according to a newstudy. Although total consumption of cotton bed linen, towels and tablelinen is not growing to any great extent in these markets, the expandingrole of imports to meet the extensive demand that exists is ofparticular interest to developing countries, which are among theprincipal foreign sources. Over the 1980-88 period the share of demandcovered by imports rose dramatically - from 27% to 42% for bed linen,from 48% to 62% for towels and from 39% to 56% for table linen. In 1988developing countries accounted for 42% of total imports of bed lineninto the four leading importing countries (supplying about 27,000 tons),35% of the towels imported (over 20,000 tons) and 57% of the table linen(6,500 tons). Although importers do not readily switch to new suppliers,exporters who can provide goods of consistent, specified qualityaccording to delivery schedules may be able to find openings. Market trends Imports of bed linen, table linen and towels into the four majormarkets reviewed (France, Federal Republic of Germany, Italy and theUnited Kingdom) increased annually between 1980 and 1988, moving fromaround 84,000 tons of goods at the beginning of the decade to about133,000 tons in 1988. This upward trend may well continue to theadvantage of developing country exporters. However overall consumptionof household textiles has been more or less stable over the last severalyears. Since 1980, for example, the total market for bed linen in Italyand France has grown slowly, while in the United Kingdom and the FederalRepublic of Germany it has remained relatively static. Demand is notexpected to grow dramatically in any of these product groups, but theshare of imports should expand within the total market. Bed linen: Imports of bed linen into the four major West Europeanmarkets accelerated during the 1980s. Between 1980 and 1988 totalimports of bed linen rose by about 68%, from 38,100 tons to 63,800 tons.Imports of cotton and cotton-rich bed linen increased even faster,expanding by 97% during the same period, to 56,100 tons in 1988. The share of imports accounted for by developing countries hasgrown considerably. While in 1980 these countries supplied 30% of thetotal, eight years later their share had reached 42%. In volume terms,imports from these countries attained a record level of 27,000 tons in1988. This compares with 16,900 tons imported in 1987 and 11,600 tons in1980. Of the four countries surveyed, the Federal Republic of Germany isby far the largest import market for bed linen. In 1988 its totalforeign purchases in this category amounted to 28,100 tons, 15% higherthan in the previous year and 80% above the 1980 level. While over 98%of these imports were classified as cotton and cotton-rich, it can beassumed that the goods in question were almost entirely of cotton.Developing countries accounted for around 44% of the FederalRepublic's imports in 1988, or 12,200 tons. The major suppliersamong this group were Pakistan, Turkey and India, which exported 3,935tons, 3,311 tons and 2,057 tons respectively to the Federal Republic.These three countries combined accounted for about three-quarters of thetotal imports from developing countries. exports small quantities of bedlinen to the Federal Republic, while Indonesia has become a new source,supplying 369 tons to this market in 1988. Imports of bed linen into both the United Kingdom and France havealso expanded over the last several years, although from a lower level.In the United Kingdom, of total imports of 14,300 tons in 1988,approximately 6,900 tons were supplied by developing countries, while inFrance developing country imports reached 5,100 tons that year out oftotal imports of 14,400 tons. As in the Federal Republic of Germany, themajor supplying developing countries to the United Kingdom in 1988 werePakistan, with 3,263 tons; India, with 1,421 tons; and Turkey, with1,022 tons. These three accounted for 83% of total imports of bed linenfrom developing countries. However, unlike in the Federal Republic ofGermany where 63% of developing country supplies were of printed woven cotton bed linen, in the U.K. market the major imports were of unprintedgoods. Imports of bed linen into France are predominantly made of wovencotton, both printed and unprinted. A large number of countries supplythis market, each with relatively small quantities. While Pakistan,India and Turkey are leading sources, Thailand was the major exporter ofbed linen to France in 1988 with 1,388 tons. China, Tunisia, Egypt andMauritius also supply small quantities to France. Italy is the largest manufacturer of bed linen in the EuropeanCommunity and is the smallest importer of this product. In 1988 itstotal foreign purchases of these items reached 7,000 tons, 23% higherthan a year earlier. Nevertheless, Italian imports continued to expandduring the 1980s, and by 1988 were nearly 80% above the 1980 level.Italy's orders from developing countries almost doubled, from 1,400tons to 2,700 tons between 1980 and 1988, with the major suppliers beingPakistan, Turkey and China. Total and per capita consumption of bed linen in the major WestEuropean countries is very large, albeit relatively stable. In 1988consumption reached 150,800 tons. While this was almost 13% higher thanin 1987, consumption was only 5% above the 1980 figure. Since cotton isby far the most important fibre for bed linen, shifts are likely tooccur around a stable level of consumption as cotton prices fluctuate.Given the per capita income in the Federal Republic of Germany, it isnot surprising that consumption of bed linen is the highest there of thefour countries surveyed. The reason for the slowly changing level ofconsumption in that market during the 1980s was both a low populationgrowth rate and a shift towards goods of a higher quality. Furthermore,bed sizes tend to be up to 20% larger than in both France and the UnitedKingdom, which would also account for a higher volume of consumption. The ratio of imports of bed linen to total consumption increasedsignificantly for the four markets during the 1980s, from almost 27% in1980 to 42% in 1988. The Federal Republic of Germany has the highestimport dependency ratio for bed linen, which in 1988 reached over 60%,almost doubling the 1980 figure. The ratios have also increased inFrance, the United Kingdom and Italy. By 1988 these stood at 41%, 46%and 18% respectively. While these proportions are in themselves high,large quantities of fabrics - of which the bulk is cotton - are alsoimported into Western Europe to be converted into finished products. Inthe case of the United Kingdom, for example, imports of cotton fabricsaccount for almost 90% of total materials used in manufacturing bedlinen, while the comparable figures for France, the Federal Republic ofGermany and Italy are above 50%. An estimated 70% of the bed linenconsumed in the major markets of Western Europe is made from importedfabrics. Towels: In direct contrast with the unchanging level of domesticproduction, the importation of made-up towels into the four markets hasshown strong growth, particularly since 1985. After changing littleduring the first half of the 1980s - at about 38,000 tons - imports oftowels have risen in each successive year. Total foreign purchasesamounted to 57,800 tons in 1988, 13% above the 1987 level, which wasitself almost 19% higher than in 1986. Cotton and cotton-rich towelimports - again almost exclusively of pure cotton - reached 56,000 tonsin 1988, 97% of the total consumed. Imports from developing countries have shown a similar upwardmovement since 1985 in terms of volume, and their share of the markethas also risen. By 1988 supplies of made-up towels from developingcountries had reached 20,100 tons, 3,800 tons higher than in 1987 andmore than double the 1985 figure. The market share of developingcountries was 35% in 1988 compared with 26% in 1985. As with many other textile products, the United Kingdom is thelargest import market for towels. In 1988 these imports totalled 20,300tons, 25% higher than in 1987 and three-fifths above the level at thebeginning of the decade. Almost all imports are of pure cotton, with thebulk being of terry towelling. Supplies to the United Kingdom fromdeveloping countries amounted to 6,300 tons in 1988, 19% higher than ayear earlier; two-thirds of these were made from terry fabrics. A largenumber of developing countries supply the U.K. market. The mostsignificant in 1988 were Pakistan, China, Turkey and India, whichexported 1,284 tons, 1,252 tons, 1,187 tons and 901 tons respectively.Brazil, Egypt, Indonesia and Sri Lanka and, to a lesser extent,Mauritius and Thailand were also emerging suppliers. While the Federal Republic of Germany ranked only second as animporter of towels into Western Europe, it was the largest consumingcountry during the period as far as developing countries are concerned.Total imports during 1988 amounted to 17,400 tons, 6% higher than theprevious year, with terry towels accounting for three-quarters of thetotal. Imports from developing countries reached 7,600 tons the sameyear, registering a gain of 21% over 1987. Brazil is the leadingsupplier; in 1988 its exports of made-up towels to the Federal Republicamounted to 2,400 tons, 31% of the total. These were entirely of terrycloth. Other major suppliers were Pakistan, Turkey and China, eachproviding over 1,000 tons, while smaller amounts came from Colombia,India, Indonesia, Mauritius and Taiwan Province (China). Although imports of made-up towels into both France and Italy havealso expanded, by 44% and 100% respectively between 1985 and 1988, tototal 13,700 tons and 6,400 tons, neither are large markets fordeveloping countries. Supplies from these countries amounted to 3,300tons for France and 2,900 tons for Italy in 1988. Imports into Francecome mainly from Pakistan, China, Brazil, Cameroon, India and Sri Lanka,while Brazil, Pakistan, India and Cuba are significant exporters oftowels to Italy. Total and per capita consumption of made-up towels in the fourcountries has shown very rapid growth since the middle of the 1980s. By1988 consumption in the four markets combined had reached 93,300 tons,almost 7% above the 1987 level and 15% higher than that of 1980. Cottonmade-up towels accounted for 98% of total consumption. The relativelyhigh proportion of heavier bath towels in the U.K. market has resultedin that country being the largest consumer of this item in weight amongthe four markets. In 1988 U.K. consumption amounted to 31,600 tons,one-third of the total of the four. The Federal Republic of Germany wasthe second largest consumer, followed by France and Italy. Between 1980 and 1988 the proportion of imports to totalconsumption in the four countries rose from 48% to 62%. For France, theFederal Republic of Germany and the United Kingdom, the ratio was above60%, while that for Italy was 40%. The rise in this ratio was mostapparent in the case of the Federal Republic. Between 1980 and 1988 theproportion went from 48% to 68%, which can in part be explained by arise in the volume of imports. Again, since imports of terry fabrics areused in the domestic production of made-up towels, the actual importshare in terms of fabric content is higher, possibly by an additionalten percentage points. Table linen: As in the cases of both bed linen and towels, indirect contrast to the declining level of domestic manufacture, importsof made-up table linen showed a continously rising trend during the1980s. Between 1980 and 1988 the total volume of table linen importedinto the four markets rose by 52%, from 7,500 tons to 11,400 tons.Imports of cotton and cotton-rich table linen is a much smaller volumemarket than either towels or bed linen, but the share of developingcountry imports has shown impressive growth. In 1980 developingcountries supplied almost 39% of total imports, while eight years latertheir share had reached 57%. In volume terms, imports from developingcountries attained a record level of 6,500 tons in 1988. This compareswith 3,800 tons in 1987 and 2,900 tons in 1980. Table : Imports of cotton household textiles into major WestEuropean markets(1) 1980-88(1) France, Federal Republic of Germany, Italy and United Kingdom. Within the European Community, the Federal Republic of Germany isthe largest market. Approximately 4,700 tons of table linen wereimported into that country in 1988, 38% higher than in the previousyear. Nearly 60% of that was considered as being cotton and cotton-rich.Developing countries account for 83% of all such imports into theFederal Republic. Knitted or crocheted table linen came to 47% - 1,840tons - of total imports from developing countries in 1988, with Turkeybeing by far the most important supplier. The other 2,100 tons importedconsisted of woven table linen. China, Brazil and India were the threemajor sources, providing 865 tons, 459 tons and 216 tons respectively in1988. Smaller suppliers included the Philippines, the Republic of Koreaand Malaysia. While France is the second largest importer of made-up table linen,at 3,000 tons in 1988, developing countries do not have an importantmarket share. Since 1980 less than 1,000 tons per annum have beensupplied from these sources. The two largest developing countrysuppliers are China and India. In the case of Italy, imports of table linen continued to growduring the 1980s, albeit from a low base. In 1988 around 2,400 tons werepurchased from foreign sources, of which over 90% were of cotton andblends rich in cotton. Developing countries accounted for half of thevolume traded, all of which was of cotton. The major suppliers amongthese were China, India, Pakistan, Turkey and Brazil, while smallersources included Mauritius and Laos. The U.K. import market for table linen is extremely small, withannual amounts only just above 1,000 tons throughout the 1980s. Total and per capita consumption of table linen remained stablethroughout the 1980s, slightly under 20,000 tons yearly for the fourWest European countries combined. Consumption has been highest in Italyand the Federal Republic of Germany, at 7,800 tons and 7,400 tonsrespectively in 1988. Together these two account for three-quarters oftotal demand in the four major markets. The share of cotton andcotton-rich table linen is higher in Italy, at 94%, than in the FederalRepublic of Germany with 64%. One reason is that more tablecloths aremade from flax in the Federal Republic than in Italy. The United Kingdomhas the lowest level of consumption of table linen. In 1988 the figurewas only 1,500 tons. Like bed linen and towels, the import dependency ratio for tablelinen has shown an upward trend during the period, from 39% in 1980 to56% eight years later. The share for cotton and cotton-rich table linenhas shown a similar movement, rising from 35% to 51% during the sameperiod. Although France and the United Kingdom have the highest suchratios, which in 1988 exceeded 80% in both cases, in volume terms thesecountries have the smallest markets. In contrast, the largest market,Italy, has the smallest proportion of imports to total consumption. In1988 its share was ten percentage points higher than eight yearsearlier. While it is expected that the ratio will continue to grow inthese markets, in terms of volume the market for made-up table linen isone-fifth that for made-up towels and only 13% of that for bed linen. Variations in demand Considerable differences exist in consumer requirements for cottonhousehold textiles among the countries surveyed concerning quality,fabric weight, sizes, fashion, colour, fibre, finish and price. Forsuppliers approaching the West European market for the first time orsimply seeking to extend a successful operation from one Europeancustomer to another in a different country, the variation in demandbetween one geographically small area and another is frequentlyfrustrating. Particularly significant are differences in assortmentsoffered, packaging, quality and sizes. For instance, in the UnitedKingdom, at least two sizes of single beds and two of double beds are incommon use (several other sizes are also available). In the FederalRepublic of Germany beds are longer, again with several different sizevariations available. French beds measure yet other dimensions, with twoversions generally available for both double and single beds. Stillanother situation exists in Italy, where mattress lengths are up to 8 cmto 10 cm shorter than in other major West European markets. Product ranges that sell successfully in one market may requireconsiderable modification to sell well in another. Such differences aremost marked for bed linen. In the U.K. market bed linen is increasingly sold in ranges ofcoordinated curtains, pillowcases, duvet covers and valence sheets ordivan trims. Approximately 60% of the homes in that country own duvetsrequiring covers. "Divan" type beds are the most common, usingvalences (divan trims) or valence-type bottom sheets. The remainder useblankets over flat bleached or plain dyed sheets. This markets shows astrong trend for 50% cotton/50% polyester blends for sheets, pillowcasesand duvet covers. In the Federal Republic of Germany the requirements for bed linenare different. Coordination of all textile features of bed linen is muchless important than in the United Kingdom. Typical items in this lineare fitted bottom sheets, top sheets and cotton quilts. Such productsare almost entirely of cotton (above 95% of the volume sold). In France both the fitted bottom sheet and the duvet and cover haveincreasingly replaced classic flat sheets and blankets. It is estimatedthat at the retail level about half of the pieces sold are fitted top orbottom sheets, 30% are flat sheets and 15% to 20% are duvet covers.Coordination of various items of bed linen is not important in thismarket. Most bed linen sold in France is of cotton. Apparent rises incotton's share of sheets, from 82% in 1980 to 89% in 1988, areprobably the result of the movement from blends of 67% polyester/33%cotton to 50%/50% in recent years. The latter ratio has establisheditself in all blended bed linen sold in Western Europe. Italy is the market in which fine percale cotton flat sheets excel.Bottom sheets, often fitted, are frequently sold in sets with topsheets. Alongside this, however, most households have a parallelcollection of plain dyed or bleached sheets, again with the bottomsheets fitted. The use of quilts is not extensive in Italy for climaticreasons. As in the Federal Republic of Germany, bed linen ispredominantly made of cotton. Import channels The percentage of business in household textiles done by differentretailer, or retailer-type distributor categories, varies among the fourcountries. For example, in Italy 50% of the business in bed linen goes throughindependents and 30% through street market traders (independentretailers with or without permanent premises). In the United Kingdomindependents handle less than 12% of that business and street markettraders probably less. Mail-order is the most extensive in France amongthe markets surveyed, with 34% of bed linen sales (24% in the UnitedKingdom, 22% in the Federal Republic of Germany and only 5% to 6% inItaly). Such differences in the retail situation necessitate differentimport channels. The primary marketing channels for exporters to the four major WestEuropean markets are manufacturers in those markets, wholesalers,mail-order houses, major department stores, variety chains and multiplestores. In the four markets surveyed, the local manufacturer in theimporting country is one of the most important outlets for foreignsuppliers of cotton household textiles. Such companies either sell theimported merchandise under their own (or a subsidiary) brand name, orpass it on to mail-order houses, variety chain stores or other outletswith their brand name on it. The wholesaler/importer is also a significant marketing channel.Wholesaling is highly developed, particularly in the Federal Republic ofGermany. In addition to importing finished goods, wholesaler/importersalso sometimes "manufacture" their own brand by usingcommission finishers to finish and cut items of bed linen from importedgrey cloth. Their function in supplying the retail trade is verydiversified. For large mail-order companies, the wholesaler's roleis usually to provide goods that are short in supply. In the case ofsmall retail groups, the wholesaler may fill the regular requirements oract as an agent. Large retail groups, multiples and variety chains tend to importdirect. However the small size of their orders and the diversity incolour and size of their requirements are likely to make business withthem rather difficult for new suppliers to the market. Their qualityspecifications are generally much higher than those of mail-ordercompanies or wholesalers (the latter need goods at all quality levels). Major mail-order buyers attempt to purchase as much of theirrequirements as possible direct from the local manufacturers orexporters in the supplying countries. Their ability to do this varies,hence their need for secondary sources, mainly wholesalers, in order tokeep adequate supplies of the goods offered in their catalogues. Mostmail-order companies attempt to provide very short delivery times. Inthe Federal Republic of Germany they will go to great lengths andexpense to ensure this, and are therefore more hesitant to dolong-distance business than are mail-order firms in some of the othermarkets surveyed. Voluntary buying groups are essentially supplied by wholesalers andlocal manufacturers, with which they negotiate bulk purchase discountsfor their smaller retail clients. They rarely import direct. Entry into the West European market for table linen remains to agreat extent the province of specialist importers, which should beconsidered as the main target for new market entrants in most of theselines. Such importers sell to almost all entities, including retailgroups, mail-order houses and even wholesalers who are importers of bedlinen and towels. Possibilities for new suppliers Buyers of household textiles are generally unwilling to change froman existing foreign supplier to a new source without considerableincentive. Many large distributors contacted during the survey have notchanged their main import sources for five or even ten years, and fewexpressed an interest in examining new sources in countries they had notdealt with before. On the other hand, as wage levels rise in what have hitherto beenlow-cost producers among traditional suppliers, new sources are likelyto be looked at more carefully. Some buyers have begun to visitdeveloping countries to survey such prospects. Buyers have expressedparticular interest in countries ready to re-equip with up-to-datemachinery, in which existing industrial and training skills are in placeto make such investment worthwhile. Firms already producing for theirown domestic or another export market are given special consideration inthis context.D.E. Morris, P. Ruttyn and R.J. Stogdon work with the InternationalInstitute for Cotton in Brussels. This article is based on a study thatthey recently prepared for ITC, Cotton Household Textiles: A Survey ofSelected Western European Markets, covering France, Federal Republic ofGermany, Italy and the United Kingdom. PHOTO : Developing countries are major suppliers. Left, qualitycontrol in the United Republic of Tanzania. PHOTO : Imports of bed linen have risen rapidly. At right,finishing of cotton sheeting.