Rieter’s Shares Are Falling due to Bad Sales

Shares of Rieter, a Swiss manufacturer of textile machines, fell drastically after it got known that orders for machinery from Germany declined for a sixth month in April 2012.

Rieter dropped as much as 7.3 percent. The decline pushed the stock down 3.7 percent this year. Competitor OC Oerlikon Corp declined 2.3 percent.

Orders for German machinery, adjusted for inflation, fell 11 percent from a year earlier in April, according to data from the Frankfurt-based VDMA industry association. Domestic sales contracts dropped 14 percent, while export orders declined 9 percent. Germany is the largest national export market for Switzerland’s machinery industry.

Source: Bloomberg

Global Fashion Brands Leave China

Experts say that the global fashion brands are gradually shifting their manufacturing bases from China to countries with lower production costs and labor costs.

In one of his recent interviews Wang Tiankai, President of China National Textile and Apparel Council (CNTAC) said the trend is inevitable as China was no longer a "cheap-in-everything paradise".

Media reports said some Italian fashion brands already moved their production lines to Turkey and Tunisia. The news comes as China's labour and raw material prices rose significantly last year, reported by Xinhua.

China's consumer price index rose by 5.4 percent year-on-year in 2011. Labour cost jumped by 30 percent while raw materials rose by over 20 percent since early February 2012. Official data showed 24 provinces, regions and municipalities in China have raised their minimum monthly wages by an average of 22 percent last year.

The increasing costs has weakened China's competitive edge, leading to a slowdown in the once booming sector.

China's textile exports in 2011 edged up 0.5 percent year-on-year, of which clothes exports dropped by 0.2 percent.

Wang said that the low demand due to the global economic downturn and the industry's cut-throat competition had driven manufacturers to cheaper countries in Southeast Asia or to nearby countries in Europe.

"It is a natural trend for industrial adjustments and the trend will be more obvious in the coming years," he said, adding that large-scale outflow of factories will not occur as China remains a big manufacturing centre.

Besides cost concerns, some experts attributed the change partly to China's efforts to move up the value chain.

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Japan is Attracted by Bangladesh’s Heavy Industry Expansion, Including Textile Manufacturing

Mainichi Japan reports that local companies in Bangladesh are aggressively diversifying into heavy machinery industries, offering a new window of opportunity for world and Japanese manufacturers in a promising Asian country (Bangladesh has a population of some 160 million).

Auto, electronics, textile manufacturers from Japan rush into this expanding and growing market with an effort to establish the necessary platform and start grabbing market shares.

The textile sector of the country has been one of the main industries prospering and showing constant growth throughout the last decade.

As Bangladesh has been seeing annual economic growth of around 6 percent in the recent years and its government is seeking development of industrial clusters by setting up special economic zones.

Hoping to beat foreign rivals in establishing a presence in the promising market, a Japanese economic delegation led by the government-backed Japan External Trade Organization, known as JETRO, visited Bangladesh in February. Officials from about 40 Japanese companies including electronics, auto parts and textile manufacturers took part in the program, reflecting Japanese firms' growing interest in the country's cheap labor and economic growth.

Some of the officials who visited the country cited concerns about lagging infrastructure development, but voiced hope for business potentials arising from gaining a foothold before more companies from around the world come into the market.

Source: Mainichi Japan