Hi All,
As I was doing my weekly run through WWD I found it very interesting that prior to this class this article wouldn’t have as much of an impact on me as it does today.
It speaks to the global investments that have spiked in 2013, it takes all aspects discussed in class- job creation, FDI increase and firm commitment’s to growth in these particular countries.
The U.S. was the top host of FDI (according to the UN report). As this is relevant to fashion/textile industries, it is hopefully a sign of the fashion industry going in a better direction than after the recession of 2008.
Prior to 2008, Luxury products were aspirational and consumers felt good when finally buying their dream car/suit/watch. After the recession, we saw what was somewhat of disassociation from those consumers that still could afford these luxury items. I remember in 2008 having many of our top clients ship their items to their home, this so that they wouldn’t be seen with the many bags of goods purchased. Buying luxury was shamed upon, this as the world was struggling to get over the global economy downturn.
The luxury goods industry has been trying to get back to 2007 levels for about 6 years now. If this is a sign of what is to come in the future- there’s a good chance that luxury items will be more desirable, not to 2007 levels but closer than we currently stand.
Eddie
June 25, 2014
Global Investments Spiked in 2013
GENEVA — Greenfield investments in the global textile and apparel industry, spearheaded by major outlays in the retailsegments in key markets such as the U.S. andChina, posted a sharp rise in 2013 to reach a historic high in excess of $24 billion, more than twice the 2012 level, a United Nations report said.
New investment projects in the textile and apparel retail businesses globally totaled $17.7 billion, while new investments in textile and apparel manufacturing reached $4.5 billion, while logistics, distribution and transportation came in at just over $1 billion, according to the U.N. Conference on Trade and Development’s “World Investment Report, 2014.” Greenfield is a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. In addition to building new facilities, most parent companies also create new long-term jobs in the foreign country by hiring new employees.
The surge in retail commitments reflects a focus on “market-seeking investments focusing on consumers in big markets,” Richard Bolwijn, analyst at UNCTAD’s Investment and Enterprise division, told WWD.
The U.S. attracted the largest outlays in new projects with $6.7 billion, of which retail accounted for $5.8 billion, manufacturing $558 million and investment on headquarters $371 million, the report data show. New investment in the U.S. retail segment in 2013 included a $1 billion investment by the Saudi Arabian investor company Fawaz Al Khobar Group with 3,000 jobs created and $49 million by Australia’s Lorna Jane, generating 185 jobs, while similar funds were earmarked by U.K.-based Burberry, Topshop and J. Barbour & Sons.
New investments were also made by major French, Italian and Swedish brands. These included Yves Saint Laurent, Hermès International, Sandro, Alexander McQueen, Giorgio Armani, Prada, Valentino, Versace, Canali, Hennes & Mauritz, Acne Jeans and Zara.
Investment activity was robust in U.S. textile manufacturing by investor companies from around the globe. China-owned Keer America outlayed $218 million to create 500 new jobs, Canada’s Gildan Activewear invested $200 million to establish 700 jobs and India’s ShriVallabh Pittie Group put in $70 million to create 250 jobs.
China last year attracted $2.2 billion in greenfield investments in textiles and apparel, with retail accounting for nearly $1.7 billion; logistics, distribution and transportation $272 million, and manufacturing $255 million, UNCTAD said. Brands and global retailers that unveiled new investments in the country included Hollister, H&M, Marc Jacobs International, Prada, Valentino and Geoxx.
Large new investments were also made in the retail segments in France, worth nearly $1.2 billion; the U.K. $1.1 billion; Hong Kong $615 million; Canada $595 million; Japan $525 million; Italy $434 million, and India $330 million, the report said.
In textile and apparel manufacturing, the biggest outlays were made by Turkish-owned companies. This included a $900 million project in Algeria that will generate 3,000 jobs by Taypa Tekstil, a $700 million investment in Russia creating 3,000 jobs by Nergis Holdings, and a $500 million project in Egypt establishing 1,500 jobs by Eroglu Holdings.
Overall, the UN report said global FDI rose 9.1 percent to $1.45 trillion in 2013 and projects that global FDI flows will increase 11.5 percent to $1.61 trillion this year. In 2013, the U.S. was the top host economy and attracted FDI inflows of $187.5 billion, up on the previous year’s $160.5 billion, followed by China with $123.9 billion compared to $121 billion in 2012.