Deutsche Bank kept its “sell” rating on Taiwanese textile manufacturer Eclat Textile Co (儒鴻), saying that any tariff benefits that the company’s production facilities in Vietnam might gain from the potential passage of the Trans-Pacific Partnership (TPP) would not materialize until 2017, while stiffer competition is a more immediate threat.
Eclat, which produces high-end functional fabrics at its factories in Vietnam, would see benefits from the pact limited by the “Yarn Forward” Rules of Origin (ROO) demand that TPP signatory nations use yarn produced by TPP members to receive access to zero tariffs, and the 12-to-18-month waiting period required for the trade pact to clear the legislative processes in participating nations, Deutsche Bank analyst Anne Ling (林建純) said in a report released on Thursday last week.
“Consensus has been too optimistic about the benefits of the TPP this year and next year. We are more conservative as we expect wage increases to have negative impacts before any tariff benefit can be received,” Ling said in the report.
The quality and price competitiveness of Vietnam-made yarn still lags behind yarn made in Taiwan and China, and Eclat would still rely on imports to produce garments, disqualifying their products from tariff eliminations, Ling added.
Ling attributed Vietnam’s limited yarn supply to limited cotton production, a lack of chemical infrastructure and poor yarn-design capability.
Instead of suppliers, US sports apparel brands, such as Nike, Under Armour, Lululemon and VF Corp, stand to gain the most after the TPP is implemented, the report said.
In addition, only 14 percent of US textile imports come from nations it has free-trade agreements with, the report said, citing data from the US Department of Commerce’s Office of Textiles and Apparel.
The report described Eclat as a company stranded in “no-man’s-land,” as it must weather rising wages in Vietnam before reaping TPP benefits.
Direct labor costs for Eclat’s Vietnam division are expected to increase by 30 percent this year from last year and to climb by 23 percent and 16 percent next year and in 2017 respectively, according to the report.
The conclusion of the TPP negotiations might trigger significant order reallocation to Vietnam after 2017, leading to a compound annual growth rate of more than 30 percent in the country’s textile exports to the US from this year through 2017, Ling said.
Eclat is also facing rising competition amid a robust tide of fabric and garment investments in Vietnam in anticipation of tariff benefits. Yu Yuang Group (裕源紡織), considered to be one of the largest direct competitors of Eclat, has been ramping up its production capacity in Vietnam since the first quarter, and has since been able to match Eclat’s output in the country, the report said.
MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it plans to double investment in data center-related technologies, including advanced packaging and high-speed interconnect technologies, to broaden the new business’ customer and service portfolios. The chip designer is redirecting its resources to data centers, mainly designing application-specific integrated circuits (ASIC) with artificial intelligence (AI) capabilities for cloud service providers. The data center business is forecast to lead growth in the next three years and become the company’s second-biggest revenue source, replacing chips used in smart devices, MediaTek president Joe Chen (陳冠州) told a media event in Taipei. “Three or four years
Until US President Donald Trump’s return a year ago, when the EU talked about cutting economic dependency on foreign powers — it was understood to mean China, but now Brussels has US tech in its sights. As Trump ramps up his threats — from strong-arming Europe on trade to pushing to seize Greenland — concern has grown that the unpredictable leader could, should he so wish, plunge the bloc into digital darkness. Since Trump’s Greenland climbdown, top officials have stepped up warnings that the EU is dangerously exposed to geopolitical shocks and must work toward strategic independence — in defense, energy and
Motorists ride past a mural along a street in Varanasi, India, yesterday.
For the second year in a row, a Brazilian movie has wowed international audiences and critics, securing multiple Oscar nominations and drawing fresh interest in the Latin American giant’s film industry. Experts say the success of The Secret Agent, which has won four Oscar nominations, a year after I Am Still Here won Brazil its first Oscar, is no fluke, with a bit of a push from the country’s political climate. “This is neither a coincidence nor a miracle. It is the result of a lot of work, consistent policies, and, of course, talent,” Ilda Santiago, director of the Rio International Film
RSS