Turning trends into opportunities in Asia’s textile industry

With its factories and supply chains serving brands across the world, Asia has long been at the centre of the global textiles industry. Over the past 20 years, the textile and apparel trade in Asia has grown at a rate of 4.5% a year and now accounts for nearly 65% of the global market, up from just over half in 2005.¹

While the long-term trend remains positive, the sector faces a number of headwinds.

In recent years, growth has been weighed down by weak consumer spending in Europe and the US, which together account for more than half of global apparel demand.² While falling inflation has lifted the near-term outlook, the industry must also reckon with long-term structural shifts.

Consumers and investors are increasingly focused on sustainability. A fractious geopolitical situation is threatening to weigh on global trade. Supply chains continue to face upheaval as international businesses look to reduce risks.

According to rankings produced by Fashion Revolution, an activism movement focussed on the fashion industry, global brands like Puma, Gucci, and H&M are among those with the most transparent commitments to sustainability, including within their supply chains.³ The emphasis placed by well-recognised brands can help to raise awareness among consumers and acts as a catalyst for reform at suppliers.

In Asia these structural shifts are creating new opportunities. Many businesses are rethinking their supplier networks to capture the benefits of free trade agreements, such as the Regional Comprehensive Economic Partnership (RCEP) connecting 15 economies across Asia.⁴

Governments and policymakers are keen to support the sector, too. Textiles and apparel feature in local manufacturing initiatives across Asia, such as India’s Production Incentive Scheme (PLI), which was first implemented in 2020 for electronics manufacturing but was expanded to a wider range of sectors in 2023, including textiles.

According to CareEdge Ratings, a credit ratings agency based in India, the Indian textile and apparel industry was worth about $150 billion in 2024, up from $100 billion in 2021, and is projected to reach $177 billion in 2026, driven in part by expectations of a desire by the US under president Donald Trump to reduce its dependency on China for many goods.⁵

Moreover, Indonesia’s “Making Indonesia 4.0” roadmap explicitly targets textiles and apparel as one of the five priority sectors for manufacturing growth.⁶ Together, it’s clear that the sector is becoming increasingly prioritised by both established and growing markets across Asia.

In this period of change, innovative and forward-looking textile businesses in Asia are well-placed to capitalise on emerging opportunities.

The shifting global landscape, however, will test their ability to adapt. Businesses may need to move quickly to ensure their supply chains remain can withstand any potential geopolitical shocks. That may mean diversifying production across a wider geographic footprint or creating more vertically integrated facilities.

In an uncertain environment, manufacturers may also need to reconsider their commercial relationships to ensure that they are not overly reliant on any single business partner.

Sustainability is also a major concern. Globally, the textiles and apparel industry accounts for up to 10% of greenhouse gas emissions,⁷ and consumes over 200 trillion litres of water each year.⁸ Much of that environmental impact is generated upstream in the value chain and has not traditionally been captured by major brands or apparel businesses. A 2024 report from CDP and HSBC found that corporate supply chain emissions (scope 3) are on average 26 times greater than operational emissions (scopes 1 and 2).⁹

The sector is rising to the challenge with initiatives such as the Future Supplier Initiative, launched in 2024 to promote collective action across the value chain, initially in Bangladesh.¹⁰

With the right approach, investments in sustainability and energy efficiency can improve productivity, reduce risks, and lift margins. Firms that can demonstrate strong performance against global sustainability standards are more likely to be chosen as suppliers to climate-conscious global brands.

We are playing our part in supporting the continued development of the textile and apparel industry in Asia. We have a presence across Asia in 19 markets, with a strong understanding of local businesses, particularly in the ASEAN region.¹¹ We also have a host of International Business Guides¹² that can support you as you expand.

This includes digital trade finance solutions such as HSBC TradePay, which allows clients to draw down trade loans to make immediate just-in-time payments to suppliers. In a competitive industry, a continued focus on efficiency through the digitalisation of operations and processes, as well as better data analytics and planning, will continue to pay dividends.

To give an example, Hirdaramani Group, a Sri Lanka-based garment manufacturer with a 130-year heritage, turned to us to support their international expansion, including a digital payments solution in Bangladesh that gives the business more flexibility for payments and reconciliation.¹³ We have also worked with Pacific Textiles, a Hong Kong-based manufacturer of knitted fabric, since its founding in 1997, including on the financing of a new plant in Vietnam in 2022.¹⁴

We also provide sustainable supply chain finance facilities and sustainability-linked trade facilities to support businesses in the region as they work towards building more sustainable supply chains. One example is Taiwan’s Makalot Industrial, which makes clothing for many of the world’s retail chains. In 2022 we arranged a US$30 million sustainability-linked trade finance facility for Makalot that was linked to the company’s energy efficiency improvement targets.¹⁵

That followed our provision of a similar facility to Hong Kong-based clothing manufacturer Epic Group with pricing tied to the intensity of Epic’s greenhouse gas emissions and freshwater use.¹⁶

For New-York headquartered PVH, the owner of brands including Tommy Hilfiger and Calvin Klein and with manufacturing operations across Asia, we provided an sustainable supply chain finance programme that was innovative for being tied to environmental and social objectives as well as the sustainability ratings of PVH’s suppliers.¹⁷ The performance of those suppliers is measured using tools that include the Higg Facility Environmental Module¹⁸ developed by Cascale, a non-profit formerly known as the Sustainable Apparel Coalition.¹⁹

As Asia’s textile and apparel sector responds to new demands and emerging trends, access to financing will be a key tool for businesses that are investing to shore up their place in global supply chains. We remain committed to supporting businesses on their ongoing transformation.