13541 Fri, 01/11/2008 - 5:02pm
By Warren Shoulberg
FRANKFURT, Germany–If you thought worldwide geopolitical developments had nothing to do with the price of sheets and towels, think again.
All throughout the Heimtextil fair here this week—the largest textiles trade show in the world—what was playing out on the front page, particularly in Pakistan and Europe, was being reflected in the way the world market for sheets and towels was going. For some, it was pricing issues, for others the very concept of doing business in a particular country.
The ongoing political and social unrest in Pakistan surrounding the assassination of former Prime Minister Benazir Bhutto is clearly having some short-term impact on textiles business there, though not as much and for probably not as long as some had speculated.
Half a world away, the continued decline of the dollar versus the euro is just about forcing most American customers to forgo longtime European suppliers and shift business elsewhere. And even for those who haven’t done it yet, there is a feeling that they won’t be able to hold out much longer.
While there were clearly fewer premium European suppliers showing here, there was no noticeable drop-off in visits to Pakistani stands here. But what’s going on over there was impacting what’s going on over here.
“Absolutely yes,” said one Indian agent when asked if Pakistani politics was hurting business in that country. Like everyone discussing this issue, he asked that his name not be used. “China and India will both pick up business in the short term.”
But he didn’t expect it to last very long, citing the Pakistani currency as one tool the country will use to hold on to business. “In the long term, they will get the business back.”
“It’s just a phase,” said the head of a major Indian company that competes with Pakistani suppliers. “Things will settle down there,” he said, adding that once that happened, business would pretty much return to normal.
“We’re having a CNN moment,’” agreed the head of a buying team from an important American retailer. “Listen, Pakistan has never been the most stable country around, but people have always done business there.”
The U.S. head of an important Pakistani bed and bath resource confirmed that while the company lost a few days of production immediately following the Bhutto assassination, manufacturing and deliveries have pretty much returned to normal.
Back in Europe, it was the bottom line not the political line that was impacting business. The buyer for a major American retailer said he was still looking at European goods, but the exchange rate was making things increasingly difficult. “It was easier last year than this and I don’t know how much longer we will be able to do it.”
The U.S. agent for several better European suppliers noted that fewer of his American customers were coming to Heimtex this year, a fact he attributed directly to the lack of buying power of the American dollar. But like many suppliers he said he had put through a price increase—7.5 percent in his case—and that was helping offset the exchange rate. “The buyers understand what’s going on,” the agent said.