Demand for textile and garments declined considerably in 2008 and 2009, particularly in the US, Japan and Europe due to the rising unemployment levels and decline in consumer confidence. While few consumers exhibited preference for low-priced products, several others sought to defer purchases. The recession urged industry participants to resort to cost saving measures such as work furloughs, line closures and staff reductions to survive in the competitive environment. Several countries adopted protectionist policies in order to deal with social and political instability, decline in international trade, and closure of factories. The industry however recovered driven by the economic stimulus packages offered by various Asian countries. Governments of various countries implemented strong policy framework and provided support to intensify the pace of recovery. The global textile industry is also witnessing the sustained migration of manufacturing activity from the developed nations to developing countries.

China dominates the global textile market in terms of annual production capacity for cotton textiles, woolen fabrics and chemical fiber garments. In view of the recession, China adopted a different strategy to focus on domestic market, as against the earlier export-oriented operations. Improving economic conditions, coupled with favorable government support policies as well as industrial upgradations contributed to the increase in industry’s production output. Domestic demand is expected to drive production, sales and exports growth in the Chinese textile industry. Factors such as favorable infrastructure, liberal labor laws, and social security are expected to contribute to the industry growth.

Cotton is a major raw material used in about 40-50% of textiles. In addition, cotton makes up for about 85% of all natural fibers, other than wool, hemp and linen. Cotton consumption is largely driven by population growth, as evident by the fact that consumption has tripled during the period 1950 and 2009. In addition, factors such as rising per capita incomes, stable or falling prices of cotton in comparison to other fibres, and extensive promotional campaigns of market participants have contributed to substantial growth in demand for cotton. India, China, Pakistan and the US dominate the global cotton production.