Small and medium enterprises (SMEs) play a significant role in the global textile trade, contributing to the industry’s growth and sustainability. While large multinational corporations dominate the market, SMEs are also key players, especially in the production of niche and specialised textile products, including the eco-friendlier ones.

The textiles industry is one of the largest industries on the planet. It is also one of the oldest, as people have long been using private businesses and corporations to design and manufacture clothing that are worn on a daily basis.

Through hundreds of years of technological innovations, the textile industry has only adapted and grown. Where it may have taken a seamstress a few days to create a gown a few hundred years ago, it can now be done in less than an hour and can also be mass produced.

The Continual Adaptation of Textile Industry

The textile industry has undergone some of the most dramatic changes over the last century, and that has continued over the last 25 years. Globalisation has played a significant role in the dramatic transformation of this industry, as designers and manufacturers have found that there are far better options to produce clothing in so-called ‘developing nations’ than there are in Europe and North America.

As a result, globalisation led to companies shifting their production overseas, creating a point where most of the textile trade and design is now done in other ‘developing’ countries.

The trend to shift production to other countries began in the 1970s, seeing a rise of manufacturing jobs primarily in Southeast Asia, often at the expense of European and North American countries. For example, the number of workers in the textile and clothing industry in Malaysia increased 597 per cent from 1970 to 1990, while the strength grew 416 per cent in Bangladesh during the same period, and Sri Lanka and Indonesia both saw increases of over 300 per cent. China currently has 5.3 million workers in the textile industry, an increase of nearly 2 million in just the last 30 years.

European nations have suffered the most as a result. The United Kingdom has seen a 55 per cent decline in textile workers while Germany has seen a 58 per cent decrease. Finland has lost 73 per cent of its jobs in this industry and Sweden and Norway have both lost 65 per cent. Thus, globalisation has dramatically changed the landscape of textile industry.

The Rise of Small and Medium Enterprises

This migration of the industry has led to the rise of the small and medium-sized enterprises (SMEs). According to the United Nations, SMEs have been a primary source of employment and revenue for many developing nations and have been growing rapidly across multiple industries in general, accounting for 90 per cent of all businesses and 60-70 per cent of all employment.

These SMEs grew rapidly coming out of the COVID-19 pandemic as people returned to pre-pandemic levels of income and businesses were looking for an increasing number of employees. This helped to spur greater development of these SMEs, and the textile industry has been one of the those that has benefitted greatly.

The number of SMEs has grown from 204.4 million in 2000 t0 333 million in 2021. That is a rise of nearly 55 per cent in 20 years, and that number is expected to reach near 350 million by the end of 2023.

What is even more impressive about this number is that the average company is not expected to survive beyond three or four years in today’s market. Back in the 1970s, a SME was expected to last as long as 35 years on average, but that number has dropped to just a few years in today’s market. It is a cutthroat economy, but many more entrepreneurs are seeing value in starting their own small enterprise or expanding to a medium-sized enterprise.

What Is Driving this in the Textile Industry

The textile industry is riding the coattails of this trend. A large number of SMEs have entered the industry over the last 50 years, especially within the last 25, and many industry analysts have determined key factors that have played a role in the rise of SMEs within this industry.

Filling A Niche

For countries where textile companies and employees were lost, there became a growing need to adapt. There was still room for the textile industry in countries like Germany, France, the United States, and other Western nations. However, large manufacturing plants were not going to be the standard any longer. Most of these had moved to Southeast Asia, Africa, and South America.

However, when one has a multibillion-dollar industry, there are going to be business owners and entrepreneurs looking to capitalise on the revenue that is available. This is where SMEs filled the void.

For Western nations, small designers and retail shops became the standard. This is especially true with changes in technology and climate awareness. Consumers were not going to find mass-produced jeans, polo shirts, and dresses created in countries like France, the United Kingdom, or United States. Instead, what they could find would be more handcrafted, tailor-made garments.

SMEs became a place where consumers could find custom items made or where small numbers of a certain item were produced. There was no longer the company which had 5,000 employees. Instead, it was the 10-100 employee sized company that has now dominated within these Western nations.

They Adapt as Well

The rise of SMEs is not unique to Western European and North American nations, however. With large textile companies moving to developing nations, small and medium-sized enterprises have found a niche as well.

This is occurring for several reasons, starting with the fact that there is a large supply of skilled labour who were able to perform tasks related to textile and garment production. Large companies may opt to find cheaper labour, opting to lay off more experienced workers who cost more to employ. These become ideal employees for smaller sized organisations that want to provide better, handcrafted items for customers.

The rise of tourism has also helped in this endeavour. With many finding Cambodia, Vietnam, Thailand, the Philippines, Kenya, South Africa, Colombia, Venezuela, Panama, and similar nations to be a great vacation destination, they are also looking to find items that are unique to the country. There is no need to buy a dress shirt made from a large manufacturer if they can buy that at their tourist spot. Instead, they want the more authentic, handcrafted garments that are produced by the small and medium enterprises.

The SMEs are able to reduce costs by taking left over pieces of fabric or defective garments and turning them into a garment that could be sold at a local shop or market. Both residents of the country and tourists see value in these garments, and it has become a booming industry.

Large Companies Depend Upon SMEs

An interesting dynamic is that large fashion brands have come to depend upon SMEs, so they are able to fulfil their own clothing orders. Often these large brands turned to garment manufacturing companies in Asia, who were often small to medium scale enterprises. In this way, the large enterprises have become dependent upon small and medium-size businesses to provide them with the garments to be able to fulfil orders.

This becomes a win-win for both large and smaller sized enterprises. The large fashion companies are able to reach out to SMEs to supply them with the apparel based upon a “make to order” basis. They can then pass on the items to retail chains.

The Socially Conscious Customer

In recent years, one of the biggest factors in changing the international textile industry has been the rise in socially conscious customers. They are those customers who are looking to save the planet or take measures that are eco-friendly. As a result, there is an increasingly demanding need for unique garments to be created.

SMEs are filling this void. Companies are creating garments that are vegan or which use recycled materials to produce. Customers want to ensure that the carbon footprint and the impact on the planet is reduced, and these companies are able to provide that, something that becomes difficult for large manufacturing firms as they produce in mass quantity.

The shift to eco-friendly production would require a massive overhaul of the large textile industry, but small and medium enterprises are able to fill that gap now. Because there are not large machines pumping out hundreds of shirts or pants per hour that need to be replaced, they can provide what customers are looking for.

This is likely only going to increase the number of SMEs within the textile industry over the next 5-10 years. More customers are concerned about their individual impact on the planet and want to purchase from companies that are as socially conscious as they are. The large manufacturers simply cannot tout that type of commitment, and this is why SMEs are going to keep growing.

The role of SMEs is fascinating, and it will be interesting to see how this industry will change in the upcoming years.