Dechen Yeshi has the kind of commute most city dwellers would give their right arm for: from her house atop a valley on the Tibetan Plateau, she strolls down a grassy slope, taking in the crisp mountain air and verdant surrounds, to arrive at a workshop five minutes away. The 38-year-old moved to the lofty prefecture from Connecticut 13 years ago, not necessarily in search of tranquillity but to set up a textiles business that she and her mother, Kim Yeshi, hoped would create work for the people who live there. “We wanted to do something that was poverty-alleviating, but at the same time uses people’s skills and the local raw materials to create something amazing,” says Kim, who lives in India with her husband, a Tibetan academic. After establishing a base in Amdo, which lies to the east, the duo launched Norlha, a clothing company and white-label producer for some of the world’s biggest luxury names.
Norlha is one of a growing number of contemporary brands whose main priority is to create work for communities, rather than make fashion for fashion’s sake. In doing so, these independents are actively challenging one of the biggest criticisms of the industry – that it predominantly serves the people high up, while too often exploiting those who actually make the clothes. These brands and the communities they support occupy all corners of the globe: the likes of Varana, which hones ancient craft in India; Lemlem, which works with weavers in Ethiopia; Sindiso Khumalo, which collaborates with artisans in Burkina Faso and Cape Town; and Philip Huang, which utilises traditional dyeing techniques in Thailand.
“I believe that fashion can create jobs,” says LVMH prize finalist Kenneth Ize, who works with weavers in Nigeria to create vibrantly striped textiles for his collections. “I want to create value around the craft, and I believe that through showing this culture to the world, it could mean significant growth for the country. It’s not only going to be about making fashion, it’s going to grow the economy in general.”
One UK-based proponent of community-led fashion is Patrick Grant, the creative director of menswear brand E Tautz and founder of Community Clothing, a social enterprise designed to create work for Britain’s dwindling textile industry. Grant has partnered with 28 factories, each specialising in a core part of the chain – including spinners, weavers, embroiderers, textile printers and garment makers – to create perennial basics for men and women. “I want to help restore economic prosperity to our textile regions,” says Grant, who estimates to have created more than 140,000 hours of skilled manufacturing work since launching the brand in 2016. “We design products that play directly to their strengths, utilising their existing skills and machinery, and taking their advice on fabric and yarn types and on garment construction.”
Part of the endeavour of these brands is to use the resources that have traditionally been present in each area – from wool or linen in the UK to cotton in India or Ethiopia. In Tibet, an abundant raw material is the fibre from yaks, of which there are around 14 million across the plateau. The wool, which can be coarse and unruly, has traditionally been used for insulation; Norhla, however, uses the soft underdown (known as khullu) that the yaks naturally shed – and which has not previously been widely utilised – to make luxury accessories and ready-to-wear for men and women. “The reason that this project was so attractive to the nomads is because we were giving the yak a new and modern context,” says Dechen. “These are people who for generations and centuries have seen the yak as central to their way of life.”
For others, it’s about preserving skills and techniques that have fallen out of favour with modern industrialisation. Varana, which has its flagship store on Dover Street in London, employs artisans in India whose craft has existed for centuries but is no longer in as much demand. “We started because the skills were dying out, because the children of these craftspeople aren’t really doing what generations of their families have done,” says founder Sujata Keshavan. “The tragedy is that, because of a lack of work, a lot of the weavers are actually breaking stones on the road and doing unskilled labour, because they can’t get orders. They have these amazing skills, but they don’t use them.” Keshavan is counteracting that by taking the techniques and applying them to designs that are more attuned with the high-end fashion market. “They’ve been doing this specific craft for years and years, but the market has changed,” Keshavan adds. “If we want to shine a light on these crafts, and hope that they continue, it’s very important that the design is a bridge between what would be desired today by people all over the world and their capabilities.”
That includes jamdani, a loom-embroidered textile traditionally used for saris that has been identified by Unesco as a craft that needs to be preserved. Instead of using the motifs that have typically been woven into the cloth – intricate, geometric patterns or neatly tiled florals – Varana creates pieces such as a bone-white, floor-length dress with a pattern that mimics soundwaves. There’s also khadi, a feather-light fabric used in a capsule collection of long skirts and dramatic, balloon-sleeve blouses. The cloth is made entirely by hand, without the use of electricity. “It’s got the lowest carbon footprint in the world of any fabric,” says Keshavan, who also notes that her khadi is made from rain-fed cotton that is 100 per cent biodegradable, and therefore highly sustainable.
Being respectful of the environment is also a priority for many of these brands, and is something that is easily achieved by virtue of the traditional processes and techniques that they employ. The duo behind New York and Bangkok-based label Philip Huang, former model Huang and his wife, Chomwan Weeraworawit, use natural indigo dye produced by artisans in north-east Thailand to create their designs, which range from kimono-style jackets to socks and blankets. They came across the process – which is less polluting than the synthetic equivalent – while visiting Weeraworawit’s family in Thailand some years ago, and were immediately mesmerised by the technique of soaking the leaves of the indigo plant and beating the liquid to extract the vibrant hue. “The artisans we work with, the indigo grandmas, many of them are in their 70s, and have been doing this their whole lives,” says Huang. “But there aren’t many of the younger generation involved in the work, so we made it our mission to appeal to the youth, and I think it’s something that they would engage with.”
The idea of building communities through clothing production is one that the Ethical Fashion Initiative too has been striving towards since 2016. Founder Simone Cipriani wanted to create a bridge between marginalised artisan groups and global lifestyle brands; the United Nations and World Trade Organisation-led initiative has since engaged communities in Mali, Afghanistan and the Ivory Coast, and has relationships with brands from Vivienne Westwood and Stella McCartney to United Arrows. “The networks of artisans we co-create with,” says Cipriani, “become not only an interface for trade with global brands and distributors, but also a tool to rebuild their society’s social capital – the capacity of working together for a different common future.”
That is the sentiment shared across the board – that fashion and the production of it can be a force for positive social change. “It’s a challenge, but working together makes us all have this mutual sense of responsibility for each other,” adds Dechen. “It’s not just sending your order out to a far-flung factory from a design studio. The designers come here and they work with the artisans. We are all human beings working together.”
Bolsonaro faces investigation over election fraud claims
Brazilian politics updates
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Brazilian president Jair Bolsonaro’s legal problems have multiplied after a court opened an investigation into his unsubstantiated warnings of voter fraud in presidential elections next year, a probe which could lead to him being disqualified from running.
The judicial inquiry comes as the far-right leader’s ratings are on the slide following accusations of his incompetent handling of the Covid-19 pandemic, which has claimed the lives of more than half a million Brazilians.
Rising living costs and allegations of corruption in vaccine procurement within his administration have damaged Bolsonaro’s standing further.
With political pressure building, the populist has increased attacks on the electronic voting system in recent weeks, reiterating calls for the adoption of printed paper receipts in order to avoid manipulation.
Opponents fear the former army captain is seeking to cast doubt on the legitimacy of the vote, in preparation for refusing to recognise a potential defeat. A group of 18 current and former Supreme Court justices have defended the current ballot system, which was introduced in 1996, insisting that Brazil had eliminated election fraud.
The Superior Electoral Court this week opened an administrative probe into Bolsonaro over his claims, for which he has provided no evidence. It also asked the Supreme Court to investigate whether the president had committed a crime by disseminating fake news about the voting system.
The president hit back on Tuesday. “I will not accept intimidation. I will continue to exercise my right as a citizen, to freedom of expression, criticism, to listen, and to meet, above all, the popular will,” Bolsonaro told supporters in Brasília.
The electoral court’s intervention showed the judiciary was striking back against Bolsonaro’s attacks, said Carlos Melo, a political scientist at Insper in São Paulo. “He [Bolsonaro] is harming the rules of the game, of democracy and the institutions,” he added. “It’s not different to what [Donald] Trump did, and demagogues in other countries. His intention is to question the electoral process without proof.”
Both moves by the electoral court could in theory eventually pave the way for Bolsonaro being barred from standing in the 2022 poll.
“There is a long way until this can bring actual legal consequences against the president which might affect his eligibility,” said Rogério Taffarello, a partner in criminal law at Mattos Filho and professor at the Getúlio Vargas Foundation. “[This] does not mean, of course, that the existence of such investigations cannot generate political consequences”.
The president is already the subject of a criminal investigation into whether he failed to act on warnings about alleged irregularities by public officials in negotiations over vaccine purchases. Bolsonaro and the government deny any wrongdoing.
Protesters have taken to the streets in cities over the past two months calling for the impeachment of Bolsonaro, who in polls is trailing former leftwing president Luiz Inácio Lula da Silva, also a likely frontrunner in next year’s election.
Bolsonaro had long promised to present evidence of cheating in elections, even claiming that the 2018 ballot he won was tampered with. Yet last week he admitted to not holding any proof, only “indications”.
Despite his falling popularity, Bolsonaro retains backing in Congress from an amorphous grouping of centre-right political parties known as the Centrão, or “Big Centre”. Analysts said for now this support appeared to be holding.
Additional reporting by Carolina Pulice
South Korea looks to fintech as household debt balloons to $1.6tn
South Korea Economy updates
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After her family business of ferrying drunk people home was hit by closures of bars due to Covid-19 curfews and social distancing, Lee Young-mi* found herself juggling personal debts of about Won30m ($26,000).
The 56-year-old resident of Suncheon in South Korea was already struggling to pay off or refinance four credit cards, but now faces the prospect of those debts rapidly multiplying after her husband was diagnosed with cancer.
“We’ve had little income for more than a year as not many people are out drinking until late into the night,” said Lee. “Now my husband won’t be able to work at all for the next three months after his surgery.”
Lee’s story is playing out across Asia’s fourth-largest economy as self-employed workers, who make up nearly a third of the labour force, have seen their incomes reduced sharply due to coronavirus restrictions. Now, after struggling for years to keep a lid on household debts that hit a record Won1,765tn ($1.6tn) in March, Seoul is looking to fintech companies and peer-to-peer lenders for answers.
Among them is PeopleFund, which touts tech-based investment products backed by machine learning that allow borrowers to refinance their higher-interest loans from banks and credit card companies.
The company has loaned at least $1bn to more than 7,500 customers since it was established in 2015. Its products allow borrowers to switch their debts to fixed-rate, amortised loans at annual interest rates of about 11 per cent, a change from the riskier floating rate, interest-only loans common in South Korea.
PeopleFund has received about Won96.7bn in financing from brokerage CLSA, and along with Lendit and 8Percent is one of the first among the country’s 250 shadow banks to win a peer-to-peer lending licence.
“The country’s most serious household debt problem is with unsecured non-bank loans, whose pricing has been too high. We can offer more affordable loans to ordinary people unable to receive bank loans,” Joey Kim, chief executive of PeopleFund, told the Financial Times.
The proliferation of digital lenders and fintechs in South Korea, where higher-risk borrowers are often cut off from bank financing, has been encouraged by the country’s government.
“We hope that P2P lenders will help resolve the dichotomy in the credit market by increasing the access of low-income people to mid-interest loans,” said an official at the Financial Supervisory Service.
South Korea’s household debt situation has become more pressing since the onset of the pandemic, with increases in borrowing for mortgages, to cover stagnating wages and to invest in the booming stock market. South Korean households are among the world’s most heavily indebted, with the average debt equal to 171.5 per cent of annual income.
South Korea’s household debt-to-GDP ratio stood at 103.8 per cent at the end of last year, compared with an average 62.1 per cent of 43 countries surveyed by the Bank for International Settlements.
Much of the new debt has been risky. Unsecured household loans from non-bank financial institutions were Won116.9tn as of March, up 33 per cent from four years ago, according to the Bank of Korea, much of it high interest loans taken out by poorer borrowers.
Getting on top of the problem has taken on national importance. In a rare warning in June, the central bank said the combination of high asset prices and excessive borrowing risked triggering a sell-off in markets and a rapid debt deleveraging.
“If financial imbalances increase further, this could dent our mid-to-long-term economic growth prospects,” BoK governor Lee Ju-yeol said in July.
The country’s economic planners, however, are struggling to contain debt-fuelled asset bubbles without undermining South Korea’s fragile economic recovery.
The government has attempted to address the danger by tightening lending rules. Regulators in July lowered the country’s maximum legal interest rate that private lenders can charge their customers from 24 to 20 per cent.
Economists caution that rising debt levels increase South Korea’s vulnerability to an economic shock.
They also warn that the asset quality of financial institutions could be hit by a jump in distressed loans when the BoK rolls back monetary easing, expected in the fourth quarter.
“Monetary tightening is needed to curb asset bubbles but this will increase the household debt burden, holding back consumption further,” said Park Chong-hoon, head of research at Standard Chartered in Seoul. “The government is facing a dilemma.”
For Lee Young-mi, however, the 11 per cent rate offered by the PeopleFund is still too high. “I am not sure how to pay back the debt.”
*The name has been changed
European and Chinese stocks rise after calming words from Beijing
Chinese equities updates
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European shares chased gains in China after calls from Beijing for greater co-operation with Washington helped sooth jitters over a regulatory crackdown in the world’s biggest emerging market.
Europe’s Stoxx 600 index rose 0.7 per cent on Monday to hit new all-time highs, while the UK’s FTSE 100 rose 1 per cent led by economically sensitive stocks including banks and energy groups. London-listed lender HSBC gained 1 per cent after it reported second-quarter figures that easily beat analysts’ expectations.
The gains came after the China Securities Regulatory Commission, Beijing’s market regulator, called on Sunday for closer co-operation with Washington, stressing the country’s efforts to improve transparency and predictability after a crackdown on tutoring groups obliterated the market value of the $100bn sector’s biggest companies.
Chinese listings in the US have become a geopolitical flashpoint as Beijing has sought to exert greater control over the country’s powerful tech sector. The US Securities and Exchange Commission said on Friday that Chinese groups that sought to sell shares in America would be subject to stricter disclosures.
Shares in China rebounded after their worst month in almost three years, with China’s CSI 300 benchmark of Shanghai- and Shenzhen-listed blue-chips rose 2.6 per cent on Monday, while Hong Kong’s Hang Seng index added 1.1 per cent. The city’s Hang Seng Tech index, which tracks big internet groups including Tencent and Alibaba, reversed early losses to rise 1 per cent. Futures tracking Wall Street’s benchmark S&P 500 index climbed 0.6 per cent.
Last month, China’s cyber-security regulator announced plans to review all foreign listings by companies with data on more than 1m users after top leaders in Beijing called for an overhaul of how the country regulates initial public offerings in the US. The crackdown came just days after the $4.4bn listing of ride-hailing group Didi Chuxing.
The intensifying scrutiny of how Chinese groups access capital markets has pummelled stocks, delivering the worst month for China tech groups listed in the US since the global financial crisis. The Hang Seng Tech index fell 17 per cent last month.
“While we do not consider it prudent to completely avoid investments in China, further volatility can be expected until the first quarter of 2022, by which time we believe most regulatory changes may already be in place,” analysts at Credit Suisse wrote in a note on Monday.
Meanwhile, data released by China at the weekend showed that factory activity grew at the slowest pace in 15 months in July as demand contracted for the first time in more than a year.
Government bonds were steady with the yield on the benchmark German 10-year Bund, which moves inversely to its price, gaining 0.01 percentage points to minus 0.45. The equivalent US 10-year yield was steady at 1.234 per cent.
Bond yields have been falling in recent weeks, despite higher than expected inflation readings in the US and indications from the US federal Reserve last week that it was moving a step closer to the day when it would start tapering its $120bn in monthly asset purchases.
The euro rose 0.1 per cent against the dollar to $1.1885, while the pound gained 0.1 per cent to purchase $1.3924. Prices for global oil benchmark Brent crude fell 1 per cent to $74.66.
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