Southeast Asian apparel manufacturers at the Source It event expressed determination to survive in the face of intensified price pressure in a post-quota world.
China is becoming a bigger manufacturing giant, but some Southeast Asian garment producers say they do not fear the competition as they concentrate on providing value-added services and developing niche markets. "There's no doubt that more buyers are using China as their first choice for manufacturing, but no one will put all eggs in one basket," said Philippe Guguen, factory manager for Laos-based Vision Manufacturing Company Ltd.
Guguen was among more than 9,000 who gathered for the Interstoff Asia and Source It events, held simultaneously this past March in Hong Kong. Source It, with more than 100
firms from 11 countries exhibiting, promoted the Association of Southeast Asian Nations (ASEAN) countries as a fully integrated sourcing region.
Vision Manufacturing is focused on finding niches where it can be the second-best choice for U.S. or European buyers, Guguen said. Specializing in denim with fancy washes, the firm promotes its in-house R&D team when seeking new customers. "We're a company managed by Europeans, but based in a low-labor-cost country," Guguen said. "We understand the design trends and the needs of our customers. All these are factors that distinguish us from our competitors."
Allan T. Hao Chin, director of the Philippines-based Blue Bell Commodities Inc., said that in the post-quota era, "going for volume is not the way to survive.
"China has the most complete supply chain, and we can never catch up with China price-wise," said Hao Chin, whose company produces woven
children's wear with a special hand-smocking technique that Chinese competitors have yet to duplicate."Right now China is very progressive in manufacturing with machinery," he said, but added it may eventually capture more market share in specialty manual sewing jobs such as smocking. "We have to keep one step ahead of them," he said.
For the past 10 years Blue Bell Commodities has been focusing on the high-end market and working to establish its Periwinkle brand, as it leverages its in-house design team. "We don't simply take orders," Hao Chin said. "Each season we'll make our own presentations to show clients the newest designs we have."
Thailand-based producers at Source It also emphasized one-stop services. "We want to run away from the price competition with China and instead offer unique products," said Somdet Susomboon, director of Thailand's International Cooperation group, a branch of the Thai government's Department of Export Promotion (DEP).
The Thai pavilion at Source It featured contemporary men's suits and women's skirts and dresses made of Thai materials but styled in conjunction with Italian artistic directors. The fashions were the result of the Thai Tex Trend (T3) project, a DEP program created to combine Thai firms' capabilities in design, production and marketing. "With T3 we hope to provide value-added services to our customers," Susomboon said.
In his speech at Source It's CEO Roundtable Forum, Gary Ross, vice president of worldwide sourcing for Liz Claiborne, stressed that price and quality are no longer the only differentiators for buyers in choosing apparel manufacturers in the quota-free era. Services make a supplier stand out, he said.
Ross defined services in seven categories, including:
1 - compliance;
2 - consistent operational procedure;
3 - product development;
4 - vendor certification;
5 - fast and flexible manufacturing;
6 - distribution; and
7 - technology.
"Yesterday the most difficult task we had to do was make a garment; tomorrow it will be the easiest," said Ross. "It's the combination of outstanding price, quality and services that will separate the winners from the losers."
The elimination of quotas has already caused many factories to consolidate, said Ken Loo, secretary of the ASEAN Federation of Textile Industries - Cambodia. "Factories are going through a consolidation phase," Loo noted. "There will be ones who can't make the cut, but there will also be others who can expand and take advantage of the fact that buyers are consolidating their orders too."
Despite fierce competition from other countries, Cambodia's apparel industry will not shrivel and die, Loo said. "We have probably the best labor compliance records, as all factories are monitored by the International Labour Organization," he said. "We also have the market access advantage. We can export duty-free garments to the European Union countries. We're lobbying for duty-free access to the U.S. market."
But Loo said there are also plenty of challenges ahead for Cambodia, including corruption and union issues, which can disturb production.
Most exhibitors at Source It concluded that coping with an ever-lower manufacturing price floor is the foremost challenge in the coming year. "Quota abolition has driven the prices further down," said Betty Lim of Malaysia-based Maxlin Garments. "If it's difficult to compete now, it'll be impossible in the future."
Lim's company has adopted a vertical setup, with fabric mills, manufacturing factories and marketing offices located in Singapore, Hong Kong, China, Brunei, Sri Lanka and Lesotho. "Ninety percent of our products go to the U.S.," she said. "We'll not compete in basic items. Rather we'll develop our specialty, such as the use of functional fabrics."
Although competition is heating up, many Southeast Asian firms see the post-quota era as an opportunity to explore new business possibilities. For instance, Tropic Isles, a Filipino manufacturer of children's swimwear and beachwear, may expand into exercise wear. "Exercise wear used to be limited by the quota, but this is no longer a problem," said Emmanuel Puyat, general manager. "We see it as a business opportunity to expand into related areas. Besides, we have never explored the Asian market in the past. The consolidation [within the] ASEAN will provide us with a new platform to do so."
JAN KOT is a free-lance journalist based in Shanghai, China.
for more information Source It Exhibition of ASEAN-region sources for garments, fabrics and related products and services.
Next Show: March 22-24, 2006; Hong Kong http://sourceit-hk.com
AFTEX, the ASEAN Federation of Textile Industries, was co-organizer of Source It and can provide contact information for apparel producers mentioned in this article.