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| Sunday, 7 April 2002 |
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Marketing key for survival in quota-free world by INDUNIL THENUWARA Marketing will be the keyword for apparel manufacturers if they are to stay in business when the Multi Fibre Agreement ends in 2005, a representative for a leading US garment buyer said. Claire Snowdon, General Manager Liz Claiborne International Ltd. (Sri Lanka Liaison Office) told the Sunday Observer that understanding the market and catering to buyer requirements will be the key for survival when the present quota system is abolished in 2005. The quota system has forced international buyers to source from some countries which they would not have considered otherwise. There is a fear that with the phasing out of quotas, many apparel manufacturing countries will lose their business to high-performing countries such as China. "Although China will definitely get a large portion of the business, this does not necessarily mean that Sri Lanka will face a crisis. It will certainly be a challenge, but not something the island cannot face," she said. According to Snowdon, buyers look for the right product with the right quality at the right price to be delivered on time. "Sri Lanka offers quality in its product, services and information. The cost has been a bit high, but the industry is already looking at reducing costs. Lead times may not be that short, but there are ways to speed up the process. "However, where Sri Lanka lacks is in the marketing procedure. This is an area where the industry would need to do some catching up. Only those who understand the market and can provide value-added quality products to suit their clientele will survive in the quota-free era," she said. Garment factories will have to go beyond their manufacturing expertise and enter an era which is entirely market-driven. Apparel manufacturers will have to canvass for their orders with international buyers and only those who can do this successfully will survive. Buyers now look for parties who are capable of providing the whole package and not one part of it, Snowdon said. Some small players will not meet these requirements, but if they are to survive, they will have to adjust themselves. They could also form strategic alliances with larger groups, she said. As a means of gearing Sri Lanka's apparel industry to face the quota-free world, the Chartered Institute of Marketing (CIM) and the Sri Lanka Apparel Exporters Association are preparing a course for the industry within the CIM syllabus. It is expected to help the industry to handle this issue and develop the sector to be market competitive. Snowdon said that Sri Lanka is no longer a cheap source for apparels, neither is it a commodity market. Buyers now look for much more from these markets. So vendors will have to carve out a niche for themselves. "Productivity is another sector which is looked at closely by buyers. This is where China is scoring with an efficiency of +60 per cent. In Sri Lanka, I understand that this is in the area of 45 per cent. Among the garment factories that we deal with here, which I believe to be some of the best in the country, it is around 50 per cent. "In China, work ethics encourage productivity. Workers tend to work away from home in places close to their workplaces so attendance is high. They also get paid for the work they do. In Sri Lanka there are fixed wages with minimal incentives. There are no quality incentives to encourage workers to produce the best product unlike in China," she said. "Big buyers also work with companies which provide a conducive environment for their employees. Child labour is also frowned upon. The local companies have to comply with certain regulations and we have not found incidences of non-compliance among our manufacturers here," Snowdon said. Commenting on the possibility of Mexico being a threat to Sri Lanka due to its close proximity to the USA, she said the island need not worry about this. "Over the last five years, we have actually seen a reduction of business in Mexico and many factories have closed down. Although the lead times are shorter there and the product is OK in quality, the same cannot be said for the quality of its services and infrastructure. Also, it offers only commodity items." She commended the efforts of the government in lobbying with the US and European Union for duty-free business. However, she stressed that all elements will have to be balanced if local industry is to make the best of the situation. "If Sri Lanka could perform well in the past despite an ongoing war, it could definitely perform better with peace in the horizon," she said. |
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