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| Sunday, 5 January 2003 |
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| News Business Features Editorial
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Formula to increase growth in apparel industry Diversifying into new markets and strong branding efforts are key to increasing growth in the apparel industry, the single largest foreign exchange earner for Sri Lanka.
The country's apparel industry is now heavily concentrated in the two large global markets of USA and the European Union (EU), which has resulted in a business risk due to heavy dependency. Diversifying into new markets is necessary to increase export volumes and reduce dependence on these two markets. According to the latest issue of the apparel digest 'Sri Lanka Garments' issued by Sri Lanka Apparel Exporters Association, the global development of trade blocs and regional preferential trade agreements is an additional threat to the industry, which must be adequately addressed by effective lobbying to obtain equal status. Price continues to be an important factor in the global apparel industry. Sri Lanka is not as competitive as it should be due to poor labour productivity and insufficient technological advancements. Labour productivity rates in cost competitive countries are approximately 65-75 per cent which is very high compared to the rates of 35-45 achieved by Sri Lanka. Manufacturing lead times in countries geographically closer to the US and EU are about 30-60 days whereas our lead time is around 90 days on average. The main reason for this is the import of raw materials for apparel manufacture. Another factor that can increase growth is strong branding. "Sri Lankan apparels must be consistently and aggressively branded to promote their relative strengths. It is expected that many global players will be able to deliver the basic customer expectations of price, quality and speed. Therefore, Sri Lanka must differentiate itself from the competition by providing enhanced services," states the publication. A total service includes having a raw material base, superior product development, efficient manufacturing capability, logistical efficiency and providing the buyer with assistance in the form of marketing, design or legal know-how. Therefore, the model envisaged for Sri Lanka is "total service". The country imports over 40 per cent of its raw materials including woven fabrics and accessories. The development of apparel zones together with fabric mills, washing plants, printing and heat sealing plants as well as water treatment plants will help the industry to provide a total service to its buyers. Consumers in the EU are now becoming more price conscious and importers demand large discounts from apparel exporters based in Asia. In the higher value added clothing segment, countries like Malaysia, Taiwan, Korea, Hong Kong and Singapore continue to be strong competitors for South Asian countries. The demand pattern has changed significantly with the fashion industry shifting from structured clothing towards casual items. The changing environment in the global market has forced Sri Lanka to increase its market share in niche markets in Western countries and also tie up with fashion houses. Therefore, it is essential to shift to high value added items and focus more on customer segmentation and modern production technology to capture the demand in niche markets. There is high potential for babies' and children's clothes as parents and relatives often buy in a high price range. More prominence should be given to modern designs to attract consumers to these items. Therefore, image building campaigns and strong lobbying are necessary to obtain more orders while selection of fabrics, speed of delivery and competitive prices too will pay a key role in attracting more orders from foreigners, adds the publication. Structural changes in Western retail markets have resulted in buyers changing the methods and time of sourcing. "Traditional pre-season orders are being replaced by last minute ordering and 'within season' ordering. The new methods account for about 36 per cent of the apparel sourcing. This is expected to increase to about 52 per cent by 2005. The publication states that the new sourcing patterns will pose immense challenges to the Sri Lankan apparel industry as the reduction of traditional sourcing will decrease our core competency. A handful of apparel exporters in Sri Lanka have invested in supply chain management-enabling technologies. Therefore, the apparel industry in Sri Lanka will have to develop speedy sourcing and enhance its 'within season' ordering capabilities to be competitive in the global arena. |
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