The much talked about recession still keeps sending shivers, with its adverse effects seen all around the globe. Garment exporters have already felt the heat with declining orders, and importers demanding for more price cuts. Shipment of garments is further expected to decrease in the coming months of March and April. Despite the looming recession and crisis bites, there is still a ray of hope for the Asian apparel exporters. Japan has now decided to shift its apparel imports, and sourcing from China to other Asian countries. This brings profound connotations to the apparel exporters of Asian countries.

 

Recently the Government of Japan announced that plans are being contemplated to source apparels from Asian countries other than China as sourcing from China has become costlier. With the economic slump creating a feeling of uncertainty about apparel orders, Japan's declaration has brought some hope among the beleaguered Asian garment exporters. Garment factories now, have the prospect of acquiring profitable new business.

 

Apparel Market of Japan:

 

Japan's apparel market is regarded as the second largest in the world. Young women's casual fashion market constitutes approximately 60% of the overall market, and is estimated to be around $28 billion. Japan is open to apparel imports. Many leading apparel manufacturers of Japan have shifted their production sources off-shore, which has increased more than 50% over the past eight years.

 

'Street casuals' such as jeans and t-shirts, and 'office casuals' such as shirts, pants, skirts, and sports wears that can be worn at the office have a potential market in Japan. Apart from this, pullovers and jackets also have a good market. Women of Japan prefer to wear garments that are fashionable and trendy. The market has been infected due to sluggish economy. Due to this, many apparel manufacturers have re-organized their production lines, and have reduced a number of brands. They are now focusing more on the profit margins rather than the sales revenue. Shifting their production overseas is one way to reduce costs.

 

Japan's Policy Favors Asian Countries:

 

Japan is currently negotiating with Asian countries to import clothes duty-free. The country presently imports majority of its apparels from other countries, with China being a key player comprising 93% of the total imports of Japan. Industry analysts predict that with the recent declaration of Japan, clothing exports from China to Japan might decline to 50% from their current 77%. (Of the total apparel exports of China, 77% is to Japan) They further assert that if this happens, it might transform the industrial scenario for many apparel industries in countries like India and Bangladesh and increase their profitability. Since the middle of 2008, Japan is showing keen interest in Bangladeshi apparels. Possibilities exist that the total apparel exports might double for some industries in Bangladesh and South East Asia. Factories in countries like Thailand, Indonesia, and Cambodia might be able to take some business away.

 

Apparel exports constitute 20% of the total GDP of India. India's exports to US and EU comprise of 77% of garments. Recession is pulling down the shutters of many apparel companies in India. For the factories that are able to survive through this crisis, and rise up to the standards of Japan, coming years will be profitable. The Government, reducing the service tax from 12% to 10% would be helpful to some extent. With low labor costs, and taxes in their economies, Bangladesh and Vietnam are well ahead in competition with India in securing export orders.