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

 

Recently the Government of Japanannounced that plans are being contemplated to source apparels from Asiancountries other than China as sourcing from China has become costlier. With theeconomic 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 isregarded as the second largest in the world. Young women's casual fashion marketconstitutes approximately 60% of the overall market, and is estimated to bearound $28 billion. Japan is open to apparel imports. Many leading apparelmanufacturers of Japan have shifted their production sources off-shore, whichhas increased more than 50% over the past eight years.

 

'Street casuals' such as jeansand t-shirts, and 'office casuals' such as shirts, pants, skirts, and sportswears 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 infecteddue to sluggish economy. Due to this, many apparel manufacturers havere-organized their production lines, and have reduced a number of brands. Theyare now focusing more on the profit margins rather than the sales revenue. Shiftingtheir production overseas is one way to reduce costs.

 

Japan's Policy FavorsAsian Countries:

 

Japan is currently negotiatingwith Asian countries to import clothes duty-free. The country presently importsmajority of its apparels from other countries, with China being a key playercomprising 93% of the total imports of Japan. Industry analysts predict thatwith 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 industrialscenario 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 totalapparel 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% ofthe total GDP of India. India's exports to US and EU comprise of 77% ofgarments. 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 thestandards of Japan, coming years will be profitable. The Government, reducingthe service tax from 12% to 10% would be helpful to some extent. With low laborcosts, and taxes in their economies, Bangladesh and Vietnam are well ahead incompetition with India in securing export orders.

 

 

Companies in Japan generally start with a small order, and once they develop a mutual understanding with the manufacturers, place bigger orders. With proper exploration of the market, business development support, and establishing contacts with top Japanese buyers, Asian countries can skim the cream in Japanese apparel market.

 

References:

 

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