When it comes to the textile and apparel sector, China has often managed to steal the limelight from other Asian countries. Though success has come in plenty for China, other Asian countries like Bangladesh, India, Sri Lanka and Thailand are expected to give China a run for its money.
Sri Lanka has left an indelible mark on the apparel and textile world with its impressive 21.40 per cent growth in terms of quantitative expansion till October 2013. According to the United States Fashion Industry Association, Sri Lanka ranks 12th among the fastest growing apparel producing countries. The stage is set for Sri Lanka to play a bigger and greater role in the global textile and apparel market.
Conventional to contemporary
The Sri Lankan textile and apparel industry is focussing on achieving a target of US$ 8.5 billion by 2020. The country 's growth graph backs this target, as the industry recorded a growth of US$ 4.3 billion in 2013 and US$ 2.3 billion by June 2014. According to MPT Cooray, Secretary General of the Joint Apparel Association Forum (JAAF), "The continuous success is heavily based on the sincere global relationships built by all the players in the industry over the years and it further strengthens." Sri Lanka is considered as one of the top apparel exporting nations of South Asia.
The textile and apparel sector has undergone several significant changes in the past decade in Sri Lanka. One of the major and most crucial changes is the induction of innovative technology and production of value added textiles. The country is working on further strengthening of design, inventory and product life cycle management.
Unlike the traditional approach that guided the textile and apparel sector, Sri Lanka has adopted a contemporary outlook and today every step, ranging from production to marketing and sale, is technology-laced. The country's upgraded machinery and sophisticated e-commerce portals have opened a direct access to European markets. The remarkable increase of 6.7 per cent in apparel exports to USA in 2014 from the figures of 2013 is another achievement of Sri Lanka. The country has become a home to luxury brands like Nike, Tommy Hilfiger, Victoria's Secret and Gap which have opened manufacturing units in the country for apparel production. Apart from this, a number of European and Asian fabric suppliers continue to store fabrics in Sri Lanka, as the country's strategic geographic position assures quick regional shipping and also offers clearing in less than a day.
Advantage Sri Lanka
Amid a shift in the global textile and apparel sector, Sri Lanka has managed to provide quality assurance along with improved working conditions for labourers. The country is also known for its triple bottomline approach: People-Planet-Profit. This has won accolades all over the world.
When other developing countries like Bangladesh and China are facing continuous criticism for hazardous working conditions and chemical use by textile sector, Sir Lanka has managed to remain in the news for all the right reasons. Several leading Lankan textile and apparel plants have managed to get Leadership in Energy and Environmental Design (Platinum) certification by the United States Green Building Council. The apparel industry, which is also Sri Lanka's largest export industry, has a designated programme for the industry under the title Garments without Guilt, which promotes eco-friendly manufacturing of textile and apparel.
Sri Lanka's pool of skilled labour also works to its advantage. Among the most crucial prerequisites that foreign brands look for in countries they are outsourcing to are expertise in design, efficient logistics for speedy delivery, flexible laws, reliability and quality assurance, and environmental friendly approach to textile and apparel manufacturing. Sri Lanka has managed to score well on all these fronts, which has elevated it to the level of a leading apparel outsourcing hub.
Exploring global markets
Even as the European Union remains Sri Lanka's largest export destination followed by the United States of America, the country is keen to penetrate the markets of Japan and China. The major competitor for the Lankan textile and apparel sector in China is Vietnam, but Sri Lanka's high quality and value added clothing can help reach this goal.
The Sri Lankan apparel export revenues were calculated to be US$ 4.8 billion till September 2014. Import expenditure on textile and textile articles also increased by 40 per cent, year-on-year, to US$ 182 million following the continuous growth of textile and garment exports from Sri Lanka. The country's major import partners include India, China, Iran and Singapore besides the European Union and United States of America. Sri Lanka also organised the maiden Apparel Promotion Delegation to Brazil in the third quarter of 2014 to promote Sri Lankan textiles in Brazil.
Competing with other economies
As Sri Lanka gears to expand its market, it is facing competition from other high-accelerating markets. Apparel sectors of China, Bangladesh, India, Vietnam and Cambodia present a steady growth graph in comparison with Sri Lanka. In fact, Pakistan and Egypt, which have smaller market shares, have shown rapid growth. While Sri Lanka's market share has increased in the European Union, the country has failed to keep the same momentum in the United States following decline in textile and apparel exports.
On the constructive side, Sri Lanka's cost advantages are similar to Pakistan and Bangladesh. However, the price of cotton and labour costs are higher in Sri Lanka, and so are operating and capital costs. Manufacturers shifting out of China are giving priority to India and Bangladesh over Sri Lanka. Further expansion of the local market and increasing manufacturing capabilities can change the tide for Sri Lankan textile and apparel.
Labour costs were low during the war but this advantage is no longer applicable now. In order to keep up with its reputation of timely delivery, the country needs to explore automation. Trade experts have mentioned before that Sri Lanka has failed to supply apparel at low cost, providing corporate houses with cheaper alternatives like Bangladesh and Vietnam.
Sri Lanka's apparel industry is the second-largest foreign exchange earner for the country, but the current serious labour shortage may create trouble if corrective measures are not taken. The country is concentrating on automation of the industry to deal with the labour crisis. Joint Apparel Association Forum Secretary General Tuly Cooray shared, "We have to minimise human intervention at all levels of manufacturing to increase productivity by using the resources available optimally."
Another issue that needs to be addressed, according to Sri Lanka Apparel Exporters Association Chairman Saif Jafferjee, is the two per cent hike in EPF payments proposed in the 2015 Budget. The proposed hike will be an additional burden on the apparel industry, which will deter investors from setting up business in Sri Lanka.
Sri Lanka has developed a good rapport with several luxury brands that continue to do business there. The high manufacturing standards and complying with economic sustainability have ensured that Sri Lanka's textile and apparel become synonymous with quality and environmental accountability. Still, the country has a tough target of achieving higher apparel export revenues in the next five years, for which it has to resolve issues like labour shortage and beat competition from other developing nations.