Written by: Fibre2Fashion
Written by: Fibre2Fashion
Readymade garment exports of Sri Lanka have been in quandary ever since the issue of renewing GSP Plus Scheme of EU has been addressed. This scheme is essentially a preferential treatment accorded to developing countries enabling them to come at par with the developed and technically advanced nations, while making commercial exchanges.
Such preferences largely come in the form of reduced tariffs for specific product groups when entering the EU market.
Despite a noteworthy growth in the apparel sector this year, fate of the manufacturers will remain uncertain until the final decision comes to the forefront. Fibre2fashion has taken the initiative to delve deeper into this situation for coming up with an alternative to such baffling market conditions, if renewal does not come through.
With burgeoning global competition, retailers have been demanding greater value-added apparel with an innovative aspect. Moreover, in the wake of rising inflation and a slew of economic failures, purchasing power of the developed countries weakened considerably. As such, profit margins of both exporters and manufacturers have shriveled and sunken like quicksand, creating an atmosphere where only the fittest can survive.
Besides perpetual problem of having to source raw materials from outside has also vexed garment producers who are now losing all the motivation to sustain operations. Leading players in the apparel industry have opined that companies need to have a well defined strategy and a set of business objectives that are well communicated throughout the chain.
So long, the GSP plus scheme, granted by the EU, served as a backbone to the maturing garment sector of Sri Lanka. So much so that experts accredited such preferential schemes for being the key reason behind escalating growth rate and expanded exports. However, if a hypothetical situation is to be presupposed whereby the special preference scheme is withdrawn, the situation is likely to get reversed.
Renewal of the preferential scheme is due by the end of this year but the Government has already warned exporters about the possibilities and has advised them not to entirely count on GSP for a buoyant export business. Umpteen questions have been raised about how then would domestic exporters manage and sustain their garment trade without an 'umbrella scheme'. This is because in the absence of GSP, Sri Lankan garment exports would be thrown open to enormous competition and subsequently indigenous apparel products and those belonging to other countries would be treated alike and judged by the same yardstick irrespective of whether the country is developed or not.
This certainly is a concerning issue because Sri Lanka would no more be trading in a vacuum where it would deal with only the EU, but rather in an environment streaming with strong contenders having an expertise and technological know how of the production process.
In a bid to tide over these threatening probabilities, experts observing the domestic and international garment market have urged Sri Lankan export oriented garment enterprises to glue their focus on polishing marketing skills which alone can salvage the apparel industry from the ravages of time (by attracting foreign buyers), incase of a withdrawal of the GSP scheme.
When a comprehension of these marketing skills was made as to what really should it encompass, a slew of tactics came to the forefront. While some believed that there is an urgent need to increase domestic production of fibre to cement the supply gap, others stressed on developing revamped firms that can offer wider services instead of acting as mere contract manufacturers.
Another focus area could be that of 'narrow casting' which calls for strengthening ties with a limited number of clients rather than spreading the net wide on to numerous potential buyers and failing to meet their growing demand. A major advantage of restructuring and recreating such marketing strategies is that it would go a long way in projecting producers as competent thus justifying their claim for higher prices.
It is with regard to this that Fibre2fashion approached a number of reputed garment export companies and association of Sri Lanka for their view and valuable suggestions. Mr. Rohan Masakorala, Deputy Secretary General of Joint Apparel Association Forum (JAAF) seemed very optimistic about EU reviving the GSP scheme and stated that "the association has organized a number of special courses for apparel marketing and that the member companies have been urged to follow the same for expanding their exports to the EU."
Mr. Rohan Masakorala further added saying that garment enterprises have already adopted strategies like global branding campaign - 'Garment without Guilt' - and supplying quality goods, to better its international competency.
The 'Garment without Guilt' campaign, an entirely new industry appropriate trademark, was introduced in the country in November 2007 and focuses on ethical manufacturing and sustainable development of the industry that assures of ethical working conditions, free of child labor, forced labor, discrimination and sweatshop practices.
Mr. Russell de Rosayro from Golden Needle Apparels commented on similar lines saying that "only a trained professional would be able to bring business to its company by emphasizing on the strengths of the company, thus ensuring a book full of orders. Besides, in order to make an impact in the global market place, the company needs to convince buyers of its technical abilities, adherence to good labor practices and a sound working environment."
He also stressed on the need to move away from basic products to cater to a mid-upper end market because "in order to survive in the midst of growing competition, one must gear up to undertake low volume, technical and qualitatively superior products and for this training operators to be multi-skilled is a must."
Underlining the major disadvantages of domestic enterprises on a comparative basis, Mr Russel expressed disappointment that despite being in the export business for over 35 years, Sri Lanka is still way behind from where it really should have been. The situation gets all the more aggravating when seen from the perspective of its competitors who have robust textile manufacturing units to support their respective garment industries. In light of this backdrop and considering the fact that the sector is capital intensive, 'the Government must grant meaningful incentives for making the sector attractive for foreign investors to set up mills.'
When similar issues were presented to FGM Lanka Pvt Ltd, Indrani Jayawardane, Director of the company noted that, "quoting competitive prices, market assessment in terms of buyer's preferences, providing sample to importers, getting updates on latest market trends and trade fair participation can also be undertaken as key marketing skills for withholding potential clients. Besides, opening fabric mills and promotion of more vertical projects can also contribute tremendously in making Sri Lanka self-sufficient in raw material supply to feed its garment industry."
Leading garment companies Brandix, Smart Shirts Lanka, Ceylon Knit Trend, Slimline, Carlton Garments and others have voiced similar opinions demanding Government support for giving a boost to the industry. However, unless these enterprises themselves take upon the challenge to become self-sufficient, self-reliant and attractive for foreign clients, no amount of additional aid or Governmental assistance can help uplift the sector from a likely downfall.