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The European Union suspended duty-free privileges to Sri Lanka in 2010. How has it affected the country's textile and apparel sector?
Yes, it was unfortunate and it has certainly slowed down our growth to the EU. The industry re-focused its efforts towards the US market and shifted some of the capacity to the United States, now growing at a pace of nearly 20% over last year and to other markets, growing at a pace of 17%. A combination of factors helped us weather the loss of GSP+. First, the industry itself is very resilient and already had built strong customer partnerships and these customers were not necessarily going to jump ship immediately. Second, the US was traditionally our stronger market so re-directing our focus was not that challenging. The third factor was what was happening around us in terms of the challenges faced by other supply bases due to costs or compliance.
Which are the countries or regions the company is looking forward for its expansion? Why?
As the answer to China, I firmly believe that South Asia will be the only option for large retailers to source their apparel from, with Sri Lanka being the hub. Our operations in Sri Lanka will continue to focus on the niche value added products as well as the front-end services and we have now invested heavily in India and Bangladesh for growth. In India we have invested in a one-of-a-kind supply chain city. Brandix India Apparel City (BIAC) - a 1,000 acre facility - is based on the 'Fibre to Store' concept and uses the advantages of scale and strong business fundamentals leveraging global expertise to offer 'total solutions' within the site. Brandix Casualwear Bangladesh, which was set up to expand the Group's Woven Bottoms business as well as to provide the multi-country offering to customers, began commercial production in April 2011. I believe South Asia provides a conducive environment for the apparel industry with its technically proficient world class talent pool, and its large textile base, with India leading the way as the second largest Cotton producer in the world.
In terms of garment making, what ideas, advancements or research had to be rigorously pursued to ensure success?
For me, the equation is very simple. We need to develop and market phenomenal products at substantially lower retail prices with speed and at the desired quality standards. It has to be driven through the efforts of the entire supply chain starting with the retailer. The retailers have to relinquish some processes that they have been zealously hanging onto whilst the supply chain has to offer the assurance. It has to be a true partnership, a collaboration that depends on mutual trust and transparency. We have had some success in this area where we control much of the supply chain to some of our key customers. While they have not been able to reduce the retail price of the product, we have managed to deliver high quality product at incredible turnaround times enabling the retailer to sell the goods at full retail price. In order to achieve this, Lean Manufacturing has been one aspect which has greatly helped us to reduce our waste and improve on our efficiencies in order to mitigate the increasing cost of labour. Another area of focus has been on process and machinery automation and the creation of innovative products. Our eco-friendly efforts have also helped us to reduce our overall costs whilst at the same time being environmentally friendly. We will continue to evolve these speed replenishment programmes and work with our customers to create better product at cheaper prices to finally deliver true value to the consumer.
Let me ask you this, in the apparel trade, where buyers scour for cost savings, nothing succeeds quite like duty-free market access. Do you agree? Can you elaborate it?
Naturally the answer is yes. No retailer can ignore the direct impact it delivers to his bottom line. But there is a downside as well. Often the retailers rush to a destination purely on the duty concession, but if they look at the overall cost of that end-to-end transaction the picture is not that pretty. They have to look at what else that country can offer - if the country is beset by labour issues, delivery delays etc, the damage to the brand may be far greater than the benefit of the duty free access. Also, there is a tendency for an industry to become complacent when you have a natural advantage like that.
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