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Global sourcing: search for the cheapest textile and garments supplier

In the competitive world of trade and busines, to survive and to make more profit than competitors the endless search for cheaper and cheaper production bases around the world never stops. Apparel and textile sector is also not different .There are very little areas the apparel and textile industry has left untouched. But still the hunt goes on. From Africa to the Americas, Burma to Bangladesh, there seems to be a never-ending debate as to the next sourcing hotspot.

Chinas’ Domination of readymade Garment sector in the verge of ending

China, has enjoyed a dominant position in apparel and household textiles manufacturing for several years, makers of these items located in developed nations such as the U.S. and Canada have suffered a long period of decline. To consumers in Europe and North America, this growing reliance on China as a low-cost producer has meant very low retail prices for goods of reasonable quality.  However, recent increases in the value of the Chinese currency, combined with rapidly rising labor costs, have put Chinese manufacturers in a much less competitive position. Competition from very low-cost nations in Africa as well as Vietnam, Sri Lanka, Mauritius, Malaysia, Cambodia, Bangladesh, Pakistan, the Philippines and elsewhere is intense, and a large portion of apparel manufacturing formerly done in China is moving to these areas at a rapid pace. For example, Vietnam’s apparel exports to the U.S. jumped to $7.1 billion in 2012 from $6.6 billion a year earlier. China’s apparel exports to the U.S. were $29.0 billion in 2012, down slightly from 2011’s $29.3 billion.

While China continues to have a robust apparel manufacturing industry, it is moving up the industrial chain by fostering manufacturing that requires greater skills, better technology and more investment in advanced equipment. Such segments that are rapidly evolving in China include InfoTech, automobiles, trains, aerospace, medical equipment and telecommunications gear. While nowhere else comes close to China as a single supply base, buyers can – and are – creating opportunities elsewhere. Quick response, speed to market, and more rapid replenishment, for instance, favour sourcing countries located close to consuming markets.

The PC16: Identifying China’s Successors

The research on Indian Ocean basin Stratfor Global Intelligence identifies the 16 countries best suited to succeed China as the world’s low-cost. The research focused in the Indian Ocean Basin. The most interesting pattern is in the eastern edge of Sub-Saharan Africa: Tanzania, Kenya, Uganda and Ethiopia. Sri Lanka, Indonesia, Burma/Myanmar and Bangladesh are directly on the Indian Ocean.  All 16 countries have room for huge improvements in efficiency in everything from product development, to merchandising and buying processes, as well as working more strategically and collaboratively across the supply chain.

retailers_todaySo while China is currently still the best-placed garment making centre – it is clearly not the only place to source from.

Bangladesh competes with China in apparel export

Bangladesh one of the post-china emerging economies has already started competing with China now in global apparel exports. Though the gap between China & Bangladesh is pretty huge, the gap between Bangladesh & other countries like Sri Lanka, Vietnam and Cambodia is widening. The apparel industries of Bangladesh are doing very well and poised for an excellent growth trajectory in coming years. Of the population of between 160-170 million, around 50 percent is in the age group of 20-30 years. This age group holds tremendous potential for upside growth for our industry. The main advantage for Bangladesh is that though China also has a growing aged population along with compulsions on domestic market front, China is facing acute labour shortage. Where as in India, industry dynamics are changing rapidly and emergence of IT and other industrial sectors has overtaken apparel industry in terms of growth prospects & employment. So it is not an impossible dream that as the world apparel trade would reach $600 billion in coming years of which China may contribute around $180-200 billion. Bangladesh with current exports at $15-16 billion holds huge upside potential for growth in coming years and which we feel will happen. In a decade or so, Bangladesh will be undisputed leader in apparel exports. The realistic fact is not in favor of Bangladesh. David Birnbaum, the founder of garment/textile consultancy Third Horizon Ltd, has also been looking at the issue. In his opinion sourcing is a lot more than finding the place with the lowest labour rates.

A benchmark study carried out by his team compared garment exporting industries in Bangladesh and China.
With the scores achieved by individual sourcing criteria illustrating why China wins every time in every category except FOB cost. Still Bangladesh has a great futuristic chance taking over from China if this sector gets proper support from the respective authorities.

Source: www.just-style.com

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