HONG KONG — As China exerts increasing influence in the textile and garment industries, companies striving to be competitive are starting to diversify and become more vertical.
Lark International Apparel, a sourcing company based in Hong Kong, started transforming its business model two years ago to that of a manufacturer to “strengthen the business,” said Anita Li, who coordinates brochures and other marketing research functions for the company. “The apparel business may be a good business, but it’s getting harder and harder.”
Privately held Lark, an exhibitor at Interstoff Asia Autumn this month, set up three joint-venture factories in southern China and two joint-venture offices. Lark also has a sample-making plant in Dongguan, China, and works with other factories in the country, as well as in Southeast Asia, Central America, the Middle East, Eastern Europe and Africa. Offices are in Hong Kong, Macau, New York and Vancouver.
Lark expanded to three showrooms from one in September and there are three in-house designers who can help clients develop their products. The company also has its own fashion label, Urchin, that it’s planning to expand in department stores. The brand is supported by an office and designer in New York.
“We can provide design ideas to customers as a service…and widen clients’ lines,” Li said.
Companies in Cambodia have also made adjustments to remain competitive. The government is working to improve the import-export process and is focusing on corruption, said Ken Loo, secretary general of the Garment Manufacturers Association in Cambodia.
The benefit of Cambodia is that labor is cheap and there’s good market access because of its Least Developed Country status, Loo said, adding that the overall quality has improved.
Loo said that Gap has always been Cambodia’s biggest buyer, in addition to Marks & Spencer, Adidas and Sears. “The industry prides itself on on-time delivery,” he said.
Some firms have tried to upgrade and offer services such as embroidery and printing, but Cambodia doesn’t have design capacity yet and also hasn’t attracted a textile industry. It imports all raw materials.
Exports from Cambodia increased 20 percent in value and 30 percent in quantity year-on-year, said Loo, adding, “We’re exporting more, but that doesn’t mean we’re making more money.”
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The rush to manufacture in China hasn’t been as extreme as some feared.
We’re “not seeing the big sucking sound that everyone thought would go to China,” said Michael Que, director of the Confederation of Garment Exporters of the Philippines.
Among the things that the Philippines can improve are speed-to-market, quality, modernized machinery and design, he said. But ultimately, the industry is price-driven now as opposed to quota-driven. That’s a better situation for the buyer, Que said, because the big brands give a target price before a proto-sample is even made.
The real test, however, will be competing with China once quotas are gone in 2009, he said, adding that the Philippines needs to work on a free-trade agreement with the U.S. because it isn’t clear what will happen then.
“If I’m tariff-free in the States…maybe I might have an 8 percent cost advantage over China,” Que said. “The hope is always that China does well because the region does well.”
He added that growing consumerism in China “will take away the pain to some extent.”
There are some companies, however, that don’t feel a pressing need to offer more value-added services. Fabric and garment company Winwell Group from Jiangsu, China, has no plans to expand its services or hire a designer.
Eighty percent of clients bring their own samples, but the company also has a showroom with some designs on offer, said Mike Lee, who is part of the import-export department in the textile division, which has 150 staffers. The bulk of Winwell’s clients are from the Asia-Pacific region, while 20 percent are from the U.S. and 30 percent from Europe. The company has six factories in China.
Trade show organizer Messe Frankfurt stuck with its revamped Interstoff format that reflects a one-stop-shopping model. The fair, which ran from Oct. 4 to 6, had 267 exhibitors this year compared with more than 280 in 2005 with 10,514 buyers. Organizers said 8,821 buyers attended the fair this year. Countries represented included Austria, China, Hong Kong, Italy, Japan, South Korea, Pakistan, Taiwan, Turkey and the U.K.
Source It, an ASEAN event, made its fall debut and ran concurrently with Interstoff. There were 45 participants from eight countries: Cambodia, China including Hong Kong, Laos, Malaysia, the Netherlands, the Philippines, Thailand and Vietnam.