BANGKOK — With one eye on free-trade talks with the U.S. and another on the eventual end of Chinese export restraints, Thailand’s garment manufacturers want to expand exports to the U.S. by targeting small- to mid-sized U.S. apparel brands.
The Thai Garment Manufacturers Association and the Ministry of Commerce plan to open a Manhattan office for Thailand’s exporters that would offer one-stop shopping for U.S. apparel companies seeking low-cost suppliers.
“Thirty-five apparel brands dominate half of the U.S. market and most are already buying from Thailand,” Tienchai Mahasiri, president of the manufacturers association, said during an interview in his 31st-floor office in downtown Bangkok. “We are going after the other half, the smaller companies. We think there is great potential to increase our U.S. exports up to 50 percent in that segment.”
By opening a U.S. office, Mahasiri said the Thai industry could simplify sourcing by offering designs and prices that include all fees: transportation, insurance and import duties. He estimated the Thai government would spend $10 million on the effort and an office may open in 2006. Los Angeles and Miami are also under consideration for Thai export offices.
“We want better U.S. market access,” said Kartchai Jamkajornkeiat, president of Apparel Avenue Co., which sews garments for Nautica and Phillips-Van Heusen. “We’re trying to get an edge over our competitors.”
The one-stop shopping concept is part of a five-year strategy aimed at positioning the industry for an anticipated U.S.-Thailand free-trade agreement, which President Bush and Thailand’s Prime Minister Thaksin Shinawatra predict could be negotiated next year. The pact would need Congressional approval.
Thai manufacturers also are preparing for 2008, when U.S. restraints on China’s textile exports are lifted. Admitting the difficulty of ignoring its giant northern neighbor, Jamkajornkeiat said Thailand is trying to elicit cooperation from China’s textile industry in its plan to boost garment exports. About half of all garments in Thailand are sewn from imported fabric, he estimated, adding that if Thailand’s apparel exports are to increase, the industry will need even more raw materials from China.
“Chinese textile makers are coming to see if they can invest in Thailand and we’re negotiating with them,” he said. “It’s better to work with them than against them.”
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The Thai textile industry is also upgrading because of perceived threats from a future of unlimited Chinese exports, said Phongsak Assakul, president of the Thai Textile Manufacturing Association.
“We’re anticipating when the safeguards are lifted,” Assakul said, noting that Thailand is focusing on boosting its manufacture of cotton and cotton-blend fabrics.
The U.S. and China last week signed an import-restraint agreement that set quotas on Chinese goods through 2008.
Thailand’s textile and apparel industries can’t compete with China’s low-end manufacturers, but should instead focus on the high-end market, said Henry Liu, marketing director for Bangkok-based garment maker Castle Peak Holdings Public Co.
His firm sews for Columbia, L.L. Bean, Patagonia, Jones New York and Polo Ralph Lauren, and exports 75 percent of its production to the U.S. It is investing heavily in building capacity for pants, shirts and outerwear, he said. Most of its fabric is imported from China, Hong Kong, Japan and Europe.
“Thai fabric just isn’t appropriate for outerwear,” he said.
Because of Thailand’s welfare system, salaries are higher than those of its Asian neighbors. Thai garment workers make an average of $250 a month, while those in China may earn $50 each month, Jamkajornkeiat said. Garment workers in Cambodia earn on average $40 per month, while those in Indonesia are paid $120 to $150 per month.
“Thailand is at the stage where it can produce garments from the high end to the low end,” Mahasiri said. “For the small- and mid-sized buyer, if an item is 20 cents more, they don’t worry. It’s the large manufacturers, like Wal-Mart, that can’t afford that difference. For them, it’s a huge amount.”
Thailand is the 20th-largest U.S. trading partner. Last year, two-way trade on all products totaled $23.9 billion, according to U.S. government statistics. The textile and apparel industry is the largest manufacturer in Thailand with more than one million employees. It accounts for 20 percent of total manufacturing employment and is the country’s second-largest export industry.
Thailand exported more than $3 billion in garments to the U.S. last year. More than one-third of all Thai textile and garment exports are U.S.-bound. The European Union is Thailand’s second-largest market for textile and apparel exports, and the countries belonging to the Association for Southeast Asian Nations rank third.
Thailand’s garment makers export 10 million to 15 million pieces annually to the U.S., Mahasiri said. At Apparel Avenue Co., Jamkajornkeiat said he anticipated boosting his exports to the U.S. by 50 percent this year because of a major expansion undertaken two years ago. He expects to ship five million pieces to the U.S. this year.
For U.S. brands already sourcing in Thailand, the one-stop concept won’t mean a change in business. The Gap has men’s and women’s pants, kid’s knitwear and men’s and women’s sweaters manufactured in Thailand, said Karen Leung, senior manager of the Gap office in Bangkok.
“We don’t focus on countries, but on vendors,” Leung said.
The Gap imports about 95 percent of its fabric from China for sewing in Thailand, Leung said.
“We explored using Thai fabric, but their capacity and turnaround time was not as quick as China and Taiwan,” she said.
A spokeswoman for Ann Taylor Sourcing Far East Ltd. in Bangkok also said the one-stop plan would not affect its Thai business, noting that Ann Taylor has casualwear sewn in Thailand.
The Thai government also is spending about $40 million on its Bangkok Fashion City project, aimed at developing the human resources needed for a bigger, more competitive Thai garment industry. Designers from the Fashion Institute of Technology in New York have been recruited to teach fashion design at Chulalongkorn University, whose campus sprawls across downtown Bangkok. The 18-month project also hosts trade fairs to showcase Thai designers and products, and aims to promote smoother working relations between the Thai garment and textile industries.
“This entire project is meant to encourage fashion manufacturing,” said project director Programode Vidtayasuk, who is also director general of the government’s Department of Industrial Promotion. “It’s trying to help create branding of the Thai fashion industry.”
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