2013: A year in review - Sourcing winners and losers
What a difference a year makes for garment-making countries. While some were crippled by ongoing unrest, deadly factory fires and natural disasters, others saw exports increase in a critically competitive environment.
Ethiopia is pushing ahead with plans to become a major African apparel hub, taking advantage of its status under the Africa Growth and Opportunity Act (AGOA) and major foreign investment is flowing into the country from China, Turkey, India and Europe. The Ethiopian government has reported export earnings of US$29m for the country's clothing and textile industry in the first quarter of the current fiscal year (2013-14), up more than 50% from the export earnings of $19m during the same period last year. During the past fiscal year 58 medium-sized textile and clothing companies joined Ethiopia's export businesses, including major Turkish textile manufacturers Angel's Cotton and Etur Textile Plc.
Sri Lanka is on the way to become a leading regional production hub, not only in manufacturing but in knowledge based services to the apparel industry. The Sri Lankan government continues to push infrastructure and development, inking a memorandum of understanding with India in September to expand business and cooperation in servicing the expanding Chinese market. In November, leading Sri Lankan apparel exporter Brandix took on global management consultants Accenture to help it build world-class, streamlined back office processes that could help it tap the lucrative and strategic Chinese e-commerce market, among others in the region.
A year is a long time in manufacturing and Indian manufacturers know it well. The slide of around US$1bn in garment exports from India in 2012-13 has not only been turned around but increased by a massive 24%, with exports slated to rise to $16bn in 2013-14, according to the Confederation of Indian Textile Industry. India has benefited from orders diverted from China and Bangladesh according to some analysts, as well as the recovering American economy and stronger demand from Europe. Experts are predicting the development of efficiency, sustainability and cost savings in the production line as important next steps to ensure long term growth in India.
Companies looking for alternative low-cost sourcing alternatives to China combined with the lifting of economic sanctions by the US and Europe have seen increasing interest in Myanmar's clothing industry. Although the country lags in infrastructure and capacity to service this demand, a new project launched this year with European assistance called SMART Myanmar is seeking to build capacity and increase skills with training initiatives, including a study tour to Europe for stakeholders, and the identification of showcase companies and benchmarking for best-in-class companies. A recent survey of chief purchasing officers in 29 European and US apparel companies saw Myanmar placed as a top three choice for 47% of respondents.
Vietnam had a bumper export year, with a surge in garment and textile exports of 18% in the first nine months of the year to reach US$13.2bn, according to figures from the ministry of industry and trade. The US remained Vietnam's biggest export market worth $6.4bn, up 14% over the nine month period, followed by the EU, which rose 9.2% to $1.98bn. According to one recent report, China is expected to overtake the US to become Vietnam's largest trading partner by 2030, and it appears to be well on the way, with exports to China in the last year growing by 33%. Exports from Vietnam to the whole of Asia (excluding Japan) are expected to rise by an average of 15% per annum between 2013 and 2020.
It's hard to imagine a worse year for the Bangladesh clothing industry. The Rana Plaza collapse in April killed 1,132 garment workers and several other incidents throughout the year related to safety killed dozens of workers, injuring many more. Foreign retailers linked with the factory disasters have signed up to two industry-wide initiatives aimed at improving standards at Bangladesh's garment factories, but the economic consequences of dismal worker conditions were slower to emerge with little or no impact in garment exports to the US. The real losers of course in all of this have been Bangladesh's army of underpaid and exploited garment workers and strong criticism has been levelled at the compensation process for the families of victims from the Rana Plaza collapse.
An ongoing dispute at SL Garment Processing in Cambodia, which supplies apparel retailers such as Gap Inc and H&M, persisted for several months of the year, with a three-month strike over working conditions and the removal of a newly-appointed manager causing unrest and production upsets. The minimum wage for full-time work increased to US$80 per month in May, although the Asia Floor Wage Alliance says the new figure is still just one-quarter of the monthly living wage of $274 a Cambodian worker and her family require to cover basic needs. Local unions in Cambodia had called for a wage hike to between $89 and $150 per month.
Typhoon Haiyan swept a path of destruction through the Philippines on 10 November, killing over 2,000 people and displacing many hundreds of thousands. Numerous small-sized sewing factories were destroyed in the Visayas, the country's central islands, effectively wiping out the subcontractors for the main garment production industry in and around Manila. Aid was slow to reach the islands with disastrous road conditions persisting. The Philippines industry is slowly picking up the pieces, expressing hopes they might achieve assistance in the form of accelerated beneficial trade access to the European Union and US to help in the rebuilding process.
Eleven people, including a six-year-old boy, died during this year's cotton harvest in Uzbekistan, according to reports from the Cotton Campaign, a coalition of labour and human rights activists. The Central Asia country is one of the largest exporters of cotton in the world and this year International Labour Organization (ILO) observers monitored the harvest for the first time. Lack of compliance with international conventions could prove costly for Uzbelistan's industry, with apparel giants such as Carrefour, Inditex, Target, Walmart, and Marks & Spencer already pledging not to use Uzbek cotton until the issue is resolved. According to the Cotton Campaign, cotton from the 2013 harvest is destined primarily for firms in China and Bangladesh, and secondarily for firms operating in Uzbekistan, such as Daewoo International and Indorama.
The dark side of Italy's sourcing network was exposed in a terrible blaze that ripped through a Chinese-owned factory in the Tuscan city of Prato in December. Seven people died and four more were seriously injured in the fire that swept through a factory with dormitory accommodation for workers and makeshift cooking arrangements that were possibly the source of the fire. Although concern over the issue of illegal workers and working conditions in the area has been raised for several years and from several quarters, official raids have been largely ineffective in containing the spread of illegal and dangerous factories in the Prato area, now a major garment manufacturing hub in Italy dominated by Chinese-owned businesses.
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