Myanmar is one of the most popular emerging apparel sourcing bases

Myanmar is one of the most popular emerging apparel sourcing bases

With Myanmar in the spotlight following this week's military coup, Dr Sheng Lu, associate professor in Fashion and Apparel Studies at the University of Delaware, takes a look at the country's clothing industry and export trends.

The textile and apparel industry plays a major role in Myanmar's economy, particularly the export sector. Data from the United Nations (UN Comtrade) shows that textiles and apparel accounted for nearly 30% of the country's total merchandise exports in 2019, followed by footwear and luggage. Industry data also shows that the textile, apparel and footwear sectors employed more than 1.1m workers in 2018, up from only 0.3m in 2016.

Since the United States lifted its import ban on Myanmar and the EU reinstated the Everything But Arms (EBA) trade preferences for the country in 2013, Myanmar has been one of the most popular emerging apparel sourcing bases. On the other hand, as a developing country Myanmar is highly dependent on imported textile raw materials. As of 2019, nearly 83% of its textile imports came from China.

From 2015 to 2019, Myanmar's apparel exports to the world enjoyed an impressive 57% annual growth. Its apparel exports to the EU (97% annual growth) and the United States (78% annual growth) have been expanding particularly fast.

Myanmar’s top apparel export markets (US$1,000)

Export market20102015201720182019Annual growth rate 2015-2019
World$340,394$820,516$2,435,026$4,129,724$5,059,17257.6%
EU$68,943$188,430$1,200,964$2,168,361$2,836,19597.0%
Japan$103,684$263,465$644,938$1,111,856$1,128,34643.9%
South Korea$90,247$183,251$230,683$350,118$384,58220.4%
United States$1,239$27,441$128,909$192,019$276,83578.2%

Source: Data source: UN Comtrade (2021)

From 2019 to 2020, some of the top fashion brands carrying 'Made in Myanmar' apparel include United Colors of Benetton, Next, Only, Guess, Jack & Jones, and Mango.

There are multiple reasons why fashion companies source apparel from Myanmar:

  • Thanks to foreign investment – nearly half of Myanmar's garment factories are foreign-owned – the country specialises in making higher-quality functional/technical outwear clothing like jackets and coats. This is different from many other apparel exporting countries like Bangladesh, Vietnam and Cambodia, which mostly export low-cost tops and bottoms.
  • Myanmar's apparel exports enjoy duty-free market access to the EU, Japan and South Korea. The country is also a beneficiary of the US Generalized System of Preferences (GSP) programme. This explains why its apparel exports mostly go to the EU (56%), Japan and South Korea (30%), and the US (5.5%).
  • Relatively low production cost: garment workers earned around $85/month in 2019. 

Reputational risk matters. Myanmar's latest political instability will hurt its attractiveness as an apparel sourcing base, given the many other alternatives out there

However, Myanmar still accounts for a tiny share in fashion companies' total sourcing portfolio because of the "size effect." As a country with a population of just 55m, less than 500 garment factories currently operate in Myanmar compared with nearly 5,000 in Bangladesh, 6,000 in Vietnam and over 100,000 in China. For example, as of 2019, less than 0.1% of US and EU countries' apparel imports came from Myanmar.

Western fashion brands could reevaluate their sourcing strategy from Myanmar because of the recent coup.

In a recent study we found that apparel sourcing is not merely about "competing on price." Instead, fashion companies give substantial weight to factors such as "political stability" and "financial stability" in their sourcing decisions reputational risk matters. Myanmar's latest political instability will hurt its attractiveness as an apparel sourcing base, given the many other alternatives out there.

Furthermore, the international community – including the US and EU – is considering new sanctions against the country. Should Myanmar lose its EU EBA eligibility or no longer enjoy duty-free access to its key markets, apparel exports could be among the biggest losers.

It would also be challenging for Myanmar to find an alternative apparel export market during the pandemic. Just 1.3% of its apparel exports went to China in 2019.

Click on the following links for further analysis of the potential impact of the Myanmar coup on the country's clothing industry: