The UK retailer Tesco says its purchases from Sri Lanka increased by nearly 60% this year and that it is targeting a growth of 40% year-on-year for the next three years.

"This year, Sri Lanka's contribution to Tesco is around GBP120-140m (US$226.5-264.8m)in retail value. This is exceptional growth of nearly 60%. For the next three years we plan to grow this by 40% on average," said Christophe Roussel, the international sourcing and logistics director of Tesco, during a visit to the island.

Tesco does not have factories in Sri Lanka and is only involved in buying from Sri Lankan manufacturers. The company deals with about 30 garment factories that it feels is compliant with its values and standards.

Sri Lanka's biggest attraction is the speed in delivering goods to the UK, Tesco believes.

"It is about 13 days to ship from Colombo to the UK. This is the fastest time in all Asia. It takes around three weeks to ship from China and about the same time to ship from India and Bangladesh," said Roussel.

As prices in Sri Lanka are comparatively more expensive, Tesco says that from now on it will focus on sourcing value-added items from Sri Lanka that are not as cost-dependent as basic goods.

"The price comparison for apparel is slightly more expensive in Sri Lanka but from now on we will use Sri Lanka for better and best ranges of clothing that have more added value," said Roussel.

Tesco sources GBP2.5bn worth of goods from ten countries into its retail outlets. Nearly half, around GBP1.2bn, are garments made in five different countries. 

"In business we split the risk. The clothing business is split roughly 20% between five countries," said Roussel.

"A lot of companies put all their business in China and regret this now because quotas have been re-imposed on specific categories of clothing from China."

Tesco's clothing sales in the UK alone are around GBP1bn and the group recorded GBP43bn sales in 2005 - inclusive of non-garment sales.

During the first six months of this year retail sales in 2,700 Tesco outlets in 13 countries topped GBP22bn and the company is confident of doing better than GBP43bn in 2006.

Tesco is also considering purchasing non-garment items from Sri Lanka, like tea, pineapple and processed fish.

By Dilshani Samaraweera.