Apparel exporters seek diversification of markets

Considering that over 90 percent of Sri Lankan apparel exports are consigned to just two regions in the world; the US and EU, the industry is trying to make forays in to other markets like China, Brazil, India, Russia and Japan. In order to diversify and make a mark in these overseas markets, the clothing sector is seeking free trade agreements (FTAs) with these countries, which will help the sector boost exports.
For instance, apparel exports stood at US $3.35 billion in 2010, of which shipments to the US scored $1.37 billion and those to the EU marked $1.70 billion, to garner a market share of 40 and 50.6 percent respectively.
“It has been observed that over 90 percent of Sri Lankan apparel exports are dependent on two major markets namely US and the EU and there is a clear need to diversify markets”, says Mr KJ Weerasinghe, Senior Advisor, Joint Apparel Association Forum (JAAF), a body made up of clothing producers, while speaking exclusively to fibre2fashion.
“Secondly while taking measures to increase market share in the current two key markets, analysis of global import data encourages us to look at emerging economies that are on a high economic growth path. These countries while continuing to be manufacturers and exporters of apparel, are themselves apparel importers of certain categories.
“The Sri Lankan apparel industry has set a target to reach US $5 billion in 2015. Diversification of markets is very important to achieve this target. Furthermore, since the internal armed conflict ended in mid-2009, the apparel industry has become a development partner working with the government on its post conflict development effort. Therefore, is the need to have increased market access into new markets to provide employment opportunities to unemployed youth in the disadvantage areas of the country including the north and east of the country.
“It is in this background that the apparel industry will focus on Japan, Russia, China, Brazil, Canada and Indian markets in our diversification effort. In this context increased market access to Indian market is also envisaged.
“Currently under the Indo-Sri Lanka Free Trade Agreement (ISFTA) a quota of three million pieces is available to be exported on duty free basis, which has been fully utilized in 2010. However, the additional quota of five million pieces remains unutilized on account of restrictions that, the five million pieces should be made out of Indian fabric. The apparel industry expects its government to obtain annual quota of 10 million pieces without any restriction on ports, fabric or tariff lines to be exported to India on duty free basis.
“The apparel industry in Sri Lanka with over 30 yeas of experience has grown to be a mature industry and has become a supplier to top international brands. In addition, its high compliance levels, good labour practices, being a socially responsible industry and as an integrated full serviceprovider, it will be able to position itself and undertake promotional activities in new markets it had identified for diversification.
“The benefits accruing to the industry and in particular to its workers from such a market diversification effort is obvious. Such diversification would enable to provide improved worker conditions, accelerate green manufacturing and economic development of less advantaged areas of the country as apparel industry is moving into these regional areas and becoming a development partner working with the government”, he concluded this very informative interview by saying.