Content area
Full Text
For developing country suppliers, no other service may be more important than sourcing to compete in the post-2005 era.
The elimination of quotas has changed the global clothing industry forever, raising the bar for suppliers. The facilities that were needed to compete in the industry before anuary 2005 are no longer sufficient. The ability to ship a decent garment, on time every time and at a competitive price, is no longer an asset. It has become an entry-level requirement.
Without these basic facilities, the client will not even talk to a manufacturer. And with them, manufacturers will only be invited to go to the end of a very long line of other factories queuing up to face clients who ask: "What can you do for me?"
If the manufacturer's answer is only, "I can ship a decent garment on time every time and at a competitive price", they will be out of business because thousands of other factories are prepared to provide the same facilities, plus other services.
To survive in the new industry, producers must be able to reply, "Besides the product you need, I can provide the services you want." Sourcing fabric and trims is the single greatest service the factory can offer the customer. Few factories - even the largest - have developed the required skills.
How did this situation come about? Its roots lie in changes brought about by the evolution of the industry in recent years.
Market shifts to less efficient producers
The 1974 Multi Fibre Agreement, and its consequent quota system, was the key factor shaping today's global garment industry. Developed countries used it to restrict sharply exports from traditional suppliers - the efficient garment producers of Hong Kong (China), the Republic of Korea, Taiwan (China) and, later, China. Customers developed relations with new garment-exporting countries such as Bangladesh, India, Pakistan and Sri Lanka in South Asia.
Other developing countries and least developed countries also attracted business by exploiting trade preferences such as bilateral free trade agreements and the Generalized System of Preferences, which exempted certain imports from these countries from duty.
The result was a shift in market share from more efficient to less efficient producers. Take the case of the United States of America, a...