By  on April 19, 2005

HONG KONG — As China’s apparel and textile exports soar, executives at the Interstoff Asia show were focused on finding ways to grow their companies, which have been freed of quota restrictions.

Much of the talk focused on China, with some developing world officials dwelling on how to distinguish their industries from Chinese competitors and others contemplating expanding into the world’s most populous nation.

“Elimination of quotas means anyone is free to do business with anybody,” said Ken Loo, secretary general for the Garment Manufacturers Association in Cambodia. “We want to attract the buyers who are concerned about compliance.”

A World Bank survey said buyers of Cambodian goods ranked compliance among their most important criteria, along with price, quality and speed, he noted.

He said rather than focusing on China, Cambodia regards its main rivals as Bangladesh and Vietnam. The latter is not a World Trade Organization member and still faces quota restrictions.

“Realistically, we don’t need to compete with China,” Loo said.

For the year ended Jan. 31, Cambodia shipped $1.45 billion worth of fabrics and garments to the U.S., less than 10 percent of China’s volume. Loo acknowledged that Cambodia’s industry is going through a “consolidation phase” and has lost about 26,000 garment jobs, representing almost 10 percent of the industry, since the start of the year, when quotas were dropped by WTO members.

From India, Michaeli Mesmer, vice president of marketing for Alok Industries, a $300 million maker of knits, wovens and embroidery, as well as a printer and dyer, said he hopes his nation’s industry will be able to rely on quality, innovation and design. Mesmer said his company can’t compete with Chinese suppliers when it comes to low-priced, high-volume runs, but has advantages in higher-quality goods.

“Indian labor is a more informed, educated labor,” he said.

Alok Industries has five factories near Mumbai. About 70 percent of its sales are to the U.S., with the balance going to Europe. Mesmer said he wants to develop local markets and eventually sell about 10 percent of his products to Indian consumers.In 2005, the company is aiming to triple its overall operations with the end of quotas, high demand and economies of scale, Mesmer said. Still, “You can’t take anything for granted,” he said.

While competitors tend to regard China warily, the Chinese firms at the show, which wrapped up March 23, said they were faced with their own challenges.

Tina Lee, marketing executive for Chinese yarn maker Huafu Group, said, “To be frank, I’m not so confident about garment factories in China.”

She said labor costs are higher in China than countries such as Vietnam, and China doesn’t have much international trade experience compared with Singapore, South Korea or Turkey.

“We have a lot to learn,” said Lee, adding that this is mostly a concern for garment manufacturers and not for yarn suppliers.

Huafu Group sells melange yarn to the circular knitting. The company has 8,000 workers.

Its new products at Interstoff Asia included a cotton yarn in which 5 percent of the fiber was organically grown cotton and another yarn made from cotton and a soybean-based fiber.

The blend of 60 percent soybean fiber and 40 percent cotton is one of the company’s most expensive offerings because it’s only recently been developed, said Michelle Sui, Huafu market development manager. She said the cost of the organic cotton was also high, around $3.50 a pound.

The Huafu executives said their sales have risen 30 percent since quotas were lifted on Jan. 1, though they attributed the growth to changes in strategy as much as the change in trade regulations. The company now spends more time working directly with designers and other end-customers to promote demand for its yarn.

Devin Lee, manager at South Korea’s Jin Young, said if the lace and knitted fabric manufacturer had a chance, it would move some of its manufacturing operations to China or Vietnam.

Jin Young, which has 150 employees and 45 machines, could produce more at lower prices in China, Lee said. However, he expects the company to grow beyond its $2.5 million annual sales, despite the troubled economy in South Korea.

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