WORLDSOURCE FOCUS: 2005
Byline: Scott Malone
NEW YORK — As the phaseout of quotas in 2005 ticks closer, garment manufacturers from a growing number of countries are turning their attention to the U.S. market in hopes of getting a bigger share of the largest single-nation market in the world.
They have one big anxiety, which will sound familiar to domestic manufacturers: How will anyone compete with China?
This was the theme at last week’s Worldsource show, which wrapped up a three-day run Tuesday at Pier 92 on the Hudson River here. The new event was organized by men’s wear trade show producer NAMSB.
One exhibitor, Pacific Jeans Ltd. of Chittagong, Bangladesh, currently produces about 4 million items a year and ships about 40 percent of its output to the U.S.
M. Nasir Uddin, chairman and managing director, said he aims to raise that percentage.
“We want to grow our business here,” he said. “After 2005, there will be no more quotas and there will be more room to grow.”
He acknowledged that the recent slowdown in U.S. consumer spending also had him stepping up efforts to boost sales.
“Businesswise, things are a bit slow,” he said. “Profits are also very weak right now.”
While he expressed confidence that business would pick up again, he was more concerned about how the competitive outlook would change in 2005 and particularly how his firm and others would compete against Chinese producers.
“We are concerned because China is a big supplier and a major competitor for all the world,” Uddin added.
A sizable contingent of exhibitors came from sub-Saharan Africa, looking to take advantage of the duty- and quota-free status that region was given under the 2000 Africa Growth and Opportunity Act.
“The U.S. is a new market for us,” said Anil Kohli, director of Firemount Textiles Ltd., an apparel maker on the island of Mauritius.
His 12-year-old company primarily sells to Europe, but Kohli said the large scale of U.S. retailers and brands makes doing business here appealing. He said: “If you get the right customers, the volumes can be considerable.”
Anthony Yang, managing director of Fascinating Botswana Ltd., an apparel knitter based in Ramotswa, Botswana, said AGOA could play an important role in developing the economies of nations like his beyond its current focus on exporting raw materials, primarily diamonds.
“Once there are no more diamonds, there will be a problem if an industry hasn’t been developed,” Yang said. “There will be no more money.”
While his company, which employs 360 and is owned by Chinese investors, is currently using sub-Saharan African yarns to quality for AGOA treatment, Yang said he hopes Botswana will be declared a “lesser-developed” country under the terms of the act, which would allow it to import materials from elsewhere in the world and keep its duty-free treatment.
“South African materials are much more expensive and lower quality than we could get from China,” he claimed, adding that the requirement for local materials “doesn’t help Botswana because it does not have local suppliers.”
Not all sub-Saharan countries are experiencing growth in their industries. One exhibitor showed up from the island of Madagascar, which has been facing extreme civil unrest since a disputed presidential election in December. Two men are currently claiming the presidency of the country and their supporters have brought most business and shipping around the capital city to a standstill. Rioting in the past few weeks has claimed more than two dozen lives.
“We are very disappointed,” said Jean-Louis Ledeux, sales manager of Polo Group, a maker of casual clothing in the coastal city of Mahajanga that is not associated with Polo Ralph Lauren Corp. “Not one is trying to influence the people to find a solution.”
While the nation’s main port in Toamasina has been mostly closed for weeks and rioters have destroyed the only bridge connecting it to the capital city of Antananarivo, Ledeux said his company has been able to get some shipments out through a smaller port in Mahajanga.
“We are pushing all our orders through, but new orders aren’t coming in because people don’t want to have problems,” he said.
He added that the cost of doing business has risen exponentially since the start of the unrest, which has also been marked by prolonged general strikes in the capital city, where most apparel factories are located. The price on benzene, which his factory uses has fuel, has soared from 60 cents to $5.50 a liter.
Still, Ledeux said he was pleased to be doing business at all. His factory needs 650 staffers at full capacity and is currently employing 400.
“We have some luck because Mahajanga is a port city and we have reserves of benzene,” he said.
A pair of Chinese apparel makers at the show said they hope to increase their sales to the U.S. post-2005 now that China has been admitted to the World Trade Organization.
Shua Li Huang, foreign trade business manager with Shantou City Aoshan Garment Ltd., which makes primarily uniforms and is based in Shantou, said her company is looking to start selling to U.S. customers.
“Before, our product was mostly sold to the government…but we are trying to export our products,” said Shua. “As China has entered the WTO, there will be more opportunities.”
While her company has only recently begun producing jackets for regular consumers, as opposed to policemen and other uniformed services, she said U.S. buyers have shown interest in her factory.
“They know our price is very competitive,” she said.
Edward Zhing, branch manager of Yangzhou Wanda Garment Factory, a maker of down apparel and sleeping bags based in Yangzhou, said U.S. companies are already his largest customers, but he hopes to expand his business here.
“We have a lot of U.S. customers,” Zhing said, “but with the WTO, we want to grow.”
A number of exhibitors from Asia, Africa and Central America expressed the hope that despite the abolition of quotas among WTO member nations in 2005, the U.S. would not simply throw its doors open to unlimited amounts of imports from any one nation.
“If the U.S. opens all its quotas to China, then the U.S. wouldn’t need to buy anything from any other country,” said Steed Hwang, president of Bushine International Co., a Taipei, Taiwan-based maker of casual clothing. “China can supply everything.”
Celia Shu, Bushine’s marketing representative, added, “We don’t think that will happen because everyone knows it will be too disruptive.”
Similarly, Richard Phua, chief executive officer of 2BeSource.com division of Tex Line Associates, a sourcing company based in Singapore, said, “I don’t think that will happen because the apparel trade is very important to many nations.”
While he expects quotas to be abolished as expected, he clarified: “There will be other ways to evaluate these things, other barriers, more concern on human rights.”