NEW YORK — Even in Asia, textile and apparel manufacturers are struggling for ways to deal with the cutthroat price competition many anticipate when the quota system ends Jan. 1.
Executives from several Asian countries said at a pair of trade shows in Manhattan last week that they hoped the end of the restraints that have governed the global apparel trade for three decades will benefit them. But they also expressed concern about what will happen when import caps are lifted.
N. Narahari, export manager with Madura Garments, a $110 million apparel maker that is part of the $4.5 billion AV Birla Group conglomerate, said his company expected to boost the capacity of factories in Bangalore, India, after the 147 nations of the World Trade Organization drop their quotas.
“That will certainly help,” he said in an interview at the Innovation Asia show, sponsored by lyocell brand Tencel. “We don’t have a lot of quota now, so that will allow us to expand.”
Narahari raised a concern familiar to many domestic manufacturers: The prospects are good, he said, “as long as the U.S. controls China.” The U.S. does have the option to limit its imports of Chinese goods for as long as three years under a safeguard provision allowed by China’s WTO entry deal.
China’s share of the U.S. imported textile and apparel market has been growing rapidly, even with the quotas in place. For the year ended May 31, China shipped $12.41 billion worth of those goods to the U.S., a 21.5 percent increase from the previous year that gave it a leading 15.9 percent market share, according to Commerce Department data. Over the same period, India, the U.S.’s fourth-ranked supplier of textiles and apparel, shipped $3.25 billion worth of goods, 0.6 percent higher than the previous year, and had a 4.2 percent market share.
With strong corporate backing, the Birla Group has invested in technological advantages, Narahari said. The company licensed the rights to use Nano-Tex fabric treatments from the International Textile Group unit in its shirts, pants and suits. He said offering higher-quality goods with distinct properties such as those provided by the Nano-Tex processes may help companies avoid being drawn into price wars.
That also was a prime concern at Meantime Enterprise Co., a Taipei, Taiwan-based yarn spinner and knitter that showed at PanTextiles New York.
Cheng Ning, the company’s representative in New York, said her firm, which employs 130 and produces 600,000 pounds of yarn a month, was concerned about going head-to-head with Chinese manufacturers after the quotas are lifted.
“We are trying to focus on something specialized,” she said. “We’re investing in product development to differentiate ourselves.”
Offering the same products as Chinese suppliers, Cheng said, might be a losing proposition, “because those manufacturers can put out there products at very low prices, sometimes even below cost.”
PanTextiles, organized by the Taiwan Textile Federation, ran Wednesday and Thursday at the Manhattan Center on West 34th Street. Innovation Asia ran Tuesday through Thursday at Amuse restaurant on West 18th Street. Each had 23 exhibitors.
Also at Innovation Asia, S.P. Munda, chief executive officer of Rajat Collections, a garment supplier based in Bangalore, said his company believes its service niche will help it survive after 2005.
“We’re a small company, so we can offer a lot of service,” he said, noting that the firm employs about 40 people. “My customers are in touch with me all the time.”
He said the quota limits haven’t much affected his company because of its size, and because he receives quota rights free from the Indian government owing to the higher price of his goods. His company’s tops carry an average $8 price, FOB — a measure of the cost of production and transport to a foreign port that is typically 25 percent of U.S. retail prices.
“I don’t deal in those $2 or $3 items,” he said.
The end of the quota system may hurt India “if neighboring countries start dumping goods at low prices,” he said.
Some small Indian companies view the end of quotas as an opportunity rather than a cause for concern.
Shanmugam Radhakrishnan, ceo of Vastra Apparels, a garment maker based in Tamil Nadu, said he made his first business visit to the U.S. last week to prepare himself for 2005.
“With the phaseout of the quotas next year, we wanted to see if we could line up four or five small customers here in the U.S.,” he said. “With the quotas going away, there will be a chance for growth, so we wanted to start to build a base here.”