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NEWS UPDATES Asean Affairs        25  April 2011

Asean developing garment plans

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As global clothing retailers move away from China, Asean countries are looking to benefit by integrating production facilities in Asean.

"The global apparel industry is valued at around $1.4 trillion annually and the ongoing shift is not something any particular country can handle on its own," said R.J. Gurley, director of the USAID-funded VALUE project.

The sheer size of procurement demand from the region requires firms to be able to coordinate with each other across borders in the 10-member Asean grouping to deliver goods on time, he said at an industry seminar last week.

"None of the factories in Thailand or Cambodia can handle it all alone," he said, "but as a single entity, Asean can," Gurley said.

Major global brands have been shifting their focus away from procurement from the Chinese mainland over the past few months, which is a boon to a sector once termed a sunset industry in Thailand and other Asean countries.

Chinese manufacturers are shifting their focus to the local market and spurning international clients who are at times more stringent about production processes.

Internationally renowned brands such as Guess have been among the first to move procurement from China, and it is looking at Asean as a possible replacement.

Mr. Gurley noted Guess was not the only brand to move. At a recent buyers' meeting in Hong Kong called Prime Source, a discussion was titled "Sourcing in Asia/Alternatives to China". This event was attended by some of the world's leading buyers and everyone was concerned about future problems if China becomes more inward-looking.

Mr. Gurley said this was a pilot project for various industries that are looking to integrate in Asean where the strengths of one country could be used to cover the weakness of another in order to meet the needs of the market.

"A good example is Cambodia. There are over 350 garment-makers in Cambodia but not many raw material providers," he said, requiring imports from countries such as Thailand or Indonesia. Safsa facilitates the matching of high-quality raw material manufacturers with garment-makers of a similar pedigree to meet the needs of global brands.

This arrangement avoids the rising cost of setting up new plants, as most textile and garment products are not taxed if shipped within Asean since the Asean Free Trade Area (Afta) took full effect this year.

"As much as 99.65 percent of the tariffs on textiles and garments have been eliminated," he said.

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AseanAffairs   04 January 2011
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