Over 200 delegates attended the ASBCI's annual industry conference and dinner at the Hinckley Island Hotel in Leicester to hear 10 eminent speakers from across the international clothing sector define and explore the emerging landscape of global trading.

Speakers from the UK, Sri Lanka, India and Turkey unanimously agreed that the lifting of quota's with China at the beginning of the year marked 'a turning point for the global clothing industry.' In the UK alone, £7.3 billion worth of garments will come off-quota in 2005.

The common response was one of acceptance and the advice to adopt 'the right supply partners in the right countries.' Delegates were shown that dominant brands and retailers will increasingly rationalise their offshore supply partners and go direct to larger, vertically integrated offshore sources.

The resulting surge in imports will have serious implications for the UK's already congested ports, road and rail networks. The price deflation trends set by the value retailers will continue to fuel price wars and erode margins on the high street.

Good news for the consumer - not so for suppliers, as it is predicted they will be asked to 'pay the cost' for the lower price points. On an optimistic note, delegates were shown that UK suppliers can reinvent themselves to play a critical and highly competitive role in delivering fast-fashion to the UK high street.

The day concluded with an industry dinner where fashion phenomenon Tony Glenville gave ASBCI members and their guests an anecdotal and revealing insight into his eclectic life as a freelance designer, personal stylist, journalist, editor and raconteur.

In a brilliant career he stressed he never lost sight of the end game, 'We are in it to make money. High fashion is for the press. The price, the money is what the clothing industry is ultimately about.'

New landscape of global trading In her keynote presentation, Hana Ben-Shabat, principal consumer goods and retail practice UK for leading management consultancy and analyst group A.T. Kearney, clarified both the enormity of the quota issue, assessed its impact to date and identified emerging trends with likely future scenarios.

She advised delegates that in the UK alone some £7.3 billion of garments would come off-quota during 2005, representing 51% of apparel imports. She went on to show that in the first three months of the quota lift, UK clothing imports from China had jumped by 30% and if this trend continued by the end of the year, such imports would account for around 25% of the UK's total imports.

The implications for other countries, she explained, were even more serious. Spain for example had seen its Chinese imports leap by 558.2% in January, Morocco saw its textile exports drop by 33%, Nepal by 48% in the first quarter while the US and EU saw apparel exports from China rise by $1.6 billion in just 60 days.

She observed that countries had taken either decisive or non-decisive action to counteract the import wave from China. Argentina and Turkey for example had both imposed new quota restrictions on imports in readiness for January 1st 2005, while at the other extreme Canada has adopted 'a let's see what happens response.' The US and EU are attempting to instate trading restrictions now.

She suggests the implications for retailers are about cost reduction, price deflation, defining a new sourcing map and applying new sourcing models. By sourcing from China, it is estimated retailers can reduce costs by between five and 25%. Many have said they will keep margins stable and reinvest in products.

The implications for suppliers is clear says Hana Ben-Shabat, 'Buyers are looking for specialised, one-stop-shop, expert and vertically ntegrated suppliers, of which an excellent example is Luen Thai in China otherwise known as "supply chain city". Retailers can site an office there and select the services they want from a local supply chain menu.' It is, she concluded, a vision of the new trading landscape.

Retail consultant Christine Cross expanded on the supply chain 'menu' theme in her presentation Global sourcing strategies - capitalising on opportunity, minimising risk. Against a backdrop of increasingly sophisticated and demanding consumers, retailers have to constantly review their operating and sourcing models to retain their competitive edge.

In a bid to stay competitive and maximise their profit within the context of a rapidly changing marketplace, retailers have to 'buy for less'. This means sourcing from the right supplier in the right country which she claims 'can yield an average 5.8% saving on cost of goods but a detailed evaluation of cost, quality and value for money of the finished product must take into account all of the associated costs from raw materials and cost of manufacturing through to transport, duty and tariffs.'

She urged delegates to look for suppliers in countries where mutually beneficial trade agreements are already in place. Her detailed analysis highlighted the 'service' strengths of particular countries, with France, Italy and Ireland for example scoring well on range design, the UK, Turkey and Portugal on pattern and design, Morocco, Thailand Romania and Slovakia on prototyping and China, Bangladesh, Sri Lanka and Indonesia on production.

However, build in a 'lead time balance.' It can take 21 days to ship a 'best cost' volume shipment of jeans to the UK. So Turkey - with a delivery time of four days - would be the better option for short order lead times and repeats. There is already a trend, she noted, for retailers to forge supply relationships with strategic suppliers and in so doing significantly increase the volume of business.

China is, she acknowledged, 'the 800lb gorilla that can flatten all in its path if it wants to.' However there are strategies for making businesses competitive in the face of the gorilla. Fundamental to these is knowing the detail of the global services "menu" on offer and the related costs. By understanding this detail 'you can decide to eat either a la carte or table d'hote!'

Made in Turkey

Dr Gungor Kesci, associate professor of international finance, one of Turkey's most authoritative industrial figures, focused on the enormous investment programmes currently shaping the Turkish-based textile and clothing industry.

Dr Kesci described a 'two-pole manufacturing world post 2005' of mass production versus fast fashion and flexible manufacturing. Mass production will be colonised by such low-cost wage countries as China, Pakistan and India who can offer 'local' access to raw materials and large manufacturing infrastructures with huge capacities. The limitation of these countries is the longer delivery times.

Turkey however is aligning itself with the fast fashion and flexible manufacturing pole. To this end it is building a sophisticated and vertically integrated industry characterised by innovation, skill sets and a commitment to advanced flexible manufacturing processes.

Already one of the world's largest cotton producers, Turkey is exploiting its position within the European customs union, and positioning itself as a vertical producer of apparel with a 'full package solution.'

Technology parks have been built, that are dedicated to developing new products and processes for the textile industry including new yarn treatments, knitting designs, technical textiles, weaving, dyeing and finishing techniques. He explained, 'We are competing by developing a skilled base, innovative product and efficient processes. Specialism will differentiate our full package not price.'

A sourcing hot spot - India's answer to global competition Sanjeev Saran, managing director of REAL in Mumbai fast tracked delegates through India's rich textile past to its current status as a stable and growing economy. India, he said, 'is enjoying a boom time' within which the textile industry is playing a key role.

Indeed, in recent years, India's textile and apparel exports have been growing at an annual rate of around 20%. Employing some 30 million people, textiles is the second largest employer after agriculture, and is the biggest net foreign exchange earner. It accounts for four per cent of India's GDP, 14% of industrial production and 21% of gross export earning.

Self-reliant on all raw materials except wool, India produces 21% of the world's spinning capacity and 33% of the world's weaving capacity. In the past five years, its spinning mills have increased from 2,444 to 2,699 and its powerloom units from 0.35 million to 0.41 million.

India has adopted a proactive response to the China challenge, and put in place a five-year industrial management and development plan called "Vision 2010." The aim is to grow its textile economy from its current $37 billion to $90 billion by 2010 and create a further 12 million new jobs.

This will represent a 15% annual increase in textile and apparel exports from the present $14.57 billion to $50 billion by 2010 and increase its world market share from four to eight per cent. 'This is a more cautious and realistic growth than we have experienced in recent years as it takes into account the whole China, quota issue,' explained Sanjeev Saran.

Critical to the success of Vision 2010 is attracting new foreign investment. It needs $13 billion by 2010 to realise its growth objectives. To attract interest from overseas, India has put in place several preferential trading incentives, such as new duty regimes and subsidies for new processing facilities, and launched a programme of industry initiatives.

For example, a new cotton technology mission to improve the quality and availability of cotton, an infrastructure project that will improve access and deliveries, new hi-tech weaving parks to integrate its fragmented production sector and dedicated professional manpower courses in India's universities. It is also seeking to address some of its trading limitations such as inflexible labour laws that do not take account of spring/summer production peaks.

'Textiles still is and will be a sunshine industry in India. More and more US and EU companies have a presence and sourcing hub here and are increasingly using it as a textiles provider for other manufacturing locations. India also offers access to a huge, one billion strong consumer population and of course, unlike China, English is our second language. And meaningful communication is the foundation of successful sourcing.'

Focus on Sri Lanka - What is, what was and what is to comeDavid Rose, CEO, Garment Services Group, Sri Lanka has spent over 20 years of his clothing career in Sri Lanka and gave delegates an intimate account of the devastation wrought by the tsunami tidal wave. 'Striking without discrimination all in its path with no regard or respect for economic, cultural or social status, and oblivious to ethnic and religious divide it shattered lives and communities in a reckless moment of complete destruction.'

The number of dead accounted for was 38,000, David believes the real toll to be as much as 55,000. He applauded the efforts of those involved in the rebuilding and recovery of the affected areas and observed 'Thankfully the direct damage to the garment industry was restricted to those few located in the coastal towns.' Indeed David Rose stressed the garment industry had played a pivotal role in the recovery effort and was helping create on-going regional wealth.

He went on to say that as a smaller emerging economy, Sri Lanka is particularly vulnerable to increased exports from China. An estimated 32% of Sri Lankan exports currently go to Europe and this is under threat. In Sri Lanka, an estimated one million people work in the apparel and related trades, out of a total population of some seven million.

To protect these jobs and secure the future of the industry, Sri Lanka's industry groups united to form a cohesive policy board - the Joint Apparel Association Forum (JAAF). To date JAAF has driven the upgrade of flagship factories implementing world class standards that can be emulated countrywide, it has removed budget constraints and implemented VAT incentives, it is negotiating tariff concessions with the EEC, has set up technical training colleges to nurture a new breed of middle management and is developing raw materials' factories to improve its backward vertical integration capability.

Significantly new industry investment is being targeted at the South Eastern areas of Sri Lanka, those hardest hit by the tsunami. New roads, power supplies, homes, schools and factories are underway with the aim of creating a further one million jobs in the region.

The challenge is to turn Sri Lanka from a manufacturer into a full service provider and shift dependence on discount merchandise to top-end speciality markets where business is not just price driven.

What Sri Lanka does not need is handouts but 'aid through trade'. He urged delegates to take advantage of Sri Lanka's high performing GSP and imminent enhancement of duty relief, of its excellent goods in/out logistics capabilities, of its established communication and IT coverage and its free trade agreements with India. 'We're as good as we stand and if we're good at our job someone will listen,' he concluded.

From source to store - a colourful approach to making sourcing easier, faster and more cost effective Dr Gordon Cawood, technical director and Mike Carrington, sales and operations director of Stevenson's Dyers how adjustments to sourcing practices could save retailers and brands money and increase the success of fashion ranges in-store. Historically a dyer, Stevenson's has reinvented itself as a 'full service' garment finisher in order to attract a new 'breed' of quick response business.

First urged Dr Cawood UK garment buyers should 'work smarter'. Research has shown that between 12 and 30% of a typical buy is not sold at full price, 'So instead of focusing on the 10p saving yielded by cheaper fingers, focus on the £10 loss if a garment has to be sold at a 50 per cent mark down.'

While UK suppliers cannot compete with offshore sources on labour costs it does have distinct advantages. It is closer to the point of sale, UK suppliers understand retailers' quality standards, and are good at designing new product. To maximise these advantages Stevenson's has devised a new low-cost balanced sourcing method called the Quick Response Model that yields a better net margin.

On behalf of such clients' as Arcadia Group, C&A, Debenhams, Ghost, NEXT, M&S and Monsoon it receives made-up garments in ecru from all of the major sourcing destinations including China, Sri Lanka, Mauritius and Madagascar. The garments arrive vacuum packed so therefore more goods can fit into less space in the cargo container and as they are unfinished and of reduced value there is less duty to pay.

The ecru garments are held in the UK until early sales indicate which colours are selling. Stevensons dye the garments accordingly and then labels, presses, packs and distributes garments direct to store or a distribution hub.

The immediate benefit to retailers is a reduction of in-store mark-downs, the savings on importing ecru rather than finished goods, right product, right time in store and satisfied customers.

A colourful show of garments showed this process working on an array of knitted argyle sweaters and cashmere cardigans, linen dresses, cotton cord trousers and multi-coloured rugby tops. As Dr Cawood concluded, 'Use it or lose it there is a choice beyond China and it's down the road in Ambergate.'

What retailers really need now - a high street perspective on product and sourcing Paul Wright, head of technical services fashion and homeware for Matalan Retail gave an honest and sometimes disturbing account of working with offshore companies.

Matalan currently works with around 200 suppliers and as Paul Wright said, 'We are only as good as our supply base, so we work together to develop efficient and safe processes and practices. We have come across dinosaurs who are reluctant to implement necessary change usually on thegrounds of cost; but then we all know what happened to dinosaurs!'

Matalan is prepared to support the change process but only with suppliers who demonstrate the right "passion, motivation and attitude." He said, 'We like companies that get the basics right and who are willing to engage in meaningful communication.'

Poor communication leads to excessive working hours, late deliveries or costly airfreight, poor quality and order cancellation. He observed, 'Bangladesh and Sri Lanka both have the advantage of communication over China.'

Paul Wright's presentation showed in graphic detail how some factories existing practices ran counter to both basic health and safety practices and efficient manufacturing. Newly sewn underwear left in enormous heaps on factory floors, unprotected hands feeding interlining into cutting machines, unchecked boilers and exposed electric cables piles are still commonly found.

To conclude his presentation Paul Wright addressed the ethical sourcing question. He questioned the wisdom of applying western style standards to some off-shore situations, 'If a child of 14, who has left school, is not permitted to work in our factories because we have applied an 18 year ruling, then they will find alternative employment like breaking bricks for aggregate or prostitution.

'The factories we deal with don't want to upset us, so they would never employ a person under 18 or indeed who 'looks' younger than 18. I am not sure we are helping in such situations.'

For more information contact the ASBCI on 01422 354666 or visit the website at www.asbci.co.uk.

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