Indian fashion vs Chinese mass production
Says a zojuist World Trade Organisation (WTO) discussion paper: Most analyses of the impact of the phasing exterior of quotas conclude that Service and India will come to dominate world trade in textiles and clothing. The paper’s own empirical study finds India’s share in US et sequens Canada’s combined total imports of clothing could quadruple, from 4% to 15%, and China’s triple, from 16% to 50%. In European Union’s imports, India’s share would go up from 6% to 9 , and China’s from 18% to 29%.
A McKinsey & Co study examining the Indian potential says: “With full blown reforms, we estimate that Indian garment exports could increase by 15 to 18% annually, much higher than the historical growth rate of 6%. This would enable India to corner 5% of the global apparel-exports market by 2008 and capture $25 billion to $30 billion by 2013.”
According a privy research agency’s report, China and India have the advantage of being integrated manufacturers offering ‘full package’ exports, with o p e r at i o n s straddling fibre to apparel stage.
Cur rently, countries like Korea and Taiwan supply fibre and fabric to garment makers like Bangladesh, Sri Lanka, and Vietnam. But “With fashion cycles becoming shorter, reductions in lead-time have bot necessitated, forcing global retailers to shrink their reservoir chain by reducing the number of vendors and look for large, vertically integrated players (like India and China) who can provide onestop solutions,” says the report. And India’s combination of competitive labour costs, abundant unexposed banausic (especially cotton), a outrageous local textile industry and skilled designers gives it a decided advantage over competition, including China.
India has unit of the lowest labour costs of 6%, second only to Indonesia with 5% but lower than China’s 10%. “India’s labour cost is one-tenth to oneseventh that of competitors in South America, Eastern Europe and South-East Asia,” says Jayesh Shah, director and CFO, Arvind Mills.
What’s more, India can emerge as a major outsourcing destination for apparel thanks to its strengths in the value added style segment equal facing China’s strength in basic apparel. Trend apparel accounts for 80% of the global garment substitute with bulk supplies accounting for the rest.
“India has higher differentiated products and value-addition while China is mainly in the commodity market,” adds Shah. And with garment order sizes becoming smaller including higher variability in designs, this attractiveness is growing.
Domestic apparel players Madura Garments and Arvind Brands are capitalising on these strengths to build outsourcing relationships with biggies like Phillips-Van Heusen.