Financial Times

Martin Trust on the challenges of 2005

Sri Lankan garments exporters might lose market share in the United States when quotas are removed in 2005, a top exporter has warned.

Exports from the "China region" (China, Hong Kong, Taiwan and Macau) to the US, which presently stand at $11 billion, can easily increase to $20 billion when the protection offered by garment quotas is removed, said Martin Trust, founder of Mast Industries, a major force in garment exports.

In a speech at a breakfast meeting hosted by the American Chamber of Commerce, Trust warned that China and its regions are capable of producing the very merchandise presently manufactured in Sri Lanka.

This begged the question, "will Sri Lanka continue to provide compelling reasons for the US buyer to remain in the country as opposed to China?"

The rag trade guru offered some sound advice to improve the industry, according to a report on the Board of Investment web site. He recommended privatization of state banks and specialization.

"Sri Lanka cannot compete with India and Pakistan in the manufacture of commodity products," Trust said. "Understand your customer, understand your brands, build up your performance record, focus on productivity and just get rid of the excuses."

The doyen of Sri Lanka's garment trade has established a mutually rewarding 20-year association with the island.

Trust is also Senior Advisor to Limited Brands Incorporated, now maintaining over 4,500 retail outlets off a "one catalogue" operation. This company handles $9 billion in sales, merchandising world famous brand names, 'Gap', 'Calvin Klein' 'Victoria's Secret' and others. He is also a partner of the famous baseball franchise, the 'Boston Red Sox'.

Sri Lanka lay sixteenth on the list of garment exporters to the USA, with Mexico, China, Hong Kong, the Dominican Republic and South Korea grabbing the top five spots.

Though Bangladesh and India were marginally higher ranked, the former had to ship in nine hundred million units to Sri Lanka's four hundred million. Noted Trust, "by any measure, Sri Lanka is doing well."

Garments constituted about half of Sri Lanka's total exports, while garment exports to the USA make up a third of the island's total exports.

"On a per capita basis, Sri Lanka's exports were fourfold of that of Pakistan and significantly more than India," Trust said.

As to the quality of the products exported, Trust noted that the buyers were willing to pay more for a Sri Lankan garment because they were "highly valued by the customers."

The promise of peace, said Trust, had one wondering, "if this country could focus all its attention in competing in the world marketplace what a marvellous development this would be."

Paying a glowing tribute to Sri Lanka and its workforce, Trust said that in 20 years doing business, "every time I visit Sri Lanka, I see real progress, better efficiency, more convenience, enhanced service, improved skills, greater professionalism, innovation and most importantly, world class talent. This country has always been for me, an amazing place in terms of human content and its ability to come up with bright young smart people who continue to drive the industry. They continue to impress people not just in the United States but throughout the world."

Touching on the apparel retailing trends in the US, Trust said that 32 unrelated Departmental Stores had now been consolidated into just three.

"Expect more acquisitions and fewer ultimate players," he predicted.

Consumers were no more willing to accept any garment put before them. In turn, the producers had to be brand savvy, posses the ability to understand why it was being made for consumption and track the brand to comprehend its image significance to the consumer.

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