Financial Times

Value addition grows in apparel industry

During the past two decades Sri Lanka has earned a reputation as the preferred sourcing destination for leading retailers and brands, Mahesh Amalean, chairman of MAS Holdings (Pvt) Ltd told the recent Sri Lanka Business Opportunities Seminar in Tokyo.

Among these are Marks and Spencer, Gap, Tommy Hilfiger, Abercrombie and Fitch, Ralph Lauren, Speedo, Nike and also the world's most admired specialty retailer, The Limited Inc, a Fortune 500 company which owns brands such as Victoria's Secret.

"Sri Lanka has created a highly competitive export manufacturing base and supply chain to cater to the demand from global retailers and brands," he said.

"The competitiveness of the industry is reflected by the fact that its value added component has been growing strongly despite the overall deflationary pressure in the global apparel manufacturing sector."

Several manufacturers including YKK, Esquel, Triumph International and Kellwood, renowned for their manufacturing technology, have established partnerships in Sri Lanka, Amalean said.

The long-term partnerships formed with such manufacturers have contributed towards the development of strong technical and managerial expertise for export manufacturing in Sri Lanka.

Apparel exports to the US alone make up one-third of total exports from Sri Lanka.

"To put this in perspective, Sri Lanka exports four times more apparel than Pakistan on a per capita basis to the US," Amalean said.

"In order to 'react to fashion', as it is commonly referred to in the industry, many apparel manufacturers in Sri Lanka offer speed and flexibility by providing a fully integrated service from design, product development to manufacturing and delivery."

Apparel manufacturers maintain strong relationships with the supplier base and collaborate on design and product development and "just in time" manufacturing.

Sri Lanka continues to attract some of the best manufacturers of raw material in the industry.

"Recently, a French lace manufacturer known in the industry as the "creator of lace" decided to establish a manufacturing facility in Sri Lanka," Amalean said.

Sri Lanka also offers high quality workmanship that meets the requirements of the most discerning customer.

Amalean gave the example of a manufacturing facility in Sri Lanka who has a joint venture with Speedo International to make the FASTSKIN® swimsuit, also commonly known as the "shark skinned" swimsuit, which will be used by athletes at the Olympics in Athens next year.

Sri Lanka's apparel industry also has a high level of social and environmental accountability, especially in the area of health and safety, for which it has won recognition. Supply chain management solutions such as "Vendor Managed Inventory" are now increasingly offered by Sri Lankan manufacturers to their customers to ensure minimal inventory and on-time product delivery.

Amalean gave the example of his own company to illustrate the competitiveness of export manufacturing out of Sri Lanka.

"Over the past 10 years, our group of companies successfully supplied over 60 million bras to Victoria's Secret. Bra manufacturers are known as the "watchmakers" of the apparel industry. This is because bras are precision products that are engineered to "fit" closely to the human body.

"Recently, we were able to propose to Victoria's Secret a unique value proposition - to supply 30 percent of their requirement of cotton collection bras with faster turnaround and a better price compared to our competitors in China, Thailand and Israel."

Another exporter who manufactures pants for Abercrombie and Fitch was able to keep the business away from its competitors in Mexico and China by delivering a fashionable and complex product at the right time to the store.

"The Abercrombie and Fitch pant is a complex product that requires 55-60 minutes to manufacture. The Sri Lankan company designs, develops, sources all raw materials from Sri Lanka, manufactures and delivers the pants to Abercrombie and Fitch retail stores within four weeks. This has enabled Abercrombie and Fitch to sell almost 96-97 percent of its inventory of pants at the ticketed price!"

Hari Selvanathan, who is in charge of restructuring the tourism sector, told the meeting that the industry's new strategic initiative is to make Sri Lanka "the most sought after destination in the Indian Ocean".

Sri Lanka is about to launch its first sustainable development zone, featuring a blend of traditional hospitality and agriculture and will develop modern infrastructure and quality standards to make the island an up-market destination catering to niche markets.

It is a "land where every attraction is less than a day's drive," he said.

Property values are on the rise and a significant number of foreigners have invested along the southern coast.

"The 300-year-old Galle Fort, a world living heritage site, is a plum investment. Property value at this site has increased from $24 per square foot to $102 per square foot in the last three years," Selvanathan said.

In the Bentota national holiday resort, 4,000 acres have been zoned for river-based tourism development and are to be developed on the lines of Bali with golf courses, a race course, water sports, gaming entertainment and theme parks.