The Japanese government’s recent announcement it wanted Japanese companies to move clothing purchases from China to other Asian countries could have profound implications for buyers and sellers alike. With total apparel exports possibly doubling for some apparel and textile factories in Bangladesh and South East Asia, the policy could increase the purchasing costs of for many European and American buyers. But at a time of increasing uncertainty about garment orders, it offers many Asian factories the prospect of really profitable new business.
In the latest update to THE SOURCE, its review of sourcing trends, Clothesource analyses the implications of the announcement by Shigeru Takagi, Director of Japan’s International Textile and Clothing Trade Office at Japan’s Ministry of Economy, Trade and Industry. Takagi revealed that Japan wants clothing and textile imports from China to drop to around 50% from their current 77% .
“If this happens, it could transform the profitability of many Bangladeshi and South East Asian clothing factories – however long the current recession goes on” said Clothesource CEO, Mike Flanagan. “But there are real questions about how serious the Japanese really are – and about how long it would take”
“Japan imports practically all the clothes it wears” added Flanagan, “and 93% of those clothes imports come from China. Just 7% of its clothing imports come from South East Asia or Bangladesh – the countries with which Japan has, or is negotiating, agreements to import clothes duty-free. Moving a third of Japan’s clothes imports to those countries could mean a 400% increase in their clothing exports to Japan – and in some cases, that could well double their total clothes sales.”
But the Clothesource analysis wonders how easily government policy can influence Japan’s clothes buyers. “Japanese clothing retail is in turmoil right now” Flanagan went on. “Fast Retailing, with its ultra-cheap, highly innovative business model, is rapidly taking share of a falling market from Japan’s mainstream clothing sellers. It’s not obvious Fast’s interests are the same as its competitors”
Just as important for Asian factories is the timescale many need to bring their operations up to the standard needed by Japanese buyers. “Cambodians have found the Japanese want twice as many supervisory staff on a production line as European or American buyers” , the Clothesource CEO pointed out. “That adds to cost – and improving operations takes time. Japan won’t save Asian factories from the problems of falling European or American orders this year.
“But, for factories that survive this year, coming up to Japanese standards will be a real profit improver in the years to come. Ultimately, there could well be factories in Thailand, Cambodia, Indonesia or Bangladesh that might be able to afford to turn some American or European business away”
NOTE TO EDITORS
Clothesource Limited, based in Charlbury, Oxford, UK and Bucharest, Romania, provides the world’s leading apparel retailers, brands and exporters with market intelligence on apparel trading.
Contact: Mike Flanagan, Clothesource Limited, 10,Park Street, Charlbury, OX7 3PS, UK
+44 1608 810153; flanagan@clothesource.net
