Apparel Sourcing From India and China

In the post-quota era, India and China are emerging as the major hubs for global apparel sourcing, mainly to U.S.A. and the European Union.

There are several factors which led to this development. The vast size of the Indian textile industry and its competitiveness make it one of the worlds leading apparel exporters. India has vast sources of raw materials. Labor costs are low in India. Indian traders have a wealth of entrepreneurship, designs and experience, which enable them to produce and apparel of high quality. Changes in the policies of the Indian government have opened up the Indian economy to the outside world, which has led to a rise in exports. Indian textile firms are quick in making changes such as expanding their capacity and adopting new technology, keeping in view the growing demand for Indian apparel all over the world. India has a large source of cotton domestically. About 75% of Indias exports are cotton items.

Reputed foreign traders like J.C. Penney, Wal-Mart, Gap, Marks & Spencer and others source apparel from India. No other country except for China can quite match the Indian textile industry. In the year 2005, after the abolition of the quota system, Indian exports to U.S.A. grew by 34% and exports to the European Union went up by 30%. Most of Indias exports are to U.S.A. and the European Union. Both of them together account for around 70% of Indias exports. In the year 2005, India ranked 3rd in apparel exports to U.S.A. and 5th in apparel exports to the European Union. The total textile exports of India were 8568.61 million USD for the period April-October 2005, which rose to 9022.61 million USD in April-October 2006, recording an approximate 5.3% growth.

Indian apparel exports are rising; however they are still behind China in this respect. U.S. imports of apparel from India rose from 2976.18 million USD in January-December 2005 to 3186.90 million USD in January-December 2006, which reflects a growth of about 7%. U.S. apparel imports from China rose from 15142.87 USD in January December 2005 to 18517.52 million USD in January-December 2006, reflecting a growth of about 22%.

China is the worlds largest exporter of home textiles. In the first five months of 2005, home textile exports from China rose to 2.2 billion USD, recording a rise of 40% as compared to the previous year. The rapid rise in exports from China raised alarm in the European Union and in U.S.A., and safeguard measures have been taken by these countries. As a result, many Chinese traders have started concentrating on other markets like Japan and Australia. Some firms have started increasing sales in their domestic markets. Many firms have started stepping up on their research and development measures in order to improve quality. Traders have started using eco-friendly materials for production of fabric. However, in spite of safeguard measures by U.S.A. and the European Union to limit Chinese exports, most of the traders in China are increasing (stepping up) production in anticipation of further growth in exports.

With India and China coming up as the major centers for apparel sourcing globally, the need has arisen for Indian and Chinese traders to understand the culture of the host country, to adapt to their working style and develop a working relationship with the people of that country. This has become necessary to develop an effective product which would be readily accepted in a foreign market. Traders are required to undertake a detailed study of the market of the host country and the prevailing trends. They are required to work with a different time zone and deal with people belonging to a different culture and having a different mentality from theirs. They need to develop a product for customers who are very different from them and sell the product to them. Various factors such as cost, time and the market in which the product would be sold have to be considered, which is a rather difficult task to undertake from a distance and out of ones own culture. Traders have to understand the mindset of the consumer for whom the product is to be developed in order to provide them the best product.

There is tough competition between India and China to grasp the latest trends in the global fashion industry and translate them into best quality products i.e. apparel.

Global consumers too have become more aware today. They wish to know the origin of the product and in certain cases, the process of production and the material that was used. The consumers wish to be informed. The number of consumers who prefer eco-friendly products has increased.

In spite of these challenges, India and China are emerging as major players in global apparel sourcing. This is evident from the rising export figures of these two countries.

References:

www.researchandmarkets.com
www.financialexpress.com
DGCIS, Kolkata
OTEXA