Sri Lanka's apparel manufacturers are optimistic about export demand in the current year, despite concerns about a slowing European economy. This optimism is attributed to their focus on ethical manufacturing, factory investment, and the influx of new international buyers. Sri Lanka's major apparel manufacturers recently showcased their products at Expo 2012, the country's largest post-war trade event in Colombo.

Organized by the Export Development Board, Expo 2012 aimed to raise international awareness of Sri Lanka's post-war export industries and attract export orders. The presence of large foreign investors at the event was seen as a vote of confidence in Sri Lanka. Additionally, the Sri Lankan government hosted the US-Sri Lanka Trade and Investment Framework Agreement (TIFA) talks in parallel with the exhibition, allowing exporters to present their products to a high-level US trade delegation.

Apparel is Sri Lanka's leading export product, making a significant contribution to the country's economy. Clothing and textiles accounted for 52% of total industrial exports from Sri Lanka in terms of value and around 40% in terms of volume last year. The industry expects a prosperous year in 2012, with most companies reporting healthy order books for the coming months.

Brandix, Sri Lanka's largest apparel exporter, expressed confidence that export demand would remain strong despite worries about the European economic slowdown. This confidence is partly due to the increasing costs of production in China and the overheating of Vietnam, which has led manufacturers to explore Sri Lanka as an alternative destination.

Although export data for the year is only available for January, there has been a 1.6% growth in export incomes for textiles and garments compared to the same month in the previous year. In the preceding year, apparel and textile exports saw significant growth, with export incomes reaching US$4.2 billion. Brandix attributes some of this growth to the ethical manufacturing standards maintained in Sri Lankan apparel factories. While ethical practices, promoted through the 'Garments without Guilt' campaign, may not directly translate to higher profit margins, they have attracted more orders and allowed Sri Lankan garment factories to distinguish themselves in international markets.

"There are lower cost destinations like Bangladesh, but they have an ethical question mark hanging over them," said Raghuraman. "Now, with more consumer awareness, compliance matters. It's not like before. Buyers are now getting into ethical sourcing. That's where we have been able to do better. They are not paying us more for ethical products but they are giving us more orders."


New international buyers


The end of war has also helped the apparel industry. With travel warnings letting up after the end of a 25-year civil war in May 2009, new international apparel brands are now placing orders with Sri Lankan factories. "Since the end of the war we have seen some new brands coming to Sri Lanka. Previously there were restrictions, like travel warnings. But now anyone can come to Sri Lanka. It has also become easier for our long term customers as well, and they have also increased their outputs from Sri Lanka because there are no security issues now," said Raghuraman. Brandix says its order books are full until July and is not expecting a downturn for the rest of the year.


Daya Apparel, another large exporter, hopes to attract new buyers for its multi-purpose clothing that is water and dust resistant. "Many buyers don't know this type of thing is available. All this time only one international brand was buying these items from us. But we showed these items to other buyers who came to the exhibition and they were very interested, because these garments are very versatile," said Merchandising Director Ranjith Fernando. Daya Apparel says its order books are full until August and is hopeful of growth during the rest of the year.


This article was originally published in 'The Stitch Times', May, 2012.