Although the Asian garment market increased its size in terms of value during the pre-pandemic years, market concentration in the sector also kept rising, says a research brief by the International Labour Organisation (ILO).
Consolidation and concentration are limited to large, vertically-integrated supplier groups, but they also include a redistribution of functions between buyers and suppliers, with the latter increasingly taking on elements of product design and development, inventory management, stock holding, logistics, factory selection and multi-factory production planning, the research brief said.Although Asia's garment market rose in size in value terms before the pandemic, market concentration also kept rising, says a research brief by the International Labour Organisation. Consolidation and concentration are limited to large, vertically-integrated supplier groups, but they also include a redistribution of functions between buyers and suppliers.#
The top ten garment brands steadily gained in market share in the region, from 8.8 per cent in 2011 to 11.4 per cent in 2020. Similarly, the top ten footwear brands increased their market share, from 17.9 per cent in 2011 to 29.1 per cent in 2020, the brief, titled ‘The post-COVID-19 garment industry in Asia’, said.
Only 20 companies made around 97 per cent of the economic profits in the Asian garment industry; 12 of them were among the top 20 companies by economic profit for the past decade. As the pandemic continues to test corporate resilience and favour the largest and most capitalised companies, it is unlikely the recovery will see any change to these trends. Further consolidation may be more likely, ILO said.
One example is Nike, which significantly decreased the number of footwear factories from which it is sourcing globally, from 163 in 2010 to 112 in 2019 (minus 31 per cent). The number of garment factories also reduced, from 631 in 2019 to 334 in 2020 (minus 47 per cent). Industry observers expect these trends to continue beyond the COVID-19 crisis.
Many observers expect small-batch production, led mostly by small and medium enterprises, will grow in the post-pandemic period. In some instances, garment lead times and inventory in this market segment can be reduced through ‘made-in-cloud’ technologies, characterised by automated resourcing, cost-planning and logistics, the research brief noted.
Prior to the pandemic, Myanmar had emerged as a new frontier destination for global garment sourcing, albeit still small in size and value relative to near neighbours like Bangladesh and Viet Nam.
Following the February 2021 military coup, much uncertainty has emerged about its future as a manufacturing hub, even though some brands have recommenced sourcing from the country after earlier suspensions.
Fibre2Fashion News Desk (DS)
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