Sri Lanka pushes for Ethical Purchasing !

Last week at the Sri Lanka Designer Festival’s Ethical Symposium attracted some of the best names in the Apparel Industry with key buyers from retailers like Zaras, Top Shop, Monsoon and respected industry experts like Collin McDowell, Douglas Miller.

 

 

The highlight of the event was the call by the Industry heavy weights to practice Ethical purchasing which will support the Sri Lanka’s proposition of branding the country to be “Destination for Ethically manufactured fashion apparels in the world” and if this is not done, Sri Lanka can become Ethically unemployed. Though it sounds sexy an industry leader backed the argurement by saying that he had many times decided to walk away from a business than give into a price war by buyers, which will take away the ethos the industry is fighting hard to herald to the world. When I heard that comment I was indeed very proud to be part of the core team that strategised and organized the event for the country as it was a classic example of a Public-Private partnership at play to develop Sri Lanka to be the emerging growth nation in South Asia.

 

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The week long festival included fashion shows, workshops and facility visits to the top apparel manufacturers in Sri Lanka that showcased the industry to the world and hope fully can reverse the -4.9% decline in the Apparel Industry at 241 million dollars that account for almost 47% of the export revenue of the country. A point to note is that overall exports have also contracted by 16.8% as at end September 2009.


Internal Reforms

The Apparel Industry is a classic example of a sector that has successfully done its internal reforms so that it remains competitive at a time when its key markets like the US and EU is facing an economic down turn with millions out of jobs that will have a direct impact on the apparel sales in a country. It’s a que that the mobile telephone industry of Sri Lanka can take as last year the total industry was in the red with the ruthless price war that was at play. The apparel industry painfully underwent the self inflicted reform process and there by kept it self agile with a change in business shape that has made this inddustry survive one of the most difficult trading times since the great depression in the 1930’s.

 

Exports under pressure

Whilst commending the industry, the fact is that on the overall export proceeds have contracted by 16.8% and the Apparel industry has been shaven off a value of 4.9% as at end September ’09. The sub categories of woven fabrics has declined by 20%, Garments by 2.6% and other made up textile articles by 39% which gives us an idea of the challenge ahead.

 

From a country perspective the US is reeling at -19.5% whilst the EU is at +8.6% whilst countries like Italy at +4% and Germany at +19.5% which is encouraging. With the upward movement in the last quarter and the increased retain sentiment the overall Apparel Industry will recover unless the woes of “Dubai World” takes the world once again on spin.

A point to note is that the Industry is upbeat even with the cloud hanging on GSP+ which is encouraging. Industry experts say the impact can be at a maximum 12% exposure level which is not bad from a business sense. However, with the resettlement process in full swing and the 1st ever investment forum to be staged in Jaffna in January 2010 we can expect a positive outcome on this issue is my view.

 

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A model Industry

The 3.4 billion dollar export industry employs 270,000 people directly and touches the lives of over a million people in Sri Lanka. Incidentally the apparel sector accounts for 33% of the manufacturing employment in the country. It has moved away from being a mere tailor to a total solution specialist and then to a world class Apparel solution specialist and today it is on course of creating a new wave in the world on the Ethically manufactured fashion apparel proposition. The industry boasts of creating the 1st lead platinum rated Apparel factory in the world where the CEO of Marks and Spencer-uk, Sir Rose Stuart personally coming over for the opening ceremony. However the world has moved at a faster pace and the challenges keep hitting the industry.


Ethically manufactured tag

Whilst having a very strong proposition of a ‘Garment without Guilt’ the challenge is that garments that are made in Sri Lanka does not carry this tag because retailers are worried that it infers that other garments in the store does not meet these stringent standards. Hence practically, the end consumer tangibly does not get the feel that they are wearing apparel that has been manufactured in a factory that does not employ child labour or a sweat shop condition etc. Hence what it means is that from a demand side there is a question mark on the commercial viability of this proposition and hence, sustainability of this promise from supply end becomes question –at least as at now.


Ethically Unemployed

Apart from a consumer end due to the economic downturn orders are placed as short lead times and at challenge price points that creates pressure for a country likes ours to adjust to these requirements and practice the ethical way of manufacturing products. Hence the demand pressure might even lead to Sri Lanka becoming an ethically unemployed nation from an Apparel Manufacturing perspective which is a serious issue strategically. This was the very point that was highlighted by the industry at the Ethical Symposium in Sri Lanka that there has to be a commitment from a buyer so that ethical manufacturing becomes sustainable. This can only happened if there is a convergence of commitment from a demand and supply perspectives. If not it will be only a dream for a few us is my view.


Changing times

If we track back in times this proposition gave birth to the world when there was a lot of concern on the low price merchandise from China that started surfacing at the department stores in the US & EU. Then came a spate of allegations on the sweat shop practices that were being used. However, post the financial bubble bursting and almost a 10.2% people out of jobs in the Us the world focus changed to survival and the proposition that any sale would do. In other words purchasing clothes on a social responsibility reason became a backburner Issue. But in my view the world has ridden this wave successfully and now once again the logic of being socially responsible might become an important reason to purchase, which means that Sri Lanka’s proposition will become a business models that will be the world standard. I guess time will reveal this.


Way Forward

The time has come for a public-private partnership to take this industry to the next level. If this is not done it will be another Tea Industry scenario for Sri Lanka where the worlds passes us by. I strongly feel with a Public-Private partnership we must tie up the Garments without Guilt proposition with the Made in Sri Lanka label. There after withy celebrity endorsements like ‘Beyonce’ and sports stars like ‘Maria Sharpova’ should be used to create awareness among consumers to purchase clothes which have the tag Garments without Guilt so that it becomes the work standard.


Secondly from a supplier end the designer elements must have a happy marriage to the apparel industry. This can increase the value added component into the industry whilst also having a cushion to compete in the event the GSP+ becomes non existent.


The stage is set to move the Apparel Industry to become the driver of the country of being a “Destination for ethically manufactured fashion apparel of the world” but it can be only a reality if there is a Private-Public partnership model and not just left for the private sector fight the lone battle just like the plight of the Tea Industry or the Tourism industry of Sri Lanka.                  


The author has an outstanding track record in the private and public sector in Sri Lanka and now serves the International public sector - United Nations Operations(UNOPS)  as the  National Portfolio Development Manager for Sri Lanka & Maldives. The thoughts are strictly his personal views based on his Doctoral Research Studies.

Source : Daily Financial Times