Can Myanmar emerge as the next low-cost destination for global apparel brands and retailers, following China losing its sheen as a cheap production hub? Should this new development also worry garment makers in other South East Asian countries?
The vibes emerging from leaders in countries like Bangladesh, Cambodia and Pakistan seem to indicate that Myanmar could emerge as a potential destination for sourcing clothing for worldwide retailers and brands. However, they do not see Myanmar as a threat to their country’s apparel sector in the immediate future.
It is a known fact that garment brands are in constant search for low-cost production hubs and in their quest, production hubs have moved from US and Europe to China, Bangladesh, India, Vietnam, Cambodia, Sri Lanka and Pakistan. This year in April, in a historic decision, the European Union (EU) suspended most of its sanctions against Myanmar, due to the sweeping democratic changes adopted by the present government and also in an effort to encourage further reforms.
However, the biggest clothing and textiles importing country – US has still not lifted sanctions. It is also worth noting that the EU has not lifted sanctions, but only suspended them for a year. As recently reported on fibre2fashion, global apparel brands are gradually moving out from China, due to its rising costs. Domestic Chinese brands and suppliers to global brands too are looking at overseas destinations to cut costs.
China’s loss could be Myanmar’s gain if it is able to attract the investments flowing out China or other high cost production bases, if it adopts correct investment policies and initiates sweeping reforms. Although, overall garment exports to top ten overseas destinations adds up to just around US $608 million in 2011, the pace at which these shipments are growing will make one sit up and take notice.
For instance, apparel exports to Japan, Myanmar’s bigger buyer of garments, nearly doubled from $181.57 million in 2010 to $349.30 million in 2011. Likewise those to South Korea also nearly doubled in the same period from $123.89 million to $232.42 million. Likewise, apparel exports to the Latin American country of Colombia have skyrocketed from a measly $8,000 in 2007 to $435,000 in 2011, which again zoomed more than five times to $2.74 million in 2011.
However, on the flipside, clothing exports too have declined in the last two years to major destinations like South Africa, France, Australia who are among the top ten buyers of made in Myanmar garments. Shipments to France have crashed from a high of $13.35 million in 2007 to just $500,000 in 2011. Those to South Africa have plunged from a peak of $136.72 million in 2007 to only $2.48 million, better than those to France.
Photo Credit: fibre2fashion.com