Garment exporters urged to look closer to home as us demand dries up

The Thai Garment Manufacturers Association will this month send a team to explore new contracts with Japanese importers, which it sees as a big opportunity.

Association vice president Somboon Juasathirattana noted in an interview with The Nation that this would strengthen Thai competitiveness thanks to lower export tariffs under the Japan-Thailand Economic Partnership Agreement (Jtepa).

"We have relied too much on the US market, ignoring Japan and other neighbours. It is time we looked to the region, which has suffered less from the global economic crunch, for closer relations in terms of trade and investment," said Somboon, who is a director of Thai Garment Export, Thailand's second largest clothes-exporter.

The economic meltdown has cut sharply into US demand for garment imports, particularly high-end ones, Somboon said.

The 25- to 30-per-cent decline in US orders has made Thai Garment Export, which relied on the US market for more than 90 per cent of its exports, axe 1,400 jobs this year. The company focuses on the high-end market for business suits, shirts, slacks and blouses.

The crunch has crippled the overall US economy with millions unemployed, prompting leading clothing shops to close.

The association says Thai garment exports have grown only slightly by 0.42 per cent to US$285.37 million (Bt10.3 billion), mainly due to sharp growth in the Japanese market offsetting US figures.

Thai garment-manufacturers have relied heavily on exports to the US. In January these decreased by 9.6 per cent to $126.08 million, 44 per cent of the total. Japan has been Thailand's third-largest export market, though accounting for only 7 per cent of total exports, but this increased sharply by 21.5 per cent to $20.44 million last month.

Japan for its part wants to reduce the risk of relying on imports from China.

Somboon said Thai exporters could easily muscle in as Japanese buyers had grown concerned about the safety of Chinese products.

China is Japan's major garment-supplier, with over 90 per cent market share.

The prospects for high-end clothes are gloomy, he concedes, but opportunities exist for sportswear, underwear and children's wear with increased demand for cheap necessities.

Thai Garment Export is seeking contracts with new buyers in Japan and Asean to ensure continued orders for its high production capacity and avoid further layoffs.

It employs 7,200 workers at five plants, which produced over 13 million garments last year.

Yet Somboon expressed concern that a shift this year to new target markets would not be easy given each market's unique style of preferences.

"Garment-manufacturers must find out what a market favours before they can satisfy it," said Somboon, "and that takes time."

He predicts Thai garment exports will see flat growth this year worth Bt3.5 billion.