Overseas investment, innovation key to Nan Yang

Corporate August 13, 2014 01:00

By Petchanet Pratruangkrai
The N

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Amid a changing global economic landscape and intense competition, Nan Yang Textile Group foresees a brighter future in its bid to become an increasingly regional player by placing emphasis not only on the provision of quality products, but also on compli

The group is one of Thailand’s leading vertically integrated textile businesses, with activities ranging from yarn-spinning to garment-making.
Chief executive officer Ben Tuangsitthisombat said his target was to promote the company to become an increasingly regional operator by continuing to expand in many countries.
Nan Yang currently has businesses in Laos, Vietnam, China and the United States.
Under its new investment pipelines, the company is considering setting up a new garment-production plant in Cambodia or Myanmar next year, he said.
The expansion plan will meet the demands of a changing global economic landscape, in which the Thai textile and garment industry will no longer enjoy cheap labour at home and in China.
The Kingdom is losing tax privileges under the Generalised System of Preference for its exports to many countries, he added. It will therefore focus its expansion plan on new potential markets in which it can benefit from tax privileges. 
Nan Yang, which exports its yarns, textiles and garments worldwide, not only produces made-to-order items, but also has its own brands, including being a production-rights owner for the well-known global Lycra and Coolmax brands.
As the second generation to run the family’s business, Ben foresees that textile and garment enterprises should no longer consider cheap labour as a major factor for expanding their businesses, as wages in many countries, including China and Asean economies, will continue to increase. 
While low labour costs will be a thing of the past, tariff privileges will become a major factor that could help reduce operators’ production costs.
Moreover, innovation is an increasingly important factor for the industry, because consumers nowadays are not only concerned about product quality, but also about ethical production, good labour practice and environment-friendly products, said the CEO.
Nan Yang invests in research and development each garment season, he added.
“An innovative product will not only lead to consumer satisfaction and help cope with tough competition in the industry, but also helps reduce production costs – and mainly energy costs – for the company,” Ben explained.
Nan Yang has recently joined with US-based Invista, a leading global firm and innovator in the nylon, spandex, polyester and speciality-materials industries, to adopt Invista’s bio-derived spandex made from maize for producing specialised textiles and garments.
The new products are recyclable, which makes them a key part of its programme to reduce carbon-dioxide emissions. 
The chief executive said the adoption of innovative products enabled the company to reduce its production costs and expand its customer base by serving a wider variety of demand in the textile and garment market.
For instance, Nan Yang has many new corporate customers, such as banks and airlines, for the supply of textiles in producing uniforms for their employees.
In the broader context, Ben said Thai textile and garment enterprises still had a good chance to expand globally, as neither segment was a “sunset” industry if enterprises learned to adapt to changing factors.
Asean economic integration is one supportive factor driving Thailand’s textile and garment business growth, he added. 
Thailand and Indonesia are the only two countries in Asean that have a fully integrated supply chain from upstream to downstream in the industry. Enterprises can, therefore, use the Kingdom as a base for supplying raw materials and as an innovation centre, while expanding their businesses in other Asean countries by way of assembly plants for export to third markets, he said.
Nan Yang, meanwhile, foresees more growth from overseas investment under its plans for the future. 
While about 80 per cent of the company’s production is currently domestic, the proportion accounted for by overseas facilities will gradually rise as the group sets up additional overseas plants, he said.
Sales of the company’s textiles experience double-digit growth each year, compared with zero-to-5-per-cent expansion on average in the Thai textile industry. 
Garment sales also exceed the average growth of the industry, he added.
Nan Yang Textile Group can produce about 37 million garment pieces and 17,000 tonnes of textiles to serve the world market each year.