27th June 2011, www.lankabusinessonline.com
Sri Lanka has begun luring back foreign apparel buyers who shifted to other Asian producers following the global economic crisis after they failed to meet buyer expectations, an exporter has said.
Orient Garments, which is to list on Colombo Stock Exchange's second board, also said it aims to capture orders now supplied by Eastern Europe by offering shorter lead times.
"It has been evident that some of the world's leading apparel buyers have shifted their sourcing towards low cost countries such as Bangladesh, Vietnam and Cambodia from Sri Lanka in the light of the global economic turmoil," the company said in its prospectus.
"However, due to the reason that particular low cost destinations have failed to accomplish service levels with required standards such buyers are gradually returning to Sri Lanka."
According to the prospectus of the firm, which a unit of Sri Lanka's Finco group, Sri Lanka can also benefit from rising costs in China.
"Challenged with currency appreciation, subsidy withdrawals and escalating labour costs China is rapidly turning into an unprofitable garment manufacturing destination," it said.
"This trend in China presents an opening for Sri Lanka to reinforce its position as a cost effective sourcing country in the global fashion industry."
Orient Garments said Sri Lanka's garment manufacturing sector has been able to overcome hurdles like the end of textile quotas and the withdrawal of GSP+ import duty concessions by the European Union.
The company said it also plans to seize the demand in European countries for apparel orders shipped within a short lead time which is currently catered to by Turkey and other Eastern European countries at a premium price.
It plans to allocate 20 percent of its existing capacity of 3.1 million pieces to process export orders which require quick response time.
"Under the new scheme, the company will deliver goods within nearly 70/80 days from the order acceptance instead of 100/120 days," it said.
"This will enable the company to increase the market share by capturing new market segments while increasing its profitability by way of adding a premium to its price."
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Orient Garments supplies international fashion brands and retailers such as NEXT, Tesco, Tommy Hilfiger, Polo Ralph Lauren and Burberry.
It has five garment manufacturing plants with almost 1,500 direct sewing machines, two embroidery units with 105 embroidery sewing heads, and nearly 3,500 workers.