Home > Textile News > Thai Clothing Exports are Rebounding This Year

Thai Clothing Exports are Rebounding This Year

Published: 2004-12-27
Thailand's apparel exports are sharply recovering this year, as a clear sign that higher labor costs do not necessarily lead to lower sales. Thai clothing industry was able shifting to higher quality of products and lower lead times. Largest companies could successfuly compete on the global quota-free market, as a result.

Thailand's apparel exports surprisingly rebounded in the first nine months of the year with total shipments up 11.50% in value terms at US$2.51 billion.

Clothing exports had declined 6.21% and 5.65% in 2001 and 2002 respectively, before only rising 1.34% in the past year.

Shipments of cotton apparel were up 14% over the January-September period while bra exports even rose 20% after falling 1.66% in the past year (see table below).

US imports up 20% in October

Stimulated by a decline in the baht in US dollar terms until October, sales to the US also rebounded in 2003.

US apparel imports from Thailand were up 4.65% over the first ten months of the year.

Shipments even increased by 20% in October in volume terms, compared with an overall rise in US imports of only 5.32% in the same month.

The recovery in Thailand's sales to the US was partly due to a jump in orders of cotton underwear (352), already the most important category.

US demand for cotton skirts, man-made fiber bras and underwear also played their role.

Although quotas will be eliminated in a few days, leading to more competition from China, Thai clothing industry was apparently able differentiating from low-cost sources.

Producers generally shifted to higher-quality products and made efforts to reduce lead times.

Largest companies that actually work for major brands benefited from a rebound in orders after their customers were reportedly disapointed by deliveries from China or Vietnam.

Small units under threat

Smaller Thai units with old equipement could face serious difficulties or even disappear in the quota-free world, however.

In order to limit the post-quota impact, authorities try accelerating free-trade negotiations with the United States.

As usual, Washington intends imposing a yarn-forward provision, forcing Thai clothing producers in using US or domestic materials.

Exporters would prefer more liberal rules of origin based on a "substantial transformation" in the country.

Although the domestic textile capacities were expanded in the past two decades, Thailand still needs importing foreign materials.

A lack of updated spinning facilities would limit the benefits of the free-trade agreement (FTA), as a result.

The yarn-forward provision could also boost investment in textile capacities, on the other hand.

Before any deal with the United States is effectively implemented, Thai exporters could take advantage of a free-trade agreement with Australia that will take effect from 1 January 2005.

More importantly, Thailand is part of the ASEAN (Association of South-East Asian Nations) which intends accelerating the integration of 11 "priority sectors", including textiles and apparel.

Import duties could be fully eliminated between ASEAN six oldest members by 2007.

Reads:695