Fix quality, garment producers told

The Jakarta Post, Jakarta

Indonesia's garment producers have to improve productivity, service and, most importantly, quality, if they want win a bigger share of the world market, particularly in the United States, a consultant suggests.

"Price is no longer a major issue in the world garment market, but product quality is," Senada global marketing consultant Andreas Saldias Pozo told a media conference Thursday.

Senada recently conducted a two-week survey, which was financed by the U.S. Agency for International Development (USAID), on the prospects for Indonesian garment exports in the U.S. after the removal of the export quota for Chinese garments at the end of December 2008.

The study found that Indonesian manufacturers had the potential to grow sales in the U.S. market, but lacked efficiency.

Pozo said the survey showed that only half of Indonesia's garment producers had an efficiency rating of between 80 and 85 percent.

Pozo suggested that local garment manufacturers improve their competitiveness through improving workers' skills and reequipping.

The government has allocated Rp 255 billion (US$246 million) in subsidies and low-interest loans this year to help textile producers purchase new machinery.

"There is still more room for improvement to anticipate the global race with leader China, and others that have only recently become players, including Vietnam, following the lifting of the Chinese quota," said Pozo.

China, the world's leading garment supplier, exports its garments to the U.S. based on quotas extended by that country. The three-year quota system will expire on Dec. 31 next year.

Other major exporters are the Eastern European countries, Pakistan, Tunisia, Korea, Vietnam, Thailand, Bangladesh and Indonesia.

In addition, Pozo suggested that local garment manufacturers provide more services to buyers, and develop the home market to reduce their dependence on exports.

"Garment manufacturers need to provide more services to buyers, such as arranging on-time shipments and payment at the buyers' warehouses instead of the producers' warehouses," he said.

"In this face-to-face business, manufacturers also need to negotiate directly and build good relations with buyers in their home countries. Go to the U.S. and don't wait for buyers' agents to place orders," he added.

Indonesian garment producers, whose exports were worth 4.5 billion last year, ship about 47 percent of their total exports every year to the U.S. -- the world's second largest market after the E.U. -- but control only between 3 and 4 percent of the U.S. garment market, which is worth $75 billion a year, according to the study.

U.S. clothing companies that buy garments from Indonesia include Banana Republic, G.A.P. and ESPRIT, according to Pozo.

Major U.S. garment suppliers are Mexico, with 20.7 percent of the market, worth around $8.1 million, followed by Honduras with 13.4 percent and El Salvador with 5.05 percent.

Worldwide, the value of the garment trade stands at $300 billion, and is growing by 7-10 percent per year.