FROM THE EDITOR-IN-CHIEF’s DESK…
When the going gets tough, the tough get going…! This ageold saying is as true today as it was the day it was coined…; in fact, maybe even more relevant today!
When the garment export business was flourishing, margins were very high and the Government treated the industry with kid gloves because they were earning the much needed foreign exchange. There was a sense of pride in being associated with the industry.
With time the situation changed… Many factors took the sheen away from garment exports and the first was the increasing competition; competition from new companies within the country, from emerging cheaper destinations like Bangladesh and new foreign exchange earning businesses like IT and Pharma.
This was followed by a change in the business environment – quota went, the business lost its priority status, and many benefits like no income tax were withdrawn. On top of this, many local issues related to Government policy and outlook towards the industry adversely impacted the industry.
And as if the industry was still in need of a nail in the coffin, the global markets went into recession and prices dipped drastically. Even though the markets are reviving now, prices are still moving downwards, practically killing any hope of earning a margin that makes it not worth-while for many companies to keep their factories running.
The final blow that has come in the form of reduction is duty drawback and a complaint filed by the US at the WTO about India’s export subsidy programmes, which has only added to the uncertainty.
Exporters are really struggling; many admit that the duty drawbacks were the margins that they could play with, as buyers are not willing to budge on prices. More so, with other established destinations and emerging destinations offering products at lower prices, the competition is really nail-biting. In this scenario, it is the tough and fundamentally strong companies that are continuing to grow. Though all admit, including those who are doing well, that conditions are challenging and doing global business is not easy anymore, the end is certainly not near.
What is required is to go back to the fundamentals of business and re-invent the factories with a fresh perspective. Quality, timely deliveries, compliance are all given, no one can play with them…, and so what is it that exporters can add or do that will make them stand out?
Well for one, they can improve their systems for better productivity, cut down on overheads that are only adding to the cost, and not the value of the product, besides training workers for efficiencies and using automation where the work is repetitive and not skill based but output can be substantially improved, like button attachment, loop attachment, pocket setting, etc… Working on internal efficiencies is more important than ever before, and more concerted effort in this area is required.
Of course having a niche product helps, but not by itself… It is also important to offer service – service that is responsive, and adds value to the experience that a buyer has in placing an order with any exporter…; an experience that brings him back, time and again.