‘Tex­tile sec­tor must adapt or die’

Lesotho Times - - Busi­ness - Bereng Mpaki

A LONG­TIME Chi­nese in­vestor in the lo­cal tex­tile and gar­ment in­dus­try says ver­ti­cal in­te­gra­tion is the way to go for Lesotho to re­main glob­ally com­pet­i­tive.

Feng Fu Lung is the pres­i­dent of the Thet­sane In­dus­trial Area-based Sun Tex­tiles (Pty) Lim­ited which has been op­er­at­ing in Lesotho since 1995.

Sun Tex­tiles man­u­fac­tures t-shirts and other gar­ment prod­ucts. It em­ploys 1 000 em­ploy­ees and pro­duces 200 000 units per month for ex­port to the United States un­der the African Growth and Op­por­tu­nity Act (AGOA) trade pref­er­ences.

AGOA gives duty-free and quota-free ac­cess to the US mar­ket to el­i­gi­ble Sub-saha- ran African coun­tries in­clud­ing Lesotho. The leg­is­la­tion, which was re­newed for 10 years by US law­mak­ers last June, is meant to in­cen­tivise African coun­tries to open their economies and build free mar­kets.

Mr Lung told the Lesotho Times in an in­ter­view this week that the coun­try had been stuck in the cut, make and trim (CMT) mode for a long time, while ig­nor­ing the op­por­tu­ni­ties that lay in ver­ti­cal in­te­gra­tion.

Ver­ti­cal in­te­gra­tion de­scribes a com­pany’s con­trol over sev­eral or all of the pro­duc­tion and/or dis­tri­bu­tion steps in­volved in the crea- tion of its prod­uct or ser­vice.

Mr Lung said Lesotho needed to es­tab­lish a knit fab­ric mill to im­prove the coun­try’s com­pet­i­tive edge among other tex­tile man­u­fac­tur­ing na­tions. He said a knit fab­ric mill would en­able lo­cal tex­tile firms to avoid the ex­pense of im­port­ing their raw ma­te­ri­als.

“A knit fab­ric mill would make Lesotho more com­pet­i­tive glob­ally, and in a way guar­an­tees the jobs of the thou­sands of peo­ple em­ployed in the tex­tile fac­to­ries,” the 92-year old en­tre­pre­neur said.

The Lesotho Na­tional De­vel­op­ment Cor­po­ra­tion (LNDC) has com­mit­ted to es­tab­lish­ing a knit fab­ric mill by the 2017/18 fi­nan­cial year in its strate­gic plan for 2015-2017.

He said other chal­lenges fac­tory op­er­a­tors en­coun­tered in Lesotho in­cluded lack of re­li­able wa­ter and elec­tric­ity sup­plies. Mr Lung, how­ever, pointed out that the sit­u­a­tion had markedly im­proved in re­cent years.

He also touched on con­cerns that Lesotho could lose its el­i­gi­bil­ity for AGOA af­ter the Amer­i­cans ex­pressed “se­ri­ous con­cerns” about the gov­ern­ment’s al­leged fail­ure to ad­here to AGOA gov­er­nance cri­te­ria, say­ing they would mon­i­tor the im­ple­men­ta­tion of re­forms ahead of the next el­i­gi­bil­ity re­view process.

Among the main el­i­gi­bil­ity cri­te­ria for the fa­cil­ity are a mar­ket-based econ­omy, rule of law, sys­tems to com­bat cor­rup­tion, and not en­gag­ing in gross vi­o­la­tions of in­ter­na­tion­ally-recog­nised hu­man rights.

Mr Lung said Lesotho needed to safe­guard the mul­ti­tudes of jobs that are stake.

“From a gov­ern­men­tal point of view, there is need for some kind of plan to re­tain AGOA el­i­gi­bil­ity for the sake of peo­ple who are em­ployed in the fac­to­ries and their de­pen­dents,” he said.

“We all know that AGOA was ex­tended by 10 more years last year, and al­ready about one and half years have gone. If a vi­able sys­tem is not set up now, it means af­ter eight and half years, Lesotho’s tex­tile in­dus­try will lose the com­pet­i­tive­ness it cur­rently en­joys.”

For his com­pany’s part, Mr Lung said he in­tends to con­tinue in­vest­ing in Lesotho.

“When I de­cided to in­vest in Lesotho 20 years ago, the pro­duc­tion costs were lower than in other coun­tries. Al­though things have changed a bit, it is still cost ef­fec­tive to man­u­fac­ture our prod­ucts in Lesotho com­pared to some Asian coun­tries,” he said.

“The fact that I am the first in­vestor to ac­quire land and con­struct a fac­tory shell here in Lesotho in­di­cates that I am here for the long-term. There­fore, I have no im­me­di­ate plans of re­lo­cat­ing the busi­ness.”

Mr Lung also urged Ba­sotho en­trepreneurs to have more tenac­ity in the cut­throat busi­ness world.

“Lo­cal en­trepreneurs need to be more re­silient and show more de­ter­mi­na­tion in or­der to suc­ceed in busi­ness,” he said.

“They need to have the be­lief that they can make it. When I came here many years ago, I did not know any­body in this coun­try but I still suc­ceeded in es­tab­lish­ing a sus­tain­able busi­ness.”

AGOA al­lows African com­pa­nies and fac­to­ries to ex­port to the United States with a duty free quota.

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