Bangkok Post

High hopes for Thai fashion products

Industry encouraged to make own brands

- LAMONPHET APISITNIRA­N

The export value of Thai fashion products is expected to reach 1 trillion baht a year in the next five years as the country is on the right track to compete globally, according the Thailand Developmen­t Research Institute (TDRI).

The target is well above the current export value of 620 billion baht for fashion goods, including garments, textiles, leatherwea­r, jewellery and accessorie­s.

TDRI’s president Somkiat Tangkitvan­ich said the Thai fashion industry should penetrate Asean member countries, especially its closest neighbours, where economies, and by extension purchasing power, are due to grow very fast.

He said Myanmar’s GDP was forecast to grow 8.3% annually during 2016-22, while Laos could see 7.3% growth and Vietnam 6%. Thailand’s annual GDP growth, by contrast, is projected at 3.6% over the same period.

Producers in the Thai fashion industry, however, should also adjust themselves to be more competitiv­e. Mr Somkiat said they need to create and produce their own brands in order to attract higher margins and brand awareness, as opposed to solely functionin­g as original equipment manufactur­ers (OEM).

“They should develop themselves to be original brand manufactur­es (OBM), whose profit margins are as high as 30%, or original design manufactur­ers (ODM), whose profit margins are around 15%,” he said.

Mr Somkiat added that Thai fashion producers should further focus on adding value to their products to attract the luxury segment since they can no longer compete downmarket, as their labour costs are much higher than their competitor­s in other Asean states such as Vietnam and Indonesia.

He said creating their own brands would not only help increase the export value of the Thai fashion industry, but would also help build up the country’s own brands to compete on the world market.

Thavorn Kanokvalee­ewong, the president of the Thai garment manufactur­ers associatio­n (TGMA) said there are only a handful of companies in the Thai fashion industry that are OBMs or ODMs, while up to 90% still operate as OEMs with low margins.

The TGMA has also encouraged Thai fashion makers to create their own brands with new designs that can compete well upmarket.

“Asean countries and Japan are major markets that we should focus on as they are also interested in Thai products,” said Mr Thavorn. He added that the Thai garment industry was one of the targeted sectors that the government aims to support under its cluster policy.

According to TGMA data, the export value of Thai garments dropped 7% to 90 billion baht last year, largely because of the global economic slowdown, high operating costs, high wage costs and greater competitio­n.

Mr Thavorn said the garment sector should invest more in research and developmen­t and improve its manufactur­ing equipment to meet global standards.

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