Changing Trade Competitiveness: The ITC Approach 6 Technical Assistance Needs 6 ITC responses

1st Need: A Sector Strategy (Action Plan) Develop overall country response Build critical country mass Build PPP based on strong sector associations Make a sector value chain analysis Critical Mass: significant amount of companies. Small companies alone won’t survive

1st Response: The SHAPE

1st Response: The SHAPE Analyse Brainstorm Action Plan Strategy A Structured Thinking Process: Analyse Brainstorm Action Plan Strategy

The SHAPE – Ten Step Approach 1. Analyse Domestic Supply/Exports/Imports 2. Analyse the Value Chain (VC) Analyse 3. Identify problems in the VC and define the Actions 4. Identify export and sourcing Opportunities and define the Actions Brainstorm 5. Group Similar Actions together 6. Prioritize Actions and assign Time Frames Action Plan 7. Working Group 8. Finalize Strategy 9. Official Launch 10. Implement and Monitor the Strategy Strategy

Clothing Associations Textiles Associations AGENTS/BUYING HOUSE Clothing Associations CUSTOMS PROCEDURES MACHINERY YARNS ACCESSORIES & PACKAGING TEXTILE Mnf. & Exporter RMG DESIGN INSTITUTE LARGELY KNITWEAR FABRIC SUPPLIED Textiles Associations MARKET RESEARCH TESTING AGENTS BORDER DOMESTIC SUPPORT SERVICES TPO RAW MATERIALS DONOR ACTIVITIES Other Associations Sales (+Marketing, and Services) Outbound Logistics Customs-GSP/Quota Export Clearance Business Inbound Logistics Customs, Import Clearance Sourcing

Quotas stifle competition Now competitors are everywhere 2st Need: Know your Competitors Quotas stifle competition Now competitors are everywhere

2st Response: THE FiT

THE FiT: Benchmarks performance It is divided into 4 broad areas Management & Organization Sales & Marketing Financial Planning Production, Sourcing & Operations Questionnaire distributed, association responsible

3rd Need: Information on Sourcing and Supply Chain Management Skills Cost-structure of a woven shirt up to the FOB point 75% of cost = sourcing

Input supplies & Logistics Fabrics: $0,59 Trimmings:$0.16 Labour $0.07 Overheads $0.08 Profit $0.10 Input supplies & Logistics $0.75 Labour $0.07 Overheads $0.08 Profit now $0.16 $0.69 ! WOVEN SHIRT: For every 1 Dollar earned approximately 60cts is spent on inputs A 60 % increase in its Gross profits without increasing sales A 10 % reduction in the supply cost of fabric and trimmings = … Any reduction in purchasing and logistics costs has a direct and large impact on export competitiveness

3rd Response: “Source-it” ITC textbook 1.- New ITC textbook on fabric sourcing, training and supply information 1.Introduction   2.Material Sourcing Process 3.The Buyer/Designer Side 4.The Factory Side 5.Salesmen Samples 6.Ordering Stock Materials 7.Fabric Inspection 8.Final Checks 9.Trim 10.Production Schedule 11.Things Go Wrong The Art of Sourcing 12.Where to Source What 13.Satisfying the Buyers’ Needs 2.- Training 3.- Sourcing Data Base (SAARC and ASEAN countries)

4th Need: Understand changing markets and adapt products accordingly Numerous competitors and complex trade structure; Opportunities in higher-end and niche markets with value-added products; Exploit market potential in other developing countries, especially in a regional context. Big old markets remain. Now markets growing faster (Brazil, Turkey, China, India...)

4th Response: Providing Information A new T&C website http://www.intracen.org/textilesandclothing T&C workshops on the business implications and how to prepare for increased competition Development and implementation of tailor-made projects

Providing Business Information

Providing Data Analyis The outcome of STEP 4 is a set of ACTIONS to be carried on in order to overcome the problems identified in the VC. Once the Value Chain is mapped, we have to identify bottlenecks and problems, analyse their causes, brainstorm for alternatives and finally work towards finding solutions or Action.

Providing Technical Assistance

5th Need: E-Trade to attract larger buyers The use of «e» in light of the quota phase-out Overview of technology developments e-requirements imposed by buyers in the US and EU The role of HGK & Singapore trading houses Case studies of e-successful manufacturers Dissemination and training

5th Response: Business Guide A Business Guide on e-Applications in the T&C Sector

5th Response: Business Guide A Business Guide on e-Applications in the T&C Sector Overview of technology developments e-requirements imposed by western buyers The role of HGK & Singapore trading houses Case studies of e-successful manufacturers Dissemination and training In STEP 7 all the ACTIONS grouped into Categories should be now Prioritized by Difficulty and Importance and then assign time frames.

Market Pressure on Clothing Manufacturers after the quota phase-out e-influence e-influence

Likely evolution of the T&C Industry Today Producer Conflicts Retailer Competition Future Response Demand Customer

The Global T&C Value Chain and the use of e-Applications E-Linking of the Value Chain Sales Info + Direct Order Delivery Status Info Fabrics Clothing Agent Retailer MARKET Physical Delivery Clothing Value Chain R&D Inbound Logistics Production Outbound Logistics Marketing to Retailers

Strategic Response: Critical (country/regional) mass 6th Need: Develop a Regional Approach Strategic Response: Critical (country/regional) mass Rules of Origin require regional cooperation Regional/Sub-regional Partnership Regionally integrated industry Link foreign investors to local business

South-South Trade Development 6th Response: Strengthen regional trade cooperation South-South Trade Development Regional trade development along the regional value chain GSTP: General System of Tariff (trade) Preferences GSP (General System of Preferences) among developing Countries

ITC’s TA to the Clothing Sector Need 1: Sector Strategy Development Clothing Sector Strategy Development «the Shape» Need 2: Know your competitors Benchmarking tool The « FiT » Need 3: Sourcing Information and SCM skills Skills development & regional supply information Need 4: Understanding changing markets New website; workshops; tailor-made projects Need 5: E-Applications in T&C A Business Guide Need 6: Intra-regional trade along the value chain South South Trade Development Approach

Sourcing Manufacturing Sourcing Manufacturing Sales (+Marketing, and Services) Inbound Logistics Customs, Import Clearance Outbound Logistics Customs-GSP/Quota Export Clearance 1.- Sectror Strategy Develpment “The SHAPE” Sourcing Manufacturing Sales (+Marketing, and Services) Inbound Logistics Customs, Import Clearance Outbound Logistics Customs-GSP/Quota Export Clearance 2.- Undersatnding it’s own and competitors’ performance “The FiT” 3.- Developing fabric sourcing skills to become “full-package”suppliers Sourcing Guide and database 4.- Understanding changing markets Garment-Maps and ITC T&C website 5.- Applying e-applications in the T&C sector Business Guide in e-commerce for T&C Implementing tailor made market penetration approaches in line with buyer requirements ITC Tailored Consultation