Sri Lankan suppliers shrug off GSP+ impact
Just-style, the apparel and textile industry’s leading online
resource with an experienced editorial team and network of international
analysts who are dedicated to provide a blend of up-to-the-minute
information, insights and intelligence across the globe. Just-style
visited the Sri Lanka Design Festival (SLDF) which concluded on November
16 with quite an impact on the local creative industries.
It is the second time the country has held the event, and puts a
spotlight on the apparel industry as a leader in ethical design and
fashion manufacturing practices.
This is what Just-style reported to the world on Sri Lanka Design
Two of Sri Lanka’s most prominent manufacturing groups say they have
not yet felt the effect of losing the GSP+ (generalised system of
preferences) status with the EU. Speaking to Just-style at the Sri Lanka
Design Festival this week, two key executives both say removal of the
status hasn’t impacted top line sales.
“Ultimately we didn’t see a sudden impact on business,” said Brandix
Lanka Chief Executive Ashroff Omar, which makes jeans and intimate
apparel for the likes of Gap and Marks & Spencer (M&S).
“I don’t know whether the impact will come gradually or whether the
global rebound will help the country to absorb it and move on,” he said.
MAS Holdings, CEO Nathan Sivagananathan which makes lingerie and active
wear for M&S and Nike, also insists it is business as normal, although
some production has been outsourced as a consequence. He told
just-style: “Overall we haven’t seen a decline in orders and the
majority of our customers have been flexible.” Sivagananathan said that
MAS also has design, innovation and research operations to help offset
the affects of losing GSP+. “Based on all of this I think we have been
able to serve our customers. Where customers have said that we still
need the GSP+ we have moved a little bit of our production to
Bangladesh,” he said.
The EU withdrew GSP+ in August, blaming alleged human rights abuses
during the final stages of Sri Lanka’s recently-ended 30 year civil war.
The system had given the country’s apparel exports zero duty access to
the EU since 2005, and meant many exports of many goods could face a
duty of up to 9.6 percent.
But while apparel exports from Sri Lanka suffered last year, falling
5.6 percent due to slumping Western demand, the nation’s Export
Development Board (EDB) reports a rebound in 2010.
A recovery in Western markets has sparked the improvement, leading
retailers to place more orders. Sri Lanka’s investment in sustainability
and ‘eco-factories’ is also attracting Western brands who are looking to
clean up their supply chains. Therefore, the timing of the GSP+ loss has
so far saved the industry from taking an immediate hit.
While Sri Lanka still benefits from GSP, buyers are not being pulled
there for rock bottom prices anyway, with neighbouring Bangladesh and
Cambodia ticking those boxes. Buyers are more likely to arrive looking
for a longer-term green supply agreement they can show off to
shareholders back home.
Indeed, the resilience of MAS, Brandix and Hirdaramani to losing GSP+
is thanks to such partnerships. Less developed factories in the country,
meanwhile, will rely on smaller orders from niche eco labels. Therefore,
to continue to be resistant to the removal of GSP+, Sri Lanka’s eco
drive needs to resonate loudly with the West.