JAAF delighted on China SL MoU initiative

The Joint Apparel Association Forum (JAAF) has expressed delight on the announcement that consequent to the visit of President Mahinda Rajapaksa to China, a number of memorandums of understanding (MoUs) have been signed to improve and strengthen bi-lateral economic relations between the two countries, particular on trade investment and tourism.

Secretary-General of JAAF, Tuli Cooray, in a release said that that the JAAF has been advocating in the past two years on the need to negotiate market access instruments with new and emerging markets particularly with China.

Besides China being a top exporter of apparels to the global markets, it also has its own domestic demands and in 2012 alone China had imported apparels to the tune of US$ 4 billion, he said.

Last year Sri Lanka's apparel exports to China were in the region of US$ 15 million. A new market need was emerging for top quality Chinese local brands with high level of GDP growth and rising per capita income have widened the middle class in China, he added.

China's global apparel imports in 2012 were a staggering US$ 4 billion from US$ 2.2 billion in 2010. And Sri Lanka's exports during the same period increased from US$ 0.7 million to US$15 million, which demonstrates the growth potential of the Chinese market, he emphasized.

Sri Lanka's apparel industry which has evolved to be a mature international player is today a supplier to many a leading brands and has significantly reduced its supplies to the low end of the market, he pointed out.

Sri Lanka has carved out a niche market for itself and does not consider China to be a competitor, he said. Our aim is to supply to higher end of market by manufacturing for Chinese local brands as well as exporting international brands through manufacturing bases in Sri Lanka, he said.

Speaking of the vision of the industry, the Secretary-General said that is to make Sri Lanka the apparel hub for Asia, as Sri Lanka is no longer a basic manufacturer but a total solution provider with from and back end services to their clients.

Last month, a delegation from China National Garment Association (CNGA) visited Sri Lanka and had a series of fruitful discussions with the JAAF membership.

"We believe the agreement to launch preferential trade packs with China demonstrates the visionary leadership of President Mahinda Rajapaksa as these trade packs will be another historical landmark since the signing of rice/rubber pack in 1952".

"It is well known that apparel exports which counts for 40% of country's total exports depends on two markets, namely the US and the EU to which we export 90%, needs to be sustained, he remarked. However diversification of export markets is an important component of the governments export growth strategy to reach an overall national export target of US$ 15 billion by 2016".

"JAAF have set a target for our industry to reach US$ 5 billion by 2016, from the current level of US$ 3.8 billion through organic growth.

In this context the proposed trade arrangements with China will facilitate in no small measure in achieving our growth target as market diversification is a part of our export growth strategy," he remarked.

Cooray said that the industry was confident that apparel exports to China could reach US$1billion level in the not too distant future.

The current trade flows between the two countries also reflect the asymmetrical nature of the two economics; while Sri Lanka's exports last year was a meager US$108 million, imports from China amounted to US$ 2,568 million.

We believe that future trade packs with China will be able to reduce this trade gap substantially over the coming years through increased exports to China.