Global trends are very important barometers for any serious clothing manufacturing concern because they have serious implications for the domestic and regional industry as well. The globalization of the world into one big economy means that companies do not only face stiff competition from domestic competitors but also from international companies as well.

The most important event so far to have a direct effect on many of us although not clearly visible has been the abolishing of quotas on trade in textiles and clothing on 1 January 2005. As a result, prices are falling and major Western buyers are narrowing their sources. On a global scale, large Asian countries with vertically integrated industries are becoming the world’s leading suppliers. China in particular can produce virtually any textile or clothing item at any quality and cost.

The end of quotas in the textiles and clothing industry is benefiting large Asian producers especially China, yet other countries also have a stake in the business. The sector plays a major economic role in many least developed countries, especially in Africa, and in other small and vulnerable countries of which Zimbabwe is included. It is becoming clear what will happen in many least developed countries (LDCs) and small, vulnerable countries with their low-value products and fragmented industries resulting from past reliance on quota protection and little regional cooperation.

Competition is sharper, with successful textiles and clothing producers setting new standards of service. The trend so far suggests two types of suppliers from developing countries. The first can be described as “mega companies,” with management headquarters in Asia and production networks around the world. They use economies of scale to produce mostly basic articles — such as t-shirts, sweaters, cotton trousers, underwear and woven shirts — at low cost and in large quantities. The other types are highly skilled and flexible companies located near buyers, which could also benefit from preferential market access. These firms can supply smaller quantities of higher-value products at short notice. However, most firms in LDCs and small vulnerable countries do not fit into either category.

In the past, quota protection and duty-free access to rich markets encouraged many LDCs to develop textiles and clothing exports. Sub-Saharan Africa’s share of the United States apparel market rose from almost zero to 2.2% in 2004. The reason was duty-free market access under the United States’ African Growth and Opportunity Act (AGOA), combined with relaxed rules of origin requirements that allowed countries to use cheaper fabric from Asia for their garment exports. Unfortunately, Zimbabwe has been excluded from AGOA due to other socio economic and political considerations.
Unfortunately too, sharper competition is eroding the protected status of LDCs. Many companies are now realizing, that even preferential access to markets is not enough.

Some of the reasons for the poor performance of LDCs are as follows:

Most LDC clothing exports are made out of cotton, which is relatively less protected than man-made fibre apparel. The United States, for example, imposes an average 20% duty on imports of cotton-knit shirts, but 32% duty on shirts of man-made fibre.

To make the most of their duty-free access, firms should therefore develop clothing exports of man-made fibre and improve their sourcing skills to find man-made fabrics. Garment production skills are not very different whether using cotton or man-made fabrics.

LDCs could also explore markets for “ethnic” textiles or clothing.

To help LDCs maintain clothing exports, major import markets should offer them non-reciprocal preferential market access conditions, including rules of origin requirements that are easy to fulfil. Canada’s preferential scheme for LDCs or the “third country fabric sourcing provision” under AGOA are good examples of flexible rules of origin. However, the “double transformation” requirements under the EU’s Everything but Arms initiative or agreements with African, Caribbean and Pacific countries do not improve market access. LDCs do not have substantial textile industries to supply the fabric to fulfil these rules.

Similarly in the United States, most preferential access agreements stipulate “yarn or fabric forward” rules of origin. That means everything from yarn or fabric onwards to produce the garment needs to originate in the beneficiary country or the United States. As US yarn and fabric are generally not competitive compared to Asia, these requirements undermine ways to improve the competitiveness of LDCs.