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Import News - Clothing goes global

Import News from the Importers Institute


8 July 2000 - Clothing goes global

New Zealand will always need an efficient local clothing industry, but it is shooting itself in the foot by continuing to support a tariff on imports.

In this address, originally delivered to the Apparel & Textile Federation's conference, Daniel Silva discusses how the clothing industry is becoming global - and those companies that wish to succeed have no choice but to adapt.

***

The Importers Institute favours free trade. It is not my purpose today to get into those emotive arguments of free trade versus tariffs. So, I will limit myself to a one-word comment on your federation's decision to support a continued 19% tariff: Duh!

Spending on most clothing has an element of discretion. Shall I buy a nicer pair of jeans, or go out on Saturday night? A nice dress, or snowboarding in Queenstown? A fancy suit, or a weekend in Sydney?

There must be a point to welcoming a 19% tax on your products, but it eludes me. I note that wine makers are always asking for lower taxes on their products - maybe they know something clothing makers do not.

It is unlikely we will again have an industry producing mass market clothing, much as we are not likely to go back to assembling TV sets, six o'clock swills or amateur rugby. It follows that we will continue to import the stuff - in large quantities.

It really doesn't matter all that much whether we import it or make it here - of course, we will continue to do both. The business you are in is to supply what consumers want to wear. You can't do that very efficiently, if your only source is in Madras, or Onehunga.

Your clients, the retailers, will want you to have stock on tap. Some quaint traditions of this industry, like doing indent ranges, will go the way of the dodo. You will be expected to provide more and more of clients' requirements from stock service - same day in Auckland, elsewhere overnight, and no additional cost, thank you.

To be successful in this industry, you need to have the right product, of the right quality at the right price and at the right time. Some of it will come from that factory in Onehunga, some will come from a similar factory in Collingwood, but most will probably come from China.

Why do you think such good gear is available at such good prices in places like France and the USA?

It is not because those countries have found the secret of becoming super-efficient manufacturers. In fact, most of what you see in French or American malls is made in places like Turkey, Latin America or China. The reason it is available is that their apparel suppliers have become very efficient at sourcing the right product from the right places. All over the place.

Most of our own imports will continue to come from China, in the near future. Many people still think of Chinese clothing as being cheap and nasty. You know it isn't - it is actually cheap and good. Remember when "Made in Japan" was a synonym for shoddy? In time, public perceptions of Chinese quality will similarly change to accommodate reality.

Other developing countries are also fighting for world market share, for example, Vietnam and India. However, they are missing the vital ingredient that has made China a success story in clothing exports. That ingredient is the rule of law - also known as Hong Kong.

On the mainland, your friendships with the deputy mayor or the local Red Army major in charge of corruption are far more important than any written contract. For a mere 7%, your Hong Kong buying agent will look after those things for you and will even reply to your emails.

The people of Hong Kong have increased their efficiency and productivity. That is why, in the short span of one generation, they became wealthier than New Zealanders. This gap continues to widen - even Dover Samuels couldn't close it.

On the other hand, there is absolutely no reason why we can't import from Europe, the States or elsewhere - I expect we will. This industry, like others, is becoming truly global. The Chrysler you rent in LA is of the same quality as the Toyota you drive at home or the Renault you drive in Spain.

Some people say the future of this industry lies with high fashion design. They have visions of Auckland competing with London, Paris and New York - it's not going to happen. Paris is a fashion centre because it is, well, Paris. Just because Lord Rutherford was born in New Zealand, Nelson did not become an atomic industry centre.

We have some talented designers selling expensive outfits to a few outrageously overpriced boutiques. Good for them. But, with the proverbial due respect, they will not be in the business of creating a significant new industry to employ New Zealanders.

So, what is the future of the garment industry in this country? Well, the future is already here. This is as good as it gets. The best apparel suppliers will be those who can guarantee fast deliveries and consistent product quality. They will be the most wired and will travel a lot.

In short, they will be those who operate the most efficient supply chains. And that must include the ability to source part of their ranges from efficient local manufacturers.

* *

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