Export performance of the garments industry across key emerging markets in Asia was generally mixed last year, due to surging demand in some supply zones and flagging sales in others.

In Myanmar and the Philippines, outbound shipments went up as a result of strong demand from the US. Although the latter registered higher revenue in 2014, the development was more pronounced in the former because of its changing political environment. The shift to democracy in Myanmar has effectively removed economic sanctions imposed by the US. Furthermore, the EU's admission of Myanmar into its Generalized System of Preferences in September allowed the sector to generate greater income as it started to benefit from reduced duties.

On the other hand, the year was not as bright in India and Nepal, which both recorded a dip in export growth stemming from slower demand in the EU and the US. India's sales also declined substantially as rising competition from Bangladesh and Turkey eroded market share.

Despite the downward trend registered in these sourcing centers last year, suppliers are cautiously optimistic about this year's export performance. In both countries, the sector is exploring new markets in Southeast Asia, the Middle East, Australia and Latin America. Manufacturers in Nepal, meanwhile, are relying on growing demand from Canada and Japan.

Product trends

Suppliers emphasized a number of styles last year, with the most dominant being models that feature enhanced fit and construction. As fashion trends worldwide tend to favor slim designs and body-hugging casual wear, dress shirts, pullovers and pants, makers have realigned production to address the strong popularity of such items especially among younger consumers. Garments that conform to various body profiles also received high priority.

Another design trend that gained widespread traction last year was the used of mixed textiles, with the aim of improving durability and performance. Soft and lightweight fabrics, including blended combed cotton, polyester and spandex, are adopted in baby and children's wear. Sportswear such as basketball jerseys and tracksuits increasingly incorporated moisture-wicking textiles.

Enterprises have also boosted innovativeness by utilizing new materials, which include fibers derived from lotus flowers, eucalyptus trees and bamboo. Besides being environment-friendly and sustainable, these inputs have shown to be more durable and economical than cotton and silk.

The combination of traditional and modern design elements continued to be a significant style trend last year. This was especially evident in releases from India and Nepal, where conventional methods of decorating and weaving are still heavily employed. In the former, garments such as the kurti, which is a loose-falling women's shirt, have been modified to feature brocade and cutwork. Models are also accented different types of embroidery such as zari, which uses gold thread and spangles, and shisha, which small pieces of mirrors or reflective materials. Printed motifs also remain to be a popular option as decoration.

In terms of color, models generally came in bright hues of red, green, pink, orange, yellow and blue. Other shades not as vibrant, which also enjoyed high demand included gold, beige and teal for women's wear, and blue and black for men's and boys' shirts. In addition to solid colors, patterns were also popular, with checkered, plaid, floral and polka dots as the best-selling options.

Challenges

Asia's garments industry faced a number of difficulties in 2014, the most prevalent of which was the increasing cost of manpower. Due to the rising cost of living in a number of sourcing hubs, governments have been adjusting minimum wages. Many SMEs are finding it hard to meet these new salaries, and most that are able to are doing so with diminished profit margins or higher product prices. To alleviate this problem, some companies have let go of workers, while others have started subcontracting more manufacturing processes.

Electricity shortage is another obstacle confronting the industry. In India, Nepal and Myanmar, frequent outages have been a concern for years due to inadequate supply amid the growing population in these countries. The Philippines, meanwhile, is not yet beset with this difficulty. However, old power plants and the government's sluggishness in building new ones are threatening the status quo. A number of local economists have projected blackouts to start in 2015 and become a regular occurrence in the coming years as the country's economy continues to strengthen and demand swells.

Price competition is also a hurdle facing the sector in Asia. Being small and midsize, most garment enterprises lack the capability to compete with China, which for the most part still offers the lowest quotes. To address this difficulty, makers are targeting midrange, high-end and niche markets not commonly catered top by suppliers in China.

The dependence on imported materials is another impediment to sustained growth. Companies typically source fabrics and other materials overseas, particularly China, South Korea, Indonesia, India and New Zealand. Compared with other supply zones that buy the bulk of inputs locally, manufacturers in the Philippines, Myanmar and Nepal have comparatively higher expenditure in terms of procurement, which adds to prices and competitiveness.

The dependence on imported materials is another impediment to sustained growth. Companies typically source fabrics and other materials overseas, particularly China, South Korea, Indonesia, India and New Zealand. Compared with other supply zones that buy the bulk of inputs locally, manufacturers in the Philippines, Myanmar and Nepal have comparatively higher expenditure in terms of procurement, which adds to prices and competitiveness.

2015 Outlook

Garment prices are largely expected to climb this year in order to ensure profitability in the face of increasing production and raw material expenditure. Adjustments are seen to be minimal, with quotes generally rising by 5 percent or less. Some suppliers, however, plan to modify quotes by a greater margin because they have been delaying it for years.

Overseas revenue is seen to rise across the board because of solid prospects for sales in major destinations. Emerging markets in the Asia-Pacific, the Middle East and Africa are also contributing to the positive outlook.

In terms of design, new models will mostly come in modern styles and be accented with various types of decorative and colorful trimmings such as embroidery and lace. Improved fit and performance will continue to be emphasized.

For more information about the Hinrich Foundation's industry-specific sourcing reports spanning seven different countries in Asia, visit Online Developing Country Sourcing.

This article and its contents are provided by the Hinrich Foundation, a partner of Global Sources in promoting trade across Asia. The products and the suppliers featured in this article are export assistance program beneficiaries of the Hinrich Foundation.