Hastakala Craft manufactures this woolen handbag with floral trimming.

Suppliers are highlighting products made of natural and repurposed materials to meet the intensifying popularity of such products and offset the competition.

Suppliers of fashion bags in Nepal are pushing for sustainable growth based on earth-friendly practices to meet rising demand.

Because of emerging ecological awareness worldwide, companies are launching more products that adopt plant-based inputs such as jute, hemp and allo to keep up with the trend. These natural fibers can be easily purchased from local vendors and are less expensive compared with leather and fabrics. Jute, in particular, has been traditionally cultivated and considered the cash crop by farmers in Mechi, Koshi and Sagarmatha zones. The availability of these materials helps domestic makers modify designs and offer competitive prices.

Concerned that higher quotes accompanying steeper textile and leather costs will push customers to source from rival hubs, enterprises are developing pieces from reprocessed components to bring down prices. These include models in old fabrics and used rice sacks, which have been receiving positive response from buyers in the Asia-Pacific region, particularly Japan, Australia and New Zealand.

These steps are vital as manufacturers strive to maintain viability amid intensifying competition in the region. Moreover, efforts to deal with industry challenges are fuelling the optimism of suppliers. Makers are anticipating at least a 5 percent increase in exports over the next 12 months. This comes as major retail chains such as Kmart, Wal-Mart and Udo Fischer boost their purchasing activities in Nepal this year, signaling the improving economic conditions of major markets in the West.

Exports

This backpack from KD Handicraft Export Pvt. Ltd is made of hemp and designed with multicolor panels.

Official statistics on revenue from fashion bags are not available because the national government does not categorize it as a distinct export segment. The line, however, can be considered as a component of handicrafts goods, which is divided into textile and nontextile products.

Data from the Federation of Handicraft Associations of Nepal or FHAN show that shipments of textile items, which consist of pashmina, felt, wool, cotton and silk pieces, dropped 13 percent to about $20 million in the 2012-13 fiscal year. This was after the segment saw a 35 percent increase in total turnover from the previous period.

Sales of wool goods plummeted from $8.3 million to $6.1 million. Income from silk products went down 30 percent to about $1 million. Exports of cotton products plunged from $1.8 million to $1.5 million.

The drop is blamed on the sagging demand for handicrafts in the US, which accounted for $14.2 million, down 17 percent YoY. The sovereign debt crisis that affected some EU members last year also contributed to the fall.

Revenue from allo products climbed 28 percent to roughly $27,000. Hemp goods exports jumped from $288,000 to $289,000. Earnings from miscellaneous textile goods, which include jute models, grew 22 percent to $176,802. Shipments of pashmina items rose from $4.3 million to $5.6 million, up 30 percent YoY.

The improvement is credited to strong sales in the Asia-Pacific, specifically Japan. Deliveries there surged nearly 20 percent to $2.8 million. The positive figures are also attributed to stable demand in emerging markets such as Ecuador, Chile and Peru.

The US remains the top overseas market, with total handicraft exports amounting to $14.1 million. Germany and Japan round out the top three with $4.05 million and $3.9 million, respectively. Other important destinations are the UK, France, Canada and the Netherlands.

Challenges

The heavy dependence on imported materials is considered as the primary obstacle facing the sector. Fabrics, specifically cotton and silk, are largely purchased from mainland China and India. Wool is mostly procured from New Zealand, Australia and Chile. Buffalo hide is often sourced from Taiwan, India and Thailand. Glass beads used as embellishments are normally from mainland China and the Czech Republic.

The additional costs involved in buying components abroad prevent makers from offering inexpensive prices. To avoid direct competition with low-cost hubs, most enterprises focus on midrange and high-end items. In addition, some companies are adopting plant-based inputs such as hemp and jute, which are more economical. Several manufacturers are incorporating old fabrics and sacks, which are obtained from recycling centers and junk shops.

Another stumbling block affecting the line is manpower shortage. Suppliers have been finding it hard to hire skilled and semiskilled workers because many are leaving the country to seek better pay and opportunities abroad. According to the Ministry of Labor, roughly 36,000 people depart from Nepal monthly and pursue overseas employment, mostly for construction jobs in the Middle East.

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.