We thank Foengfurad Mungtavesinsuk for responding to our questions about the status and development of the Thai apparel industry. She is an assistant professor in the Textile Science and Technology Department at Kasetsart Univeristy where she works to educate the future managers of the industry.
Q. How has the apparel industry in Thailand changed over the past 15 to 20 years?
A. The Thai apparel industry started to expand during the period from 1988 to 1992. Some of the companies that were established then have doubled, tripled, or in some cases, expanded to a hundred times their original size.
From 1993 to 1997, we saw the highest number of new apparel companies joining the industry. This was followed by a period of financial crisis and economic slowdown in Thailand from 1998 to 2002. Nonetheless, during this period over a hundred new companies were established.
The period from 2003 to 2007 witnessed the end of the quota system, which caused a slight slowdown in the sector, but segments of the industry experienced growth. The export data show that there was a decrease in quantity but an increase in value of the products exported during this time. Apparel firms also became much more aware of issues of concern in the global marketplace, such as labor and social welfare protection, environmental protection, and product safety.
Looking forward, Thailand will still be attractive for buyers, particularly as a niche market, with firms that are quick to respond to market needs, changes in fashion, and product development.
Q. Is there a Thai style when it comes to apparel and textiles? If so, what are its defining characteristics?
A. Mostly, Thai fashion follows international trends but with more detailed and colorful styles. For example, by tradition, each day of the week has a color associated with it: Monday is yellow, Tuesday is pink, Wednesday is green, Thursday is orange, Friday is blue, Saturday is purple, and Sunday is red. If people do not know what to wear on a given day, they can choose a color and an outfit based on what day of the week it is.
Another example of the Thai sense of style related to color is how Thais dressed during the celebration of the 60th anniversary of His Majesty King Bhumibol Adulyadej's accession to the throne in 2006 and His Majesty’s 80th birthday in 2007. Thai people expressed their feeling of immeasurable loyalty to the king by wearing yellow clothing, because the king was born on Monday and yellow is the color associated with Monday. During that time, yellow dye stuff was out of stock in all of Asia for a while.
After the king recovered from being sick, Thais wore pink because a Thai astrologer had forecast that pink was good for the health of His Majesty.
Such an astonishing sight could never occur elsewhere in the world except here in Thailand.
Q. What effects have the end of the international textile
quota system had on the apparel industry in Thailand?
How does the industry compete with China and Vietnam?
A. The quota system used to be
a big problem for the Thai textile industry during the period of “order in
big quantity and at low price.” After these types of orders moved to China with
the end of the quota system, the Thai industry focused on high quality and
small to medium-sized orders with quick order fulfillment times. In
this environment, apparel companies that had good management could
develop strategic partnerships with buyers.
As compared with China and Vietnam, Thailand has only a few companies that can produce large orders at low prices. However, Thailand can definitely compete in the long term with more sustainable production orders at the middle to high-end, because overall the education, communication, and transportation systems in Thailand are more advanced than in some other Asian countries. And with today's oversupplied market, the buyer should be thinking more about market efficiency to get the right product, not just the cheap product — that is, a reasonable quantity at a reasonable price instead of a huge quantity at a cheap price. In the new market concept, Thailand is a sustainable partner for buyers.
Q. How does the Thai government help or hinder the apparel industry there?
A. To add and create further value, the Thai apparel industry must improve and develop into a professional industry. The government has launched a number of projects to help the industry become more professional, such as Project 13, Invigorating Thai Business (ITB), which focuses on productivity improvement, design and product development; the New Entrepreneur Concept; the Bangkok Fashion City; a consultant fund; and the Manufacturing Development to Improve Competitiveness Program (MDICP), which focuses on supply chain, logistics, and branding.
Q. How do Thai apparel and textile companies move up the value chain and stay “ahead of the curve” in regards to anticipating demand for new styles?
A. Local brands follow fashion trends and have their own collections that change with the seasons. To be competitive with the international brands in Thailand, local companies try to refresh their brands, review the brand's standing in the market, and improve their product development, operations, and professionalism. Thai apparel and textile companies need to team up as a cluster for full-package service to buyers, such as doing the sourcing, design, and predevelopment for the buyer to reduce the cost for the buyer but increase the value of the product.
Q. How are Thai garment managers and workers trained? What training does Kasetsart University provide to the industry in Thailand?
A. There are training programs for the apparel industry offered by the government, universities, and the private sector, but most of the training takes place on the job. Kasetsart University gives seminars, provides in-house consulting, and short-course training. For example, our training in the area of design and product development focuses on design and branding concept, design and production data (technical design), technical wording in English with type and style, visual merchandising, merchandising management, international size standards, pattern construction, construction and fitting, collection presentation, and exhibition and display. Our training program on productivity improvement focuses on garment industry engineering, time standards and target set-up, production planning, production systems, line balance, factory layout, and team spirit communication and leadership. And our training program on market opening focuses on design and product development management, company strategy, marketing strategy, and business planning.
Q. How do Thai apparel companies finance their operations? When in need of further financing, do they go to a commercial bank or is family investment in the business still the dominant practice?
A. Thai apparel companies finance their operations by going to the commercial banks. Thailand has a lot of local and foreign-owned banks, even banks focused on the small and medium-sized enterprise (SME) sector.
Q. What do Thais want in the clothing that they buy? What can U.S. brands do to be more visible in the Thai market?
A.The big U.S. brands are already in the Thai market and enjoy a high market share. Thai people will buy the international brands with good quality and high fashion. For more visibility in the Thai market, American firms might want to engage in some activities related to social responsibility in order to get good publicity.
Q. In your opinion, how can U.S. apparel SMEs start doing business in Thailand, for example sourcing unique garments for retail stores in the Mid-Atlantic region? Or selling niche apparel items, such as accessories, in the Thai marketplace?