Thailand becoming design, raw-material hub

No longer only a manufacturing hub for Japanese clothing companies, Thailand is becoming a centre for raw materials and design, thanks to high competency for high-technology production and added-value creativity.

During a visit to Bangkok yesterday, Kazuo Niijima, senior division manager for the Japan Apparel Fashion Industry Council, said garment producers in his country were focusing more on Thailand as a supply base for their Asean operations.

He pointed out that more Japanese clothing manufacturers were planning to establish factories in Cambodia, Vietnam and Laos where labour costs are lower. 

“After a long history in Thailand with apparel manufacturing, the country is now considered a major supplier supporting Japanese manufacturing in neighbouring countries,” Niijima said. 

Moreover, he emphasised that Thailand was also considered a centre for design and technology transfer from Japan since it boasts high competency to serve the middle- and upper-class markets. 

Japan would like to escape from relying mainly on China for its clothing imports, he said. Asean countries including Thailand will gradually play a more important role, while the proportion of imports from China will be reduced.

Japan imports US$27 billion (Bt840 billion) worth of garments a year. Until recently, more than 90 per cent came from China, while Thailand managed to take only 1-2 per cent of the Japanese garment market.

Niijima believes that Asean will become a strong centre for supplying clothing to Japan thanks to high-quality manufacturing and close cooperation between his country and this region, particularly with Thai garment manufacturers.

He also expect enterprises will benefit more from the Japan-Thailand Economic Partnership Agreement (Jtepa) and the Asean-Japan Economic Partnership Agreement (Ajepa) thanks to the free flow of goods, while the manufacturing sector will enjoy rules of origin for producing among Asean countries and re-export to the third market.

Despite the recent flooding, Niijima said Japanese traders and investors still had confidence to do businesses in the Kingdom, as the severity of the disaster was unusual.

Six leading garment firms from Japan are visiting the country for the third Thailand-Japan Textile and Apparel Business Matching held yesterday and today by the Export Promotion Department of the Commerce Ministry. The participating companies are Onward Kashiyama, Decente, Japan Scope, Sanei Production Network, World Production Partners, and Renown Incorporated.

Sukij Kongpiyacharn, managing director of Hong Seng Knitting, a leading Thai clothing firm, said the Kingdom should urgently develop its garment manufacturing sector to meet Japan’s demands. That market prefers high-quality goods, which the Thai garment industry has high ability to produce. 

Sukij said that since Thailand has a policy to increase the minimum labour wage, it should take the opportunity to focus more on medium- and upper-class markets such as Japan, as they have high purchasing power and are willing to pay higher prices for well-made, premium-grade products.

He expects that garment exports from Thailand to Japan will gradually grow, as that country is already the third-largest market for Thai garment exports.

Japan accounts for 10 per cent of Thailand’s garment export value. The United States is still the country’s largest export market, accounting for 40 per cent of total value, followed by the European Union with 30 per cent.

Globally, Thai garment exports were worth $624 million in the first 10 months of the year, up by 44.69 per cent compared with the same period last year.

Sukij, who is also president of the Thai Garment Manufacturers Association, said the country’s garment exports this year were expected to see flat growth at $3.2 billion.

Phatai Sooksommai, minister of the Office of Commercial Affairs of the Thai Embassy in Tokyo, said export of Thai garments to Japan was expected to grow continuously amid closer economic cooperation under Jtepa. 

Thai apparel exporters will also focus on promoting their own brands to increase export value. 

He predicted business matching would lead to more trade, worth several billions of baht, in the near future as Japan companies have high interest in quality and good design.