Highlights of Source-It CEO Summit

Phongsak Assakul – AFTEX Chairman 

Mr. Phongsak Assakul reminded of the many fears and concerns as a consequence of the unfamiliar territory ahead. As a consequence, the ASEAN countries developed their road map, urging factories to shorten their lead times and become more flexible, to meet the requirements of the post-MFA era. Major changes including the incorporation of colour, style and trend information in collections for buyers. Besides, trade and investment agreement with the US would ensure survival down the road. 

“Reaction : Dynamic / Shifts in Global Sourcing in View of Bilateral and Regional FTAs” by Marc Compagnon, Executive Director, Li & Fung 

With a business worth about US$9 billion, Li & Fung is the largest trading group in the world today, and the annual growth rate is about 23%. The reason for continued growth is the continued emphasis of the company on service. 

Li & Fung now supply to about 100 countries and sources from approximately 14,000 manufacturers in about 40 countries. 

According to the speaker, in spite of fundamental problems including quota and inflationary cost pressures, China was among the winners. Southeast Asia region had also experienced 40% growth since WTO, specifically in Bangladesh, India and Pakistan. Losers were in Africa, Latin America and the Middle East. Business in Central America has shifted to being totally vertical, using US yarns “or not”. 

Indonesia, which he termed “the sleeper” was underutilized as US buyers tended not to go there, but the apparel side had seen dramatic changes, and the industry was competitive. 

Malaysia as a supplier was “steady” but might go forward due to the FTA. In the Philippines, business had grown steady and would continue to play a significant role. Singapore was, for Li & Fung, an important sourcing office but the production there was very small. 

Thai business was steady and “creeping up” and particularly strong in niche products such as children’s and performance wear.  

On the subject of whether FTAs / bilaterals will affect buyer’s preferences or supplier’s competitiveness, the speaker noted that strategic sourcing differs by customers or buyers, and the issues were those of cost versus reliability, as well as lead times. Lead time is most important in this business, and the buyers need most fashionable merchandise as well as low prices.

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