The latest US economic data shows a continuing downward trend in consumer spending there. In August, US industrial output and retail sales remained static, and sales of clothing contracted 0.7 percent MoM, the steepest fall in eight months. Given this, it is expected that US imports of garments will decline substantially ahead. As a result, Thai garment exports to the US will likely face dramatically intensified competition amid eroding purchasing power.
KResearch expects that the value of Thai garment exports to the US for 2011 will reach USD1.24-1.26 billion, representing a 2.0 percent decline YoY, or perhaps no growth at all. However, our garment exports overall will continue to perform well this year with a projected growth to around USD3.33-3.43 billion, rising 4.0-7.0 percent YoY, thanks to steady increases in purchase orders from Japan and ASEAN that will help to offset shortfalls to the US.
Despite an anticipated decline in these exports to the US, our key garment export items – e.g., lingerie and children's clothing – are very competitive there and Thailand remains a leading source. Therefore, if Thai exporters want to retain their market share in America, they should maintain quality and safety standards. In addition, exporters should place great importance on delivery deadlines and must foster good relations with their customers and business partners to stay ahead of rivals.
On future improvements, Thai garment manufacturers should enhance their supply chain efficiency, establish R&D cooperation with fashion designers and subcontractors, as well as expand sales channels. Moreover, they must align their products with US non-tariff barriers that are expected to become tougher in the future, especially regulations on eco-friendly products and ‘green textiles'.
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