Recently, Thai Silp South East Asia, a Thai garment exporter with 5,000 workers, announced that they would close on August 7, 2007, but got a reprieve on July 13, 2007, after announcing the closure of their factory on July 11, 2007. This seems to be just the ;tip of the iceberg” in the garment industry, where competitiveness has eroded considerably amid tougher competition from rivals with lower production costs, including China, Vietnam, India and Indonesia. The recent rapid surge in the Baht has not helped, either, and has worsened the situation, making Thai-made products more expensive in the eyes of importers, some of whom have reduced their purchase orders, or even negotiated with Thai exporters to cut their prices. To stay afloat, garment producers should expedite enhancements to their competitive capabilities and potential. To this end, they should try to cut production costs, create greater value to their products through quality upgrades and brand creation to differentiate their products from competitors. Significantly, new markets with potential should also be sought. In so doing, the problem of business closures in the industry will not be repeated.
The direction of Thai garment exports in 2007 has shown signs of substantial slowing as the Baht has appreciated to its highest in a decade, based on the value of Thailand's garment exports in the first 5 months of 2007, which was only USD1,176.7 million, falling 4.7 percent, YoY. This deceleration has been seen in all our key export markets. Significantly, the US market which normally takes a proportion of 50.1 percent of the total export value in garments, has exhibited a 6.0 percent fall in the export value there, while the EU market normally accounting for 25.8 percent has exhibited a 4.1 percent fall, and the Japanese market with typically a 5.8 percent proportion is showing a 19.6 percent fall in the export value to them. Although the export value to ASEAN market has risen 4.1 percent, its small proportion of only 2.4 percent is insufficient to boost the overall picture of garment exports much. If the Baht carries on with this bullish trend, it is projected that the export value of garments for the entirety of 2007 will be around USD3 billion, falling around 6.4 percent. The factor of the Baht's appreciation has forced garment businesses to face losses or earn lower profit when converted into Baht, and some of them – particularly small-to-medium enterprises – may likely not be able to continue operation and close, leading to labor and social problems.
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