Benchmark Study III: India’s garment industry and the Public Welfare

Any foreign professional analyzing India’s economic, political, and social condition would probably conclude: Here is a country unable to move forward. A country given to the quick fix and political expediency rather than strategic change; where demagoguery too often trumps honest political leadership.

There can be no doubt that India faces a series of obstacles, which it seems government is unable to overcome.

Economic challenges

  • GDP growth is now 5%, the lowest increase in a decade
  • Inflation has reached 9.2%, among the highest in the world (rank 197th)
  • The budget deficit is among the highest in the world (rank 166th)
  • Government tax and other revenue totals 8.2%, perhaps the lowest in the world (rank 211st)
    • 40% of the economy operates in the grey area, paying 0 taxes
    • Foreign direct investment (FDI) is falling rapidly
    • The current account trade deficit is -$80.2 billion, among the highest in the world (rank 192nd)
    • Unemployment 9.9% (rank 107th)
    • Underdeveloped industry sector
      • 53% of labor force employed in agriculture accounting for 17% of GDP
      • 19% of labor force employed in industry accounting for 18% of GDP.
      • 65% of labor force employed in service accounting for 28% of GDP

Structural unemployment is rampant.  In an urban society, employment is cyclical, rising in good More...

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Posted in Factory Strategies, Garment Factories, Global Issues, India, Politics, Religion | 1 Comment

Benchmark Study India: Part II – Operational Problems v Structural Obstacles and Systemic Barriers

Part I presented a list of areas of performance, ranking India against its 6 major competitors:  Bangladesh, Cambodia, China, Indonesia, Turkey, Vietnam as measured by its customers and major competitor factories.

Among the most serious production related problems were the following:

Normally these would be operational problems, which can be solved by the factory.

  • Increased productivity by more worker training, which will lead to
      • Reduced Lead times
      • Greater value for price
      • Higher quality
      • Greater reliability
    • Decreased worker attrition by higher wages and greater benefits
    • Better customer service by better education for managers and merchandisers, which will lead to
      • Greater ease of doing business

However, there are exceptions where the problems are not operational but rather the result structural obstacles and/or systemic barriers. In these cases efforts on the part of management are equivalent to rearranging the deckchairs on the titanic.

I am not suggesting that more worker training, management education, higher wages, better working conditions and greater worker More...

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Posted in Articles, Garment Factories, Garment Factories, Global Garment Industry, Global Issues, India | Leave a comment

Corruption and the Garment Industry

And the winner of the 2013 Country-with-the-least-Corruption Award is CHINA.

This is something we all know, but few of us have recognized.

I bet the Chinese Government never expected to receive this honor. However, it quite true and quite deserved — if you are working in the global garment industry — which gives you an ideas of the places we go to make your T-shirts and jeans.

Transparency International lists 177 countries in their 2013 Corruption Perception Index . Theoretical top score 100 and lowest score 0. As of 2013 Denmark and New Zealand were joint 1st with scores of 91, while Afghanistan, Somalia and North Korea were joint last with scores of 8.

At the head of our Top 10 garment supplier list is China ranked 80th with a score of 40, and at the bottom lays Cambodia ranked 160th with a score of 20.

All of which leads us to an anomaly

On the one had, economists and development specialists have come to recognize that economic development is a natural process, which would take place without any outside assistance whatsoever. When an economy fails to develop, the issue, therefore; is not to determine what steps are necessary to induce development, but rather to determine the obstacles that block the natural development process and to take the necessary steps to remove the obstacles. The economists and development specialists have reached a consensus that CORRUPTION IS THE SINGLE GREATEST IMPEDIMENT TO GROWTH.

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Posted in China-Greater China | Tagged , , , , | 1 Comment

Welcome to the New Global Garment Industry

I: In the Beginning

The post-war global garment industry is about 60 years old. For most of that period, the industry was in the hands of marauding garmentos who preyed on supplying factories to win the lowest FOB price at any cost. The garmento was assured he had achieved the lowest cost only when his supplier went broke.

It was all a game; but a game with no rules.

One of the most often used cons was THE MULTIPLE ORDER SCAM.
The garmento would place identical orders with two or more factories, knowing that if the style did not live up to expectation, he would reject the unwanted orders for bad quality.

Another favorite con was the LC HAS BEEN OPENED SCAM.
a. The garmento places an enormous order — with a medium size factory — with a very strict delivery date.
b. The factory anxiously waits for the LC before buying material
c. As time elapses without an LC, the factory owner is placed in an increasingly difficult position. He has already blocked his space and therefore desperately needs the order but is afraid to take the risk of buying material without an LC. At the same time the customer is pushing him to get the material, threatening to cancel the order unless the factory owner buys the material
d. At the very last minute when the factory owner has all but given up hope, the garmento proudly announces, “The LC has been opened, buy the fabric!”
e. The factory owner rushes to open his More...

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Posted in Customer Strategies, Factory Strategies, Garment Factories, Garment Factories, Global Garment Industry | 1 Comment