export of garments to australia (international marketing mix
TRANSCRIPT
EXPORT OF GARMENTS TO AUSTRALIA BY
RAI INTERNATIONAL,JAIPUR
INTERNATIONAL MARKETING MIX
MANAGEMENT
To study the international
marketing function of Skon
International, Jaipur with specific
emphasis on:
To analyze the readymade garments (RMG) export
market from India.
To provide a vivid picture of Skon International, its
background, functions, market structure and potential.
To study the marketing program (including
organizational information and promotional
arrangements) of Skon International with specific
emphasis on its domestic and global competitive
situation.
To identify the challenges in internationally marketing its
products.
To make recommendations that could allow Skon
International to gain competitive advantage and be a
successful global player.
To understand the international marketing function of
Skon International in its entirety and learn how
theoretical concepts may be successfully applied to the
actual business.
METHODOLOGY
Data collected from the following primary sources:
The Managing Director and the employees of Skon
International.
The Buying Agents in New Delhi.
Deputy Director, AEPC
Additional data on the ready made garments exports was
collected from the following secondary sources:
Magazines: Clothesline, Garment Business Trader
Newspaper articles: From Economic Times, Business
Standard
Internet sites:
www.nrf.com
www.aepc.com
www.indiamart.com
Analysis of the information in relation to the international
marketing function at Skon International, factors
affecting the process and major challenges faced by the
firm.
On the basis of the above analysis, recommendations are
being made to the firm to successfully face the
challenges posed and improve its overall efficiency and
effectiveness.
PRODUCT OF STUDY
India has traditionally been a high volume exporter of
textiles. In the recent past the Indian government has
encouraged the export of readymade garments in an
attempt to move up the value chain by developing its
products and pursuing opening markets.
The readymade garment industry has three main segments
of users based on which the market is formed: Men’s wear,
Ladies garments and children’s clothes. This study is
dealing with Ladies garments. Within Ladies garments there
are two types based on the fabric: Woven and knit. As Skon
International deals exclusively with woven products the
scope of this study follows the same.
INDUSTRY NOTE
India has been exporting garments for a number of years
now and in the last few years has established a distinct
presence in the world of clothing market. From a country
traditionally known to be producing low cost products, it is
now being increasingly looked upon as a major supplier of
high quality fashion garments. Indian garments have now
reached all the leading markets in Europe, North America.
The Nordics, Australia, Japan to mention a few of them.
The garment industry has been evolving over the years. In
this process, its profile has undergone discernible changes.
Technology has been gradually upgraded and there is a
qualitative improvement in the garments produced in the
country. Many leading fashion labels are now being
associated with Indian products.
The product matrix today has a repertoire of synthetics,
cotton blends and knitwear items. The industry is shaping
itself to meet the demands of product specialization in a
highly segmented buyers market. Although our exports
continue to be directed towards the restricted markets,
there has been a steady growth in exports to non-restricted
countries and of non-restricted items.
Countries with which India has entered into bilateral
agreements under the Multi-Fibre Arrangement account for
a very sizeable portion of garment export from India. During
1998-99, U.S.A. the single largest market accounted for
28.47% of our total garment exports [i.e. 20.5% of total
exports]; E.U. the largest market block, accounted for
29.46% [i.e. 17.1% of total exports]. The other quota
countries (Norway and Canada) accounted for another
5.85% [i.e. 1% of total exports]. The countries covered by
the MFA, thus accounted for approximately 65% of the
garment exports, the rest being to non-quota countries.
The garment export industry in India witnessed a
phenomenal growth in a short span of time. Only a few
years ago in 1987, the industry had set for itself a self-
imposed target of Rs.1450 crores. Needless to mention, the
target was surpassed and export amounted to Rs. 1857
crores in that year. Since then the industry has continued to
exceed the targets fixed for all succeeding years. As per the
Apparel Export Promotion Council of India, that promotes
and regulates the growth of Readymade Garments in India,
the last published figures show exports reaching a figure of
US$ 5525.4 million (Rs.23983.39 crores) during the year
1999-2000. It has emerged as one of the most active
sectors of the Indian economy and is today the single
largest net foreign exchange earner for the country.
However with the burgeoning number of firms in the same
sector, the inevitable shakeout has begun. Readymade
garment manufacturers and exporters such as Skon
International are attempting to gain an edge and stay
competitive in global markets.
MARKET SIZE
Market size is the total volume of a product that would be
bought by a defined customer group in a defined
geographical are in a defined time period in a defined
marketing environment. The current market size of the
readymade garments exports is around 45.83 billion dollars.
MARKET POTENTIAL
Market potential is the limit approached by market demand
as industry marketing expenditures approach infinity for a
given marketing environment. Readymade garments are a
major item of the Indian textile exports. The cap of 24% on
FDI has been a big handicap till now. Now with 100% status
allowed, it is possible to install the state of the art
machinery and produce garments of high quality at
reasonable prices. Internationally reputed brands that could
be made in India can help make a big jump in the value
added garment export. India’s market potential is steadily
increasing due to the cheap labour, development and influx
of superior technology and the lowering to barriers to entry.
ACHIEVEMENTS OF THE READYMADE GARMENT
INDUSTRY
Sheer enterprenuership and booming world demand are the
key factors that have bought the Indian garment Industry
into the unique position it occupies today the top foreign
exchange earner for the country. The achievements of the
Indian garment industry over the past few years are many.
More notable one are:
There are relatively larger scale units today compared to
only small scale operations in earlier years.
Manufacturing methods have definitely improved over
the years and thus from the casuals, the industry is
moving into higher fashion. Many famous international
brand names are now associated with the Indian Apparel
Industry.
Export of garments have surged in both quality and
value terms, in both rupee and hard currency. The
average export prices have also gone up considerably
indicating the improvements in the quality of
merchandise.
Though cotton garments are India’s main forte, there has
been a distinct improvement in synthetic/ man made
fabric [MMF] base garment exports in recent years.
USAGE
In the case of readymade garments, the exporter’s
customers and the end user consumer are quite different.
The customer is the buying house, agent or retail store,
who in turn attempts to woo individual customers to buy
and consumers to wear the readymade garments for sale.
While it is consumer driven fashion trends that dictate what
the manufacturer must make for export, very often such
trends can only be understood with the help of the
customer [in this case the buying house, agent or retail
store]. Since markets are dynamic one must observe
market growth and population trends. In the case of
garment export, each market being exported to, has its own
demands, cultural and business nuances that must be
understood by the exporter in order to successfully transact
with them.
Women’s readymade garments are exported for sales in
various countries and Skon International attempts to target
the middle class woman through its clothing design. The
trends in fashion affecting such middle class women in
Skon’s current and target markets set the framework for
Skon to work within.
INTRODUCTION TO SKON INTERNATIONAL
Skon International is a 100% Export Oriented Unit (EOU)
with an annual turnover of Rs.5 crores. It is one the leading
manufacturers & exporters of ladies readymade garments.
It has an in-house designing, stitching and packaging
facility. The factory covers an area of 20,000 sq. ft. and has
a production capacity of 90,000 pieces a month. Skon's
products find ready markets in U.S.A., Japan, South America
and certain parts of Europe.
INCEPTION
Established in 1992, SKON International is a manufacturer
and exporter of a wide range of ladies readymade
garments. This move was made after careful deliberation.
EVALUATING PRODUCT GROUPS IN 1992-QUANTATIVE
ANALYSIS Criterion 1 Criterion 2 Criterion 3 CAPABILITY ENVIRONMENT EXPORT MARKET CONDITIONS CONDITIONS ATTRACTIVENESS
1. Level of technology required is low, labour intensive
2. Cost structure- availability of abundant cheap labour
3. Skilled manpower available
4. Easy access to Raw materials
1. Size of domestic market for export quality garments is low
2. Domestic competition - low
3. Fewer quality conscious mfrs.
4. High demand for Indian manufactured garments due to low cost
1. The average growth rate of garment exports from India was 20%.
2. Import restriction [quotas] in some countries
3. Cost of manufacturing is higher than importing in Indiacountries
4. China was the only major competitor
EXPORT POTENTIAL EVALUATION
Product Groups with Low Potential
Product Groups with High Potential
1. Incentives given by the income in the form of 100% tax exemption on export income
2. Indian Trade Promotion Organisation (ITPO) formed to promote exports3. Easy to set up manufacturing base in Jaipur as major centre for tie and dye and
other traditional products
DECISION TO ENTER
INTERNATIONAL ACTIVITY
The key factors that motivated Skon International’s decision
to enter into the readymade garment export sector were:
1. Background of trading
The entrepreneur concerned had an established background
in trading and was interested in seeking out new and
upcoming business opportunities to expand the existing
business.
2. Lucrative business with profitable margins
Based on research the entrepreneur found that ready made
garment exports was a lucrative business with substantial
profit margins based on volumes. Keeping in mind the
growth in the exports market the venture into the
readymade garments market seemed to be a well founded
decision.
3. Tax incentives in the form of complete exemption
In order to promote the readymade garment Industry, the
Government of India allowed for 100% tax exemption on
export income. This provided impetus to entrepreneur’s to
begin their own export oriented manufacturing units.
4. Availability of skilled and inexpensive labour
In the proposed area of operation Jaipur, the availability of
skilled and inexpensive labour was abundant. Additionally,
the area was known for tie dye and hand embroidery for
which there was a growing demand in foreign markets.
FIRST DEAL
Skon International initially began operations by tying up
with local suppliers, hiring a few experienced people and
creating some samples with the idea of gaining some export
orders. The company participated in India International
Garment Fair organized by AEPC in New Delhi 1992. The fair
served some main purposes for Skon International:
Able to meet a host of buyers from all over the globe
Able to understand the requirements of buyers more
accurately
Able to show its own sampling and designs to
prospective buyers
Able to understand the ferocity of competition.
Skon International was able to get its first order from a
buyer at the Fair. The order was for 5000 pieces of assorted
dresses, blouses and skirts from a Japanese company,
Rajko International.
INITIAL MARKETS
In the first year of operations Skon International was able to
garner buyers from new markets. The market that it
targeted successfully in its first year of operations was
Japan. In the subsequent years it enlarged its reach to
include the new markets of UK, Poland and the United
States.
VOLUMES AND SALES IN FIRST YEAR
In its first year of operations, 1992-93, Skon International
was able to garner sales worth Rs.0.81crores for a volume
of approximately 85000 pieces.
Besides its first deal for 5000 pieces of ladies garments for
Rajko International, Japan, other significant orders were
undertaken. These include 10000 bead work jackets for a
US buyer with a repeat order within the year for 25000
additional pieces. Another of the large orders came from a
Polish buyer for 20000 skirts & shirts.
GROWTH
After the establishment of SKON International in 1992, the
export market for readymade garments saw an initial
upswing allowing the business to burgeon.
Initially Skon International created sampling to show
potential clients at their own cost, keeping in mind the
fashion trends for the moment. To procure orders Skon
International participated in garment fairs and contacted
buying agents, paying them a commission as a percentage
[approximately 3%] of the order gained.
The above is a graph showing the growth pattern of Skon
International.
After a spurt in growth that saw the turnover increase by
almost 100% for the initial 4 years, Skon International faced
a slump in sales primarily due to a global recession in the
ready made export market. Additionally the South East
Asian crisis was responsible for certain problems in Skon’s
active markets.
PRODUCT MARKET MIX
With an increasing number of markets and companies
buying ready made garments from the company, Skon
International had to keep in mind the preferences of the
market in numerous ways. Some of the main differentiating
factors between requirements from markets was based on:
Kind of fabric preferred
Colours of fabric
Print of the fabric
Style of the garment
The following table shows the product market mix and the relative
importance of markets for the company:
Market Type of
cloth pref.
Design/
fabric colour
Styles Percentage
export of Skon
International
Japan Cotton Yarn dyed Wrap 55%
checks, tie-
die, prints
arounds,
aprons,
dresses
USA Rayon Yarn dyed
checks, tie-
die, prints –
pastels &
light shades
Blouses,
shorts, skirts
& dresses
20%
Italy Rayon &
Cotton
Prints & solids
– soft colours
Dresses 10%
Skon has chosen the women’s readymade garments market
as its field of operations and further segmented the market.
The buying patterns show that segmentation and the share
they appropriate in Skon’s business are as follows:
Buying House 80%
Wholesaler/ Distributor 20%
Initially, Skon International also used to operate in the retail
chain market where chain stores and single outlets would
purchase garments directly from them. However, with a 30-
50% duty on imports the retailers shifted to using
wholesalers/ distributors who are in the business of
consolidating multiple orders and making such imports
more feasible. So, while Skon does not directly cater to the
retail segment, it continues to do so through alternate
channels.
MARKETING MIX
Marketing mix is the set of marketing tools that the firm
uses to pursue its marketing objectives in the target
market.
Too often, marketing mix is confused with marketing
principals. Even though certain principles may be universal,
the in no way implies a uniform marketing mix for all
markets. To be customer oriented for example, does not
mean that the same marketing strategy should be repeated
in a different environment. Sound marketing principles are
universal. One basic principle states that marketers should
adopt the marketing concept [i.e. using the integrated
marketing approach to satisfy both customers and
corporate goals]. Regardless of their nationalities marketers
everywhere should be customer oriented.
Traditionally, the four P’s of marketing approaches are
valid. However in the case of the garment industry, it could
be argued that service plays an important role in gaining a
competitive edge in the international marketing arena and
therefore we need to look into the other four p’s-
production, probe, power and people.
PRODUCT
Skon International manufactures and exports woven ladies
garments. The product range comprises of Ladies hi-fashion
dresses, blouses, trousers, skirts, ensembles, rompers,
overalls, sarongs (pareole), scarves of Sanganeri &, Bagru
pigment, tie-dyes, hand & machine embroidery in the latest
designs.
The company prides itself on innovation and attempts to
experiment on new garments using new fabrics. Some of
these fabrics are: cotton, flax/cotton, woven checks, stripes,
dobbies, twills, jaquards, piece dyed poplins. Additionally
they use 100% viscose, yarn dyed stripes, moss crepes,
polynosic, twill, georgette, blends of cotton/viscose and
polyviscose.
The procurement of raw materials and certain outsourcing
functions are done from different places depending on the
ease of availability and cost considerations. The table below
identifies the places of procurement and functions:
Raw materials and
functions
Place of procurement
Fabric Mumbai, Surat, Erode, Salem, Chennai,
Jodhpur and Tirupur
Labels and tags Jaipur and Delhi
Accessories [incl. Zips,
buttons]
Jaipur
Applique, embroidery and
lace work
Jaipur
Tie dye and Printing Ahmedabad, Jodhpur, Surat and Jaipur
PRICE
Skon International bases its pricing on three separate
platforms on the basis of the country to be exported to and
the buyer dynamics. The price is generally quoted in US $.
These three platforms are:
1. Free on board [FOB]
Under this method the duties of Skon International as the
seller, are as follows:
Make available at the port of loading and to ship free on
board good matching in all respects the description in
the contract of sale.
Pay all handling and transport charges in connection with
the above operation.
Complete declarations required by customs and excise in
case of goods from bond or under drawback.
Meet all charges arising in connection with the goods
upto the time of their passing over the ships rail at the
final destination port
2. Cost insurance and freight [CIF]
Under this contract it is the responsibility of Skon
International, as the seller, to complete the following:
Arrange shipping space
Pay freight charges
Bear all transportation charges upto the port of
departure
Bear loading charges at the ship
Bear charges for insurance.
3. Cost and Freight [C and F]
This contract is similar to the CIF contract except that in
this contract it is the buyer who arranges the cost of
insurance and bears the cost of it, as against Skon
International, the seller.
Using one of these methods mutually acceptable to Skon
International and the buyer, the price quotation is created.
On acceptance of the quotation, the order is executed and
then payments are made in accordance with the terms of
the platform agreed upon.
PLACE
Place includes the various activities Skon International
undertakes to make the product accessible and available to
target customers. Skon uses three channels of distribution
to the final consumers. Skon had to identify, recruit and link
various marketing facilitators to supply its products and
services efficiently to the target market. It must understand
the various types of retailers, wholesalers and physical
distribution firms and how they make their buying
decisions. These channels of distribution are agents, buying
houses or wholesalers and retail stores. The goods are
either shipped directly to the customers or they are sold
through the agents who act as an intermediary between the
exporter and the importer. Skon International charges a
commission as a percentage of the sales generated by the
intermediary. Now Skon has developed a well-established
customer base therefore the shipments are made directly to
the customer.
PROMOTION
The purpose of promotion at Skon International is to
communicate with potential and existing buyers and to
positively influencing them. Keeping in mind its target
market and customers, promotion at Skon International
mainly involves participation in various trade fairs and
exhibitions both in India and abroad.
Advertising is not a part of Skon’s promotional mix as
advertising in India does reach It targets buyers situated
abroad and advertising in the foreign media proves to be
exhorbitantly expensive. Instead, Skon International
displays the entire range of garments in the fashion shows
organized in exhibitions where they feel potential buyers
would be able to see their products. Some of the trade fairs
and exhibitions in which Skon participates are:
India International Garment Fair, New Delhi
Japan Creation, Tokyo
Buyer Seller Meet, Australia
Techtextile Asia, Osaka
International Fashion Fabric Expo, New York
Interstoff South America, Sao Paulo.
Besides the trade fairs Skon mainly relies on publicity
through word of mouth. Currently the company is
constructing its website so that prospective buyer’s abroad
can get information about the company and the products
offered by it. The link for this site would be provided in sites
like indiamart.com and other search engines.
To promote goodwill and reward repeat purchase Skon
International also gives certain off-season discounts to their
buyers.
PRODUCTION
The marketing concept relocated the emphasis from
product to customer and in the process the product which
had been the focus under the earlier production orientation
concept lost importance. Skon International emphasises the
importance of production and uses imported Juki Machines
[as shown below], thus ensuring that the essence of
production is quality as defined by international norms and
the customer.
PROBE
This stands for scanning or information acquisition of
market opportunities. It involves gathering information
about markets and competitors as a basis for formulating
the marketing plan and programme. The marketing plan
and strategy are based on the research results. Skon
International’s marketing programme is limited to
understanding the market from a layman’s point of view.
The company feels that market research about competitors
both domestic and global may not be of as much use as
understanding ones own customer and fulfilling his needs.
Opportunities for new business in the market is obtained by
word of mouth referrals and limited participation in garment
fairs, where there is a high and sometime concentrated
focus of buyers.
POWER
The concept of power is related to the ability of the firm to
make the external environment congenial to its operations.
Skon International, unlike larger firms, is able to leverage
its relatively smaller size, and faces fewer problems on
entry into new export markets, beginning with small orders
and moving on to prove their worth in the form of the
deliverables. Their size allows them to manage their
external relations with ease and on a one-to-one basis.
However, the power equation is not without pitfalls for Skon
International, as often their small size leaves them with
lower credibility and bargaining power in potential and
existing markets.
PEOPLE
A marketing mix’s probability of success depends largely on
its implementation in an industry such as garment export.
People involved in the process become key in the case of
Skon International, as all efforts made by the firm are
dependent on the efficiency of the staff at every stage of
the process. Skon International being a smaller operation is
able to maintain some control on the efficiency levels and
uses personal enhancement and monetary rewards as the
checks for level of people involvement.
UNIQUE SUCCESS FACTORS
The unique success factors are what have grown Skon
International in 8 short years from a Rs.0.81 crore company
in 1992 to a Rs.3.56 crore in 2000. These factors have a
great impact on the way Skon conducts its business and is
perceived in the market as a serious player in the garment
export industry.
1. In-house design
Skon International has its own London-trained designer
from the London College of Fashion who constantly keeps
abreast with the fashion trends in both the existing and
potential markets. The designer attempts to understand the
middle class woman who is the main participant being
dressed by Skon International’s garments. So far the
designer has been applauded for her ingenuity and flair for
understanding the requirements and creating new designs
that have aesthetic beauty and functionality. This designer
can be attributed most of the acceptance of styles that
Skon International is able to find amongst its many buyers.
2. Deliverables
Skon International keeps clearly in its view the key
deliverables: quality products and timely delivery
schedules. Skon International, in gaining an order maintains
the shortest possible process time and has a 100% success
rate in delivering goods on or prior to the due date. In
addition they are able to maintain the highest level of
quality, thereby not compromising, but certainly
complementing the schedule they are keeping. The
combination of the deliverable’s time lines and quality has
found much appreciation in foreign markets where values
put on such services is often immeasurable.
3. Pricing strategy
Skon International believes in fostering long term
relationships with its buyers. Seeing the potential of
business with certain buyers, Skon International often
prices its readymade garments relatively lower than local
competitors. This pricing strategy calls for cutting margins
and making its pricing more attractive to the potential
buyer.
4. Family run enterprise
Skon International is a family ownership and its functioning
is completely in the hands of the family. This ensures that
there are strict checks on cost and quality control and that
the efficiency levels are high. Process efficiency is stressed
on and a family member oversees all functions from
procurement to packaging, marketing to designing at the
managerial level.
AWARDS AND RECOGNITION
Skon International has been exporting garments for a
number of years now. After having started as a small
player, it has slowly and steadily established a distinct
presence in the markets that it serves. Due to this
commendable performance it received a letter of
recognition from CII in 1996.
Skon International has also received a citation in 1998 from
the President of India’s offices to commend the export
performance.
COMPETITION
Manufacturers and exporters are moving towards
modernising their manufacturing facilities and employing
newer technologies to remain competitive.
DOMESTIC
The changes in the textile policy are attempting to organise
the entire garment export industry. The idea is to ensure
that once the quota system is phased out the assured
markets [comprising 75% of all export markets] for Indian
garments will not completely disappear. Self sustenance
and competitive edge is being encouraged by the policy and
the idea is two-fold:
To bring quality standards up to world class levels
To keep to timely delivery schedules
Under the earlier textile policy the garment industry as
reserved under the SSI, a limit of Rs.2 crores was imposed
on the purchase of plant and machinery for manufacturing
units. The new textile policy is encouraging foreign
investment for bigger units. This will give Indian industry a
boost by allowing it to gain some share of the volume
market that China is thus far catering to with such ease.
The smaller units/ players will continue to cater to the
smaller value business.
GLOBAL
The major partners for India in the trade in clothing are
USA, European Union, Japan, Australia, UAE, CIS and
Switzerland. Although some of them manufacture and
export garments, yet they offer potential markets for Indian
garment exporters as well. However, in view of the high
production cost they have increasingly turned towards
competitive sourcing overseas. Similarly in view of the
increased production cost in traditional supplying countries
like South Korea, Taiwan, Hong Kong etc., they are now
looking towards countries where the labour costs are
reasonably lower.
As per a 1991 study report published by Werner International, in India, the
labour cost is the cheapest at US$0.72 on an average per worker per
hour amongst most of the garment producing countries in the Asian
region. The table below gives labour cost comparisons for the Asian
region:
Country Average Cost per worker per hour
[in US$]
Hong Kong 3.05
India 0.72
Japan 13.96
South Korea 3.22
Additionally, India is facing competition from China where
the cost of production is lower than India due to the tax
structure, availability of cheap and skilled labour and
economies of scale. China’s garment manufacturing is
mainly based on volumes and machine work thereby giving
it a competitive edge where large orders are concerned.
However, India is competitive in the segment handwork
based garment industry. While China can concentrate on
the volume business India is able to sustain and grow its
ready made garment export market by concentrating on
value business.
REVENUE FIGURES
COMPETITIVE ANALYSIS
Global competitiveness is the ability of a company to
proportionately generate more wealth than its competitors
in the market.
Skon’s overall competitive framework will include all ready
made garment manufacturers and exporters. This can be
narrowed down to those manufacturing women’s woven
garments targeted at the middle class consumer. Skon must
take note of its immediate competitive framework in order
to understand its competitive position. Skon international
must study its local and global competitors and identify and
understand the following:
Number of sellers, both local and global and the degree
of differentiation amongst them.
The ease of entry, mobility and exit barriers that Skon
will face while entering new markets, growing its share in
those markets and editing those markets, if need be.
Reaction patterns of competitors to certain situations.
Customer value analysis to reveal the company’s
strength’s and weaknesses relative to various
competitors.
Degree of globalisation of that industry within which the
company is operating.
Additionally, Skon International will be better able to analyse its competitive position by viewing
a SWOT analysis:
STRENGTHS
Location advantage [close to
textile, handwork experts,
cheap labour]
Capacity for production
In-house designer
Well established buyer base
Financial stability
Able to maintain low prices and
thus an attractive proposition
WEAKNESSES
No organised marketing
division or plan
Improper categorization of
the sales & marketing
functions
Lack of market intelligence
system and benchmarking
Outsourcing leads to quality
issues
OPPORTUNITIES
Growth in the readymade
garments exports
Infrastructure development with
liberalization & entrance of
MNC’s in this and related
industries
Development of knit wear
market
Ample scope of growth in world
readymade garment export
markets
Non-tariff barriers being
lowered
THREATS
Competition by other
manufacturing and export
oriented units operating in
the women’s readymade
garment segment
External infrastructure
blocks
Textile policy to bring in
larger players with deeper
pockets and better
technology
THREE Q’ s IN GARMENT INDUSTRY
In garment parlance, the three Qs have a special significance.
They stand for
1) Quota
2) Quality
3) Quantity
Apart from quantity and quality the quota factor is also very
important of India’s exports of garments is to countries with
which India has entered into bilateral agreements under an
arrangement known as Multi Fibre Arrangement or MFA.
The current pattern is that 75-80% of our garment export are to
the countries under MFA while the remainder that is 20-25% are
made to countries out side the bilateral agreements. Our Bulk of
MFA exports are made to the EU and the USA while the non- MFA
importing countries include Soviet Union. Switzerland.
Australia, Newzealand etc. Even in the case EU and USA free
export are allowed for categories/ items not mentioned in the
agreement.
With a view to distribute the quantities allotted under the
bilateral agreement, the government of India has laid down a
quota policy. The enables the exporters to know exactly how
much quota items they can export to a particular quota country.
Since the MFA and quota system are essential elements of
garment exports. It is necessary for an exporter to understand
these two terms properly.
The quantities allotted category wise, are not negotiated and
finalized with the importing countries under the bilateral
agreements. In order to allotted and distribute these quantities
amongst different exporters, the government lays down a quota
policy. This policy. This policy is enumerated and interpreted by
the Textile Commissioners office and administered by the
Apparel Export Promotion Council (AEPC). From time to
time, the quota policy has been modified keeping the following
objectives in the view.
Maximisation of net foreign exchange earnings.
A higher unit value realization.
Fuller quota realization
Optimum development of trade and industry.
Retail formulae in USA
TYPE OF
STRUCTURE
CHARACTERISTICS Retailers
1. Chain Stores Similar
merchandising
Similar store décor
and ambience
Department
store chains
e.g. Macy’s
Speciality
store chains
e.g. Gap, The
limited
Discount store
chains e.g.
Marshals
2. Speciality chain Consisting of tens or
even hundreds of
stores spread
through out the
country
The Limited
The Gap
3. Discount stores Every day low price
stores
Soft and hard goods
K-mart
Wal-mart
4. Department Large –scale Macy’s
stores organization
Wide variety of goods
Merchandise is
offered for sale in
separate units of
departments
Bloomingdale’
s
Saks Fifth
Avenue
Nordstrom
5. Hyper markets Combined
department store and
super market with
25,000 to 30,000
sq.m. area
Features a large
assortment of general
merchandise
6. Catalogue
retailing
Some mail-order
houses offer
exclusivity through
catalogues
Others
Lands End,
Spiegel, etc