Thailand apparel and textile opportunities for growth

Thailand’s textile industry has developed significantly over the past five decades, consistently growing and developing to meet ever-changing consumer trends.

Each year, tremendous volumes of high-quality fabrics and apparel from Thailand are sold domestically and exported to the rest of the world.  Thailand is the 11th largest exporter of apparel and textiles.   In 2016, the industry’s export revenue was valued at almost USD 7 billion, contributing to over 3% of total exports with countries in ASEAN, the US, Europe and Japan as key customers.

With over 4,700 local textile producers, Thailand hosts a full range of activities across the entire textile value chain, ranging from the production of fiber, and fabric, all the way to the design, manufacturing, and sales of apparel and functional textiles.

Fibers and Raw Materials

The Thai workforce is known around the world for their amazing craftsmanship.

To enhance its competitiveness, the Thai government is working hard to ensure a robust labor force for the textile industry. The country is equipped with well-qualified researchers and experts covering every process dealing with textile production.

Ranked the 9th largest polyester producer, and the 5th largest acrylics producer in the world, Thailand is a leading global producer of synthetic fibers.

With a complete value chain, Thailand has roughly 4,700 textile manufacturers, ranging from fibers, yarns, dyeing to clothing.

The textile industry has developed significantly for over 50 years passing on the knowledge, expertise, and competencies of manufacturers from previous generations. Combined with cutting-edge technologies, Thailand has become the main producer and exporter of several textile products, qualified by global standards.

Apparel

Offering a complete value chain, over 80% of raw materials including fabrics and yarns can be sourced locally, as Thailand is home to more than 2,100 clothing manufacturers.

The country is known for its highly-skilled and competitive workforce and product quality. A number of well-known global brands, including Nike, Adidas, and GAP, outsource their production to Thailand.

In addition to the textile market, finished clothing products are thriving in Thailand including both apparel and non-apparel items. The apparel retail market has been growing at 3.5% year-on-year, triple the global growth rate.

Challenges

At the end of October, the US said it will suspend US$1.3 billion (39.2 billion baht) of GSP (Generalized System of Preferences) benefits that are set to take effect on April 25, 2020.  This applies to some apparel and footwear exports. 

The Commerce Ministry’s Trade Policy and Strategy Office said will face a higher import tariff of 4.5%, leading to US-bound exports dropping to an estimated $28.8-32.8 million next year, or 0.01% of overall exports.

The steps were triggered by concerns about workers’ rights, although some suspect the suspension could stem from US concerns about its soaring trade deficit with Thailand.   The country’s ban on ractopamine (feed additive) commonly used by US pork producers and most recently the ban on glyphosate.

Thailand had a trade surplus with the US of $1.03 billion during the first nine months, ranked 14th among countries with a trade surplus with Washington.

Although the initial estimate suggests a minuscule impact on Thai exports, it could pave the way for greater geopolitical risks between Thailand and the US in the future, said Trinity Securities executive director Nuttachart Mekmasin.

Conclusion

Thailand is ramping up its competitiveness by focusing on innovation, value-added products, and technologies. The government is providing additional incentives along with infrastructure development to further support growth in the country’s textile industry.

To further increase its competitiveness and productivity, a number of manufacturers are employing the smart factory concept, utilizing computerized systems to increase efficiencies in their production processes.

Thailand offers lots of investment, tax, and business incentives for new companies looking to expand their operation.

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