What Are The Prerequisites That Manufacturers And Exporters Use While Building Their Brand; Capacity And Expertise
The organization of foreign trade and commerce of a nation tends to mirror the expansion and specialization accomplished in its profitable structure alongside its pace of progress and auxiliary changes which in turn talks about the growth of the country and it's GDP as a whole.
At the beginning of freedom and the very dawn of the same, the complete export basket of the entire nation and the trade system expanded, we started manufacturing ready-made clothing and exporting it for foreign and well-reputed brands.
This is basically how the country turned into one of the main manufacturing hubs for the world, seeing the rise in GDP with the same, the support level from the government kept increasing day by day, however like all good things, the same came to an end. The support kept on diminishing and export was severely affected by the high cost of raw materials, labour, increasing overheads, decreasing profits and a drastic decrease in export incentives and drawbacks.
This is when the country took a turn towards modernism and turned into a consumer market from a sourcing hub. With the dawn of the internet with trend awareness as well as fashion influencers, people started following the footsteps of major brands and all the products that were produced in our own country at minimal costs, now ended up being sold back to the same population. Though since brands had direct access to the consumer base hence the retail margin was enjoyed solely by these brands as they basked in the glory of the attention that they were getting.
This is when the neighbouring countries started gaining more attention from these brands because of cheap labour, lower compliance and the lower tax rate which helped them to keep the cost of production low. The export and manufacturing market in India saw a massive period of recession and the entire market as well as the people involved in it, faced a major hit.
However, the brands that chose to remain with Indian manufacturers kept getting more and more stringent by the day making most of these exporters struggle to grow. The amount of losses surpassed profits for most of the Indian manufacturers and exporters as many of the same kind collapsed as it became tougher to sustain overheads and run factories at ease.
Though some of the decade-old huge export houses were still sustaining with the loyal set of buyers.
The sourcing hub that has been struggling during the Covid-19 pandemic, with international market cancelling orders with recognizable brands is from the US and European market and the domestic market in the doldrums.
Some of the renowned brands have been continuously asking the exporters and manufacturers to give discounts on undelivered orders. The factories have found themselves in quite a bizarre situation and survival, in the long run, could be a daunting task if this continues to be the case.
Though now amidst the recent pandemic of novel Coronavirus which has made it hard for every big and small exporter and manufacturer to sustain and has created a paranoia amongst them under the anticipation of major cancellations as almost every buyer has cancelled or held the Summer stock as the main buying markets filled with recognizable brands are from the US and European market.
In fact, Bangladesh, the second-largest garment producer after China lost more than 6 billion$ in export value amid cancellations from some of the world’s largest brands and retailers.
The strength was their capacity and manufacturing, however, now that strength has become the liability as the backend capacity is not utilized leading to rise in overheads making sustainability challenging, also resulting in unemployment from bottom to top.
Even with the slow reopening of the economy as lockdown beginning to lift, social distancing measures will continue for months. That has impacted retail in a major way. For some businesses, these temporary changes could indicate bigger problems.
Retailers throughout the globe have been the visible victims of the current crisis, behind the scenes the nuts and bolts of fashion’s supply chain are facing a bleak future and some of the major retailers like JC Penny, J Crew, Nordstrom, Neiman Marcus, Macy’s, Selfridges and Saks Fifth Avenue have already published and reported to be filing for Chapter 11.
This will further hit the manufacturing and export industry with alarming force.
As coronavirus unlock accelerate a shift to e-commerce. Many brands have managed to rely on its online business to keep operations running, limiting the damage from shuttered stores.
Zara-owner Inditex, the world's fashion retailer, said last week it expects an increase in revenue from online sales with an investment of 1 B $ and planned to shut down 1200 stores. Followed by H&M on the same route. H&M reported that its group sales halved in March-May and were down 30% in the first 13 days of June even as stores started to reopen while online sales jumped 36% in March-May.
With the current situation, as many of these orders have been collapsing wherein being a brand comes as a rescue making the Indian exporters from buyer dependent to being their own buyer and can create a D2C market through channelizing their capacity in the digital space.
Every crisis comes with an opportunity and what can be better than for these units to turnaround the tables with much lesser investment and leveraging their own capacity to earn retail margins directly by selling their brand on a concept defined as “from factory’s floor to customer’s door”.
In today’s day and age being connected with the large set of consumer base can bring in a lot more value to a company than being controlled by the orders of a handful buyers.
The fact that even though manufacturers had no hindrance with making the clothes, they had no idea what to make to be able to compete with foreign brands in the market, this problem can be solved by appointing the perfect team to handle all the operations, designing, market analysis, competition mapping while using the expertise of the backend setup of the exporters.
The new uncertainty and challenges can be embraced by the export lead brands and no matter what the situation is they can revive their parallel business swiftly as they have direct access to the consumer base.
Prime Minister Narendra Modi’s May 12 appeal to ‘go vocal for local’ fits like a glove into this scheme of things. The push for local against global is a need of the hour.
These units which have a strong backend capacity of manufacturing, stalwart working processes to join the campaign Make in India and Digital India and to use the existing capacity and backend to create their own brand which can be consumed and sold directly to the consumer on retail margins rather than manufacturing margins with the right direction and right team of expertise. As the quality of manufacturing, backend capacity and fabric sourcing of the exporters is very strong and compliant hence it is comparatively plain sailing for them to create their own brand compared to the current pool of new-age brands struggling to keep profits amidst the current extremely price competitive market by outsourcing their production.
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