CHINA: Garments Makers shift target from US to China.

Lucita Reyes, executive director of the Garments and Textile Industry Development Office, said local garments makers are targeting China’s branded high- and middle-end apparel market since they cannot compete against low-cost producers like Bangladesh and Pakistan in the low-end segment.

A number of Filipino companies have a significant presence in the China garments market, especially in the booming southern coastal region where fashion taste tends to be more sophisticated.

The designs are made in the Philippines, but manufacturing takes place in China because of its perceived lower labor cost.

Recently, however, there were a number of China-based apparel manufacturers which slipped back for production in the Philippines, especially in the export processing zones, because of rising labor cost in China.

Reyes said there a few locals exporting to China, but they have yet to fully tap that vast market.

Implementation of the Asean-China free trade agreement will provide Philippine apparel makers an advantage but the push could be boosted by a preferential tariff system similar to the arrangement being sought with the United States.

The proposed inclusion of the Philippines in the Save Our Industries Act failed to pass in the last US Congress.

The government is mounting another drive in the new US Congress but officials said they would prefer not to put their eggs in one basket.

Under the US Save Our Industries Act, garments made from US textile enjoy duty-free entry. Most of the beneficiaries are Caribbean countries, including Dominican Republic and Haiti.

"Depending on the tariffs, we could adopt the US model by using China-made fabrics. China has a good textile industry," Reyes said.

Reyes also said tapping China may drive investments in garments and textile in the Philippines since as early as two years ago, China has been encouraging small and medium companies to invest in other countries.

But she said Philippine garments makers have to gain a deeper knowledge of the distribution system in China. She said several tiers of suppliers come between exporters and consumers.

The US is still the Philippines’ biggest market accounting for 81 percent of its total exports annually. The Philippines, however, account for only 1.8 percent of US apparel imports.

China, in contrast, has a 62 percent of US imports.

To let local manufacturers know more about prospects in China, the Department of Trade and Industry is hosting a garments and textile industry conference on "Doing Business for the China Market" tomorrow where three officials of the China National Garment Association have been invited to speak.

Reyes said the conference is a follow-up to a similar gathering attended by officials of the Garment Business Association of the Philippines.

At the conference, 7 companies and two designers are expected to showcase their products.

Speakers include Dr Wei Lin, Wang Zhuo and Li Zhi of China National Garment; Lawrence de Los Santos, president of the Confederation of Garments Exporters of the Philippine and vice president of the Garments Business Association of the Philippines; Margarita de la Rama, president of GBAP, and; Rafael Montalvo Jr of the Bureau of Export Trade Promotions.

After the conference, Reyes said the Philippines can send a delegation of private companies to meet Chinese importers.