• Liberalisation and textiles

Liberalisation and textiles

This paper examines the impacts, potential and current, on the clothing industry in Madagascar, in the light of the end of the multifibre arrangement, which had ratified countries’ rights to impose quotas on textiles and clothing imports.

Using a variety of qualitative and quantitative techniques, more information was sought to better understand the current situation for the clothing industry in Madagascar. A total of 21 firms were interviewed during the three weeks of field research undertaken in Madagascar. Firms selected were broken down by five major nationality groupings: Asian, Malagasy, Mauritian, European and American (US). Two nationalities are represented in the Asian group: Chinese and Sri Lankan. European Union firms were from France and the Netherlands. Some of the key findings were:

• firms in the sample confirmed that Asian firms were more likely to export to the US than to the EU
• Madagascar is heavily reliant on a few categories of exports for export revenue. This indicates that these categories are dominant because historically they were quota-constrained, and producers went to Madagascar to circumvent quota restrictions
• relationships with buyers, mainly European, are becoming more direct, with fewer European buyers passing through intermediaries or sourcing offices now
• for many firms, Madagascar’s location is the greatest hindrance. Due to Madagascar’s isolation from not only from raw material suppliers but also destination markets, it takes producers up to four months to complete an order
• manufacturers in Madagascar face almost overwhelming competition when competing with China. In China, logistics are better organised, more services are offered, fabric and accessories are widely available, and the time to market is much shorter than for Madagascar

Some strategies for upgrading Madagascan production in the face of increased competition are:

• instead of employing different actors along the value chain for design, production and sourcing, one company has everything within the same company except the manufacturing of raw materials. By keeping everything within the same company, costs are lower than if the stages of design, sourcing and production were separate entities
• one firm’s strategy is to work with a single customer producing high-end garments for the European market. Due to the fact that the production line workers are always working with the same type of garment and fabric, workers have increased their productivity. Thus far, the strategy appears to be working as the firm’s one-year contract with its buyer has been renewed for an additional year and it is in the running for a five-year contract.

  Some of the conclusions are:

  • having access to preferential trade arrangements has played a crucial role for Madagascar. Hence, ‘special and differential treatment’ should be maintained and pursued with extreme vigour by SSA countries
  • triangular manufacturing and third party coordination has been regarded as an integral aspect of the clothing value chain, but as the examples show, this is changing to meet new conditions
  • greater investment into productive capacity is needed, ultimately, if Madagascar is to compete in a shifting market
  • Full text of document
  • Publisher details
  • Send to a friend