Apparel industry in Thailand worth US$ 8.1B in 2018

To enhance global competitiveness, players in apparel industry in Thailand need to focus on strategies that ensure high quality design and agility, increase productivity in terms of labour, reduce production cost.

Further in the downstream end the retailers are expected to reduce response time, eliminate errors and improve customer satisfaction to increase the trend of demand for apparel in domestic front as well as foreign market.

  • Definition / Scope
  • Market Overview
  • Top Market Opportunities
  • Market Trends
  • Industry Challenges
  • Technology Trends
  • Pricing Trends
  • Regulatory Trends
  • Other Key Market Trends
  • Market Size and Forecast
  • Market Outlook
  • Technology Roadmap
  • Competitive Landscape
  • Competitive Factors
  • Kay Market Players
  • Strategic Conclusion
  • References

Definition / Scope

In the entire Southeast Asian region,Thailand is located at a most competent place which gives them easy access to network to ASEAN and other countries in the Asia Pacific. There are more than 640 million consumers across Southeast Asia offer numerous opportunities for the apparel industry.

World-class infrastructure such as Suvarnabhumi International Airport, Laem Chabang deep sea port, and other trade routes permit Thailand to connect with many destination countries. As a result, the apparel sector in Thailand is the country’s second largest export sector. The Apparel industry in

Thailand contributes a large portion to the GDP of the country. As of 2017, this sector has contributed about 6.77% to the GDP of the country. Besides that it provides huge employment opportunities and also is a major sector that supports the export earnings. The apparel market in Thailand is growing consistently every year.

Market Overview

At recent times, One of the major players to emerge in the non-western world on the apparel front is Thailand. At present there are around 4,500 apparel manufacturers who are employing almost 800,000 to one million workers to operate their business. Most of these are located in the Bangkok and eastern Thailand.

There is almost 50 years of history of development of apparel in Thailand. It is one industry that produces and sells all kinds of high quality clothing such as menswear, womens wear, innerwear, children wear and sports wear. It is also well known for producing high-end fashion garments.

Top Market Opportunities

Thailand is rich in natural resources and this supports growth of diversified industries in the country. It has also benefited the apparel industry. For instance, in the northeastern part of Thailand, there is an abundence of mulberry plantations that have traditionally sustained the cultivation of silkworms which is used to produce silk.

The supporting firms existing within the Thailand’s apparel industry can compete on international level if they work in collaboration. For eg. Apparel manufacturing can collaborate with the fabric producers to develop and implement innovative and new ideas.

Market Trends

Thailand is proficient for the production of menswear, women wear, children’s wear and sportswear in large volumes, well renowned silk producer as well as it is adept in finishing, dyeing and printing services make it a number one destination to outsource such services related to apparel throughout the globe.

Apparel market in Thailand is dynamic and continues to change all the time that makes it attractive and competitive. It is because of the increasing demand for fashionable goods with high quality at affordable prices all over the world.

Well-built network of retailers in Thailand, including hypermarkets such as Tesco-Lotus, department stores such as Central department store, The Emporium etc. and outlet stores, helps to support apparel industry growth.

Thailand is refining its value-added products and technologies. The government is providing additional incentives along with infrastructure development to further boosts the growth of apparel industry. For instance, government has provided tax exemptions for 3 years to apparel producing industry in Thailand and also exemption of import duty on machinery or essential materials used in manufacturing export products.

At past, Thailand was well known for the source of cheap labor which was their competitive advantage in regard to the neighboring countries. However at recent times there is shortage of the skilled technical workers who have exquisite sewing skills.

The high wages and incentives to be provided to these skilled workers is inflating the prices of end products. As a result, this could dampen the demand among price sensitive consumers.

There is a Low demand in domestic market for the apparel in Thailand. In contrast to the international market where the same apparel is popular and highly demanded.

There is lack of raw materials needed to make the end product garment in Thailand apparel industry. It does produce few raw materials but is not up to the requirement of the industry. For instance, 500,000 tons of raw cotton is consumed for producing apparels whereas only 2% of that amount of the raw cotton is produced in nation itself. This is the major reason due to which imports of cotton have to also be made from outside the country.

As the Thai consumers demand regarding the needs in apparel is increasing day by day. They are looking for high fashion, functional, good and innovative design, if not fulfilled these firms will not be able to compete in the world market.

Industry Challenges

  • Discrimination of foreign workers- The foreign workers who are staying illegally in Thailand are fined up to $3200 and 5 years of punishment in prison. Thailand is also rated as the tier 3 country in the US trafficking in the Persons report regarding the human trafficking issue.

Due to high production costs and weakening competitiveness the apparel manufacturers were forced to move their production base to neighboring countries.

  • As of 2015, 40 Million labor are involved in the apparel and garment manufacturing sector of Thailand but the big companies as well as small factories manufacturing apparel and garment are facing shortages of labor.
  • Increase in daily minimum wages to 300 baht day which was valid from April 1, 2012. The increased cost of labor also increased the production cost of the apparel and thereby making it expensive. As a high value apparel cannot be produced without the use of skilled labor, the other countries in ASEAN region have a competitive advantage over Thailand regarding the labor costs. This is decreasing the apparel export orders of Thailand

Technology Trends

Many apparel companies have started to use nanotechnology, such as ‘DuPont’s Teflon’ to develop fabrics with stain release capabilities.

Many apparel producing firms are using a “micro-encapsulation technology” process in thai herbs producing fabric. For instance, the use of lemon grass to prevent fungus.As such Eco-friendly practices are incorporated, this provides Thailand’s apparel firms using this technology a competitive advantage in US and EU market.

In March 2017, Zara launched online sales and a mobile app in Thailand, providing a pick-up service and return in-store for online purchases. Customers are given in-store discounts and product trials when they like and share on Facebook.

Central Department Store has launched the “Central on Demand” service through the Whatsapp and LINE mobile applications. This enables customers to make inquiries, purchase through various online payment options and either pick up in store or deliver at home.

Pricing Trends

AS per CEIC, the retail price index of the clothing in Thailand is at 98.97 . The average price was observed at 94.80 from Jan 1990 to Dec 2012, with 276 observations. The data reached an all-time high of 100.50 in Apr 2009 and a record low of 57.00 in Jan 1990.

Regulatory Trends

There is a project called, OTOP (One Tumbon One Product) project which is designed by the government to support unique, locally made products and promote them nationally and internationally. Thai silk has been the focus of the program and despite growing competition from China and India, Thai silk has always the highest reputation globally in terms of its quality and distinctive characteristics.

A revisited project initiation by the government in Thailand called Bangkok Fashion City Project is a means to promote Thai apparel industry domestically and internationally. It has not only provided capital investment to boost research and development through the Thailand textile Institute that will assist in developing and exporting innovative products. Also the educational seminars are provided to private enterprises to enhance their marketing (e.g. branding) and entrepreneurial knowledge.

Other Key Market Trends

Despite of high labor costs, the industry is labor intensive in rural areas where workers are usually unskilled or semiskilled, and apparel firms hire them without relocating them to metro areas like Bangkok. Instead, they work from home, earn extra income and become self-sufficient

With fast-growing internet retail sales, many fashion brands and retailers are actively developing online sales channels to cater for Thai consumers’ busy lifestyles. Many department stores have also launched their own websites, offering online shopping with exclusive offers and discounts.

Market Size and Forecast

At present the Revenue in the Apparel market in Thailand amounts to US $8,154m in 2018. The market is expected to grow annually by 1.2% (CAGR 2018-2021).

As of 2014, Thailand has exported almost $7.52 billion worth textile and apparel products. This figure, $3.42 billion alone is exported within Asia-Pacific while $1.24 billion worth apparel and other categories of clothing items are shipped to USA. . In this figure, $5.6 billion alone accounted to the apparel industry revenue.

In 2016, Thailand’s apparel and textile industry export revenue was valued at almost USD 7 billion, contributing to over 3% of total exports. The apparel retail market has been growing at CAGR of 3.5% year-on-year, triple the global growth rate. The revenue of apparel industry alone was $5.9 billion in 2015 which increased to $6.1 billion in 2016.

Within the apparel industry, growth in the Thai womenswear and menswear market in 2016 was 4% and 3% respectively. The market for both womenswear and menswear is expected to reach USD 3.5 billion and USD 2.6 billion by 2021.

The jeans market in Thailand is expected to reach USD 426.7 million in sales by 2021.Undergarments in Thailand reached sales of USD 1.7 billion in 2016, an annual growth rate of 6.5% from 2011. Finally, Sportswear is valued at USD 1.3 billion.

Market Outlook

The major trading partners of Thailand in the textile and apparel sector during the observed time frame are the U.S. (representing 24 per cent of all trade), the EU (representing 15 per cent of all trade) and Japan (representing 9 per cent of all trade) Thailand’s trade in textile and apparel products with ASEAN (representing 7 per cent of all trade).

13 In the ASEAN region, Thailand alone represents 25 percent of total exports of apparel. Among the ASEAN countries are net-exporters of apparel and the major exporter is Thailand

Technology Roadmap

Thailand has a high mobile internet and social media usage, creating a favorable environment for the rapid growth of social commerce. In Thailand, there are about 51 million Facebook users and 11 million Instagram users.

Many foreign and local fashion brands and retailers have set up official pages on these platforms, posting photos and details of products, while consumers can leave comments and make inquiries.

Social media applications are also used by local sellers for one-on-one communication with the customers to build trust. For Hong Kong exporters wishing to develop the Thai market, social media would be a cost-effective marketing channel, particularly for targeting millennials and young professionals.

Distribution Chain Analysis

Thailand’s apparel industry tends be geographically concentrated or clustered in specific areas, such as Petchakasem Road (which runs from Bangkok to NakornPathom), Samusakorn, and Ratcahburi. More than a thousand apparel manufacturer’s prime area is limited to these locations.

Competitive Landscape

Thailand’s clothing industry uses a very comprehensive value chain which is totally integrated. The industry is fully integrated, meaning it has an upstream sector (synthetic fiber and yarn manufacturing), a midstream sector (manufacturing fabric, spinning, weaving, knitting, bleaching and dyeing) and a downstream sector (apparel manufacturing).

Thailand has a large textile and apparel sector, which can supply most of the inputs for production of apparel also it has the largest share in the international fragmentation too. The textile and apparel sector in Thailand consists of a few big, dominating firms, and a large amount of Small and Medium Enterprises.

95 per cent of the manufacturers in the apparel sector were SMEs.  The apparel industry production, distribution and retail environment of the apparel industry in Thailand is hyper-competitive and also the competitiveness among Thai manufacturers is also competitive

Competitive Factors

The local competitors are going global- ‘AIIZ’ a successful Thai apparel brand that has been known as the “ZARA of Asia”, has successfully captured both domestic and Asian markets, including Indonesia, Brunei, Cambodia, United Arab Emirates, and Kuwait.

Jaspal Group of Thailand is also expanding to Southeast Asian markets under the brand names of CHAPS in Malaysia and the Philippines, and is planning to open more outlets in Hong Kong, Taiwan, and Vietnam in the next few years. A number of well-known global brands, including Nike, Adidas, and GAP, outsource their production to Thailand.

Internal Completion- Pena House which is a Thai apparel brand is belligerently expanding to cities across Thailand by opening more outlet stores. If such strategies are employed by the similar firms it will lead to oversaturation and strengthen domestic competition.

Key Market Players

  • Hightech Apparel
  • LuckyTex
  • PMC
  • Thanulux PLC
  • iC
  • Nan Yang
  • Designer Brands-
  • AIIZ
  • Dry Clean Only
  • MC Group
  • Greyhound Original
  • NaRaYa

Strategic Conclusion

To enhance global competitiveness, players in apparel industry in Thailand need to focus on strategies that ensure high quality design and agility, increase productivity in terms of labour, reduce production cost.

Further in the downstream end the retailers are expected to reduce response time, eliminate errors and improve customer satisfaction to increase the trend of demand for apparel in domestic front as well as foreign market.

Further Reading


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