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Sri Lanka Turns Trade War Into New Supply Chain Opportunity

Sri Lanka is turning the still unsettled differences between the U.S. and China into an opportunity to remind U.S. buyers of its sourcing capabilities.

Exhibiting at Apparel Sourcing USA, which ran alongside Texworld USA in New York City this week, manufacturers said U.S. buyers should think of three things when considering sourcing in Sri Lanka: quality, compliance and sustainability.

“We are very good at the maintaining of high quality standards,” Roy Munaweera, chairman of RM Holdings, which manufactures casualwear, active wear and intimates, said, noting that he’s seen the interest from U.S. buyers increase in light of the trade war. “We are more cost competitive than China, lead time is about three weeks sailing to the USA, and most of the materials are available in Sri Lanka for garment manufacturing, like fabric, elastics, accessories. You can call us a one stop shop.”

Despite that, Sri Lanka still isn’t an option many U.S. companies have tried, or invested deeply into.

“Eighty percent of our production we ship to Europe and about 20 percent to U.S.,” said Pradeep Suranjana Hattanarachchi, managing director of Stylish Garments, which manufactures women’s and children’s wear, and counts Walmart and Target among its customers. The problem causing the lack of U.S. business in the country, according to Hattanarachchi, has to do with a lack of education. “Some of them don’t know that Sri Lanka is one of the best manufacturing destinations, and we have capabilities of doing high-value added garments.”

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Brands like Nike, Hugo Boss and Adidas have already tapped into Sri Lanka for sourcing, and the country’s quarter-century of experience in apparel manufacturing proves it’s not an upstart option.

On compliance, which perhaps registers among the greatest concerns for companies considering sourcing in a new country, Sri Lanka maintains international standards.

“You can manufacture garments without guilt in Sri Lanka,” Hattanarachchi said. “All of the factories are under compliance.” For the U.S., many of the factories in Sri Lanka have CTPAT certification, and many are GOTS certified and using organic and Fair Trade raw materials for their production.

Norlanka is one of those manufacturers, and the company has outlined its sustainable roadmap to 2023 and beyond—and it’s enlisting all of its vendors to get on board or find another manufacturer to supply to.

“By the end of 2020, 50 percent of our goods will be sustainable cotton, and by end of 2023 100 percent of cotton will be sustainable,” said Sanjay O Khuraana, general manager of sourcing for Norlanka, which manufactures activewear, athleisure and nightwear across categories. Currently, 40 percent of the cotton the company uses to make its product—for brands and retailers like Primark, Asos and Urban Outfitters—is made from sustainable cotton. “On polyester, by 2023 we’ll be 100 percent recycled or dope dyed.”

Beyond that, Norlanka is looking into reducing the size of its hangers to cut back on waste, it’s enlisting its thread supplier to reuse the cones the thread comes wrapped around, and it plans to only work with factories and suppliers that are ZDHC certified going forward. Sustainability plans are well in place at the company, and the goal now is to pick on the sourcing opportunity the U.S.-China trade war has left on the table for other countries to claim.

“We see there is a huge potential with this trade war going on for us to really compete, obviously not to the scale of China, but there is a lot of business that will move over to Sri Lanka,” Khuraana said. “What we see is U.S. buyers currently source a lot of bottoms out of Sri Lanka, and they do source a lot of lingerie, but apart from these two categories, there is a huge scope for jackets, there’s a lot of opportunity for ladies wear and then you have quite a big opportunity for nightwear.

While the terrorists bombings that shook the country in April have forced a still-in-place state of emergency, Khuraana said that’s more to ensure safety than anything else.

“As far as I understand, things have returned to normal more quickly than we expected,” he said, adding that, at the moment, both goods and people can move about the country freely. “Originally when it happened, it delayed the goods by a week or two, but things are catching up now. We don’t have anything delayed.”