Nix Swimwear Sourcing Strategy

A

G L O B A L

S O U R C I N G

S T R A T E G Y

A L I S O N W I L D + J E N N I F E R P I F F + TAY LO R M I L L E R + N I C O L E D R I A N 1

TITLE

A B S T R AC T 2

This book is a comprehensive global sourcing strategy that was developed in an effort to facilitate the sourcing of products for the company Nix Swimwear based out of Santa Cruz, California. Through comprehensive and detailed research, we decided upon four countries, Thailand, Cambodia, Indonesia, and Bangladesh, as potential places to manufacture our four-piece collection of stylish yet high performance swimwear. This collection includes the Cerith- a triangle bikini, the Whelk- a two-piece tankini, the Lucine -a two-piece rash guard, and the Murex- a one piece. Market research and the development of Nix customer profiles led to a definitive pricing strategy as well as a set of values and sourcing guidelines.

Upon the development of this strategy we then examined and evaluated key factors

for each country including the economic, political and social structure of the country, labor force, business climate, government, textile industry and trade agreements. Once initial country research was conducted, manufacturers in each individual country were identified and evaluated on the basis of efficiency, quality, cost and sourcing guidelines.

Next we developed a detailed technical package to further assess the potential

cost of production for our collection. We then outlined factors such as a costing strategy, target margins, and a line plan based on industry standards as well as information provided by each supplier. The initial costing strategy was followed up with negotiations with out manufacturers so that an accurate final cost could be determined. Finally, a placement strategy was created involving the placement of each product in the most profitable and efficient countries that also allowed us to maintain our sourcing guidelines.

Lastly we identified any potential risks and determined how to mitigate those risks as well as discussing Nix’s future growth plans as the company continues to expand.

3

TA B L E O F C O N T E N T S INTRODUCT ION

6

Company Profile Social Responsibility Target Market Price Range Line Plan

STRATEGY DE VE LOPME N T

20

Purpose Product Breakdown Values Sourcing Guidelines

C O U N T R Y A N A LY S I S

36

Cambodia Indonesia Thailand Bangladesh

S U P P L I E R A N A LYS I S

92

Cambodia Indonesia Thailand Bangladesh

COSTING

112

S T R A T E G Y E VA L U A T I O N

Product Volumes & Quantities

116

Countries & Suppliers Costs

Future Requirements

4

F I NAL STRATEGY

Selection of Countries

128

Selection of Suppliers Product Placement

FINAL COSTING

138

CONCLUSION

142

APPENDIX

Code of Conduct

150

Cost Sheets Tech Packs

BIBLIOGRAPHY

216

5

INTRODUCTION

C O M PA N Y P R O F I L E C O M PA N Y H I STO RY

Friends, fashion lovers and fellow college students Alison, Jen, Nicole and Taylor were bonded together by their love of sand and sea. Graduating from the Fashion Institute of Design and Merchandising of Los Angeles, California in 2010, Nix Swimwear began as a way to mesh their fondness for beautiful beaches, outdoor activities and an appreciation for the environment.

Whether they were tanning on the beach, diving through reefs or perfecting their paddle boarding, their lives constantly kept them in the water. Their desire for swimwear that satisfied both their sophisticated and modern sense of style as well as their dynamic daily life inspired a collection of suits that married fashion and function in a way that no other company could offer.

In 2011, they moved their business to Santa Cruz, California and began producing their first bikini, known as the Cerith, for local surf shops and trendy boutiques. The suit quickly sold out and the demand for Nix Swimwear far exceeded the girls’ ability to produce the suit at home. Realizing the opportunity for expansion both in the surf community as well as with chic fashionistas, Nix seeks to supply their customers with quality swimwear with the capability to perform under any and all extreme conditions.

A B O U T N I X

Based in Santa Cruz, California, Nix Swimwear is a contemporary fashion brand that offers consumers fashionable yet functional swimwear pieces for all types of water lovers. The company’s name derives from the shape-shifting water spirits of Norse folklore, which would often take the form of young women. At Nix we believe that our customers should feel empowered when wearing our pieces allowing them to become the powerful water spirit they are meant to be.

Our designs are heavily based upon current market trends and forecasts within both a fashionable and athletic scope, so both the windsurfing enthusiast and the poolside sunbather can find exactly what they’re looking for within our product line. Nix is also rooted in strong social responsibility and philanthropic efforts in order to be completely transparent and hopefully improve both the tangible and social environments, one suit at a time.

8

M I S S I O N N I X S W I M W E A R A I M S T O C R E AT E A B R A N D T H AT E M B O D I E S T H E S P I R I T, VA L U E S A N D AT T I T U D E S O F I T S C U S T O M E R S

BY P R OV I D I N G C H I C A N D D U R A B L E SW I M W E A R W H I L E M A I N TA I N I N G A H I G H S TA N D A R D O F Q U A L I T Y A N D P R O M O T I N G B U S I N E S S P R A C T I C E S T H AT S U P P O R T T H E E A R T H A N D T H E E N V I R O N M E N T.

V I S I O N W E I N T E N D TO P R OV I D E O U R C U S TO M E R S W I T H T H E B E S T VA L U E A N D Q U A L I T Y B Y O F F E R I N G S W I M W E A R T H AT C O M B I N E S FA S H I O N A N D F U N C T I O N I N TO O N E . W E A S P I R E T O C O N T I N U E T O D E S I G N P R O D U C T S T H AT A L L O W F O R A SEAMLE SS EXPERIENCE FROM SAND TO SEA .

VA L U E S + AESTHETIC + INTEGRITY + + ENVIRONMENT + RESPECT + + A C H I E V E M E N T + C O M M U N I C AT I O N + + A D V E N T U R E + C R E AT I V I T Y 9

SOCIAL RESPONSIBILITY F I G H T FO R T H E R E E F

The Great Barrier Reef is one of the natural wonders of the world but is under threat from the most widespread, rapid and damaging set of industrial developments in Queensland’s history. The Queensland government is fast-tracking mega port developments, dredging and dumping millions of tons of seabed and rock and encouraging a shipping superhighway. The Australian Government is approving these developments, including the world’s biggest coal port at Abbot Point, 50 km from the Whitsunday Islands. In order to save the reef, there must be a widespread effort to fight for it.

Fight for the Reef is a partnership between WWF-Australia and the Australian Marine Conservation Society that works to protect the $6 billion tourism industry and the 60,000 jobs that support it.

Nix Swimwear is an avid supporter of this cause and pledges to donate five percent of their yearly profits in an effort to help save the Great Barrier Reef. Every Nix purchase made supports this worthy cause and works towards a brighter future that includes all the beauty our environments reefs have to offer.

C E L E B R AT E T H E S E A

Celebrate the Sea is an annual fundraising effort in partnership with one of Nix’s favorite ocean conservation groups, Oceana. Oceana is the largest international organization focused solely on ocean conservation with a limited number of highly specific campaigns that can achieve measureable outcomes such as reducing turtle death from scallop fisheries and petitioning retailers to stop selling unsustainable marine animal products.

Nix supports these worthy causes by hosting a contest that encourages its customers to find creative ways to raise not only funds, but also awareness within their communities. The customer who raises the most money for the cause wins two free swimsuits in the styles of their choice and a story about them and their specific effort featured on the homepage of the Nix website.

10

11

TA R G E T M A R K E T

Nix’s target customer is women ranging from ages 18-30, with a middle class to uppermiddle class income of $50,000 to $130,000 a year. They are college-educated, usually with a Bachelor’s degree or higher, and typically of Caucasian ethnicity. She is typically a college student or employed in either blue or white collar occupations. Our customer lives in the coastal cites of the United States, where much of the recreational activities revolve around the water. Such cities include:

LOS ANGELES, CA SANTA CRUZ, CA MIAMI, FL PALM BEACH, FL HONOLULU, HI

She has an active lifestyle that consists of balancing a career, exercise, and recreational activities. Our customer typically has liberal political and religious views, and is aware of problems in society and the environment. She often takes action by volunteering and participating in philanthropy as well as purchasing from brands that are transparent and environmentally responsible.

Nix’s customer is young and enthusiastic and motivated by self-expression. She seeks variety and excitement, while still being environmentally conscious. Technology plays a significant role in the lives of target customer, with the internet and TV being the most trusted source of media.

Which is why our company has chosen to passionately market itself through these mode of media, mainly through the internet. Buying behaviors of our customer is often avid and impulsive, with majority of their income spent on fashion, socializing, and entertainment. Her purchases usually reflect what’s trendy and on looking good all while being environmentally-friendly.

12

LO CAT I O N : SA N TA C R UZ , CA POPULATION, 2013 ESTIMATE: 269,

419

POPULATION, 2012 ESTIMATE: 266,

508

FEMALE PERSONS PERCENT, 2012: 20.6% MEDIAN HOUSEHOLD INCOME, 2008-2012: $32,846 RETAIL SALES, 2007 ($1,000): 1,502,419 (Source: United States Census Bureau) 13

CONSUMERS JESSIE FLORES

AMY MOORE

AGE: 19

AGE: 26

OCCUPATION: STUDENT & PART TIME SALES ASSOCIATE AT URBAN OUTFITTERS

OCCUPATION: PERSONAL TRAINER

LOCATION: MIAMI, FL

INCOME: $70,000/YEAR

INCOME: $9,000/YEAR PLUS COMBINED INCOME OF PARENTS OF $185,000/YEAR

EDUCATION: BACHELOR’S DEGREE IN NUTRITION AND DIETETICS

EDUCATION: MAJORING IN PUBLIC RELATIONS AT UNIVERSITY OF MIAMI

INTERESTS: SURFING, EXERCISE, HEALTHY EATING

INTERESTS: GOING TO THE BEACH, SHOPPING, PHOTOGRAPHY

VALS/PRIZM PROFILE: EXPERIENCER, YOUNG ACHIEVER

VALS/PRIZM PROFILE: EXPERIENCER, URBAN ACHIEVER

14

LOCATION: SANTA CRUZ,CA

MOST LIKELY TO BUY: CERITH BIKINI

MOST LIKELY TO BUY: LUCINE RASH GUARD

15

PRICE RANGE

$100 T H E

C E R I T H

$150 T H E 16

W H E L K

$220 T H E

LU C I N E

$200 T H E

M U R E X 17

LINE PLAN SEASON

NAME

Cerith 160,000 Whelk 130,000 Lucine 90,000 Murex 70,000 450,000 TOTAL

JAN

FEB

MAR

Spring APR

Quantities

Quantities

Quantities

Quantities

5,000

8,000

3,000

4,000

8000

12000

Retail

Retail

Cost

Cost

Per Unit

Total

Per Unit

Total

$ 100.00 $ 150.00 $ 220.00 $ 200.00 $ 167.50

$ $ $ $ $

$ $ $ $ $

$ $ $ $ $

16,000,000.00 19,500,000.00 19,800,000.00 14,000,000.00 17,325,000.00

Average

18

Winter

3.69 3.71 5.18 5.30 4.47

20,000 25,000 13,000 14,000 72000

590,400.00 482,300.00 466,200.00 371,000.00 477,475.00

Average

MAY Quantities

18,000 20,000 11,000 11,000 60000

17,000 22,000 12,000 13,000 64000

Margin

Margin %

$ 96.31 $ 146.29 $ 214.82 $ 194.70 $ 163.03 Average

96.31% 97.53% 97.65% 97.35% 97.21% Average

JUN

SUMMER JUL

AUG

Quantities

Quantities

Quantities

22,000 28,000 12,000 15,000 77000

20,000 25,000 9,000 12,000 66000

10,000 10,000 5,000 5,000 30000

Fall/ Winter SEP OCT Quantities

Quantities

HOLIDAY NOV DEC Quantities

Quantities

15,000

4,000

4,000

17,000

4,000

4,000

7,000

8000

8000

24000

TOTAL

160,000 130,000 6,000 90,000 70,000 21000 450000

The Nix line plan is based on the projected demand for both the active customer as well as the fashion-oriented customer. Sales for January and February are light because of the general seasonal decline in demand for swimwear garments. During the spring months of March through May, sales are expected to increase due to a rise in temperature as well as the arrival of spring break holiday and vacations. The summer months of June through August have the highest sales because of the tendency of both active customers to participate in water sports as well as the fashion customer tendency to go on lavish vacations. The fall sales for the months of September and October are lighter because of another seasonal drop in demand for swimwear. The holiday season of November and December is when resort wear is released, people go on vacations to warmer climates and is also when customers tend to spend the most amount on fashion and leisure goods. For this reason, sales are raised closer to the numbers of the spring season even though the weather in most areas of the United States is colder. The Whelk and Murex appeal more to the fashion-oriented customer and consequently are only sold in the spring and summer seasons to account for the reduced demand for swimwear in the off seasons.

19

STRATEGY DEVELOPMENT

PURPOSE

As a company that prides itself on providing customers with the

best quality swimwear as well as promoting business practices that support the earth and environment, it is important that we develop a strategy that helps us achieve our mission and vision. Our objective for developing a sourcing strategy for Nix is to ensure a successful and efficient product placement plan. Since domestic production is particularly expensive, we’ve decided on sourcing outside of the United States in order to maximize profits. The nations of Bangladesh, Cambodia, Indonesia, and Thailand have sparked the interest of our company due their knowledge and experience in the production of swimwear. In addition, these countries have credible suppliers who have worked with other top swimwear brands such as Pac Sun, Billabong, and more. By identifying the most dependable suppliers with the best prices, services, and reputability, we will be able to achieve our strategy by determining the best opportunity for reducing risks and maximizing margins, all while following our sourcing guidelines.

22

23

P R O D U C T B R E A K D OW N

T H E

24

C E R I T H

STYLE #

NX910

VO L U M E

190,000

SEASON

ALL YEAR

SELLING MONTHS

JAN, FEB, MAR, APR, M AY, J U N , J U L , A U G , S E P , O C T, N O V, D E C

The Cerith is a bikini with minimal coverage designed for more leisure-oriented activities such as a dip in the pool or laying out on the beach. This style is offered year-round and is made of lightweight neoprene, mesh and nylon spandex fabrics. The minimal coverage and hardware-free construction allows for ultimate comfort and a general ease of movement for all kinds of everyday water activities as well as providing stylish details such as mesh overlays, contrasting straps and accentuated stitching. Because the Cerith will be sold year-round, we are projecting a total of 190,000 units for manufacturing.

25

P R O D U C T B R E A K D OW N

T H E

26

W H E L K

STYLE #

NX412

VO L U M E

130,000

SEASON

SPR/SUM

SELLING MONTHS

M A R , A P R , M AY, J U N , J U L , AU G

The whelk is a medium coverage tankini designed for casual water activities such as kayaking and paddle boarding. The style is seasonal and only offered between March and August. It is made of lightweight neoprene, mesh and nylon spandex fabrics. The top features a strapless design with a triangle mesh insert and zig-zag stitching. The medium coverage bottom features a printed neoprene and side mesh panels. Because the Whelk will only be sold March through August, we are projecting a total of 130,000 units for manufacturing.

27

P R O D U C T B R E A K D OW N

T H E

28

LU C I N E

STYLE #

NX129

VO L U M E

120,000

SEASON

ALL YEAR

SELLING MONTHS

JAN, FEB, MAR, APR, M AY, J U N , J U L , A U G , S E P , O C T, N O V, D E C

The Lucine is a combination rash guard and full coverage bottom designed for high performance activities such as surfing and wake boarding. This style is also offered year round and appeals to our customers who can be found challenging themselves in and out of the water. It is made of lightweight neoprene, mesh and nylon spandex fabrics. The rash guard features a circular cutout in the back with an S-hook closure and a central panel of printed neoprene fabric. The bottoms feature a high-rise waist, contrasting waistband and side mesh panels. Because the Lucine will be sold yearround, we are projecting a total of 120,000 units for manufacturing.

29

P R O D U C T B R E A K D OW N

T H E

30

M U R E X

STYLE #

NX418

VO L U M E

70,0 0 0

SEASON

SPR/SUM

SELLING MONTHS

M A R , A P R , M AY, J U N , J U L , AU G

The Murex is a one-piece that offers the maximum amount of coverage and designed for those with conservative taste as well as those participating in high performance water sports. The style is seasonal and only offered between March and August. It is made of lightweight neoprene, mesh and nylon spandex fabrics. The piece features a central patterned neoprene panel, a scoop neckline and triangle mesh insert on the back. Because the Murex will only be sold March through August, we are projecting a total of 70,000 units for manufacturing.

31

VA L U E S At Nix our values serve as direction for our actions and express how we operate our business:

AESTHETIC DESIRE FOR BEAUTY WITHIN OUR PRODUCT

INTEGRITY ACTING IN LINE WITH OUR BELIEFS

ENVIRONMENT RESPECTING THE FUTURE OF THE EARTH

RESPECT SHOWING CONSIDERATION, REGARDING WITH HONOR

ACHIEVEMENT SUCCESSFULLY ACCOMPLISHING OUR GOALS

COMMUNICATION OPEN WITH OUR CONSUMER, SUPPLIERS, AND MANUFACTURERS

ADVENTURE CHALLENGING THE BOUNDARIES WE ARE GIVEN

CREATIVITY FINDING NEW WAYS TO BE INNOVATIVE

32

33

SOURCING GUIDELINES

34

OV E RV I E W Nix is dedicated to sourcing products from suppliers who conduct their business in a just and responsible manner and share our belief in protecting human rights and maintain the environment.

All Nix suppliers are expected to make every effort possible to avoid any abusive, exploitative or illegal conditions in their factories. Below are some of our efforts to ensure that our suppliers are honoring their promise to uphold our principles.

M A N AG E M E N T The factories will have a publicly available policy dedicated to social accountability and compliance with applicable laws and other requirements. They will also operate with full compliance with the laws, rules, and regulations, including those concerning labor, worker health and the environment of their country. Lastly, the factory will allow the Social Compliance Officer unrestricted access to all areas of the facilities and to all related records at all times.

We have prohibitions on child labor, forced labor, harassment or abuse, and discrimination. Nix takes the extra steps necessary to ensure the health and safety of workers, as well as ensuring workers receive proper wages and benefits at the legal or local industry minimum standards. To take it a step further we want to win and retain customers’ loyalty by building partnerships with them and supply them with products and services that are of exceptional quality.

35

C T IOTULNET RY A N A LY S I S Business Climate Costs Government Location Risks Social Stability Sourcing Guide.

Textile Industry Trade Agreements Labor Force Socio-eco-political Total Average

CAMBODIA 4 9 5 5 4 5 5 8 4 3 6 50 5.3

INDONESIA 6 6 6 7 4 6 7 9 3 8 5 67 6.1

THAILAND 5 4 4 6 4 6 7 8 2 8 6 60 5.5

C O U N T RY A N A LY S I S

36

BANGLADESH 3 9 5 5 2 2 3 7 2 6 7 51 4.6

SELECTION OF COUNTRIES

As mentioned previously, manufacturing in the United States is very costly, which has led to our decision to look overseas in the countries of Bangladesh, Cambodia, Indonesia, and Thailand. Considering the close proximity of these countries within the South East Asia region, they present prime locations for convenient shipping across the Pacific Ocean to the Port of San Francisco, which is only two hours away by truck to our distribution center in Santa Cruz, California. These countries are known for their experience and expertise in the manufacturing of swimwear and low labor costs. Not only have these countries gained the attention of our company but they have also captured the attention of other prominent brands as well. For example, brands such as Nike, Adidas, Target and many more have gone to these countries for the manufacturing of swimwear or sportswear, similar to the merchandise Nix has to offer.

After much research, we found that Thailand has one of the biggest textile industries in the world and continues to grow as it makes advancements in technology and machinery.

While Indonesia has an exceptionally skilled work force making it the 5th largest overall labor force in world with a 91% labor literacy rate. In addition, to the textile and garment industry one of the biggest industries in the country of Cambodia, it also boasts relatively low labor costs sparking the interest of many companies interested in sourcing overseas in order to save on cost of labor. Bangladesh has attained a stable macroeconomic environment and a dynamic private sector leading to the increase in the country’s gross domestic product to nearly $120 billion.

With Nix being a new and developing swimwear brand, we wanted to focus on countries that will be able to meet our requirements of quality products, inexpensive labor, and respectable sourcing guidelines. The following section will discuss key highlights of each country and how it relates to our business. These highlights will touch on the state of each countries textile industry, government, social stability, workforce, sourcing guidelines, risks and benefits, costs, and business climate.

37

C O U N T RY R A N K I N G S

4

BUSINESS CLIMATE Cambodia offers some potentially rewarding options for investment for foreign

companies. Although the country has a small and relatively poor domestic market, investment may be sustained by the country’s location in the center of a large and expanding regional market. Businesses contemplating long term investment in Cambodia should be conscious of possible potential restrictions, which include high electricity costs, taxes and government regulation, corruption, and under-developed infrastructure (Bailey).

However, working with the Garment Manufacturers Association in Cambodia can help lower the risks of doing business in Cambodia. The organization has become relatively powerful in that it is able to secure benefits for all members in close negotiations with the Cambodian Government. These benefits include lowering the chances of corruption as well as provisions of improved infrastructure and reduced export compliance expenses (Bailey).

COSTS

9

Cambodia has a competitive advantage against other countries due to its cheap labor. Labor costs in Cambodia are among the lowest in the world and most garment workers don’t receive a living wage, which is defined as wages that cover the basic costs of rent, food, and bills. The legal minimum wage in the industry is $50 a month, which is considerably lower than the $80 calculated as the minimum required to live in decent conditions and support a family. Despite the low wages, the demand for the garment industry is high due to the lack of alternatives. As a result, many workers have long hours, lack money for basic needs, and have poor housing conditions attributed to health problems (Labour Behind the Label).

Low wages, have also caused many workers to protest and strike, demanding for the government to raise the industry’s minimum wage. Journalists, Chun Han Wong and Sun Narin from the Wall Street Journal explains, “The strike started as a protest against the government’s offer last month to raise the industry minimum wage 19% to $95 a month, starting in April—well short of union demands for $160 a month. Workers then scorned a sweetened offer made by officials last week—a 25% increase to $100 a month, starting in February—and defied government orders to return to work by Jan 2.” (Narin). The low cost of labor provides both advantages and both disadvantages to companies interested in doing business in Cambodia, in that although the labor cost is one of the lowest in the world, it increases and fuels riots and protests by workers which can delay production time and be a risk for businesses.

38

CAMBODIA GOVERNMENT

Cambodia suffered years of during the Khmer Rouge rule. Following the Paris Peace Accords in 1991 which delegated democratic elections and a cease fire, the United Nations Transitional Authority in Cambodia (UNTAC) was set up to oversee the execution of the UN Peace Settlement. UN sponsored elections in 1993 helped repair some semblance of normalcy and a new constitution, declared on 24 September 1993, transforming Cambodia into a Constitutional Monarchy (ASEAN).

Royalists formed a coalition government with the Cambodian People’s Party (CPP) making Hun Sen, the CPP leader and Prime Minister. Over the past five years, Cambodia has had much more political stability and territorial unity than it has in past decades. In the most recent National Assembly elections, the CPP won the party vote, returning Hun Sen to power. The election was renowned for its calm and control, and the whole process was described as more organized than previous years. In 2004, King Norodom Sihanouk abdicated the throne with his son Norodom taking his place— an outcome that was warmly welcomed by the Cambodian people (ASEAN). The previous information concerning Cambodia’s government shows that it is become increasingly stable over the years, lowering the risks of doing business in the country, making it a prime opportunity for Nix to take advantage of (ASEAN).

5 39

BENEFITS

C O U N T RY R A N K I N G S

Although, the Cambodia economy is less than ideal, growth is expected to occur. As of 2012, economic growth is likely to be driven by domestic and external demand specifically linked to public investment and major energy infrastructure. External demand is predicted to grow, even though it will only be moderate, with demand coming from the U.S. and Europe. Manufacturing focused on the clothing and textile market is likely to remain steady. Due to the rising cost of wages in China, the garment/ textile industry will see benefits from businesses relocating from China to Cambodia (Global Edge).

Even though, low labor costs are the country’s biggest advantage, Cambodia is also beneficial to companies due to its competitive investment incentives, large market size and access, open economy, and its strategic location in the greater Mekong sub region. The announcement of the new investment law means that Cambodia now provides the best business incentive package in Southeast Asia; making the nation’s outward-looking economy a very compelling place to invest. As a less developed country, Cambodia has advantageous access to some of the world’s richest markets for a number of products like garments and textiles. The country also tops the rankings of LDCs in market-friendliness (Phnom Penh). With the provided information it shows that even though the country faces problems, steps are being taken in order to improve conditions in the country particularly in business to make it a better option for foreign investors.

4

RISKS

As one of the poorest countries in South-East Asia with limited assimilation into the world economy, Cambodia has a long ways to go in terms of providing strong investor protections and rule of law. Even with the approaching elections, major change is doubtful and Cambodia will continue to symbolize high risks to investors, particularly in terms of corruption and reputational risks arising from human rights and environment issues (McGeown).

40

As mentioned previously, changes in the country are unlikely to occur with approaching elections, since it is a one-party state and opposition candidates are blocked from standing.

The Cambodian People’s Party has controlled the government since 1979, and has successfully in maintained over 30 years of peace in a previously-war torn country. Businesses can be confident in considerably stable regime and predictable policymaking. Nevertheless, this also indicates that the cumbersome bureaucracy, extensive conflicts of interest, and a lack of civil rights attributed with the autocratic state will continue to carry on in the long term (McGeown).

Although, Cambodia has been able to lure in businesses with its low labor costs, it continues to offer many disadvantages to investors concerning insufficient infrastructure and lack of a supply of dependable electricity, low worker productivity and increasing discontent among urban and rural workforces which adds to the likelihood of strikes (McGeown).

CA MBO D IA

SW S T R E N G T H S

W E A K N E S S E S

• Flexible textile industry and highly promising tourism sector

• Considerable share of agriculture in GDP; vulnerable to climatic vagaries

• Potential offshore hydrocarbon reserves (oil and gas)

• Underdeveloped electricity industry • Lack of skilled labor

• Country benefiting from financial support of bilateral and multilateral donors

• Dependent on concessional finance due to weal fiscal revenues

• Political stability since 1997

• Significant governance shortcomings

• Regional integration (ASEAN)

• High poverty levels

+

OT

O P P O R T U N I T I E S

T H R E AT S

• Higher crop yields

• “Oil Curse”—large amounts of oil resources but ill-suited to absorb the potential wealth of it

• FDI potential

• Worsening governance

• Tourism development

• Loss of aid

• Better governance

• Garment exports competition

• Emerging Private Sector

• Growing unemployment/insecurity

• Oil and gas exports

41

C O U N T RY R A N K I N G S

5

SOCIAL STABILITY

While Cambodia still suffers from corruption, land grabs, and human rights violations connected to the government, for many people, especially in the older generation, the social situation is considered relatively stable compared to previous conditions established by the Khmer Rouge regime. Conditions are much better now for most Cambodians, but are still limited by most external standards.

Yet, improvements in basic services such as infrastructure and education, has led to creation of more roads and schools, thus, creating a developing skilled workforce. Other areas of advancement include health programs, agricultural and water programs, and women’s programs (Ricigliano).

However, there is a possibility of change in the social stability of Cambodia, as the younger generation increases and causes a change in the overall mindset compared to that of the older generation. The younger generation expects more than just the basic services from the Cambodian government and are demanding improvements in economic opportunity, political freedom, less corruption, increased standards of living, better education, etc (Ricigliano).

Overall changes in the current social situation of Cambodia are not expected to shift in the next 1218 months, despite the changing attitudes of its citizens. By more companies with high standards for their suppliers entering the country, it can be expected for the country to make improvements in order to keep an influx of foreign investment in their country, thus, improving the social standards of the country as well.

42

CA MBO D IA

SOURCING GUIDELINES

In 2001, “Better Factories Cambodia” program was established by the International Labor Organization (ILO) in order to monitor working conditions in Cambodia’s export garment industry. In addition, the program helps to raise labor standards and competiveness in the garment industry. In addition, the program is committed to help build the reputation of Cambodia as an ethical sourcing destination, support enforcement efforts by the Royal Government of Cambodia, prompt major changes in the chronically non-compliant factories, and advance improvements in working conditions on critical issues across the industry (ILO).

The Garment Manufacturer’s Association of Cambodia (GMAC) has the mission to collaborate with all stakeholders in pursuing a beneficial business environment for the growth and development of the apparel industry. It also aims to provide quick and crucial information pertaining to the industry, along with supporting the Cambodian government and export industry in the development of human capital. Lastly, its goal is to embrace social responsibility in management principles so as to develop mutually beneficial relationships and sustainable business practices (Hinrich Foundation).

With the country taking steps to improve their sourcing guidelines in their factories it shows that the government and industry are aware of the increasing importance of transparency and how it can quicken improvements across the garment industry in Cambodia.

5

43

C O U N T RY R A N K I N G S THE TEXTILE INDUSTRY

8

Cambodia’s garment industry is the country’s largest industrial employer, and is now competing against tougher global competition and declining demand. The garment industry makes up 80% of Cambodia’s foreign exchange earnings and employs an estimated 350,000 people in over 300 factories (Business in Asia). Many of the garment factories in Cambodia are between small and medium in size in comparison to the factories of Bangladesh and Vietnam.

Results from a survey that about 65% of the garment factories in Cambodia employ between 500-2,000 workers with the most common size of factories being between 500-1,000 workers.

Only 3% of factories in Cambodia, employ more than 4,000-5,000 workers (Houssain).

The industry began to develop after new labor laws were passed encouraging labor unions and allowing the International Labor Organization to inspect factories and publish its findings. In turn, the U.S. agreed to cut tariffs on Cambodia garment exports, buying 70% of all the country’s textiles in the 1990s. Even after the deal expired in 2005, Cambodia continued to maintain its higher working conditions, resulting in the garment industry making the national economy one of the fastest growing in the region (Business in Asia).

The rapid growth of apparel industry in Cambodia has increased due to the flow of foreign firms chiefly from Asian region. Currently, Cambodia is very dependent on its export oriented ready-made garments industries, which produced around 90% of its total export earnings and created employment opportunities for 27% of the total industrial employments opening up job opportunities for a large number of illiterate poor women in the labor market. The current state of Cambodia’s garment industry has more than 300 garment export-oriented factories operating and registered with the Garment Manufacturers Association of Cambodia (GMAC), with 94% being Foreign Direct Investments, 1% joint venture, and 5% locally owned (Houssain).

44

CA MBO D IA

The textile and garment industry in Cambodia does not enjoy cash incentives and direct support from the government like those in the country of Bangladesh. Indirect incentives for growth are in the form of investment incentives, such as, tax low income and corporate tax rates, exemptions of custom duty on import of raw materials and capital machinery, incentives for special economic zones etc. (Houssain).

In spite of these challenges, investment has increased in Cambodia’s garment and textile industry.

Research from the Council for Development of Cambodia (CDC) indicates that Cambodia obtained 40 new factories valued at $239 million in 2012. Industry prospects are good, with the Ministry of Commerce reporting that the garment and textile exports in 2012 grew 14% year-on-year to $4.6 billion.

45

C O U N T RY R A N K I N G S TRADE AGREEMENTS

The US/Cambodia Bilateral Trade Agreement, has been a unique trade agreements set up since 1999 between Cambodia and the United States. This trade agreement allows for quota increases for Cambodia’s textile and garment exports into America year on year as long as the country meets national labor laws and international labor standards. Under this agreement, factories in Cambodia have been routinely monitored by the International Labor Organization (ILO), which collaborates with factory owners, workers, trade unions, and the government in order to improve standards and conditions.

The results been positive and the commitment to improving labor conditions is now seen as one of Cambodia’s key advantages in attracting foreign buyers (Labour Behind the Label).

With the establishment of this trade agreement, it benefits both Cambodia and the United States in that Cambodia receives improvements in their economy and companies from the U.S. have a better possibility of working with ethical suppliers.

4

LABOR FORCE

Most Cambodian in the workforce are still involved in agriculture, forestry, and fishing. Foreign investment is essential to the creation of jobs in Cambodia. Apprehensions among foreign investors about political insecurity and corruption have resulted in the lack of foreign capital inflows and only slow advances in job opportunities. An additional problem to foreign investment and job creation has been the country’s lack of a trained and experienced labor force having the desired productive skills (Overton).

In spite of these issues, the new garment factories surrounding Phnom Penh have become a vital source of manufacturing employment, mainly for women. The amount of women in the labor force—over 50% of the total population—is one of the biggest in the world, a disparity created in part by the massive destruction of men during the period of Khmer Rouge rule.

By law, women are ensured equal rights, but traditional views of the proper role of women has obviated women from entering senior management positions in business (Overton).

3 46

Although the country struggles with foreign investment due to political instability and corruption, thus preventing the creation of jobs, Cambodia still has a workforce dedicated to a variety of industries, especially the garment and textile industry. With this dedication, Cambodia proves to a key investment for our company as we choose suppliers.

CA MBO D IA

47

C O U N T RY R A N K I N G S S O C I O E C O P O L I T I C A L

6

SOCIAL

The social climate of Cambodia, is one that has become more stable in recent years, with

a growing population, and an expanding education system contributing to its overall growth.

The total population of Cambodia is 15.2 million, with an annual growth rate of about 1.63%. An estimated 1.55 million people reside in the capital of Phnom Penh (AVIC). Cambodia’s life expectancy increased by 24.9 years between the years of 1980 and 2012, from 38.7 to 63.6 years old (UNDP).

The educational system in Cambodia includes elementary school (grades 1 to 6), junior

high school

(grades 7-9), senior high school (10-12), and university along with other higher

education institutions. The average and expected years of schooling respectively increased by 0.8 and 4.0 years, from 5.0 to 5.8 and 6.5 to 10.5 years (UNDP). Education in the country is only required until the 9th grade, from then on minors are allowed to choose attend or not to attend school. Many of them end up joining the work force of Cambodia (CDC).

Overall, Cambodia’s Human Development Index (HDI) from 1995 to 2012 experienced

fast growth in the three HDI dimensions at an annual growth rate of about 1.7%, with a greater increase than predicted by their previous performance (UNDP). With these advances in their social climate, Cambodia shows promise in becoming increasingly stable over the ensuing years, therefore, making it a definite possibility as a country for Nix to do business in.

48

CA MBO D IA

ECONOMIC

Over the past 20 years, Cambodia’s economy has been included among the fastest growing

economies, unrivaled by any other post-conflict society. Factors responsible for this fast economic growth include the restoration of peace and security, large public and private capital inflows, an open economy, relatively stable macroeconomic conditions, and dynamic and integrating neighborhoods (UNDP).

Even though, industrialization during the 1990s has decreased the agricultural sector’s share

of GDP from 55% in 1990 to 31.4% in 2004, agriculture continues to be a vital source of income for majority of the rural population. On the other hand, the industrial sector has quickly developed and its GDP increased from 11% to about 27%. Macroeconomic growth and fiscal stability improved since the beginning of 1999 and additionally strengthened under the international Monetary Fund’s (IMF) Poverty Reduction and Growth Facility. Other efforts include, trade reforms established by the World Trade Organization membership and focus on trade facilitation and corruption matters is essential in order to help the garment industry compete in a liberalized world market (European Union).

In recent years, economic growth has been favorable, averaging 9% from 2000-

2005. The growth rate rose to 9.5% in 2004 and accelerated to 13.4% in 2005, in spite of negative external factors such as higher oil prices and avian influenza. The economic growth is mainly dependent on the garment, tourism and construction sectors, with garment exports having declined following the abolition of quotas at the start of 2005 (European Union).

Although, Cambodia remains as one of the poorest countries in South East Asia, it allows for inexpensive labor, making it advantageous for our company to choose supplier from there.

49

C O U N T RY R A N K I N G S

POLITICAL

The process of democratic reconstruction began after the signing of the

Paris Peace Agreements in October 1991, following twenty years of conflict and civil war. This also launched the beginning of Cambodia’s transition to a market economy. With King Norodom Sihamoni as head of state since his father’s succession in 2004, the country has begun to experience political stability (European Union).

Although Cambodia has made extensive gains in the field of human rights

in the last few years, it is still a country in a post-conflict situation. There are various local and international human rights organizations and civil society groups actively participating in advocacy, training and protection work in the human rights field, but much remains to be done. Violence continues to be a problem. Weak law enforcement increases the situation, causing significant impunity, fueled by corruption. In order to silence political opposition and critics, the government has begun enforcing criminal prosecutions for alleged defamation or incitement (European Union).

Even though, the country has experienced improvements in its political

climate, there still remains apprehensions from foreign investors due to Cambodia being a post-conflict country. However, Nix believes that as more and more foreign companies invest in the company, the gained increase in their economy could have the same effect on the political situation of Cambodia.

50

CA MBO D IA

51

C O U N T RY R A N K I N G S

6

BUSINESS CLIMATE

Considering its large domestic demand, stable political situation, growing middle class, and conservative macroeconomic policies, Indonesia has risen in the past few years to become a very appealing venture for direct foreign investment. The country not only welcomes but also encourages increased FDI as they see it as an opportunity to create more jobs, develop Indonesia’s infrastructure, and ultimately spur economic growth. Still, concerns such as the existing poor infrastructure, corruption, complicated and vague business regulations, and strict labor laws can sometimes deter foreign investors.

In Indonesia, The Investment Coordinating Board (BKPM) is responsible for issuing investment licenses to foreign entities and has taken steps to simplify the application process for better coordination between various government institutions. They recently, in 2012, created an online portal for its National Single Window for Investment, which easily allows foreign investors to apply for and track the status of licenses and other services online. While BKPM was intended to act as a one-stop service institution, investments in the mining, oil and gas, plantation, and other sectors require further licenses from related ministries and authorities. Likewise, certain tax and land permits, among others, typically must be obtained from local government authorities. (Investment Climate Statement) However, for the purposes of our company, the business and investment climate in Indonesia seems fairly stable and easy to access, making the country a very attractive destination to source our product.

COSTS

6

When looking at out Southeast Asian countries, like Bangladesh or Vietnam, Indonesia’s costs appear somewhat high. The country’s capital, Jakarta’s, minimum wage is not supported by its labor’s productivity, whereas a country like Bangladesh has less productive labor but its low minimum wage makes it a more attractive destination. However, infrastructure improvements are expected to help reduce the overall costs. In 2013, the Indonesian government invested $19 billion in infrastructure, to improve sectors like transport and utility, as well as to keep up with the rising FDI going into their manufacturing sector. (Inside Fashion Live). The cost of labor is roughly eight US cents in Indonesia, placing it on the more expensive side of the spectrum. Still, if elements such as strict labor laws factor into such a cost, our company would be willing to pay more to assure that our potential supplier kept in line with those laws as well as our code of conduct.

52

INDONESIA GOVERNMENT

The Republic of Indonesia, as it is fully titled, is a stable democratic country with the executive, legislative, and judicial administrative powers all equally shared. Since declaring their Independence from Japan in 1945 and instigating a Constitution, their Constitution has been amended several times, the last in 2002. By direct vote of the population, presidents and vice presidents are elected for five-year terms with the possibility for a second term if eligible. These elections are considered both just and transparent, despite the strong democratic values that tend to dictate the government. Similar to other countries, the president, with an appointed cabinet, is seen in Indonesia as a top political figure, with the full authority to direct the administration of the government. The political parties currently in existence include the most popular Democrat Party (PD), the Functional Groups Party (GOLKAR), and the Indonesia Democratic Party Struggle (PDI-P).

Indonesia’s new found democracy has thrived since it was fully established in 2004 and continues to show steady signs of improvement, making it a safe bet for potential business investors like Nix.

6

53

C O U N T RY R A N K I N G S BENEFITS

Indonesia is in fact Southeast Asia’s largest economy, with a nominal GDP of $880 billion, and is also the world’s fourth most populous country with more than 240mn people. It thus offers investors a vast home market in which to do business. One major strength noted by the SWOT analysis is Indonesia’s successful vertically integrated supply chain. A number of garment manufacturers researched have textile factory subsidiaries or partners that would ultimately be a great and convenient source for Nix’s unique fabrics. Since our suits are majority made of neoprene, a synthetic manmade fiber, our product category helps us evade the higher rates and duties usually expected for Indonesian’s apparel sector due the use of either natural or imported resources.

In fact, the country’s garment industry had been dormant for a decade up until around 2013 due to high costs and an unfavorable investment environment. However, with the recent favorable government reforms in manufacturing and buyers seeking out different sourcing ventures, Indonesia has garnered itself a brand new image. In the end, Indonesia holds a number of significant advantages for foreign investors, especially those seeking cheaper alternatives to China’s rising wages. Lower labor costs, political stability, the availability of raw materials and cheap industrial land all make an attractive and convincing case for the Indonesian market.

RISKS

4

The country’s unique geographic location and topography renders the country prone to a number of potential natural disasters and environmental dangers. Located in the “Ring of Fire”, an intersection of shifting tectonic plates featuring arc of volcanoes and fault lines around the Pacific Basin, Indonesia frequently runs the risk of seismic upheaval or volcanic eruptions. In addition, occasional floods, droughts, tsunamis, or forest fires also exist as potential natural hazards.

Indonesia scored an improved 50.8 (out of 100) in Business Monitor International’s Environmental Risk Ratings, but continues to be dragged down by scores of just 49.1 and 38.7 respectively, in the ‘infrastructure’ and ‘institutions’ sub-components (BMI). A constant struggle with infrastructure despite recent efforts as well as pervasive corruption remain crucial obstacles to improving the business environment, and these issues must be addressed if Indonesia hopes to continue to attract increased foreign investment (BMI).

54

INDONESIA

SW S T R E N G T H S

W E A K N E S S E S

• Garment & textile industries is vertically integrated, thus all aspects of the supply chain are involved, from the production of raw materials to construction and finishing

• Aging machinery currently used hinders production and drives up energy costs • High interest rates

• Apparel & textiles sector is a huge segment of the Indonesian economy, as both a large source for jobs as well as export earnings

• Lack of supportive infrastructure

• Significant dependence on imported cotton for domestic and export needs

• Strong relationships with major importers and retail corporations

+

OT

O P P O R T U N I T I E S • Increased global and regional exports through ASEAN’s evolution into a textile and apparel manufacturing hub • New government modernization scheme for the sector

• Vast local apparel market of roughly 240 million people

• Elimination of tariffs between ASEAN nations and new ASEAN trade

T H R E AT S • Rise in smuggling

• Additional crowding and competition in the sector with the upsurge of Bangladesh, Sri Lanka, and Vietnam markets • Fluctuation of the rupiah causing limitations for majority cash-on-hand enterprises

• Increasing international technical and trade barriers

55

C O U N T RY R A N K I N G S SOCIAL STABILITY

Despite economic and political growth and prosperity, Indonesia still struggles with some social issues, including low human development as well as high infant mortality rates.

Nevertheless, a number of efforts are being to combat these issues and raise the standard of living.

The country’s declining population growth rate and rising labor force participation rate already assists in doing so, and the government is taking the steps necessary to achieve their goal of provide every citizen in the population with social insurance by 2029.

Other areas of concern, such as increasing religious intolerance and ethnic violence, pose some threat to the social stability and harmony of the country as well.

6 56

INDONESIA SOURCING GUIDELINES

Since Indonesia became a member of the International Labor Organization in 1950, the two groups have closely collaborated to create a labor system that fits the priorities of the ILO, as well as the Indonesian government and three major trade unions. This mandate outlines three priority areas for the Decent Work Country Programme (DWCP) for 2012-2015.

EMPLOYMENT CREATION FOR INCLUSIVE AND SUSTAINABLE GROWTH Mainstreaming of employment in macroeconomic, labour and social policies through sound labour market analysis and tools Improved policies and programmes to better equip young women and men entering the world of work Optimized employment outcomes of public and community investments Improved policies and programmes on entrepreneurship, business and cooperative development for job creation including financial inclusion Workers’ skills are upgraded through demand-based and competency-based training to better meet labour market needs SOUND INDUSTRIAL RELATIONS IN THE CONTEXT OF EFFECTIVE EMPLOYMENT GOVERNANCE Labour administration provides effective services to improve working conditions and environment Tripartite constituents effectively engage in social dialogue to apply labour regulations and international labour standards Strengthened institutional capacity of employers and workers’ organizations to contribute to sound industrial relations according to their respective mandates and responsibilities SOCIAL PROTECTION FOR ALL Government and social partners have greater capacity to design and implement social protection policies and programmes Barriers to employment and decent work are addressed, particularly gender gaps and for persons with disabilities Effective implementation of the National Action Plan for the elimination of the Worst Forms of Child Labour Enhanced policy, institutional framework and programme implementation for empowerment and protection of Indonesian migrant and domestic workers Integrated HIV policies and programmes for women and men workers

7

57

C O U N T RY R A N K I N G S THE TEXTILE INDUSTRY

9

The textile and garment industry is a valuable asset to Indonesia’s economy, encompassing over 10% of the Indonesia manufacturing workforce, employing about 2 million people directly and 4 million indirectly. The industry also contributes a sizeable amount of foreign exchange to the nation. Most of the main textile production areas exits in in the DKI Jakarta, east, central and west Java, Bali, western Sumatera, Yogyakarta, Batam, and Banten provinces. The United States currently ranks as Indonesia’s biggest export market, accounting for a full one-third of their textile imports, followed by the European Union and Japan.

Indonesia has a rooted tradition in the production of exportation of ready-made garments and home-fashion textiles. The sector is vertically integrated in almost every phase of production, including a large existing synthetic fiber manufacturing industry in place despite the dominance of imported raw cotton. As one of the largest textile producers in the ASEAN region, production capacity usually runs at a very high utilization rate. However, efforts in equipment expansions and upgrades had to be halted as a reduced FDI, high inflation, and political instability posed more prevalent issues.

As a result, Indonesia is struggling to compete with its neighbors in Asia-Pacific, with, according to a survey, close to 10,000 of their production machines being over 20 years old (Sucofindo). In 2007, the Indonesian government began composing a textile machinery restructuring program that ultimately delegated funds valued at 117 IDR (Indonesian rupiah) to approximately 200 companies in 2011.

Once the new mandated regional minimum wages were put into effect in 2012, Indonesia’s textile and garment industries were expected to experience stiff competition as wage costs rose and export growth slowed in 2013. Yet, global textile consumption is forecasted to expand by an annual average rate of 4%, reaching 87 million tons by 2020. With the expiration of the Multi-Fiber Arrangement, a policy governing textile trade between nations, and the subsequent upsurge of quota-free trading, the apparel and textile sectors saw a shift in supply bases, reductions in sourcing prices, and a reorientation of the buyer-supplier relationship.

58

INDONESIA

According to an article published April 15, 2014, the value of Indonesian textile exports is predicted to hit $13.3 billion by the end of 2014. With the United States, Indonesia’s biggest market for apparel and textile imports, currently seeing gradual economic recovery, Indonesia has experienced a stable five percent year-on-year increase in exports to the US. The government also hopes to see a four to five percent increase in Indonesia’s export share within the world market in the coming 10 years. China, South Korea, and Thailand have all expressed interest in establishing textile manufacturing firms in Indonesia, specifically in Central Java due to its favorable business climate, low wages, and accessibility to major ports.

59

C O U N T RY R A N K I N G S

3

TRADE AGREEMENTS

As a member of ASEAN, Indonesia plays a part in the development of the ASEAN Free Trade Area (AFTA) policy, which pursues the lowering of intra-regional tariff between the ASEAN countries through the Common Effective Preferential Tariff (CEPT) scheme. More than 99 percent of products within the CEPT Inclusion List (IL) of the ASEAN-6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand) have been reduced to the zero to five percent tariff range. With around 80 percent of products in the CEPT ILS and roughly 66 percent with tariffs in the zero to five percent range, ASEAN’s newest members (Cambodia, Laos, Myanmar, and Vietnam) are not far behind. In January 2003, the ASEAN-6 committed to and successfully eliminated tariffs on 60 percent of products in the IL following the signing of the Protocol to Amend the CEPT-AFTA Agreement for the Elimination of Import Duties.

Since there are no currently established and in effect trade agreements between the United States and Indonesia, our products will not receive any of the benefits that other foreign imports enjoy. However, a US-Indonesia FTA is has been proposed and it poses a potential for freer traded goods in the future.

In the meantime, Nix can enjoy benefits like little to no duty rates if we choose to source and send our fabrics from an Indonesian trade partner, like China or Japan, to our Indonesian garment manufacturers.

8

LABOR FORCE

Indonesia’s current labor force figure, recorded in 2012, includes 118,378,606 million individuals, putting the country as the fifth largest in the world for overall labor force. The number has shown a steady increase over the years and similar growth for the future is expected, reaching an estimated 120 million people in 2013. While Indonesia may have a huge workforce that parallels that of China, it still encounters a number of challenges. As the country with the largest labor force in Southeast Asia, Indonesia’s rigorous labor laws make the process of employing workers somewhat complicated for businesses, in addition to the rising wages that also make it expensive. The World Bank ranked Indonesia as the sixth most expensive country in which to fire an employee, after the country passed a law in 2003 that requires employers to pay large sums of severance pay to terminated employees.

In the past decade, labor activism has notably risen as laws became much more protective of the workforce. However, the improved employee benefits and severance packages could almost be too generous as they become a gradual deterrent to new investments. In general, it has been found that significant work deficits exist within Indonesia’s textiles and apparel sector, reflected through the high level of employee stress and general health problems that, in the end, diminish firm productivity.

60

INDONESIA

61

C O U N T RY R A N K I N G S S O C I O E C O P O L I T I C A L

5

SOCIAL

A country not just diverse in landscape, Indonesia’s culture is also both vast and unique.

With a total population predicted to hit 253,609,643 by July 2014, the country currently ranks at number five in the highest country populations densities in the world. This population is relatively young, with 21.7% of inhabitants aged between 0-14 years of age and 66.5% aged between 1564 years putting the median age at 29.2. In 2013, research pin the average life expectancy at 71.9 years for the total population, with 69.33 years for men and 74.59 for women. Developed communities range from rural areas of hunter-gatherers to urbanized city centers filled with the modern elite. As of 2012, 44.9% of the overall population lived in these urban areas and the rate of urbanization is estimated around 2.45% in terms of an annual rate of change for 2010 to 2015.

The idea of a traditional family unit remains important for most societies as well as a collective philosophy of the group over the individual, whether the group may be one’s family, village, or island.

Socially speaking, Indonesia’s status and performance in various parameters has been

relatively unfavorable. With a .617 Human Development Index (HDI) rating in 2012, the country is currently ranked 121st out of 187 total countries. The HDI is a tool that measures the overall social development of a country by taking factors such as life expectancy, education attainment, and income into account. A final statistic, as well as one for each individual dimension, is expressed as a value between 0 (minimum) and 1 (maximum). Indonesia in fact falls after a number of its peers, such as Singapore (18th), Malaysia (64th), and Thailand (103rd), in the Index. Evidently, this poor ranking is an area of concern and the government must take action on improving Indonesian social landscape.

62

INDONESIA ECONOMIC

This vast polyglot nation, since the onset of the New Order policy, has gradually utilized

industrial and manufacturing sectors as vehicles for economic progress. In liberalizing trade and foreign policies, the country drew in large and consisted amounts of overseas investors until the financial crisis of 1997. The crisis drew Indonesia into a recession until an influx of exports of petroleum and natural gas as well as a reconstruction of fiscal policy led the country back on track. Annual growth has been recorded above 5% every year since 2004, with the expectations of 2009. While the GDP hit 6.2% in 2012, a lull in foreign investment as well as lowered export pricing is expected to bring it down to 5.3%. A widening account deficit since 2011, amongst other factors, has cause a bit of a macroeconomic imbalance, further exacerbating economic vulnerability. This issue was illustrated in an instance in 2013, when fears of a Quantitative Easing taper by the US Federal Reserve sent the value of the rupiah plummeting. Yet Indonesia’s banking sector remains sturdy in spite of these imbalances, with steadily viable government finances and consistent support from massive foreign investors, like General Motors, hoping to tap into the country’s vast consumer market (MarketLine).

Since 2005, following the economic devastation from the financial crisis as well as the

massive earthquake of 2004, Indonesia still places much emphasis on reviving infrastructure and refining the monitoring mechanism of capitals markets. President Yudhoyono created a National Economic Committee in 2010 that would offer strategic advice for more rapid national economic development. In addition, the National Innovation Committee was instituted to advocate a culture of innovation and provide recommendations for increased productivity, ultimately accelerating economic growth. The President then established the ‘Master Plan for the Acceleration and Expansion of Indonesia’s Economic Development’ in 2011, with $468.5 billion (4,000 trillion Rp) going towards increasing infrastructure, investment spending, and the level of innovation.

Today, Indonesia’s macroeconomic picture is stable. The country still suffers

from poverty and unemployment struggles, and it continues to make attempts to repair the insufficient infrastructure. Despite these setbacks, we can expect Indonesia’s economy to continue to thrive in the future, as its large consumer base, abundant natural resources, and political stability attract more and more potential investors.

63

C O U N T RY R A N K I N G S

POLITICAL

Although Indonesia has returned to relative orderliness since the chaos of

the late 1990s and early 2000s, the country faces multiple challenges and threats to its stability that could flare up again if President Susilo Bambang Yudhoyono’s successor proves incompetent or if improved governance fails to take hold. As such, investors will continue to view Indonesia as one of Asia’s riskier destinations.

Indonesia has held two rounds of peaceful parliamentary and presidential

elections, in 2004 and 2009, suggesting that democracy is finally taking root after a highly uncertain period following the fall of President Suharto in May 1998. Suharto seized power from Indonesia’s first president, Sukarno, in 1966 and ruled through a military-dominated authoritarian regime whose political vehicle was the stillinfluential Golkar party. The immediate post-Suharto period was highly unstable, given that his departure was triggered by economic meltdown. Indonesia subsequently saw the presidency change three times in as many years, and the country was almost torn asunder by separatist rebellions and religious violence, which were only quelled in the early 2000s. Given this recent history, it is still too early to say that Indonesia has taken a decisive turn for the better. (Business Monitor International Ltd)

64

INDONESIA

65

C O U N T RY R A N K I N G S

5

BUSINESS CLIMATE

Exports play a major part in Thailand’s economic system, with an estimated $11.8 billion in exports to the U.S. alone. In recent years, economic growth has created many opportunities for new sales and the expansion of infrastructures within the United States such as telecommunications, U.S. medical products, cosmetics, automotive accessories, and more. However, due to the recent disruption with the government, Thailand’s economy is seeing a decrease. If the government situation with their Prime Minister isn’t resolved, it could lead Thailand into a recession (Marketline).

Another key factor in the business climate is the amount of educated people in Thailand. The Thai government spent approximately $14.35 billion in 2011 on education, and requires a minimum of 9 years of schooling, while 12 years of education is provided by the government. Each year students are required to take a test that determines if they are prepared for the next phase (or level) in their education. This emphasis on education has improved the literacy rate to 93.6% and thus created an educated labor force of 80% (Marketline).

The previously mentioned factors play a key role in the business climate of Thailand; from their export driven economy, to their educated workforce. While the country does have advantages in its export sector and educated workforce, there is still cause for concern with the overall economy of the country and its ability to grow due to the unstable government.

COSTS

Thailand has one of the highest labor costs in the South East Asia region. In 2012, wages were increased to an average of approximately $10. Although this benefits the workers, it has created an uproar among employers, due to the fact that some of them are unable to afford the increase in wages. In addition, foreign investors have taken note in the rising wages and thus taken their business elsewhere (Marketline).

Given the increase in minimum wage, and an economy that is contingent on the government, Thailand presents a disadvantage to businesses wanting to maximize their margins. With surrounding countries offering better prices and quality, Thailand is less likely to be a possible source for Nix to do business with.

4

66

THAILAND GOVERNMENT

Thailand’s government is a constitutional monarchy with the Chief of State, King Bhumibol Adulyadej, and the Head of Government Prime Minister Yingluck Shinawatra. The role of the king is to serve as a public figure to the country, but holds little power. Most of the power resides with Prime Minister Shinawatra who has recently abused her power, thus in danger of having her title revoked by the courts (Thai Embassy)

The government lacks a variety of governance indicators that include a political voice, accountability, stability and a control on violence has created uproar with the country, and a mass amount of protests through Bangkok and the surrounding areas(Peter Shadbolt, CNN).

Corruption is common problem in the South East Asia region, and Thailand is relatively less corrupt compared to others. Given the current environment of the government, it presents more of a risk than a benefit as far as doing business in this country.

4 67

RISKS

BENEFITS

C O U N T RY R A N K I N G S

68

The benefits to becoming involved with Thailand include the amount of educated workers in the country, and low unemployment rate, which currently sits at 0.8%.

Another benefit of doing business in Thailand is their labor laws; the country made great efforts in 2012 to eradicate the worst forms of child labor (Business Monitors)

There are also labor laws such as the Thailand Labor Protection Act of 1998 which establishes the minimum rights of employees in Thailand, which covers working hours, overtime, holidays, sick leave, maternity leave, severance, and basic employee rights. There is also the Thai Labor Standards (TLS-8001) which was produced by the Thai Ministry of Labor which includes similar standards as the International Labour Organization (ILO). It focuses on voluntary commitments from companies that export to the US and European countries. These standards ensure that the workforce in Thailand is treated equally and fairly. (ILO) (SGS)

4

The risks that are involved with doing business in Thailand include a corrupt government, and prime minister, and an unstable society in the major cities of Thailand due to protests and riots. The prime minister has been involved in a serious number of allegations of abuse of her power. She faces trial and could be forced to step down and lose power. This trial is causing an outpour of Thai people who are against the Prime Minister, and hope to see her step down. However, due to the outpour of people, riots have continued to go on throughout the capital, during this trial. However, this trial not only causes mass protests, it also causes a potential decrease in economic stability, growth, and business. As seen in 2006, when the previous prime minister was under fire- the US pulled all negotiations for a trade agreement with Thailand because the US felt Thailand was unstable. (Online Reports, Bangkokpost)

There is also a huge increase in labor costs as compared to other countries like Bangladesh, and Cambodia. In 2012, the country established a national minimum wage of $10. This immediately drove up production costs, and led to many manufacturers relocating to less expensive countries.

The aptitude for disasters due to the countries climate is also something that should be noted. Many disasters have occurred in the country such as monsoons, flooding, earthquakes, tropical storms, and tsunamis. The latest catastrophic disasters was in 2011, and it resulted in one of the worst floods in over 5 decades, with a confirmed death country of over 815 people, and left millions homeless. The 2011 flood damages equated to an estimated $45 billion dollars. These disasters do raise extreme caution as massive flooding can result in economic loss, the damage of factories, and the loss of employees.

THAILAND

SW S T R E N G T H S

W E A K N E S S E S

• Fully functioning/advancing textile industry with room for growth

• Government indifference from the Thai people causing riots and protests through the country

• Westernized culture makes it easier for communication • Mostly educated workforce

• Wage increases causing manufacturers and sourcers to move to cheaper countries

• Laem Chabang port is right next to the North region of Thailand where most apparel comes from

• Economic uncertainty is constantly a preceding matter

• Lack of trade agreement with the US

• Labor laws that fit code of conduct for Nix

+

OT

O P P O R T U N I T I E S

• Huge growth in textile industry

• Growing technology in industries like textile/apparel • Very willing to do business due to export-driven economy

T H R E AT S

• Insurgency in the south • Unstable government • Political distrust

• Unsecure economic status due to government issues

69

C O U N T RY R A N K I N G S

SOCIAL STABILITY

The country’s current social stability is somewhat hindered by the government and the governments influence onto the Thai people. Currently, there are insurgents in the south of Thailand; these insurgents do not believe in the government’s decision making on certain aspects such as education.

(Peter Shadbolt, CNN).

Anti government rallies also occur frequently over the prime ministers ruling, and lack of structural reforms and policies. These rallies are created due to the Thai people that are indifferent on the government which is usually based upon which region they live in. Those who live in cities like Bangkok feel that another form of government would allow the people of Thailand to have a bigger voice. The real problem is that the society is highly unequal, and those with power and money receives all of the benefits from government expenditures and policies while the rest of the nation suffers. Although, due to recent public outbreaks, there have been reform proposals from a wide range of groups, including the prime minister; proposals such as greater government transparency, and a crackdown on voter buying. (BangkokPost)

Given the current stability of the social structure in Thailand, it is unsure how the people of Thailand would react in future situations if the political structure of Thailand worsens. If the people of Thailand react to the government situation by riots, this could impede the process of production, and could effect our manufacturing process.

6

70

THAILAND SOURCING GUIDELINES

In previous years the country had been under scrutiny for their codes of conduct. However, in recent years they have made great strides to change and improve their codes, which include ensuring the safety of the employees and the safety of the workplace, as well as the human rights of Thailand’s working people. Since the country had been under pressure, they also made efforts in 2012 to eradicate child labor, as well as efforts to comply with a number of labor laws (ILO).

There are a few acts that are implemented to ensure the fairness in the workplace.

Acts such as the Thailand Labor Protection Act of 1998, which gives Thai workers basic human rights such as workers only being allowed to work a maximum of 8 hours a day and a maximum of 48 hours per week. The act also gives workers paid vacation, specific days off, and what benefits an employee can receive if they work overtime (ILO).

Another act is the Thai Labour Standards which consists of 12 categories such as general rules, management system, forced labor, remuneration, working hours, discrimination in the workplace, discipline, child labor, female labor, freedom of association, collective bargaining, health and safety, and workers welfare. However, there is backlash to the TLS-8001. Since it is based on voluntary commitments by manufacturers, the Thai Ministry of Labour is having a hard time finding industry support. In the beginning of the TLS-8001 incentives were introduced as a way to entice employers; however, the government plans to cut funding which is causing manufacturers to not see an advantage to using these guidelines. The government also does not provide sufficient incentives both in terms of taxation and privileges for manufacturers (MOL).

There are also a few other acts such as the Social Security Act, which requires employers to register each employee for social security insurance. There is also The Labor Relations Act, which includes principles and procedures of workers’ demands and how to settle labor disputes between employers and employees. And finally, there is the Workers Compensation Act which states that employers much provide compensation for employees who are injured, ill, or die during or as a result from performing their work duties following minimum rates that are set out under the law (SSA).

The provided information, shows that the country puts an emphasis on the state of their workers and manufacturers; along with proving that Thailand has taken the steps necessary in order to comply with foreign countries and their codes of conduct. (Thai Textile Institute)

7

71

C O U N T RY R A N K I N G S

THE TEXTILE INDUSTRY

8

Thailand promotes a very steady growth on the technology in the textile and apparel industry. Thailand’s textile industry is one of the few in the world that can basically supply its own textile industry, high quality to low quality fabrics, to petrochemical and natural fiber production, to fabric and textiles, all the way to design and production. Thailand’s government has focused on making the textile industry more competitive by advancing technological innovations. The apparel industry is also continuously growing with the expansion of fastfashion stores such as H&M who opened their first store in 2012 in Thailand. The opening of these stores has increased demand for fashion and the production of garments (NIST).

In 2013, Thailand’s textile exports grew 8% and are expected to see substantial growth in 2014. Thailand’s textile industry also contributed to 12.3% of Thailand’s GDP. The textile industry consists of 695 knitting mills, 595 waving mills, 398 dyeing and printing mills, 150 spinning mills, and 16 man-made fiber mills (Marketline).

The government and the private sector concentrate on making a more competitive industry, in doing so they encourage the facilitation of growth and innovation in textile technology and production. There are a few associations that Thai textile and apparel manufacturers can partner with in order to ensure a cohesive and advanced. At the forefront of manufacturing swimwear there are two associations to mention (Thai Textile Institute)

72

THAILAND

The first association to mention is the Thai Textile Institute (THTI). The THTI works with the textile and clothing manufacturers to help improve textile technology, increase research and development, help educate the workforce, and also help factories develop brand- building skills in order to build relationships with foreign companies. The second association is the Association of Thai Bleaching, Dying, Printing and Finishing Industries (ATDP). The ATDP serves as a representative of textile processing manufacturers. They provide the necessary information to factories
as well as promote new technology and development as well as environmental conservation (INSERT SOURCE).

Thailand’s textile industry is constantly advancing and growing, and with associations like the Thai Textile Institute, and the ATDP, there is a lot of structure surrounding the manufacturing of textiles, more specifically swimwear. These associations allow for the improvement of technology, which can only help drive costs down in the future, as well as promote different ways to manufacturer these products. (Thai Textile Institute)

73

C O U N T RY R A N K I N G S TRADE AGREEMENTS

There are currently no trade agreements with Thailand and the United States, however, Thailand does have 5 agreements with other countries such as Australia, Peru, New Zealand, India, and Chile. Thailand is also a member of number of associations such as the World Trade Organization (WTO, World Customs Organization (WCO), and International Trade Union Confederation (ITUC). Many of these organizations focus on improving relations

2

with other countries around the world. (World Trade Organization)

LABOR FORCE

8 74

The Thailand labor force is comprised of 39.64 million employees as of 2013, with an 0.8% unemployment rate. There is only 16.04 million people in Thailand who do not work or unable to work, or are students, housewives or elders. Agriculture holds the most employees at 13.3 million people; nonagricultural which includes manufacturing, construction, and wholesale/ retail trade employs about 26.3 million people (Marketline).

Continuing on, unemployment rate can be broken down by regions. For example, those in the Northeast and South have the highest unemployment rate at a 1.1%; this isn’t surprising due to the amount of poverty, and insurgency in those areas; the next area for unemployment is in Central Thailand, which sits at 0.7%. Bangkok and the North are close to Central Thailand with a 0.6%. For areas like Bangkok, the unemployment rate decreased which indicates more employment and a high-middle class society within the major city. (Marketline)

Since there is a large labor force in Thailand and majority of them are educated, and the unemployment rate is down, one can assume that majority of the labor force is quick to learn their job and is efficient at their jobs. This creates a stable environment to manufacture products in due to manufacturers having well-educated employees that are knowledgeable about their jobs, who can seamlessly work on products.

THAILAND

75

C O U N T RY R A N K I N G S S O C I O E C O P O L I T I C A L

6

SOCIAL

The social climate of Cambodia, is one that has become more stable in recent years, with

a growing population, and an expanding education system contributing to its overall growth.

The total population of Cambodia is 15.2 million, with an annual growth rate of about 1.63%. An estimated 1.55 million people reside in the capital of Phnom Penh (AVIC). Cambodia’s life expectancy increased by 24.9 years between the years of 1980 and 2012, from 38.7 to 63.6 years old (UNDP).

The educational system in Cambodia includes elementary school (grades 1 to 6), junior

high school

(grades 7-9), senior high school (10-12), and university along with other higher

education institutions. The average and expected years of schooling respectively increased by 0.8 and 4.0 years, from 5.0 to 5.8 and 6.5 to 10.5 years (UNDP). Education in the country is only required until the 9th grade, from then on minors are allowed to choose attend or not to attend school. Many of them end up joining the work force of Cambodia (CDC).

Overall, Cambodia’s Human Development Index (HDI) from 1995 to 2012 experienced

fast growth in the three HDI dimensions at an annual growth rate of about 1.7%, with a greater increase than predicted by their previous performance (UNDP). With these advances in their social climate, Cambodia shows promise in becoming increasingly stable over the ensuing years, therefore, making it a definite possibility as a country for Nix to do business in.

76

THAILAND ECONOMIC

Thailand is the 2nd largest economy in the ASEAN group, after Indonesia. The economic status is mostly an upper-middle income country. It has an open economy, and in 2013, a GDP of $375 billion.

The economy slowed down in 2013 as domestic demand weakened, and the exports from Thailand were slow. Political disruption has also affected the economic performance. Although the country’s GDP was and is expected to grow at least 2.9%, however, the economy severely depends on the status of the government. It is projected that the political turmoil is causing greater damage on the economy than anyone expected. The GDP has decreased 0.6% since March due to the political outpour (ASEAN).

Since Thailand is not only export-driven, but also reliant on tourism, it was another hit to their economic structure when tourism went down due to the political rallies that have been occurring throughout the country. The current worry is that if the GDP continues to shrink the country will see another recession in the economy. This problem arises as the economy is trying to function without a full-functioning government. Due to the lack of functioning government and the decreasing economy, some analysts are saying there may be more pressure on the central bank cutting rates (Marketline).

The future of Thailand’s economy is contingent on the stability of the government. Given that, it seems that is very hard to predict a steady forecast of the countries economy, thus making conducting a business difficult. If the country’s economy continues to suffer, a recession will occur and that could cause manufacturers to lay off employees, or completely close. (ASEAN) (ADB)

POLITICAL

Thailand is governed under a constitutional monarchy. The king is the Head of State, while the prime minister is the Head of Government. The prime minister is elected by the House of Reps and cannot hold power for more than 8 consecutive years. There is a national assembly which consists of 150 members in the Senate who serve 6 year terms, and 500 members that serve 4 year terms in the House of Representatives. If the prime minister is guilty of her allegations, the senate will take over control and elect a stand-in prime minister until the elections in June (Marketline).

Although Thailand runs a very well designed constitutional monarchy, it seems that for many years those who hold major power have been scrutinized for their misuse of power, and outlandish requests such as the bill Yingluck Shinawatra has tried to instill that would allow her brother to come back into office. It seems that at this time, Thailand’s politics are on the verge of a problem. (Business Monitors) (Marketline) 77

C O U N T RY R A N K I N G S BUSINESS CLIMATE

With a highly competitive labor force, an entrepreneurial business community and a resilient and steadily growing economy, Bangladesh offers promising opportunities for investment, especially in labor-intensive industries. The government of Bangladesh actively seeks foreign investment and offers a range of investment incentives under its industrial policy and export-oriented growth strategy, with few distinctions between foreign and domestic private investors. Although Bangladesh is facing some near term balance of payments and fiscal pressures, its long-term economic outlook is bright (Investment Climate Statement).

According to the 2011 World Investment Report, Bangladesh received $913 million in foreign direct investment, a 24 percent increase from the previous fiscal year. Bangladesh is well positioned to attract increased investment by expanding its success in ready-made garment exports to other sectors, especially those that are labor intensive. Bangladesh has made gradual progress in reducing some constraints on investment but inadequate infrastructure, financial constraints, bureaucratic delays and corruption continue to hinder foreign investment.

The lack of effective judiciary or alternative dispute resolution mechanisms impedes the enforcement of contracts and the resolution of business disputes (Investment Climate Statement).

Active government support for new business investment, especially within laborintensive industries such as the textile and garments sector, points to an excellent opportunity for Nix to capitalize on the country’s liberal approach to new business ventures. One major challenge for Nix will be the presence of corruption among some businesses in Bangladesh.

If business were to be conducted in the country, multiple audits would be required in order to ensure compliance to terms of business as well as agreed upon sourcing guideline standards.

3

78

BANGLADESH

GOVERNMENT

Bangladesh gained its independence from Pakistan in 1971. The country functions under a Parliamentary democracy with three branches of government: executive, legislative and judicial (Background Notes, 6). Executive is divided into the president, prime minister and cabinet. The current president is Abdul Hamid who acts as chief of state. A new president is elected by parliament every five years. The president holds a largely ceremonial post with the real power being held by the prime minister, who is appointed by the president and serves as the head of government. The legislature is a unicameral, 300-seat body whose members are elected by universal suffrage at least every five years. There are about 30 to 40 active political parties in Bangladesh with the largest ones being the Bangladesh Nationalist Party, the Awami League, the Jatiya Party and the Jamaat-e-Islami Party (Bangladesh). The judicial branch is a civil court system based on the British model. The highest court of appeal is the appellate court of the Supreme Court. At the level of local government, the country is divided into: divisions, districts, sub districts, unions and villages. Local government officials are elected

5

at the union level and selected at the village level (Background Notes, 6).

79

C O U N T RY R A N K I N G S COSTS

9

Chittagong port’s inefficiency costs $1.1 billion extra to the economy every year, which is about two percent of its overall GDP. It was estimated that Bangladesh could see about a 30 percent increase in exports simply by making the port more efficient.

The port continues to be one of the slowest, most inefficient and costly in Asia. Purchase order to delivery cycle in one month longer in the port than that of major competing countries, which is a problem for investors. Cost of labor is U.S. five cents an hour and is expected to continually increase. Many suppliers are looking to invest in new technologies capable of producing the raw materials necessary for the ready-made-garment industry, resulting in vertical operations and an overall reduction in production costs (Economic Policy Paper on Cost of Doing Business in Bangladesh).

The inefficiency of the Chittagong port is a major problem to consider when looking to source in Bangladesh. The extra time spent in the port could potentially cause delays in transport that will affect the on-time delivery of the product and therefore add unnecessary costs. Looking to the future, the investment in new technologies, which allows for vertical operations has the potential to reduce costs by eliminating the need to outsource for the materials needed for production.

BENEFITS

The garment manufacturing sector is extremely competitive due to the low cost and high availability of trained workers. Population growth is projected to steadily increase with 45% of Bangladeshis under the age of 15. International aid makes it possible to cover the financing needs of businesses in Bangladesh. The government recognizes the lack of education among its citizens and is making efforts to improve educational services in order to attract labor-intensive manufacturing and services to the country. Investment in new technologies in weaving and the production of raw materials points to an expansion in the textile industry within the near future.

RISKS

2

The economy in Bangladesh is sensitive to development of global competition in the textile sector.

Competing countries exporting ready-made-garments that already have the capability to produce the raw materials needed for production have a clear advantage over manufacturers in Bangladesh that lack necessary technology and machinery. Bangladesh also has a very low per capita income, ranking as one of the poorest countries in the world. Lack of infrastructure within the textile and garment industry as well as energy and transportation sectors hinder productivity and efficiency. Recurrent natural disasters such as cyclones and serious floods result in major damages and the loss of harvests.

80

BANGLADESH

SW S T R E N G T H S

•

•

W E A K N E S S E S

• Relatively low cost of labor of 5 cents an hour

• Inadequate infrastructure, financial constraints, bureaucratic delays and corruption

• Labor force of 78.62 million people and unemployment rate of 5%

• Lack of effective judiciary or alternative dispute resolution mechanisms

• • Focus on improving education at all levels to attract labor-intensive manufacturing and services •

• Does not produce enough raw materials necessary for the garment industry to expand

• Rich agricultural land, relatively abundant water and substantial reserves of natural gas

• • GDP expected to remain vigorous, sustained by rising wages in the agricultural sector

• Notoriously suffers from hazardous working conditions • Poor quality education system • Limited in its reserves of coal and oil, weakening its industrial objectives • Suspended the eligibility for tariff benefits under the GSP program

+

OT

O P P O R T U N I T I E S

• Actively seeks foreign investment & offers a range of investment incentives • Suppliers are looking to invest in new technologies capable of producing the raw materials necessary for the RGM industry

• The infrastructure to support transportation, communications and power supply currently in the process of being improved • Inflation is likely to fall in 2013 with lower customs duties on imported products

T H R E AT S

• Roughly 85 to 90 percent of the fabric used in production is imported from other countries • Struggles to reduce child labor

• Vulnerable to natural disasters such as flooding and cyclones

• Industry sector may be hit by constant energy shortages, a drop in external demand and a rise in energy prices

81

C O U N T RY R A N K I N G S SOCIAL STABILITY

People in Bangladesh hold democracy in high regard because of their bloody

war for independence and therefore vote in large numbers. In general, citizens are content with the state of the government. The biggest threat to social stability in Bangladesh is the constant struggle with unemployment. With the population rising rapidly and working conditions below international standards, Bengali people potentially face a job crisis in the future. The competition for work is already high so

2

any additional scarcity in the job market may cause a social uprising (Bangladesh).

SOURCING GUIDELINES

Numerous textile associations support Bangladesh’s industry. The main two that support the RMG sector are the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). BGMEA represents 4,490 Bangladeshi export-oriented apparel manufacturers. The organization helps strengthen and promote the RMG sector by establishing a healthy business environment and cultivating relationships among the manufacturers, exporters and importers, with the goal of increasing Bangladesh’s foreign exchange earnings. Since its inception in the late 1970’s, the organization has helped increase RMG exports by 500 percent. BKMEA was established in 1996 and comprises about 1,700 knitwear manufacturers and exporters, representing the country’s largest exportearning sector. The organization works to promote sector interests, promoting and developing the sector’s capacity as well as the market. Both organizations work to improve social compliance status, and provide education and spread awareness of basic rights. Although many factories are working towards improving worker conditions, enforcement of guidelines and standards is left to factory owners and their managers who may or may not be honest about their business practices. It is the responsibility of the business sourcing their product in Bangladesh to conduct audits to ensure that the stated guidelines are actually being followed (Thomasson).

82

3

BANGLADESH

83

C O U N T RY R A N K I N G S THE TEXTILE INDUSTRY

7

Bangladesh’s textile industry can be divided into three main categories: public sector, handloom sector and the organized private sector. The private sector is the fastest growing sector in the country.

The handloom industry provides employment for a large segment of the population of Bangladesh and supplies a large portion of the fabric required by the local market. Combined, the textile and apparel sectors consist of 3,600 firms. There is a concentration of manufacturing activity in and around the capital city of Dhaka and a growing garment manufacturing presence in the country’s export processing zones.

Because textiles and ready-made garments are the two largest export sectors and employers in Bangladesh, government support will continue. The government also is liberal toward work permits (Malhorta).

According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the total fabric requirement in the captive market is about 3 billion yards, of which roughly 85 to 90 percent is imported from countries such as China, India, Hong Kong, Singapore, Thailand, Korea, Indonesia and Taiwan. Fabric demand is increasing at the rate of 20 percent per year. Although the industry is one of the largest in Bangladesh and is still expanding, it faces serious problems, principally because the country does not produce enough of the raw materials necessary for the industry to expand. The primary materials used in the spinning sector are raw cotton and man-made fibers such as viscose and polyester staple fibers. Unfortunately, none of these raw materials are produced in Bangladesh. Most spinning mills in Bangladesh produce low-grade yarn. Available figures show that current yarn production satisfied only 22-percent of the total yarn demand. In spite of this drawback, as many as 116 new spinning mills, each having the capacity of 25,000 spindles will be established in the near future (Malhorta).

The weaving sector also is plagued by a lack of organization and coordination. The existing weaving capacity in Bangladesh can meet only about 40 percent of fabric demand with the rest being imported. However, the increasing trend of expansion in the weaving sector is clear from the fact that 223 modern weaving plants, each with an annual capacity of 10 million meters, will be set up in the near future.

The knitting and hosiery sectors look brighter than weaving, and about 80 percent of garment accessories like cartons, threads, buttons, labels, poly bags, gum tapes, shirt boards and neck boards now are being produced within Bangladesh and contribute to the national gross domestic product or GDP (Malhorta).

84

BANGLADESH

Bangladesh, the world’s second largest retail exporting nation, has notoriously suffered from hazardous working conditions and sends about 85percent of its goods to the European Union and the United States. It is estimated that it would take $3 billion USD to raise the safety standards of the countries factories to an acceptable level. This has prompted firms from the U.S. and Canada to form the Alliance for Bangladesh Worker Safety whose goals include donating over $42 million USD over five years and for inspections to be carried out in an estimated 500 factories that that North American retailers use in Bangladesh (Cooke). In June 2012, a fourday shutdown at more than 300 Bangladeshi clothes factories ended after workers called off violent protests for a 50 percent wage increase to meet rising rent and food prices. The factories affected represent about eight percent of the countries garment-manufacturing base, which has seen demand suffer as a result of the global economic downturn (Bangladesh).

The ongoing hazardous working conditions are a risk that must be taken into consideration when choosing to source in Bangladesh. A complete and thorough investigation of the factory working environment as well as an explicit list of globally recognized human rights would be necessary in order to ensure compliance with the Nix sourcing guidelines.

Any sort of disaster such as the collapse of a factory would not only delay shipments and drastically increase costs in the short term but also tarnish the reputation of Nix as a company.

85

C O U N T RY R A N K I N G S TRADE AGREEMENTS BANGLADESH TRADE AND INVESTMENT COOPERATION FORUM AGREEMENT

Bangladesh currently has no trade agreement with the United States. Previously Bangladesh was part of the Generalized System of Preferences (GSP). In June 2013, President Obama suspended the eligibility of Bangladesh for tariff benefits under the GSP program, which was originally designed to promote economic growth in the developing world by providing duty-free entry for up to 5,000 products when imported from one of the 126 designated beneficiary countries and territories. The suspension was based on insufficient progress by the Bengali government in affording workers internationally recognized worker rights. In July 2013, Bangladesh was provided with an action plan on worker rights and safety that, if implemented, could provide a basis for the President to consider the reinstatement of GSP trade benefits (Office of the United States Trade Representative).

The Bangladesh Trade and Investment Cooperation Forum Agreement (TICFA) provides a mechanism for both governments to discuss trade and investment issues as well as areas of cooperation. The agreement allows the U.S. and Bangladesh to regularly work together to address issues of concern in trade and investment. It also allows the U.S. to track the discussion of Bangladeshi efforts to improve worker safety and worker rights. This is an important priority for the U.S.

2 86

BANGLADESH LABOR FORCE

Bangladesh’s ready-made-garment (RMG) sector, which is comprised of the knitwear and woven garments sub sectors, is the largest export-oriented manufacturing industry in the country, employing more than 1.8 million people (Thomasson). Bangladesh has a labor force of 78.62 million people with an unemployment rate of 5 percent in 2013. About 40 percent of the population is underemployed meaning that many participants in the labor force work only a few hours a week at extremely low wages (World Fact Book). Due to rapid growth of the population in the last few decades, the labor force in Bangladesh has grown quickly. Although all sectors of the national economy experienced significant growth, they were far below the speed of the labor force growth.

According to national statistics, only 12.4 percent of the labor force have formal employment, while 40 percent are considered “employed in family-based” businesses and 29.6 percent are considered “self-employed”. In general, the competition for working conditions is very harsh, especially in rural areas, where 63 percent of the labor force is employed. The government in Bangladesh pays special attention to improving education at all levels, as it wants to attract labor-intensive manufacturing and services to the country. However, the government admits the country’s education system suffers from poor quality education, chronic shortages of trained teachers and a shortage of books. Secondary education is not accessible for children from poor families (Bangladesh Working Conditions). The high availability of workers in Bangladesh as well as the country’s focus on improving the overall education level of its citizen’s signifies that there is a sizeable group of trained workers available to produce the high quality swimwear that Nix strives to be known for.

6 87

C O U N T RY R A N K I N G S S O C I O E C O P O L I T I C A L

7

SOCIAL

Bangladesh had an estimated population of about 161 million people in 2012 with a growth rate of 1.579 percent. Bangladesh struggles to reduce child labor. The first and foremost cause of child labor is economic impoverishment. Poverty-ridden families cannot afford educational expenses so parents are often reluctant to send their children to school and believe that their children’s time is better spent working in order to supplement the family income. Many employers prefer child labor because it is easier to exploit them into working longer hours at minimum wages. Child labor is commonly found in two sectors in Bangladesh: the Formal sector and Informal sector. The Formal sector includes factories, commercial organizations, communication and transportation. The Informal sector includes agriculture, livestock, fishing, household work, construction, rikshaw pulling and day laborers.

Following international pressures to improve conditions for garment workers, Bangladeshi lawmakers amended the country’s labor laws. The European Union has threatened to revoke Bangladesh’s trade privileges because citing that safety violations in factories are far too prevalent.

Under the new law, factories will be required to set aside 5 percent of profits for a welfare fund for employees, although the law exempts export-oriented factories. Under the previous law, workers hoping to form a union would have to gather signatures from 30 percent of a company’s workers, which proved extremely difficult since factories generally have thousands of workers. The new law bars the country’s labor ministry from giving factory owners the list of 30 percent of workers who want to form a union. Labor leaders noted that after receiving those lists, factory owners often fired union supporters or pressed many to withdraw their names from the petition to bring the number below 30 percent. The new law desperately tries to make an effort to ensure worker’s rights but still falls short of international standards. The government consciously limits basic workers’ rights while exposing workers to continued risks and exploitation. Under the new law, unions would need government approval before they could receive technical, health, safety or financial support from other countries (Greenhouse). It is painfully clear that Bangladesh needs to improve upon its attention to health, safety and the overall well-being of its citizen’s. When doing business in the country, it will be important for Nix to consider the ongoing struggle to improve the conditions within the garment industry.

88

BANGLADESH

ECONOMIC

Bangladesh is one of the most densely populated and poorest countries in the world. Its key strengths include a vast human resources base, rich agricultural land, relatively abundant water and substantial reserves of natural gas. The country has made moves to become a fully free market economy. Its economy is predominantly composed of agriculture with 60 percent of its population employed in that sector. As a result it is vulnerable to natural disasters such as flooding and cyclones.

Another major industry for Bangladesh is the textile and garment industry, which is one of its fastest growing sectors. Bangladesh is very limited in its reserves of coal and oil, weakening its industrial objectives. The infrastructure to support transportation, communications and power supply are poorly developed and currently in the process of being improved upon (Background Notes, 8).

Growth is likely to slow further over the 2013 fiscal year. Exports to Europe, which represent 56 percent of total exports, are expected to remain sluggish while investment will be hit by monetary policy tightening and a credit slowdown. Consumption, the main driver of GDP, is expected to remain vigorous, sustained by rising wages in the agricultural sector, which employs over half the economically active population. Agricultural and service sectors are expected to post solid performances, while the industry sector may be hit by constant energy shortages, a drop in external demand and a rise in energy prices. Inflation is likely to fall in 2013 with monetary policy tightening and lower customs duties on imported products and an expected price stability on food products (Bangladesh).

The main challenges facing Nix when looking at the economic conditions in Bangladesh are its vulnerabilities to natural disasters as well as problems caused by inadequate or outdated infrastructure. Delays caused by these problems have the ability to affect the efficiency of production.

89

C O U N T RY R A N K I N G S

POLITICAL

Bangladesh is one of the few democracies in the Muslim world. People in Bangladesh hold democracy in high regard because of their bloody war for independence and therefore vote in large numbers. However, democratic institutions and practices remain weak and the country battles serious problems related to a dysfunctional political system, weak governance and omnipresent corruption.

Despite the ever-existing threat of political crisis, Bangladesh strives to be a shining example if international peacekeeping and a force for moderation in international forums. Bangladesh is the second largest contributor to UN peacekeeping operations.

The country works with international organizations as well as other governments to promote human rights, democracy and free markets. With such a strong focus on civil liberties, it’s no surprise that Bangladesh has been a member of the United Nations Humans Rights Council since May 2006. Bangladesh identifies one of the chief goals of its foreign policy to be strengthening its relations with Islamic states (Bangladesh). Although the country suffers from problems of corruption within its government, the democratic system and overall attention to peace keeping are positive attributes that will not hinder the process of production within the country.

90

BANGLADESH

91

S U P P L I E R A N A LY S I S 92

SELECTION OF SUPPLIERS

We originally chose five suppliers from each of the countries, particularly focusing on ones that specialize in swimwear and/or sportswear. Other important factors in the selection of suppliers included their quali-ty, lead times, services offered, customers and customer service, and sourcing guidelines. Another key determinant was finding suppliers who were able to work with complex fabrics, since all of our merchan-dise is chiefly constructed out of neoprene.

Due to this criteria it was difficult finding suppliers who were capable of meeting this crucial aspect of our products. However, after researching and contacting suppliers we were able to eliminate suppliers who were not capable of meeting our requirements down to a top three for each country. Then, after another re-evaluation of the remaining suppliers, we chose one from each country. The following sections will list the process of elimination in determining how we selected what we believe to be the best suppliers from each country.

93

S U P P L I E R R AT I N G S

C A M B O D I A S U P P L I E R H I G H L I G H T S

As mentioned previously in the country analysis section, Cambodia is a country abundant in garment and textile manufacturers, many of which have been able to attract a variety of top brands such as Gap, H&M, Nike and more. As of 2012, there were approximately 350 factories specializing in garment and textiles, and it is predicted that the number will continue to grow as the country works to improve its conditions and standards.

While many of Cambodia’s garment factories concentrate in women’s knit tops, we were able to research and find five manufacturers that have experience in the production of swimwear. These suppliers include Wincam Corporation, Quicksew (Cambodia) Ltd., Reliable Source Industrial (RSI) Cambodia Co., Ltd., AGX Lines Inc., and Quint Major Industrial Co., Ltd. Out of these five it was determined that the weakest of the bunch were AGX and Quint due to the lack of well-known customers, low capacity and capabilities, and most significantly, difficulty in getting in touch with them. Following this elimination, our company analyzed the remaining three suppliers: Wincam, Quicksew, and RSI, in order to determine which would be the best fit for Nix.

94

CA MBO D IA WINCAM CORPORATION

Wincam Corporation was established in 2005, with a specialty in the production of swimwear for ladies, children, and infants. The 46,000 square foot, factory is located in the country’s capital of Phnom Penh, with approximately 750 workers. Factory conditions meet our requirements with decent management, fair working conditions, and modern day machinery. Other advantages of this factory is that it has exceptional lead times and costs, along with working with well-known customers such as Forever 21, Old Navy, and Target. Unfortunately, Wincam lacks the quality and sourcing guidelines we are looking for, along with have few offered services.

This supplier would be a possible option for our company due to the fact that it has experience in women’s swimwear and has well-known clients, signifying that it is a reliable supplier that efficiently produces and ships products. In addition, the U.S. is one of its top countries for shipments, meaning that it has experience with working with American companies.

FOUNDED L O C AT I O N WEBSITE C USTO M E R S

N /A PHNOM PENH Q U I C K S E W. C O M . K H PAC S U N , A D I DA S , R E E B O K , U N I Q LO

EXPERTISE

CHILDREN’S OUTERWEAR, M E N ’ S A N D B OY ’ S C LOT H I N G

C A PA C I T Y L E A DT I M E S

5 5 0,0 0 0 P C S/MO N T H 9 0 D AY S

95

S U P P L I E R R AT I N G S RELIABLE SOURCE INDUSTRIAL CAMBODIA CO. LTD.

Founded in 1972, Reliable Source Industrial Cambodia Co. Ltd. is a leading multinational manufacturer of sportswear and swimwear. They have established a reputation based on their ability to deliver reliability, accountability, and innovation to their clients and partners in the apparel industry. The company has manufacturing bases in the countries of China, Cambodia, Bangladesh, and Indonesia with more than 6,000 employees and is predicting to continue growth and expansion in ensuing years.

RSI specializes in the manufacturing of high-end functional fabrics, and has the capabilities to produce both sportswear and swimwear using both traditional cut and sew and seamless technologies. The company is especially strong in the creation of a variety of types of swimwear. In addition to manufacturing, RSI offers services in quality control and assurance, product development support, and advanced technology support. These services have attracted and built long-term relationships with prominent clients such as Lululemon, Nike, Limited Brands, Under Armour, and more.

Not only does Reliable Source Industrial comply with the sourcing guidelines set in place by their clients such as Nike and Under Armour, but it also adheres to local labor laws and international human rights norms set by organizations such as the Fair Labor Association. In addition, RSI is committed to environmental protection and sustainable development with the use of solar energy utilization plans, rainfall recycling, waste reduction, and more. The company has even begun taking steps in becoming certifies for SA800, one of the world’s strictest social responsibility standards.

After analyzing this information, we believe that RSI would be the one of the best options as a supplier for Nix due to numerous reasons. Some of which include its short lead times, relationships with well-known clients, expertise in the development and production of swimwear in high-end fabrics, and most importantly, it’s exceptional commitment to corporate social responsibility.

FOUNDED L O C AT I O N WEBSITE C USTO M E R S

1972 PHNOM PENH R S I A P PA R E L .C O M LULULEMON, DICK’S SPORTING GOODS, UNDER ARMOUR

E X P E R T I S E SPORTSWEAR & SWIMWEAR C A PA C I T Y 2 5 M I L L I O N / Y E A R L E A D T I M E S 4 5 D AY S 96

CA MBO D IA QUICKSEW (CAMBODIA) LTD.

Quicksew (Cambodia) Ltd. is an international garment manufacturing company of 1,400 employees based in the city of Phnom Penh. While the company has more experience in producing children’s outerwear and Men’s and Boy’s apparel, they have made swimwear before. This proves their flexibility and customer service in satisfying the needs of their clients such as PacSun, Adidas, Reebok, Uniqlo, and more. PacSun has placed several orders for nylon spandex (a material we are also using) women’s swimwear, proving that Quicksew is capable of producing high quality swimwear for Nix.

Although they have a longer lead time of about 90 days, they have a high capacity and offer a variety of services which include designing, producing, and selling goods. Quicksew is also a member of the Garment Manufacturers Association of Cambodia, which sets strict sourcing guidelines for suppliers to follow in exchange for making connections to prominent retailers.

This manufacturer would be a good choice for Nix due to the fact that it has much experience in the production of swimwear, along with having well-known clients who are known for their exceptional quality and sourcing guidelines. With this information it can be concluded that Quicksew would be a dependable supplier that could guarantee our company satisfying results.

FOUNDED L O C AT I O N WEBSITE C USTO M E R S

N /A PHNOM PENH Q U I C K S E W. C O M . K H PAC S U N , A D I DA S , R E E B O K , U N I Q LO

EXPERTISE

CHILDREN’S OUTERWEAR, M E N ’ S A N D B OY ’ S C LOT H I N G

C A PA C I T Y L E A DT I M E S

5 5 0,0 0 0 P C S/MO N T H 9 0 D AY S 97

S U P P L I E R R AT I N G S

I N D O N E S I A S U P P L I E R H I G H L I G H T S

After being a dominant player in the global textile and garment arena for nearly a decade, buyers and in-vestors are beginning to see Indonesia’s potential as a China ‘mini me’. Investment capital has been pour-ing into the country as more and more investors are beginning to recognize the vast opportunities that this fast developing nation has to offer. While Indonesia still has a ways to go before it rivals the powerhouse that is China, it offers a number of advantages for suppliers like us seeking other alternative locations to source our products.

While cut and sew garment manufacturers seem to dominate the sector in Indonesia, we were able to re-search and find five manufacturers that have experience in the production of swimwear. In fact, the un-derwear, nightwear, and swimwear divisions of garment production in Indonesia has performed rather impressively in recent years. This success was not driven by affordable pricing as one might expect, but rather increases in popularity and value share as major conglomerates expanded their private-label brands to include these apparel categories.

The five chosen suppliers included PT Pancaprima Ekabrothers, PT Eratex Djaja, Hollit International, PT Opelon Garment Indonesia, and PT Pan Brothers TBK. We then determined that the weakest of the five were Pancaprima Ekabrothers and Pan Brothers TBK, due to their inabilities to produce a unique swimwear product such as our own, as well as the inability to work with neoprene fabric. Following this elimination, our company analyzed the remaining three suppliers, Eratex, Hollit, and Opelon Garment, in order to de-termine which would be the best fit for Nix.

98

INDONESIA PT ERATEX DJAJA, TBK.

PT. Eratex Djaja, Tbk was established in Indonesia in 1972 initially as a joint-venture textile operation between two prominent Hong Kong textile consortiums and an Indonesia partner.

Their Garment Division was created in the 1980s as part of an overall vertical integration plan. With over 30 years of supplying quality apparel product to our customers, they have evolved to be a major supplier to the middle to high price point customers in both the local and international markets. Their major production facility for garments is located in Surabaya, taking up roughly 170,000 square meters with a work force of over 4,500 employees. They offer services in spinning and weaving, textile finishing, and an in-house washing facility.

Their core items include bottoms, shirts, and jackets, however they can produce a smaller amount of some specialty products including swimwear. They have a wide range of customers from lower/mid end brands like Vans, Lee, Express to mid/high end price points like Polo Ralph Lauren, IZOD, and DKNY. However, it is their customers like Billabong, a young women’s surf and swim brand, that spark Nix’s interest particularly in terms of products similar to our own.

It is also important to note that this supplier in involved in social responsibility efforts that also make them an appealing venture for our company. They utilize air washer plants that constantly feed clean air to their mill, as well as a water treatment plant that returns clean water into the river. They aim to provide continuous education for their employees to upgrade their skills and knowledge and they believe in equal opportunities for all. Lastly, Eratex is in total compliance with occupational health and safety standards, compensation, work hours and benefits for their workers.

FO U N D E D 1972 L O C AT I O N J A K A R TA W E B S I T E E R AT E X C O . C O M C U S TO M E R S L E V I ’S , B I L L A B O N G, N AU T I CA , R E E B O K , TA R G E T

E X P E R T I S E B OT TOM S , S H I RT S , JAC K E T S C A PA C I T Y 2 , 1 0 0 , 0 0 0 P C S / M O N T H L E A DT I M E S 3 MONTHS 99

S U P P L I E R R AT I N G S HOLLIT INTERNATIONAL

PT. Hollit International is a Jakarta based Fashion House where product development, material sourcing and production are combined under one roof. They supply a wide range of garments to top European and American companies and brands sold all over the world. The company began its operations in 1990 located in Kuala Lumpur, Malaysia and then moved to Jakarta, Indonesia in 1995. Since its establishment, Hollit has built a solid track record and a leading reputation in the international fashion market based on its expertise and know-how in Product Development necessary to meet global standards. Starting with only four employees, Hollit currently has over 200 staff that comes from many different nationalities and brings together diverse competencies.

Hollit’s expertise lies within their ability to develop products according to the latest trends. Thus, their productions lines span the likes of jackets, denim, pants, shirts, knits, swimwear, and blazers. They have an impressive portfolio of high end clients such as Hugo Boss, Calvin Klein, Brooks Brothers, Prada, and Lacoste, which gives our company confidence that they value quality in their products just as much as we do. They also produce items for O’Neill, a wetsuit and sporting swimwear company, which indicates that they are capable of creating highperformance swim products made out of neoprene, which is exactly what we are seeking to source.

They recently opened a fully-fledged samples production unit located within their premises, featuring specialist machines, cad-cam and a boiler. Their pattern makers are supported by highly skilled sewing operators and can produce real time ad-hock sample products for visiting designers and product developers. With the motto “Design on the Spot”, we believe Hollit could be an excellent manufacturer to build a relationship with as our company expands into new product categories and we continue to push the boundaries of design within our products.

FOUNDED 1990 L O C AT I O N J A K A R TA ( 1 3 U N I T S ) W E B S I T E H O L L I T. C O M C U S TO M E R S A R M A N I , T H E N O RT H FAC E , O’ N E I L L , P RA DA ,

E X P E R T I S E JAC K E T S , D E N I M , SW I MW E A R C A PA C I T Y 3 , 5 0 0 , 0 0 0 P C S / M O N T H 100

L E A DT I M E S 5 MONTHS

INDONESIA PT OPELON GARMENT INDONESIA

PT Opelon Garment Indonesia is an integrated supplier specializing in swimwear, fitnesswear, and knits, offfering an established textile factory in addition to its garment factory.

Located in Bandung, the factory is roughly 20,000 square meters and employs around 400 workers. This textile division manufactures various types of knitted fabrics, especially those with spandex content. It also specializes in knit textiles such as two way tricot, mesh, powernet, and satinet fabrics. The factory houses 70 circular knitting machines, 8 raschel machines, and a complete dye house. The company is also equipped with a sample room with a Gerber and an Optitex CAD System, a cutting room with an automatic cutting machine, and sewing lines equipped with a the Hanger Unit Production System as well as automatic sewing machines.

Their monthly capacity is about 120,000 PCS and they export to countries like the United States, as well as other European and Asian countries. They also sell their own label, “Opelon Bodywear” to the domestic Indonesian market. They produce product for Guess, Walmart, Sears, Kohl’s, and JC Penny, and their factory has been approved by the Walmart Code of Conduct Audit. While this supplier specializes in swimwear, it seems that their quality might not be up to the standards that our company is hoping for.

FOUNDED L O C AT I O N WEBSITE C USTO M E R S

1992 BANDUNG O P E L O N G A R M E N T. C O M G U E S S , J C P E N N Y, S E A R S , K O H L’ S , WA L M A R T

EXPERTISE

SWIMWEAR, FITNESSWEAR, KNITS

C A PA C I T Y L E A DT I M E S

12 0,0 0 0 P C S/MO N T H 1-2 MONTHS 101

S U P P L I E R R AT I N G S T H A I L A N D S U P P L I E R H I G H L I G H T S

As mentioned before, Thailand’s textile industry has a lot of room for growth and development. Thailand’s manufacturers have gained the attention from brands such as Nike, Dicks Sporting Goods, O’Neill Swimwear, Target. Thailand’s textile exports grew 8% in 2013, and are expected to grow in 2014. Thailand is also among the top leaders in the textile industry with developments in textiles such as anti-bacterial fabrics. Given the information, Thailand’s textile industry is lucrative for business, and creates a positive atmosphere for the future.

While majority of the factories in Thailand focus on other apparel and textile products, we were able to find five manufacturers in Thailand that have prior experience in the production of swimwear. The manufacturers we were able to find included: Oriental Garment Co., Intimate Fashion Co., LTD, Parisa Industries Co., LTD, Thai Onono Public Co., LTD, and KL Texwell Vina Co., LTD. Out of these five manufacturers, we chose the strongest ones that we felt would not only allow us to have a stable business relationship, but also the ones that we felt would be able to create our product the way we wanted. We picked these manufacturers based on things such as their capacity and capabilities, their clients, and their guidelines in comparison to ours.

It was determined that KL Texwell Vina Co., LTD and Thai Onono Public Co., LTD were the weakest companies out of the five due to their lack of customer service, and their lack of information pertaining to lead times, and quality. The strongest companies that remained were: Oriental Garment Co., Intimate Fashion Co., LTD, and Parisa Industries Co., LTD. We determined that these three manufacturers would be best for the production of Nix’s swimwear.

ORIENTAL GARMENT CO.

Oriental Garment Co. is a manufacturer that places priority on providing efficient services that include the production of only high quality products. The company also puts a great emphasis on the constant development and enhancement of products, technology and services.

They have 4 existing textile manufacturing facilities, each of which has independent production processes from the first step of cutting down to the final packaging of the product for exportation 102

THAILAND

OGC can do an array of products that include swimwear, and a wide-variety of sportswear.

Oriental Garment Co’s customer base includes: Nike, New Balance, O’Neill, Adidas, Reebok, and Dicks Sporting Goods. These clients show that OGC is a respectable company that produces the quality that large name brands expect for their customers. Also, in their Bangkok factory they have a research and development center, raw material warehouse, finished-goods warehouse, in-house embroidery, laboratory room, cutting area, sewing area, and a packing area.

As compared to other swimwear manufacturers in Thailand, OGC ships a larger number of shipments than most; the total number of shipments that the OGC in Thailand has shipped out is 167. The average is 1,783kg per shipment. This is still significantly less than normal swimwear manufacturers, but more than other swimwear manufacturers in Thailand.

Oriental Garment Co’s customer service is very good. They have an extensive website, and a large customer base that returns to their facilities. They also manage 1,600 employees and multiple factories in places such as Sri Lanka, and Vietnam. Also, they offer multiple product options and can produce many products. Their factories technology is also up to date and constantly advancing.

Given their sourcing guidelines, they do fit within Nix’s sourcing guidelines and codes of conduct. They have also been awarded multiple awards, such as WRAP for their international management standards and they are also apart of the Business Social Compliance Initiative, which is aimed at setting out the values and principles that BSCI members strive to implement in their factories. (Oriental Garment Co).

After reviewing this information, and their sourcing guidelines. Oriental Garment Co. is a suitable manufacturing company to work with. They fix all of Nix’s sourcing guideline requirements, and they are a reputable manufacturer in Thailand with a respectable customer base.

FOUNDED L O C AT I O N WEBSITE C USTO M E R S

1980 B A N G KO K O R I E N TA L G M T. C O M DICKS SPORTING GOODS, NIKE, NEW BALANCE

E X P E R T I S E SWIMWEAR, SPORTSWEAR, AT H L E T I C W E A R

C A PA C I T Y N /A L E A D T I M E S 9 0 D AY S 103

S U P P L I E R R AT I N G S INTIMATE FASHION CO., LTD.

Intimate Fashion Co., LTD was established with the goal to be a leading specialist in intimates, and men’s and women’s underwear. IFC has the ability to produce swimwear and intimates, making them a good manufacturer for Nix. As compared to other manufacturers, IFC has not shipped many shipments in 2014; and their average shipment is only 1,149kg.

Their customer base is relatively good, which clients such as Maidenform, Hanes Brand, Jockey Brand, and La Jolla Group (O’Neill). Their customer service is also relatively good; they have a solid functioning website, however, they are slow to respond to messages and do not do as much business as other companies.

Although they do produce swimwear, and that is a good thing for Nix; they only produce a limited range of products that include swimwear and intimates. They also do not have a clear direct outlook, and they produce medium quality products as compared to the customers they work with (Intimate Fashion Co.).

When it comes to Nix, Intimate Fashion Co., is an appropriate company to conduct business with. They also fit our sourcing guidelines, and they can produce the products we are looking to source.

FOUNDED L O C AT I O N WEBSITE C USTO M E R S

1992 K R AT H U M B A E N I N T I M AT E . C O .T H LA JOLLA GROUP INC (O’NEILL), MAIDENFORM INC

EXPERTISE

BRAS AND GIRDLES, UNDERWEAR, AND SWIMWEAR

C A PA C I T Y L E A DT I M E S 104

N /A 1 0 0 D AY S

THAILAND PARISA INDUSTRIES CO., LTD.

Parisa Industries Co., Ltd is a company that mainly specializes in intimates and knitted swimwear. However, they have only produced 13 orders since 2013; although, they do work with companies such as Target, and Tommy Bahama. The quality of their products based on their customers is medium quality. They do have a few blemishes in their company, such as their lack of customer service; it is extremely hard to contact anyone from their company. Their website also does not function, and they do not have a super clear strategic outlook (Parisa).

It is important to note that they do work with California companies, which means their sourcing guidelines would adhere to Nix’s thus creating an environment that we can do business in.

However, they are not the strongest in comparison to the other swimwear manufacturers in Thailand.

FOUNDED L O C AT I O N WEBSITE C USTO M E R S

N /A PHROM BURI PA R I S AU S A .C O M TOM MY BA H A M A , A R F A P P A R E L I N T E R N AT I O N A L

EXPERTISE

KNITTED SWIMWEAR, SY N T H E T I C SW I MW E A R , A N D I N T I M AT E S

C A PA C I T Y L E A DT I M E S

N /A 1 5 0 D AY S

105

S U P P L I E R R AT I N G S

B A N G L A D E S H S U P P L I E R H I G H L I G H T S

Bangladesh’s garment and textile industry is the second largest retail exporter with a total of 3,600 manufacturing firms. Manufacturing is focused mainly in Dhaka with most of the raw materials needed being imported from neighboring countries such as China, India, Hong Kong, Singapore, Thailand, Korea, Indonesia and Taiwan. The country continues to invest in the most recent technology in an effort to create vertical operations capable of supplying the materials needed for garment manufacturing.

Factories in Bangladesh specialize in a large variety of garments including men’s and women’s clothing, more specifically woven garments, lingerie, knit garments, activewear and swimwear. The manufacturers that we focused on were Fahami Industries, A.J. Fashions, Bangladesh Fashion Source, Kenpark Bangladesh (PVT) and Stone Dead Fashion Ltd. Due to the following factors, Stone Dead Fashion and Fahami Industries presented more disadvantages than advantages for our business thus leading to its elimination for potential suppliers to source from. They had a lack of experience with swimwear, low quality customers, lack of customer service and an inability to conform to the Nix sourcing guidelines. The remaining suppliers were further analyzed to determine the best place for Nix to place their products.

106

BANGLADESH A.J. FASHIONS LTD.

A.J. Fashions was established in 1997, with a specialty in woven garments. The 58,000 square foot factory produces 150,000 pieces per month and has medium to premium quality clients such as Dick’s Sporting Goods, Bass Pro Shop, Calvin Klein, Hudson Bay Co. and Sportek. The company has experience in swimwear but primarily focuses on men’s swim shorts and board-shorts. Although their workers are highly skilled, they are dedicated to an on-time delivery schedule, are Worldwide Responsible Accredited Production (WRAP) certified and comply with the global standards for human rights, A.J. Fashions does not make any effort to be sustainable or friendly towards the environment. As a result, this presents some skepticism in our decision to choose A.J. as a potential supplier.

FOUNDED L O C AT I O N WEBSITE C USTO M E R S

1997 DHAKA A J I N T L .C OM DICK’S SPORTING GOODS, C A LV I N K L E I N , S P O R T E X

EXPERTISE C A PA C I T Y L E A DT I M E S

WOV E N GA R M E N T S 1 6 0,0 0 0 P C S/MO N T H 9 0 - 1 2 0 D AY S

107

S U P P L I E R R AT I N G S BANGLADESH FASHION SOURCE LTD.

Bangladesh Fashion Source was founded in 1991, with a specialty in lingerie.

The company also produces swimwear with 400,000 units of swimwear a month, both top and bottom. Their main clients include Leading Lady and Ace Lingerie who are known for lower-quality products and bargain prices, indicating a low level of quality. Their factory holds 698 machines, a CAD facility and a Lycra system.

They ensure a 100 percent safe and healthy working environment with competitive prices and a flexible production strategy. Throughout the production process they ensure the use of environmentally friendly organic materials such as organic color and non-chemical cleaners, which is aligned with Nix’s sourcing guidelines.

FOUNDED L O C AT I O N WEBSITE C USTO M E R S

1991 DHAKA BDSOURCE.BIZ L E A D I N G L A D Y, AC E L I N G E R I E

EXPERTISE C A PA C I T Y L E A DT I M E S

108

LINGERIE 2 ,0 0 0,0 0 0 P C S/MO N T H 9 0 - 1 2 0 D AY S

BANGLADESH KENPARK BANGLADESH (PVT) LTD.

Kenpark Bangladesh is part of the larger manufacturing company Hirdaramani Group. They have an expertise in knit and woven garments but also produce jeans, skirts, trousers, reversible jackets, pajamas and swimwear. Kenpark operates 4 units and state-of-the-art factories including a sophisticated washing plant, a water treatment plant and an effluent treatment plant. Kenpark has been in business for more than 30 years. The cluster has a capacity of 1.5 million pieces a month. Kenpark is also WRAP certified. Their supply products for premium clients such as Guess, Lucky Brand, Diesel, Tommy Hilfiger, Victoria’s Secret, Ralph Lauren, Dockers, Calvin Klein, Nike, Patagonia, True Religion and Adidas, indicating a high level of quality and customer service.

They have the latest technology including pocket setters, CAD machines, pleating machines and a conditioning laboratory. Their relationships with fabric manufacturers enable them to provide comprehensive sourcing solutions for their clients. They adhere to strict ethical standards and are recognized for offering organically grown, eco-friendly products that are traded fairly. They are dedicated to being a zero carbon company and have invested in studies to analyze the carbon footprint of each of their manufacturing facilities so that they can implement targeted energy saving mechanisms.

In addition, they offer workshops and seminars and run cleanup and greening projects in schools and communities to spread the message of sustainability. They provide regular programs for employees and their families such as blood donation drives, eye clinics and routine health checks. Kenpark’s dedication to the environment, high quality clients, and manufacturing capabilities as well as its excellent approach to human rights leads us to believe that it could be an excellent supplier in sourcing Nix’s products.

FO U N D E D 1984 L O C AT I O N C H I T TA G O N G W E B S I T E H I R DA RA M A N I .C OM C U S T O M E R S L E V I ’ S , D I E S E L , V I C T O R I A’ S S E C R E T, P ATA G O N I A , A D I D A S , H&M, RALPH LAUREN, NIKE

E X P E R T I S E K N I T S A N D WOV E N S C A PA C I T Y 1 , 5 0 0 , 0 0 0 P C S / M O N T H L E A D T I M E S 6 0 - 9 0 D AY S

109

S U P P L I E R R AT I N G S Cambodia

Indonesia

Quicksew Cambodia Ltd

Reliable Source Industrial Cambodia Co., Ltd

Wincam Corporation

PT Opelon

Hollit Intl.

PT Eratex Djaja

7 5 6

8 7 7

4 4 8

5 2 8

8 9 4

4 7 6

8

9

4

4

6

3

8 6 4 7 8

9 8 7 9 9

5 4 9 3 5

6 4 7 2 4

10 8 3 9 9

8 8 6 8 6

7

8

3

5

7

8

3

8

3

4

7

7

9

10

4

6

8

10

Total

78

99

56

57

88

81

Average

7.1

9.0

5.1

5.2

8.0

7.4

Abilities Capacity Costs Customer Service Customers Flexibility Lead-time Management Quality Services Offered Strategic Outlook Sourcing Guidelines

TOTA L

SCORE

RELIABLE

SOURCE HOLLIT

O R I E N TA L

GARMENT KENPARK

110

99 84 90 94

Thailand

Bangladesh

Intimate Fashion Oriental Garment Co. Co.

Parisa

A.J. Fashions Ltd.

Bangladesh Fashion Source Ltd.

Kenpark Bangladesh (PVT) Ltd.

6 4 4

8 7 6

4 4 7

7 2 6

4 9 8

8 8 5

5

8

4

3

10

6

5 5 4 5 5

7 8 4 8 6

4 4 2 2 5

8 7 4 9 8

3 5 4 6 6

10 8 4 8 9

6

8

3

6

6

9

5

8

2

5

5

9

4

8

2

7

8

10

58

86

43

72

74

94

5.3

7.8

3.9

6.5

6.7

8.5

AV E R AG E

SCORE

RELIABLE

SOURCE HOLLIT

O R I E N TA L

GARMENT KENPARK

9.0 8.0 7. 8 8.5 111

COSTING

COSTING NIX

COSTING

ST R AT EGY

When deciding on a pricing strategy, the main factors that were taken into consideration

were quality, function and competition within the swimwear industry. Nix swimwear utilizes high quality neoprene, mesh and nylon spandex fabrics with detailed stitching. Our customers require high performance swimwear that not only looks stylish but also is able to deliver a high level of performance when necessary. The swimwear industry generally operates on a system that allows for high margins, averaging around 95 PERCENT. Other companies producing similar products at a premium level such as Mikoh, Kovey and Triangl range in price from $90 to $350. The Nix swimwear collection was

114

Style Name

Style #

Retail Price

Cambodia Cost

Margin %

Indonesia Cost

Margin %

Thailand Cost

Margin %

Murex

NX418

$200

$5.30

97.35%

$5.66

97.17%

$6.47

96.77%

$5.14

97%

Cerith

NX910

$100

$3.17

96.83%

$3.33

96.67%

$3.69

96.31%

$3.16

97%

Lucine

NX129

$220

$4.59

97.91%

$5.18

97.65%

$5.59

97.46%

$4.73

98%

Whelk

NX412

$150

$3.86

97.43%

$4.15

97.23%

$4.76

96.83%

$3.71

98%

Average Price

$167.50

Average Cost

$4.53

Average Margin

97%

$4.23

$4.58 97.47%

$5.13 97.27%

Bangladesh Margin Cost %

$4.19 96.94%

98%

The initial retail prices for Nix swimwear were based off of industry

standards and market research while the initial costs were determined through data collected about each individual country. This research indicated Bangladesh as the cheapest country to produce in with an average cost of $4.19 and Thailand as the most expensive country to produce in with an average cost of $5.13. The average price of our swimwear is $167.50 with an average margin of 97 percent.

The

average

margin

of

97 PERCENT is reasonable given the

industry standards with none of the margins for any of the countries or any of the individual swimsuits dropping below 96 percent. This indicated that our initial pricing strategy was a reasonable starting point to begin negotiations.

115

STRATEGY DEVELOPMENT E VA LUAT I O N & A N A LY S I S

TITLE

OV E RV I E W

118

Following the process of research and analysis of each country,

suppliers, and costs, we began developing a strategy. We found it to be the most efficient by dividing our products between the selected countries and manufacturers. With plans to expand our presence in specialty stores and other online venues such as Nasty Gal and Asos, we decided on starting out with an initial 450,000 units.

Among our four products, the Cerith and the Lucine will be sold year round, while the Murex and the Whelk will only be offered during March through August. This section will explain the development of our placement strategy in order to maximize our margins.

119

E VA L UAT I O N . . . ...OF

PRODUCT

VOLUMES

&

QUANTITIES

Currently, Nix offers four products categories, the Cerith, Whelk, Lucine, and Murex, which received inspiration from the names of different seashells keeping in line with our inspiration from the sea. We predict that our Cerith bikini will be our most popular swimsuit, resulting in our decision to allocate 160,000 units to be sold year round. The peak seasons of this product are expected to occur during the Spring, Summer, and Holiday seasons. An anticipated surge during the Spring is likely to occur around March due to Spring Break, while the summer months are the highest selling months of swimwear. We also decided to increase quantities during the holidays, due to numerous sales and discounts encouraging customers to buy off-season merchandise to acquire a great deal.

NAME

WHELK

Jan

5,000

Feb

8,000

Mar

20,000

25,000

Apr

18,000

20,000

May

17,000

22,000

Jun

22,000

28,000

Jul

20,000

25,000

Aug

10,000

10,000

Sep

4,000

Oct

4,000

Nov

17,000

Dec

15,000

TOTAL 120

CERITH

160,000

130,000

Our other swimsuit that will be offered year round is the Lucine rash-guard. Though not as popular as the Cerith, we still feel that the Lucine will be successful sold throughout the year especially since it is geared towards the more athletic of our consumer who doesn’t just spend time in the water for leisure but for sport. Because of this, we allotted 90,000 units for the Lucine, with Spring and Summer being its highest selling seasons, which is when water sports are most prominent.

Our Whelk and Murex swimsuits will only be sold during the months of March to August, which are the most popular seasons for swimwear. By allocating 130,000 units of the Whelk tankini, we predict it to be our second most favored product in comparison to the Cerith. The Whelk’s stylish, fashion-forward design will likely be more accepted during the spring and summer months.

The Murex one-piece was given the least amount of units with only 70,000 units. This is due to the fact that few women, especially our target customer, wear a one-piece as it is seen as a modest, traditional style that has been overshadowed by the other styles of swimwear over the years. For all the products, the highest selling month is the month of June which as seen as the peak of summer.

LUCINE

MUREX

TOTAL

3,000

8,000

4,000

12,000

13,000

14,000

72,000

11,000

11,000

60,000

12,000

13,000

64,000

12,000

15,000

77,000

9,000

12,000

66,000

5,000

5,000

30,000

4,000

8,000

4,000

8,000

7,000

24,000

6,000

21,000

90,000

70,000

450,000 121

E VA L UAT I O N . . . ...OF

COUNTRIES

&

SUPPLIERS

After analyzing the information previously presented in the country and supplier analysis, we were able to better develop a strategy for placing our product and maximizing our margins.

Although the results from the country analysis did play somewhat of a role in our decision to source from certain countries, the supplier analysis was more significant in the creation of our strategy. For instance, while Thailand and Indonesia deemed to be countries with little risk and much benefit, with their stable governments and booming textile industries, Thailand lacked reliable and experienced suppliers in our product category. As a result, Thailand proves to be a weak source of suppliers, which affects our decision in choosing it as a country of sourcing.

The countries of Bangladesh and Cambodia had the highest in supplier scores, with the Kenpark Bangladesh (PVT) Ltd. manufacturer for Bangladesh, and the Reliable Source Industrial Cambodia Co. Ltd. for Cambodia, leading the way. Kenpark is experienced in producing a variety of different product categories including swimwear, and has an exceptional capacity of an average 1.5 million units per month. Due to the factory’s superior management system, the factory floor is maintained with the latest machinery that produces high quality products in an average of 90-100 days. Kenpark also offers services in washing, water treatment, pleating, and more. Their relationship with fabric mills enables them to provide comprehensive sourcing solutions and match quality.

122

Country Score

Supplier Score

Total

Bangladesh

Cambodia

Indonesia

Thailand

48

57

68

67.5

A.J. Fashions Ltd.

72

Quicksew Cambodia Ltd.

78 PT Opelon

Oriental 57 Garment Co.

Bangladesh Fashion Source Ltd.

74

RSI Cambodia Co. Ltd.

99 Hollit Intl.

84

Intimate Fashion Co.

90

Kenpark Bangladesh (PVT) Ltd.

94

Wincam Corp.

56

PT Eratex Djaja

81

Parisa

43

71.75

72.50

72.50

58

64.63

Reliable Source Industrial (RSI) presents the highest ranking of all compared suppliers due to its advanced abilities to produce a variety of different products, but specifically specializes in swimwear.

The company also has a large capacity of being able to produce an average of 25 million pieces annually.

RSI is also flexible in producing a variety of different products at once for different clients, in addition, they are eager to meet the needs and wants of their clients as well. With an impressive lead time of around 45 days proves to be a supplier that is not only capable of producing high quality products but also profoundly efficient at doing so. This manufacturer also offers services in manufacturing, quality control and assurance, product development support, and advanced technology support.

Indonesia offers stability in the overall climate of the country, but also presents a reliable source of suppliers that could be used to the advantage of Nix. While all three suppliers of Indonesia could be a possibility for Nix to source from, PT Opelon has the lowest ranking, eliminating its potential to be a choice in our final decision. Hollit International and PT Eratex Djaja are nearly similar in the overall scores, but differ in certain areas. For instance, PT Eratex Djaja has a better lead-time of 90 days compared to that of Hollit which is about 5 months. PT Eratex also offers services that are more convenient in that many of them are offered in-house, while Hollit often works with partners at other mills in factories to complete their process. However, Hollit manages to have several advantages of PT Eratex in its ability to produce more variety of products, higher capacities of 42,000,000 pieces annually, and most importantly better quality due to meeting the needs of its high-end clientele.

123

Cambodia

Country

Reliable Source Industrial Cambodia Co., Ltd.

Supplier Style Name Total Units

450,000

Wholesale Cost per Unit Margin $ Margin % Total Wholesale Total Purchase Total Margins Avg Wholesale Avg Purchase Avg Margins $ Avg Margins %

$ $ $

$ $

Whelk

Lucine

Cerith

70,000

0

90,000

0

100.00 5.30 94.70 94.70%

$ 7,000,000.00 $ $ 371,000.00 $ $ 32,796,350.00 $ 6,629,000.00 $ 34,650,000.00

1,853,650.00

$ $

$ $ $

-

110.00 4.59 105.41 95.83%

$ 9,900,000.00 $ $ 413,100.00 $ $ 9,486,900.00 $

72.88 94.65%

4.12

PRELIMINARY PLACEMENT & MARGIN CA LC U L AT I O N

124

-

77.00 4.12

$

Average Cost/Unit $

Murex

$4.95

Bangladesh Kenpark Bangladesh (PVT) Ltd.

Murex

Whelk

Lucine

Cerith

Murex

Whelk

Lucine

Cerith

0

85,000

0

50,000

0

45,000

0

110,000

$ $ $

$ $ $

Indonesia Hollit International

-

75.00 4.15 70.85 94.47%

$ 6,375,000.00 $ $ 352,750.00 $ $ 6,022,250.00 $

$ $ $

-

$ 2,500,000.00 $ $ 166,500.00 $ $ 2,333,500.00 $

$

50.00 3.33 46.67 93.34%

3.74

$ $ $

-

75.00 3.16 71.84 95.79%

$ 3,375,000.00 $ $ 142,200.00 $ $ 3,232,800.00 $

$ $ $

-

50.00 3.71 46.29 92.58%

$ 5,500,000.00 $ 408,100.00 $ 5,091,900.00

$

3.44

After examining the provided information from the factories, Kenpark

and RSI prove to be among the strongest suppliers to place our products.

As a result, we plan on allocating all units of the Murex and the Lucine at Reliable Source Industrial, totaling to 160,000 units. Since Kenpark is more qualified in the development of the Cerith bikini, we plan on distributing 110,000 units of the Cerith, and 45,000 units of the Whelk tankini. The last potential supplier is Hollit International from Indonesia, which is experienced in the production of complex and high quality merchandise, which is why we plan on allotting 85,000 units of the Whelk tankini, and 50,000 units of the Cerith. We believe that with this distribution of our products, we can expect to see full maximization of our margins with an average of 94.65%.

125

E VA L UAT I O N . . . ...OF

COSTS

By examining the information provided in the table above, Bangladesh proves to be the country with the lowest costs to manufacturer our products with exception of the Lucine which is 14cents cheaper to make in Cambodia. Because of this we plan on placing all units of the Lucine in a supplier in Cambodia. Bangladesh also offers the highest margin of 98%, which helps influence our final decision in the selection of countries and suppliers.

Once again, Thailand offers the disadvantage of having higher costs in the production of our swimwear, leading us to be reluctant to place any of our products in the country. While Indonesia has a higher average cost, and lower margin in comparison to Bangladesh and Cambodia it still remains less expensive than Thailand, which we will keep for the consideration of our final placement.

126

...OF

FUTURE

REQUIREMENTS

Nix has already established the requirements that all of our suppliers follow and maintain our sourcing guidelines along with local ones set up in each country, our company also expects quality products from our suppliers as well. In the future, Nix hopes to expand its product line to encompass all things dealing with water including offering beach bags, cover-ups, resort wear, and more. Suppliers that meet these requirements usually have more abilities, some of which include: Quicksew, Reliable Source Industrial, Hollit International, Oriental Garment Co., A.J. Fashion Ltd., and Kenpark. All these listed suppliers have experience in producing a variety of products, and also are flexible in meeting the needs of their clients. With this information, we can conclude that these suppliers could fulfill our requirements in wanting to expand our product category.

Since neoprene is the main content of our swimwear and also what sets us apart from other swimwear brands, Nix plans on requiring its suppliers to have the ability to produce neoprene in-house or have a fabric mill partner that can produce it for them. Kenpark, PT Eratex, and Reliable Source seem to have potential to meet this requirement in that they either offer in-house fabric production or partner with a fabric mill capable of satisfying our needs.

Nix hopes that by adding these requirements for suppliers to follow, we can not only improve our values and standards, but also improve our margins as well with addition of new customers.

127

FINAL SOURCING STRATEGY

TITLE

F I N A L

130

S T R AT E GY

After thorough research of each of the countries of Bangladesh,

Cambodia, Indonesia, and Thailand along with their pertaining suppliers, we were able to develop a sourcing strategy that will best maximize our margins as a company leading to long-term success. The steps taken to develop our strategy included performing a full analysis of each country and supplier along with examining the costs to make our products in each country. A total of three countries were selected and the five researched suppliers were narrowed down to one per country. We found that the best countries to conduct business with were Cambodia, Bangladesh, and Indonesia and within these countries we chose the best supplier of each. These suppliers include Reliable Source Industrial for Cambodia, Kenpark (PVT) Ltd for Bangladesh, and Hollit International for Indonesia.

With the gathered information we were able to initiate a method that allowed for the best placement of our products, thus increasing our profits.

131

SELECTION... ...OF

COUNTRIES

As mentioned previously, Nix has selected the countries of Cambodia, Bangladesh, and Indonesia. These countries were chosen based on their abilities to produce our products of neoprene swimwear. Since all the countries are relatively close in proximity to each other, distance wasn’t much of a factor when determining our selection of countries. Although, Thailand proved to be a country with little risk, it lacked suppliers that were experienced in the manufacturing of swimwear. Nix expects its suppliers to produce high quality products and since Thailand didn’t have the required knowledge in production of swimwear it presented a disadvantage for our country to source from there. Thailand also had the highest labor costs compared to the other three countries, this presents a problem since our goal as a company is to maximize our margins and thus increase our profit. With these factors taken into consideration, our company found it fit to eliminate Thailand as a country of sourcing our products.

While Cambodia and Bangladesh did have a number of disadvantages involved with conducting business within the country such as a poor business climate, untrained work force, risks of natural hazards, and poor government; the countries have a flourishing textile industry that provides a variety of suppliers that have experience in swimwear. In addition, both of these countries had the lowest labor costs measured at 5cents per minute.

Indonesia proved to be the best country to do business in considering a number of factors such as their highly trained labor force, responsible sourcing guidelines, stable business climate and government, and most importantly a rapidly growing textile industry. The nation’s textile industry encompasses over 10% of the Indonesian manufacturing workforce, contributing to a sizable amount of foreign exchange to the nation. It is currently measured at a 5% year-on-year increase with a predicted $13.3 billion value by the end of 2014. However, the country suffers from risks in regional natural disasters common in the South East Pacific region such as monsoons and floods, along with possible threats of terrorism. In addition, Indonesia has a higher labor cost measured at 8cents per minute. Despite these disadvantages, Indonesia demonstrates its viability as country of sourcing.

132

133

SELECTION...

...OF

SUPPLIERS

Initially, there were five suppliers chosen for each country, but after factoring their sourcing guidelines, and ability to accommodate our volumes, product quality, leadtimes, as well as value added services we were able to narrow it down to the best supplier for each country. The suppliers with the strongest viability include Hollit International of Indonesia, Kenpark (PVT) Ltd. of Bangladesh, and Reliable Source Industrial of Cambodia.

Hollit International works with top brand name clients such as Armani Jeans, Prada, and Tommy Hilfiger thus contributing to the production costs and slow lead times of an average of 5 months. Yet, despite these drawbacks, the supplier still presents exceptional sourcing guidelines that fall in line to that of Nix with its prohibition of forced and child labor, and a commitment to be environmentally conscious. Its repertoire of clients proves it ability to produce high quality products as well as provide value added services of product and trend development, dyeing and washing facilities, samples production unit and more. In addition to being able to produce a variety of products, Hollit Int. also has the potential to accommodate large order amounts, with their production capacity being an average of 3.5M units per month.

Kenpark (PVT) Ltd. also works with luxury designers such as Lucky Brand and Ralph Lauren, proving its ability to produce high quality products but unfortunately for a higher production cost. Another disadvantage this supplier poses is its extended lead-time of about 3 months. However, in addition to being able to produce quality products, it also includes services such as pleating machines, conditioning laboratory using the latest technology to create these products. Kenpark has exceptional sourcing guidelines set in place with being WRAP certified, and its dedication to producing eco-friendly products that are traded fairly. Their guidelines go above and beyond of what our company requires for our suppliers to follow, which presents a great benefit to Nix. This supplier has also demonstrated its ability to accommodate large order quantities, with their production capacity being an average of 1.5M units per month.

134

Reliable Source Industrial Cambodia Co. Ltd. is a leading multinational manufacturer of sportswear and swimwear. They have established a reputation of flexibility and accommodation of high order quantities based on their ability to produce 2.1M units per month. RSI specializes in the manufacturing of high-end functional fabrics, and has the capabilities to produce both sportswear and swimwear using both traditional cut and sew and seamless technologies. The company is especially strong in the creation of a variety of types of swimwear. In addition to manufacturing, RSI offers services in quality control and assurance, product development support, and advanced technology support.

Not only, does Reliable Source Industrial comply with the sourcing guidelines set in place by their clients such as Nike and Under Armour, but it also adheres to local labor laws and international human rights norms set by organizations such as the Fair Labor Association. In addition, RSI is committed to environmental protection and sustainable development with the use of solar energy utilization plans, rainfall recycling, waste reduction, and more. The company has even begun taking steps in becoming certifies for SA800, one of the world’s strictest social responsibility standards.

After analyzing this information, we believe that RSI would be the one of the best options as a supplier for Nix due to numerous reasons. Some of which include its short lead time of 45 days, relationships with well-known clients, expertise in the development and production of swimwear in high-end fabrics, and most importantly, it’s exceptional commitment to corporate social responsibility.

135

F I N A L P L AC E M E N T

After conducting negotiations, costs per unit and unit quantities were increased due to our lack of a strong reputation as a new company. However, despite these drawbacks it presented a great starting point for building partnerships with future manufacturing partners. Initially we started out with a total of 450,000 units, but after negotiations we increased the quantities in our year round products: the Cerith to 190,000 units and the Whelk to 120,000 units. With active marketing strategies and confidence in our business we expect to be able to sell the additional 60,000 units.

Once we determined the best suppliers and countries we developed our final placement strategy.

Cambodia proved to have the best supplier of Reliable Source Industrial, which led us to placing 190,000 units of our products in the factory. The negotiated price for the Murex is $6.23, while the Lucine was $5.75. Due to the higher costs per unit we chose to place our seasonal products, the Murex and the Lucine which are only offered from March to August. We found the best method was to place all 70,000 units of the Murex and all 120,000 of the Lucine swimsuits with RSI. With this placement our margins will be $93.77 for the Murex and $104.25 for the Lucine, averaging to a 93.7% and 94.77% for each.

Cambodia

Country Supplier Style # Total Units

Reliable Source Industrial Cambodia Co., Ltd. Murex

510,000

Wholesale Cost per Unit Margin $ Margin %

$ $ $

Total Wholesale Total Purchase Total Margins

$

39,450,000.00

$

2,501,800.00

Avg Wholesale Avg Purchase Avg Margins $ Avg Margins %

$ $

$

$

Average Cost/Unit $

136

$ $ 36,948,200.00 $ 77.35 4.91 72.45 93.66%

4.91

Whelk

Lucine

70,000

0

100.00 6.23 93.77 93.77% 7,000,000.00 $ 436,100.00 $ 6,563,900.00 $

120,000 $ $ $

-

110.00 5.75 104.25 94.77%

$ 13,200,000.00 $ 690,000.00 $ 12,510,000.00

Since Kenpark (PVT) Ltd. is better at manufacturing basic swimwear we chose to place our majority of our most popular product, the Cerith bikini with 125,000 units along with 45,000 units of the Whelk tankini. This supplier also has lower costs per unit with it costing $3.89 for the Cerith and $4.65 for the Whelk. Margins will be 93.80% totaling to $70.35 for the Whelk and 92.22% for the Cerith equating to $46.11. Our final country of placement was Indonesia with Hollit International as the supplier. At this supplier we chose to place more of the Whelk tankini since they have more experience in creating a variety of swimwear. 85,000 units of the Whelk was placed here along with 65,000 units of the Cerith. Prices for each were negotiated to $5.02 for the Whelk and $3.90 for the Cerith, slightly more expensive than that of Bangladesh. With this placement our margins will be 93.31% or $69.98 for the Whelk and 92.20% for the Cerith which is $46.10.

Overall our total wholesale will be $39,450,000, with a total purchase of $2,501,800, resulting in a total margin of $36,948,000. Our average wholesale price will be $77.35, with an average purchase of $4.91, equating to $72.45 for the average margin or 93.66%. Although our manufacturing costs and units were increased, we were still able to maintain a margin of over 90%.

Murex

Bangladesh Kenpark Bangladesh (PVT) Ltd.

Whelk

0

-

Lucine

Cerith

85,000 $ $ $

$ $ $

Indonesia Hollit International

$ $ $

0

75.00 5.02 69.98 93.31% 6,375,000.00 $ 426,700.00 $ 5,948,300.00 $

$ $ $

-

Murex

Whelk

65,000

$ $ $

0

50.00 3.90 46.10 92.20% 3,250,000.00 $ 253,500.00 $ 2,996,500.00 $

$ $ $

-

Lucine

Cerith

45,000

$ $ $

0

75.00 4.65 70.35 93.80% 3,375,000.00 $ 209,250.00 $ 3,165,750.00 $

-

125,000 $ $ $

50.00 3.89 46.11 92.22%

$ $ $

6,250,000.00 486,250.00 5,763,750.00

137

FINAL COSTING

PRICES INITIAL/PRELIMINARY Style Name

Style #

Murex NX418 Cerith NX910 Lucine NX129 Whelk NX412 Average Price Average Cost Average Margin

FINAL Style Name

$ $ $ $ $ $

200.00 100.00 220.00 150.00 167.50 4.53 97.30%

$ $ $ $

5.30 3.17 4.59 3.86

$

4.23

Margin % 97.35% 96.83% 97.91% 97.43%

97.47%

N EG OT I AT E D

Style #

Murex NX418 Cerith NX910 Lucine NX129 Whelk NX412 Average Price Average Cost Average Margin

Retail Price Cambodia Cost

Retail Price Cambodia Cost $ $ $ $ $ $

200.00 100.00 220.00 150.00 167.50 5.21 96.89%

$ $ $ $

6.23 3.91 5.75 4.83

$

5.18

Indonesia Cost $ $ $ $

5.66 3.33 5.18 4.15

$

4.58

PRICES

Margin % 96.89% 96.09% 97.39% 96.78%

96.91%

Indonesia Cost $ $ $ $

6.31 3.90 6.15 5.02

$

5.35

In comparison to our initial average cost, the final average cost increased by 68 cents from $4.53 to $5.21. Our average margin decreased slightly from 97 percent to 96.89 percent. During negotiations with our Indonesian supplier, we were originally quoted a cost of $6.50 for the Murex, $4.00 for the Cerith, $6.05 for the Lucine and $5.15 for the Whelk.

These costs were much higher than our initial costing, some by a difference of up to 29%, but we were able to negotiate a lower cost by agreeing to place a greater volume of units for the Cerith and Lucine. By upping the final units from 160,000 to 190,000 for the Cerith and from 90,000 to 120,000 for the Lucine, the final prices we were able to agree upon were $6.20 for the Murex, $3.75 for the Cerith, $5.80 for the Lucine and $4.90 for the Whelk.

140

COSTS Margin % 97.17% 96.67% 97.65% 97.23%

97.27%

Thailand Cost $ $ $ $

6.47 3.69 5.59 4.76

$

5.13

Bangledesh Cost

Margin % 96.85% 96.10% 97.20% 96.65%

96.81%

$ $ $ $

6.04 3.89 5.86 4.65

$

5.11

&

MARGINS Bangledesh Cost

Margin % 96.77% 96.31% 97.46% 96.83%

96.94%

$ $ $ $

5.14 3.16 4.73 3.71

$

4.19

Bangledesh Cost

Margin % 96.98% 96.11% 97.34% 96.90%

96.95%

$ $ $ $

6.04 3.89 5.86 4.65

$

5.11

Margin % 97% 97% 98% 98%

98%

Margin % 96.98% 96.11% 97.34% 96.90%

96.95%

Overall, the final costs remained reasonable and we maintained an acceptable margin percentage. When looking at our final costs, Bangladesh is still the cheapest country to produce in with an average cost of $5.11 cents. Due to the high cost of production in Thailand, the country was eliminated with the most expensive country out of the remaining three being Indonesia with an average cost of $5.35. Although Indonesia’s average cost is more expensive than Cambodia’s, their average margins have only a slight difference of 0.10 percent. These margins indicated that our original retail prices were appropriate so we decided that they should remain the same.

141

CONCLUSION

E X P L A N AT I O N S DECISIONS

MADE

After reviewing each country, their manufacturers, and our own desires when sourcing to countries, we decided to remove Thailand from our final strategy. Removing Thailand was partially due to the lack of volume of shipments each manufacturer has produced, but also the unforeseeable future of Thailand’s political structure raised red flags for Nix. When calculating production costs, Thailand also had the highest cost out of the four countries at $0.10 a second.

After much discussion, we decided to source our seasonal swimsuits, which are only offered from March to August, which are the Murex at 70,000 units and the Lucine at 120,000 in Cambodia at the Reliable Source Industrial Cambodia Co. Factory. Cambodia was determined to have one of the cheapest labor costs, sitting at $0.05 a second.

We then decided to place majority of our year round swimsuits, which are the Whelk and Cerith in Bangladesh at the Kenpark Bangladesh Ltd factory. We chose Bangladesh due to its cheap labor costs at $0.05 a second. We decided to source 45,000 units of the Whelk in Bangladesh, as well as 125,000 units of the Cerith. Since these two suits take the least amount of time and Bangladesh has a low labor cost, we were able to produce more of these suits for a cheaper price.

Lastly, when it came to Indonesia, we knew that Hollit International was a good manufacturer to source with, and we decided that even though Indonesia had the highest labor cost out of the other two countries, at $0.08, the company has worked with customers that we feel have the quality product we desire to have. In this case, we decided to source 85,000 units of the Whelk, and 65,000 units of the Cerith

M I T I GAT I N G

RISKS

Despite plans for a bright future with these companies, we must always consider the risks that could occur. Nix plans on dealing with risks by involving internal and external monitors, by executing announced and unannounced audits to our manufacturers we will be able to stay up-todate and knowledgeable of any happenings within the factories; we also plan on interviewing employees during these audits to ensure that no unethical practices are occurring within our factories.

Another way we plan to ensure our factories are compliant is through the use of quality checks.

144

145

CONCLUSION

146

The benefits of our strategy are endless. We believe that with the suppliers we’ve picked, the swimwear we’ve designed, and the countries we’ve chosen to enter we will maximize the full potential of Nix. We picked suppliers that not only have a customer base that is recognizable, but are very quality driven, and focus on sourcing guidelines that we can agree with. We have also designed swimwear that we believe will be unique to our market, as well as relatively cheap to produce in the three countries we have chosen. Lastly, the countries we have chosen are ones that have cheap labor costs, and are maturing as a country when it comes to things such as technological advancements, and the growth of their textile industry.

We picked companies from Cambodia, Indonesia, and Bangladesh that we believed aligned with our values and sourcing guidelines. As a California company, is it not only important for each company to have their own Code of Conduct, but also align with our Code of Conduct and align with the California Transparency Act that Nix is required to follow as a company based out of California.

Working with factories that have such well-known customers such as Prada, Pac Sun, and Dicks Sporting Goods, we’ve ensured that our products will be created with the same quality in mind. We believe that having a quality that others can identify with, and have no problem spending the money on, helps our company launch into the market we are hoping to excel in.

When it comes to our inventories and lead times, we have picked suppliers that are quick at producing our products, as well as getting it sent to us in Santa Cruz. We have placed our minimum amount of product in our factories as of now, with the understanding that as we grow as a company our products and inventory will continue to grow as well.

147

CONCLUSION

Sourcing to these countries allows us flexibility with our margins, as well as our unit amount. We have worked with our suppliers to agree upon terms that benefit both parties involved, and we know that the suppliers we are working with value our business and would do anything to help continue this partnership. In the future, we know that there is room for possibility for an increase in margins, and lowered costs.

With our products being sourced to countries that have such low labor costs, and our margins being so high, we’ve allowed much room for growth in the future. We believe that due to our great margins we will be able to grow in the future with more products and a higher inventory. We were able to increase our units while spending about the same as our competitors that actually buy fewer units due to production costs in other countries. We also believe this gives us a stronger advantage than those that source their swimwear to more expensive countries. Since their margins are much lower due to production costs, they do not have as much product on hand; however, since Nix produced more units for less, we will always have more products on hand to always supply our customers.

We understand that although our countries do have blemishes here and there, every country does. With that being said, we are proud to say we provide constant business to companies that support our own beliefs as a company. We feel no shame in Cambodia, Indonesia, and Bangladesh after our in-depth research on each of them, we believe that each country possesses its own benefits for Nix, and each manufacturer is one that we believe we can grow with as a swimwear company.

148

149

APPENDIX

CODE OF CONDUCT N I X

C O D E

O F

C O N D U C T

Nix and its employees must, at all times, comply with all applicable laws and

regulations. Nix will not condone the activities of employees who achieve results through violation of the law or unethical business dealings. This includes any payments for illegal acts, indirect contributions, rebates, and bribery. The company does not permit any activity that fails to stand the closest possible public scrutiny.

Nix

has

developed

a

workplace

code

of

conduct

that

the

company,

its

employees, and its suppliers will voluntarily adopt and abide which includes:

• The prohibition of child labor

• The prohibition of forced labor

MANAGEMENT SYSTEM: The

factory

will

have

accountability

and

compliance

1.

a

publicly with

available applicable

policy laws

dedicated

and

other

to

social

requirements.

The factory is to operate in full compliance with the laws of their respective

countries and with all relevant laws, rules, and regulations, including those c oncerning labor, worker health and safety and the environment.

2.

The factory will allow the Social Compliance Officer unrestricted access to

all areas of the facilities and to all related records at all times, whether or not advance notice has been provided.

CHILD LABOR: No person shall be employed at an age younger than 15 or under the age for completion of compulsory education or country legal working age, whichever is higher.

FORCED LABOR: There of

shall prison

not labor,

be

any

use

indentured

of

forced

labor,

labor,

bonded

whether labor

in or

the

form

otherwise.

WAGES & BENEFITS: Employers shall ensure that wages paid for a standard working week shall meet at least the legal or local industry minimum standards, which ever is greater and shall always be 152

HARASSMENT OR ABUSE: Every employee shall be treated with respect. No employee shall be subject to

any

physical,

sexual,

psychological

or

verbal

harassment

or

abuse.

DISCRIMINATION: No person shall be subject to any discrimination in employment, including hiring, salary, benefits, advancement, discipline, termination or retirement, on the basis of gender, race, religion, age, disability, sexual orientation, nationality, political opinion, or social or ethnic origin.

HEALTH & SAFETY: Employers shall provide a safe and healthy working environment to avoid accidents and injury to health arising out of, linked with, or occurring in the course of work or as a result of the operation of employer facilities. The factory shall appoint a senior management representative who is responsible for the health and safety of all personnel and is responsible for the implementation of the health and safety elements of this standard.

CUSTOMERS: To continue to succeed, we need to win and retain customers by building partnerships with them. Supply products and services that offer consumers good value in terms of price, quality, performance, style, safety and environmental impact. Ensure that any quality or performance problems that occur in our products are dealt with expeditiously with the minimum inconvenience to our customers and consumers.

EMPLOYEES: Manage people with consideration and respect t, providing feedback on their performance. Not ask any employee to do anything that is illegal or immoral or that fails to comply with the standards of any recognized professional body of which he or she is a member. Encourage employees to speak up about any instances of wrongdoing or breaches of this Code that they become aware of.

ENVIRONMENT: Nix requires all supplier factories and their subcontractors to comply with all local and international laws regarding the protection and preservation of the environment. Our supplier audits also verify that factories have obtained all required operating permits to handle hazardous materials and waste. Factories are also required to have waste management systems in place to ensure the proper handling and treatment of wastewater and hazardous materials as well as to prevent any catastrophic release of chemicals in the environment. 153

CA M B O D I A C O S T S H E E T S NIX SWIMWEAR

COST SHEET

Country: Cambodia Style # #NX910 Style Name Cerith Description Bikini

Season SS15 Date: April 4, 2014

FABRICS

$/yard* $ 2.44 $ 0.55 $ 2.00

Neoprene Mesh Nylon Spandex

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene L�abel Vinyl Zip� Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

# of Units per garment

Yield** 0.15 0.07 0.05

Total $/unit Quantity** $ 0.10 1.01 $ 0.002 11 $ 0.026 2.02

Total ($) $ 0.101 $ 0.022 $ 0.053 $ 0.18

$/unit $ 0.045 $ 0.030 $ 0.010 $ 0.030 $ 0.81

Quantity 1.01 1.01 1.01 1.01 1.01

Total ($) $ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

$/unit Size 23x15x17 $ 1.94 $ 0.019 $ 0.06

Quantity 82 2.00 1

Total ($) $ 0.02 $ 0.04 $ 0.06 $ 0.12

1 11 yds 2

1 1 1 1 1

Minutes

8

Cost/ min

$ 0.056

OTHER

Freight Duty Broker Insurance TOTAL OTHER

GRAND TOTAL 154

Total ($) $ 0.37 $ 0.04 $ 0.10 $ 0.50

11.8%

Total ($) $ 0.004 $ 0.004 $ 0.004 $ 0.04 $ 0.45 $ 0.500 $ 1.01

Total ($) $ 0.073 $ 0.33 $ 0.01 $ 0.01 $ 0.43

$ 3.17

1% 1% 1% 10%

NIX SWIMWEAR

COST SHEET

Country: Cambodia Style # #NX412 Style Name Whelk Description Tankini/Two-Piece

Season SS15 Date: April 4, 2014

FABRICS

$/yard*

Neoprene Nylon Spandex Mesh

$ $ $

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene � Label Vinyl Zip � Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR

Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

2.44 2.00 0.55

Yield**

$/unit

Quantity**

Total ($)

1 17yds 2

$ 0.10 $ 0.002 $ 0.026

1.01 17 2.02

$ 0.101 $ 0.034 $ 0.053 $ 0.19

$/unit

Quantity

Total ($)

1 1 1 1 1

$ 0.045 $ 0.03 $ 0.010 $ 0.03 $ 0.81

1.01 1.01 1.01 1.01 1.01

$ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

$/unit

Quantity

Total ($)

$ 1.94 $ 0.019 $ 0.06

82 2.00 1

$ 0.024 $ 0.04 $ 0.06 $ 0.12

Size 23x15x17

Total

Minutes

16

Cost/ min

$ 0.056

OTHER

GRAND TOTAL

0.55 0.06 0.10 0.61

# of Units per garment

Total ($) $ $ $ $ $ $ $

0.009 0.009 0.009 0.09 0.90 0.500 1.51

1% 1% 1% 10%

Total ($) $ 0.073

Freight

Duty Broker Insurance TOTAL OTHER

Total ($)

0.23 $ 0.03 $ 0.19 $ $

11.80%

$ $ $ $

0.41 0.01 0.01 0.50

$ 3.86

155

CA M B O D I A C O S T S H E E T S NIX SWIMWEAR

COST SHEET

Country: Cambodia Style # #NX129 Style Name Lucine Description Rash Guard Two-Piece

FABRICS

$/yard* $ 2.44 $ 0.55 $ 2.00

Neoprene Mesh Nylon Spandex

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label S Hook Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene Label Vinyl Zip Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR

Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

OTHER Freight Duty Insurance Broker TOTAL OTHER

GRAND COST TOTAL 156

Season SS15 Date: April 4, 2014

# of Units per garment

Yield** 0.281 0.196 0.17

Total ($) $ 0.69 $ 0.11 $ 0.34 $ 1.13

Total

1 1 14 yds 2

$/unit Quantity** $ 0.10 1.01 $ 0.07 1.01 $ 0.002 14 $ 0.026 2.02

Total ($) $ 0.101 $ 0.07 $ 0.028 $ 0.053 $ 0.25

1 1 1 1 1

$/unit Quantity $ 0.045 1.01 $ 0.030 1.01 $ 0.010 1.01 $ 0.030 1.01 $ 0.81 1.01

Total ($) $ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

$/unit Quantity Size 23x15x17 $ 1.94 82 $ 0.019 2 $ 0.06 1

Total ($) $ 0.024 $ 0.04 $ 0.06 $ 0.12

Minutes

17

Cost/ min

$ 0.056

Duty Rate

11.8%

Total ($) $ 0.010 $ 0.010 $ 0.010 $ 0.10 $ 0.95 $ 0.500 $ 1.58

Total ($) $ 0.073 $ 0.483 $ 0.01 $ 0.01 $ 0.58

$ 4.59

1% 1% 1% 10%

NIX SWIMWEAR

COST SHEET

Country: Cambodia Style # #NX418 Style Name Murex Description One-Piece/ Malliot

Season SS15 Date: April 4, 2014

FABRICS

$/yard*

Neoprene Mesh

$ $

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene � Label Vinyl Zip � Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR

Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

# of Units per garment

Yield**

$ $ $

1 1 1 1 1

$ $ $ $ $

0.10 0.002 0.026

$/unit 0.045 0.03 0.010 0.03 0.81

$/unit $ $ $

1.94 0.019 0.06

1.01 13 2.02

$ $ $ $

0.101 0.026 0.053 0.18

Quantity

Total ($)

1.01 1.01 1.01 1.01 1.01

$ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

Quantity

Total ($)

82 2.00 1

Minutes

20

$ $ $ $ Cost/ min

$ 0.056

OTHER

GRAND TOTAL

1.63 0.01 1.64

Total ($)

Quantity**

0.024 0.04 0.06 0.12

Total ($) $ $ $ $ $ $ $

0.011 0.011 0.011 0.11 1.12 0.500 1.77

1% 1% 1% 10%

Total ($) $ 0.073

Freight

Duty Broker Insurance TOTAL OTHER

Total ($)

0.67 $ 0.015 $ $

Total $/unit

1 13 yds 2

Size 23x15x17

2.44 0.55

11.80%

$ $ $ $

0.56 0.01 0.01 0.65

$ 5.30

157

INDONESIA COST SHEETS NIX SWIMWEAR

COST SHEET Style # Style Name Description

Season SS15 Date: April 4, 2014

#NX910 Cerith Bikini

FABRICS

$/yard* $ 2.44 $ 0.55 $ 2.00

Neoprene Mesh Nylon Spandex

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene L�abel Vinyl Zip� Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

# of Units per garment

Yield** 0.15 0.07 0.05

Total $/unit Quantity** $ 0.10 1.01 $ 0.002 11 $ 0.026 2.02

Total ($) $ 0.101 $ 0.022 $ 0.053 $ 0.18

$/unit $ 0.045 $ 0.030 $ 0.010 $ 0.030 $ 0.81

Quantity 1.01 1.01 1.01 1.01 1.01

Total ($) $ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

$/unit Size 23x15x17 $ 1.94 $ 0.019 $ 0.06

Quantity 82 2.00 1

Total ($) $ 0.02 $ 0.04 $ 0.06 $ 0.12

1 11 yds 2

1 1 1 1 1

Minutes

8

Cost/ min

$

0.08

OTHER

Freight Duty Broker Insurance TOTAL OTHER

GRAND TOTAL 158

Total ($) $ 0.37 $ 0.04 $ 0.10 $ 0.50

7.5%

Total ($) $ 0.006 $ 0.006 $ 0.006 $ 0.06 $ 0.64 $ 0.500 $ 1.22

Total ($) $ 0.028 $ 0.23 $ 0.02 $ 0.10 $ 0.37

$ 3.33

1% 1% 1% 10%

NIX SWIMWEAR

COST SHEET Style # Style Name Description

Season SS15 Date: April 4, 2014

#NX412 Whelk Tankini/Two-Piece

FABRICS

$/yard*

Neoprene Nylon Spandex Mesh

$ $ $

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene � Label Vinyl Zip � Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR

Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

Yield**

2.44 2.00 0.55

$/unit

Quantity**

Total ($)

1 17yds 2

$ 0.10 $ 0.002 $ 0.026

1.01 17 2.02

$ 0.101 $ 0.034 $ 0.053 $ 0.19

$/unit

Quantity

Total ($)

1 1 1 1 1

$ 0.045 $ 0.03 $ 0.010 $ 0.03 $ 0.81

1.01 1.01 1.01 1.01 1.01

$ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

$/unit

Quantity

Total ($)

$ 1.94 $ 0.019 $ 0.06

82 2.00 1

$ 0.024 $ 0.04 $ 0.06 $ 0.12

Size 23x15x17

Total

Cost/ min

Minutes

16

$

0.08

OTHER

GRAND TOTAL

0.55 0.06 0.10 0.61

# of Units per garment

Total ($) $ $ $ $ $ $ $

0.013 0.013 0.013 0.13 1.28 0.500 1.95

1% 1% 1% 10%

Total ($) $ 0.034

Freight

Duty Broker Insurance TOTAL OTHER

Total ($)

0.23 $ 0.03 $ 0.19 $ $

7.5%

$ $ $ $

0.29 0.02 0.01 0.35

$ 4.15

159

INDONESIA COST SHEETS NIX SWIMWEAR

COST SHEET Style # Style Name Description

FABRICS

$/yard* $ 2.44 $ 0.55 $ 2.00

Neoprene Mesh Nylon Spandex

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label S Hook Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene Label Vinyl Zip Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR

Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

OTHER Freight Duty Insurance Broker TOTAL OTHER

GRAND COST TOTAL 160

Season SS15 Date: April 4, 2014

#NX129 Lucine Rash Guard Two-Piece

# of Units per garment

Yield** 0.281 0.196 0.17

Total ($) $ 0.69 $ 0.11 $ 0.34 $ 1.13

Total

1 1 14 yds 2

$/unit Quantity** $ 0.10 1.01 $ 0.07 1.01 $ 0.002 14 $ 0.026 2.02

Total ($) $ 0.101 $ 0.07 $ 0.028 $ 0.053 $ 0.25

1 1 1 1 1

$/unit Quantity $ 0.045 1.01 $ 0.030 1.01 $ 0.010 1.01 $ 0.030 1.01 $ 0.81 1.01

Total ($) $ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

$/unit Quantity Size 23x15x17 $ 1.94 82 $ 0.019 2 $ 0.06 1

Total ($) $ 0.024 $ 0.04 $ 0.06 $ 0.12

Minutes

17

Cost/ min

$

0.08

Duty Rate

7.5%

Total ($) $ 0.014 $ 0.014 $ 0.014 $ 0.14 $ 1.36 $ 0.500 $ 2.04

Total ($) $ 0.050 $ 0.341 $ 0.29 $0.0220 $ 0.70

$ 5.18

1% 1% 1% 10%

NIX SWIMWEAR

COST SHEET Style # Style Name Description

Season SS15 Date: April 4, 2014

#NX418 Murex One-Piece/ Malliot

FABRICS

$/yard*

Neoprene Mesh

$ $

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene � Label Vinyl Zip � Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR

Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

# of Units per garment

$ $ $

1 1 1 1 1

$ $ $ $ $

0.10 0.002 0.026

$/unit 0.045 0.03 0.010 0.03 0.81

$/unit $ $ $

1.94 0.019 0.06

1.01 13 2.02

$ $ $ $

0.101 0.026 0.053 0.18

Quantity

Total ($)

1.01 1.01 1.01 1.01 1.01

$ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

Quantity

Total ($)

82 2.00 1

Minutes

20

$ $ $ $ Cost/ min

$

0.08

OTHER

GRAND TOTAL

1.63 0.01 1.64

Total ($)

Quantity**

0.024 0.04 0.06 0.12

Total ($) $ $ $ $ $ $ $

0.016 0.016 0.016 0.16 1.60 0.500 2.31

1% 1% 1% 10%

Total ($) $ 0.064

Freight

Duty Broker Insurance TOTAL OTHER

Total ($)

0.67 $ 0.015 $ $

Total $/unit

1 13 yds 2

Size 23x15x17

Yield**

2.44 0.55

7.5%

$ $ $ $

0.39 0.01 0.01 0.48

$ 5.66

161

THAILAND COST SHEETS NIX SWIMWEAR

COST SHEET Style # Style Name Description

Season SS15 Date: April 4, 2014

#NX910 Cerith Bikini

FABRICS

$/yard* $ 2.44 $ 0.55 $ 2.00

Neoprene Mesh Nylon Spandex

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene L�abel Vinyl Zip� Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

# of Units per garment

Yield** 0.15 0.07 0.05

Total

1 11 yds 2

$/unit Quantity** $ 0.10 1.01 $ 0.002 11 $ 0.026 2.02

Total ($) $ 0.101 $ 0.022 $ 0.053 $ 0.18

1 1 1 1 1

$/unit Quantity $ 0.045 1.01 $ 0.030 1.01 $ 0.010 1.01 $ 0.030 1.01 $ 0.81 1.01

Total ($) $ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

$/unit Quantity Size 23x15x17 $ 1.94 82 $ 0.019 2.00 $ 0.06 1

Total ($) $ 0.02 $ 0.04 $ 0.06 $ 0.12

Minutes

8

Cost/ min

$

0.10

OTHER

Freight Duty Broker Insurance TOTAL OTHER

GRAND TOTAL 162

Total ($) $ 0.37 $ 0.04 $ 0.10 $ 0.50

13.2%

Total ($) $ 0.008 $ 0.008 $ 0.008 $ 0.08 $ 0.80 $ 0.500 $ 1.40

Total ($) $ 0.026 $ 0.42 $ 0.01 $ 0.10 $ 0.55

$ 3.69

1% 1% 1% 10%

NIX SWIMWEAR

COST SHEET Style # Style Name Description

Season SS15 Date: April 4, 2014

#NX412 Whelk Tankini/Two-Piece

FABRICS

$/yard*

Neoprene Nylon Spandex Mesh

$ $ $

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene � Label Vinyl Zip � Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR

Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

2.44 2.00 0.55

Yield**

$/unit

Quantity**

Total ($)

1 17yds 2

$ 0.10 $ 0.002 $ 0.026

1.01 17 2.02

$ 0.101 $ 0.034 $ 0.053 $ 0.19

$/unit

Quantity

Total ($)

1 1 1 1 1

$ 0.045 $ 0.03 $ 0.010 $ 0.03 $ 0.81

1.01 1.01 1.01 1.01 1.01

$ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

$/unit

Quantity

Total ($)

$ 1.94 $ 0.019 $ 0.06

82 2.00 1

$ 0.024 $ 0.04 $ 0.06 $ 0.12

Size 23x15x17

Total

Minutes

16

Cost/ min

$ 0.100

OTHER

GRAND TOTAL

0.55 0.06 0.10 0.61

# of Units per garment

Total ($) $ $ $ $ $ $ $

0.016 0.016 0.016 0.16 1.60 0.500 2.31

1% 1% 1% 10%

Total ($) $ 0.032

Freight

Duty Broker Insurance TOTAL OTHER

Total ($)

0.23 $ 0.03 $ 0.19 $ $

13.20%

$ $ $ $

0.55 0.01 0.01 0.61

$ 4.76

163

THAILAND COST SHEETS NIX SWIMWEAR

COST SHEET Style # Style Name Description

FABRICS

$/yard* $ 2.44 $ 0.55 $ 2.00

Neoprene Mesh Nylon Spandex

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label S Hook Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene Label Vinyl Zip Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR

Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

OTHER Freight Duty Insurance Broker TOTAL OTHER

164

Season SS15 Date: April 4, 2014

#NX129 Lucine Rash Guard Two-Piece

GRAND COST TOTAL

# of Units per garment

Yield** 0.281 0.196 0.17

Total ($) $ 0.69 $ 0.11 $ 0.34 $ 1.13

Total

1 1 14 yds 2

$/unit Quantity** $ 0.10 1.01 $ 0.07 1.01 $ 0.002 14 $ 0.026 2.02

Total ($) $ 0.101 $ 0.07 $ 0.028 $ 0.053 $ 0.25

1 1 1 1 1

$/unit Quantity $ 0.045 1.01 $ 0.030 1.01 $ 0.010 1.01 $ 0.030 1.01 $ 0.81 1.01

Total ($) $ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

$/unit Quantity Size 23x15x17 $ 1.94 82 $ 0.019 2 $ 0.06 1

Total ($) $ 0.024 $ 0.04 $ 0.06 $ 0.12

Minutes

17

Cost/ min

$

0.10

Duty Rate

13.2%

Total ($) $ 0.017 $ 0.017 $ 0.017 $ 0.17 $ 1.70 $ 0.500 $ 2.42

Total ($) $ 0.046 $ 0.650 $ 0.01 $0.0220 $ 0.73

$ 5.59

1% 1% 1% 10%

NIX SWIMWEAR

COST SHEET Style # Style Name Description

Season SS15 Date: April 4, 2014

#NX418 Murex One-Piece/ Malliot

FABRICS

$/yard*

Neoprene Mesh

$ $

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene � Label Vinyl Zip � Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR

Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

# of Units per garment

Yield**

$ $ $

1 1 1 1 1

$ $ $ $ $

0.10 0.002 0.026

$/unit 0.045 0.03 0.010 0.03 0.81

$/unit $ $ $

1.94 0.019 0.06

1.01 13 2.02

$ $ $ $

0.101 0.026 0.053 0.18

Quantity

Total ($)

1.01 1.01 1.01 1.01 1.01

$ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

Quantity

Total ($)

82 2.00 1

Minutes

20

$ $ $ $ Cost/ min

$ 0.100

OTHER

GRAND TOTAL

1.63 0.01 1.64

Total ($)

Quantity**

0.024 0.04 0.06 0.12

Total ($) $ $ $ $ $ $ $

0.020 0.020 0.020 0.20 2.00 0.500 2.76

1% 1% 1% 10%

Total ($) $ 0.059

Freight

Duty Broker Insurance TOTAL OTHER

Total ($)

0.67 $ 0.015 $ $

Total $/unit

1 13 yds 2

Size 23x15x17

2.44 0.55

13.20%

$ $ $ $

0.75 0.01 0.01 0.83

$ 6.47

165

BANGLADESH COST SHEETS NIX SWIMWEAR

COST SHEET Style # Style Name Description

Season SS15 Date: April 4, 2014

#NX910 Cerith Bikini

FABRICS

$/yard* $ 2.44 $ 0.55 $ 2.00

Neoprene Mesh Nylon Spandex

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene L�abel Vinyl Zip� Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

# of Units per garment

Yield** 0.15 0.07 0.05

Total $/unit Quantity** $ 0.10 1.01 $ 0.002 11 $ 0.026 2.02

Total ($) $ 0.101 $ 0.022 $ 0.053 $ 0.18

$/unit $ 0.045 $ 0.030 $ 0.010 $ 0.030 $ 0.81

Quantity 1.01 1.01 1.01 1.01 1.01

Total ($) $ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

$/unit Size 23x15x17 $ 1.94 $ 0.019 $ 0.06

Quantity 82 2.00 1

Total ($) $ 0.02 $ 0.04 $ 0.06 $ 0.12

1 11 yds 2

1 1 1 1 1

Minutes

8

Cost/ min

$ 0.050

OTHER

Freight Duty Broker Insurance TOTAL OTHER

GRAND TOTAL 166

Total ($) $ 0.37 $ 0.04 $ 0.10 $ 0.50

12.00%

Total ($) $ 0.004 $ 0.004 $ 0.004 $ 0.04 $ 0.40 $ 0.500 $ 0.95

Total ($) $ 0.025 $ 0.33 $ 0.02 $ 0.10 $ 0.47

$ 3.16

1% 1% 1% 10%

NIX SWIMWEAR

COST SHEET Style # Style Name Description

Season SS15 Date: April 4, 2014

#NX412 Whelk Tankini/Two-Piece

FABRICS

$/yard*

Neoprene Nylon Spandex Mesh

$ $ $

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene � Label Vinyl Zip � Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR

Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

2.44 2.00 0.55

Yield**

$/unit

Quantity**

Total ($)

1 17yds 2

$ 0.10 $ 0.002 $ 0.026

1.01 17 2.02

$ 0.101 $ 0.034 $ 0.053 $ 0.19

$/unit

Quantity

Total ($)

1 1 1 1 1

$ 0.045 $ 0.03 $ 0.010 $ 0.03 $ 0.81

1.01 1.01 1.01 1.01 1.01

$ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

$/unit

Quantity

Total ($)

$ 1.94 $ 0.019 $ 0.06

82 2.00 1

$ 0.024 $ 0.04 $ 0.06 $ 0.12

Size 23x15x17

Total

Minutes

16

Cost/ min

$ 0.050

OTHER

GRAND TOTAL

0.55 0.06 0.10 0.61

# of Units per garment

Total ($) $ $ $ $ $ $ $

0.008 0.008 0.008 0.08 0.80 0.500 1.40

1% 1% 1% 10%

Total ($) $ 0.031

Freight

Duty Broker Insurance TOTAL OTHER

Total ($)

0.23 $ 0.03 $ 0.19 $ $

12.00%

$ $ $ $

0.40 0.02 0.01 0.46

$ 3.71

167

BANGLADESH COST SHEETS NIX SWIMWEAR

COST SHEET Style # Style Name Description

FABRICS

$/yard* $ 2.44 $ 0.55 $ 2.00

Neoprene Mesh Nylon Spandex

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label S Hook Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene Label Vinyl Zip Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR

Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

OTHER Freight Duty Insurance Broker TOTAL OTHER

GRAND COST TOTAL 168

Season SS15 Date: April 4, 2014

#NX129 Lucine Rash Guard Two-Piece

# of Units per garment

Yield** 0.281 0.196 0.17

Total ($) $ 0.69 $ 0.11 $ 0.34 $ 1.13

Total

1 1 14 yds 2

$/unit Quantity** $ 0.10 1.01 $ 0.07 1.01 $ 0.002 14 $ 0.026 2.02

Total ($) $ 0.101 $ 0.07 $ 0.028 $ 0.053 $ 0.25

1 1 1 1 1

$/unit Quantity $ 0.045 1.01 $ 0.030 1.01 $ 0.010 1.01 $ 0.030 1.01 $ 0.81 1.01

Total ($) $ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

$/unit Quantity Size 23x15x17 $ 1.94 82 $ 0.019 2 $ 0.06 1

Total ($) $ 0.024 $ 0.04 $ 0.06 $ 0.12

Minutes

17

Cost/ min

$ 0.050

Duty Rate

12.00%

Total ($) $ 0.009 $ 0.009 $ 0.009 $ 0.09 $ 0.85 $ 0.500 $ 1.46

Total ($) $ 0.045 $ 0.476 $ 0.29 $0.0220 $ 0.83

$ 4.73

1% 1% 1% 10%

NIX SWIMWEAR

COST SHEET Style # Style Name Description

Season SS15 Date: April 4, 2014

#NX418 Murex One-Piece/ Malliot

FABRICS

$/yard*

Neoprene Mesh

$ $

TOTAL FABRIC COST

COMPONENTS

Bottom Size Label Thread Clear Care label

TOTAL COMPONENT COSTS

PACKAGING

Clear Plastic Hangtag Recycled Paper Hagtag String Toggle Hygiene � Label Vinyl Zip � Pouch

TOTAL PACKAGING COSTS

PACKING

Cartons Tape Labels TOTAL PACKING COSTS

LABOR

Patternmaking Grading Marking Cutting Sewing Admin TOTAL LABOR

# of Units per garment

Yield**

$/unit $ $ $

1 1 1 1 1

$ $ $ $ $

0.10 0.002 0.026

$/unit 0.045 0.03 0.010 0.03 0.81

$/unit $ $ $

1.94 0.019 0.06

1.01 13 2.02

$ $ $ $

0.101 0.026 0.053 0.18

Quantity

Total ($)

1.01 1.01 1.01 1.01 1.01

$ 0.05 $ 0.030 $ 0.010 $ 0.03 $ 0.82 $ 0.93

Quantity

Total ($)

82 2.00 1

Minutes

20

$ $ $ $ Cost/ min

$ 0.050

OTHER

GRAND TOTAL

1.63 0.01 1.64

Total ($)

Quantity**

0.024 0.04 0.06 0.12

Total ($) $ $ $ $ $ $ $

0.010 0.010 0.010 0.10 1.00 0.500 1.63

1% 1% 1% 10%

Total ($) $ 0.058

Freight

Duty Broker Insurance TOTAL OTHER

Total ($)

0.67 $ 0.015 $ $

Total

1 13 yds 2

Size 23x15x17

2.44 0.55

12.00%

$ $ $ $

0.55 0.01 0.01 0.63

$ 5.14

169

C E R I T H T E C H PAC K

170

171

C E R I T H T E C H PAC K

172

173

C E R I T H T E C H PAC K

174

175

C E R I T H T E C H PAC K

176

177

C E R I T H T E C H PAC K

178

179

C E R I T H T E C H PAC K

180

181

W H E L K T E C H PAC K

182

183

W H E L K T E C H PAC K

184

185

W H E L K T E C H PAC K

186

187

W H E L K T E C H PAC K

188

189

W H E L K T E C H PAC K

190

191

W H E L K T E C H PAC K

192

193

L U C I N E T E C H PAC K

194

195

L U C I N E T E C H PAC K

196

197

L U C I N E T E C H PAC K

198

199

L U C I N E T E C H PAC K

200

201

L U C I N E T E C H PAC K

202

203

L U C I N E T E C H PAC K

204

205

M U R E X T E C H PAC K

206

207

M U R E X T E C H PAC K

208

209

M U R E X T E C H PAC K

210

211

M U R E X T E C H PAC K

212

213

M U R E X T E C H PAC K

214

215

BIBLIOGRAPHY

SOURCES ADB. "Asian Development Bank (ADB)." Asian Development Bank. Asian Development Bank. Web. 19

May 2014.

ASEAN. "Cambodia Political Situation." ASEAN. New Zealand Ministry of Foreign Affairs & Trad,

n.d. Web. 10 May 2014.

ASEAN. "Country Report of the ASEAN Assessment on the Social Impact of the Global Financial

Crisis: Thailand.” Assocation of Southeast Asian Nations. Web. 19 May 2014.

"Background Notes on Countries of the World: People's Republic of Bangladesh." (n.d.): n.

pag. Business Source Premiere. 03 June 2012. Web. 07 Apr. 2014.

"BAFFA." Bangladesh Freigh Forwarders Association. N.p., n.d. Web. 20 Apr. 2014.

Bailey, Peter. Insitute of Developing Economies. JETRO, n.d. Web. 10 May 2014.

"Bangladesh - Culture, Customs & Etiquette." Culture Crossing. N.p., n.d. Web. 22 Apr. 2014.

"Bangladesh." World Fact Book. Central Intelligence Agency, n.d. Web. 16 Apr. 2014.

Bangladesh. Rep. Global Edge, n.d. Web. 08 Apr. 2014.

"Bangladesh Working Conditions." Encyclopedia of the Nations. Web. 17 May 2014.

Business Monitors. "Thailand Business Forecast Report." Business Source Premier. Business Monitors

International, 2014. Web. 19 May 2014.

CDC (Council for the Devlopment of Cambodia). "Social Situation." Cambodia Investment. Council for

the Development of Cambodia, n.d. Web. 9 May 2014.

Coleman, Denise Y. "Bangladesh Country Review." Business Source Premier (2013): n. pag. Web. 07

Apr. 2014.

Cooke, Daniel. “North American Retailers to Raise Factory Safety in Bangladesh.” GlobalEDGE. N.p.,

29 July 2013. Web. 08 Apr. 2014.

“Country Intelligence Report: Indonesia.” Indonesia Country Monitor (2014): 1-19. Business Source Pre

mier. Web. 14 Apr. 2014.

“Cultural Insights: Indonesia.” Indonesian Cultural Worldview and Business Practices. IOR, n.d. Web. 17

Apr. 2014.

Culture Crossing. “Thailand - Culture, Customs & Etiquette.” Thailand - Culture, Customs & Etiquette.

Culture Crossing. Web. 19 May 2014.

218

“Culture of Bangladesh.” Countries and Their Cultures. N.p., n.d. Web. 22 Apr. 2014.

“Data.” Human Development Reports. United Nations Development Programme. Web. 11 Apr. 2014.

“Ease of Doing Business in Indonesia.” Doing Business. The World Bank Group. Web. 13 Apr. 2014.

“Economic Policy Paper on Cost of Doing Business in Bangladesh.” Dhaka Chamber of Commerce.

Web. 17 May 2014.

Encyclopædia Britannica Inc., 2014. Web. 07 Apr. 2014 European Union. “Review of Cambodian Political Risks in 2012.” Asia Risk. Political & Economic Risk

Consultancy,Ltd., Jan. 2012. Web. 9 Apr. 2014.

“Free Trade Agreements with Dialogue Partners.” Association of Southeast Asian Nations. ASEAN

Secretariat, n.d. Web. 18 Apr. 2014.

Greenhouse, Steven. “Under Pressure, Bangladesh Adopts New Labor Law.” The New York Times. The

New York Times, 16 July 2013. Web. 19 Apr. 2014.

Hinrich Foundation. “Garment Manufacturers Association in Cambodia (GMAC).” Hinrich Foundation.

Hinrich Foundation, n.d. Web. 17 Apr. 2014.

Houssain, Zakir. “Report on Cambodia Textile & Garment Industry.” Cotton Africa. African Cotton &

Textiles Industries Federation, July 2010. Web. 11 Apr. 2014.

ILO (International Labor Organization). “Transparency Drives Improvements in Factory Working Con

ditions.” International Labor Organization. International Labor Organization (ILO), 17

Mar. 2014. Web. 09 May 2014.

ILO. “ThailandLabour Protection Act, 1998.” Thailand.Labour Protection Act, 1998. Interational Labor

Organization. Web. 19 May 2014.

“Indonesia’s Textile, Garment and Apparel Sector.” Global Business Guide Indonesia. GBG, 2014.

Web. 14 Apr. 2014.

“Indonesia Country Profile.” Indonesia Country Profile (2013): 1-64. Business Source Premier. Web. 14

Apr. 2014.

“Indonesia Data.” The World Bank. The World Bank Group. Web. 14 Apr. 2014.

219

SOURCES Indonesia: Introduction.” GlobalEDGE. Michigan State University, n.d. Web. 12 Apr. 2014.“Indonesia

Business Forecast Report.” Indonesia Business Forecast Report 2 (2014): 1-48. Business Source

Premier. Web. 14 Apr. 2014.

“Indonesia Profile.” BBC News. BBC, 8 Apr. 2014. Web. 14 Apr. 2014.

International Labor Office. “Guide to the Cambodian Labor Law for the Garment Industry.” Better

Factories Cambodia. International Labor Office. 2005. Web 11 Apr. 2014.

“Investment Climate Statement.” Embassy of the United States. Web. 17 May 2014.

“Investment Climate Statement.” Embassy of the United States. Web. 17 May 2014.

Labour Behind the Label. “Made in Cambodia: A Briefing on the Cambodian Garment Industry.” La

bour Behind the Label. Labour Behind the Label, n.d. Web. 10 May 2014.

Malhorta, T. C. “Bangladesh: A Growing Textile Economy.” Textile World Asia. N.p., n.d. Web. 21 Apr. 2014.

Marketline. “Thailand Country Profile Series.” Thailand Country Profile. Marketline, Dec. 2012. Web. 19

May 2014.

McGeown, Jason. “Country Risk Report: Cambodia.” Maplecroft: Global Risks Analytics. Maplecroft

Publication, n.d. Web. 10 May 2014.

MOL. “Ministry of Labor.” Ministry of Labor. Web. 19 May 2014.

“National Child Labour Elimination Policy 2010.” Ministry of Labour and Employment. People’s Repub

lic of Bangladesh, n.d. Web. 19 Apr. 2014.

Narin, Sun and Chun Han Wong. “Cambodia’s Garment Industry Resumes Production After Strike

Ends.” The Wall Street Journal. Dow Jones & Company, 6 Jan. 2014. Web. 10 May 2014.

NIST. “National Institute of Standards and Technology.” National Institute of Standards and Technolo

gy. NIST. Web. 19 May 2014.

Office of the United States Trade Representative. United States, Bangladesh Sign Trade and Invest

ment Cooperation Forum Agreement (TICFA). Executive Office of the President of the

United States. N.p., 2013. Web. 22 Apr. 2014.

Online Reporters. “FPO: Fiscal Position Still Strong.” Local News. Web. 19 May 2014.

Overton, Leonard C. “Cambodia”. Encyclopædia Britannica. Encyclopædia Britannica Online.

220

Phnom Penh. Phnom Penh: The Charming City. Phnom Penh Capital Hall, n.d. Web. 10 May 2014.

Ricigliano, Rob. “Cambodia ICAF Report.” U.S. Department of State. U.S. Department of State, Apr.

2009. Web. 10 May 2014.

UNDP (United Nations Development Programme). “Human Development Report: The Rise of the South

Analysis on Cambodia.” United Nations. United Nations Development Programme, n.d. Web. 9

May 2014.

SGS. “When You Need To Be Sure.” SGS Thailand -. SGS. Web. 19 May 2014.

Shadbolt, Peter. “Explainer: Thailand’s Deadly Southern Insurgency.” CNN. Cable News Network, 19

Feb. 2013. Web. 19 May 2014.

SSA. “Social Security Programs Throughout the World: Asia and the Pacific, 2010.” - Thailand. U.S

Social Security Administration. Web. 19 May 2014.

Thai Embassy. “Royal Thai Embassy.” Thaiembdc. Thai Embassy. Web. 19 May 2014.

“Thai Textile Institute.” Thai Textile Institute. Thaitextile.org. Web. 19 May 2014.

Thomasson, Sarah C. “Bangladesh: Apparel On The Rise.” Textile World Asia. N.p., n.d. Web. 21 Apr. 2014.

World Trade Organization. “Thailand and the WTO.” World Trade Organization. WTO. Web. 19 May 2014.

Yuvejwattana, Suttinee. “Thailand’s Unrest Wreaks Greater Damage Than Forecast.” Bloomberg Busi

ness Week. Bloomberg, 19 May 2014. Web. 19 May 2014.

221

F A S M

4 2 0 :

P R O F E S S O R M A Y

2 0 1 4

G L O B A L C A N E P A

S O U R C I N G