Jessica Ogden Sri Lanka

Sri Lanka Country Sourcing Report

Jessica Ogden Fasm 420-Fall 2017

Contents:

1. Country Overview 2. History and COuntry Traits 3. Country Stability 4. State of the Apparel and Textile Industry 5. Trade Agreements with the U.S. 6. Country Transportation

Country Overview:CUrrent News

Brandix named Sri Lanka’s Exporter of the Year for 5th successive year

The Brandix Group is known for exporting casualwear, jeans, sleepwear, loungewear, briefs and bras around the world and officially is Sri Lanka’s top exporter for the fifth year in a row. They also received the awards for “Highest Employment Provider in the Export Industry; Highest Net Foreign Exchange Earner in the Export Industry; the sectorial award for Highest Foreign Exchange Earner in the Apparel Sector and the award for Excellence in Sustainable Development, in a reaffirmation of the depth and scale of the Group’s involvement in the export sector.”

The awards are given out by President Maithripala Sirisena and show the clear front-runner when it comes to exporting. -Sept. 15, 2017

Hirdaramani Puthukudiyruppu factory achieves LEED platinum status

A LEED certification, or Leadership in Energy & Environmental Design, “is a green building certification program that recognizes bestin-class building strategies and practices.” These certifications are given out by the U.S. Green Building Council in order to recognize and highlight commendable Eco-conscience factories all over. For example, they had “high rate for water efficiency, substantial reduction in energy use, use of recycled materials in its construction, good indoor air quality and as a result, achieved operational efficiency and reduced its carbon footprint”.

-Aug. 2, 2017

7. Main Suppliers 8. Shipping Resources 9. Lead Time of Production 10. How to Conduct Business 11. Risks and Benefits & Conclusion 12. References

Swim Week Colombo promotes green conscious fashion

The third annual Swim Week Colombo in Sri Lanka had a unique spin this year because it focused on “Green Conscious and Earth Sensitive” agendas. It is thought that this will lead Sri Lanka’s fashion industry into a greener mindset going forward because of the fashion show’s platform. “The new trends in Swimwear [were] shown by top internationals brands...along with 11 Sri Lankan brands which included Buddhi, Meraki, Peronie, Maus, Conscience, Arugam Bay, Rachel Raj, Koca and Indian brands like Aviva and Ajay Kumar.” -July 13, 2017

New US Trade Rep assures no major changes in trade policy on Sri Lanka

“The United States has stressed that there shall be no major change in its trade policy towards Sri Lanka in the aftermath of its new administration...” Currently Sri Lanka is a part of the Trade & Investment Framework Agreement (TIFA) with the U.S., this is meant to “enhance trade and economic relations between the two countries”. This was a way of reassuring Sri Lanka that even though the U.S. has been making steps towards reforming other U.S. involved treaties/agreements, they will not be changing any relations with Sri Lanka. - Sept. 18, 2017

Where is Sri Lanka:

Sri Lanka is located in the continent of Asia, right off the tip of India.

With that said, it does not share borders with any countries.

Languages: Sinhala, Tamil, English Currency: Sri Lanka Rupee Religion: Buddhism 70%, Hinduism 13%, Islam 10%, Catholic 6%, Other 1%

Public Holidays:

History And Country Traits:

Duruthu Full Moon Poya (Jan 12) Tamil Thai Pongal Day (Jan 14) National Day (Feb 4) Navam Full Moon Poya (Feb 10) Maha Shivratri (Feb 24) Madin Full Moon Poya (March 12) Bak Full Moon Poya (April 10) Sinhala and Tamil New Year Eve (April 13) Good Friday (April 14) Sinhala and Tamil New Year (April 14) May Day (May 1) Vesak Full Moon Poya (May 10) Vesak Full Moon Poya Holiday (May 11) National Heroes’ Day (May 22) Poson Full Moon Poya (June 8) Idul Fitr (June 26) Esala Full Moon Poya (July 8) Nikini Full Moon Poya (Aug 7) Idul Adha (Sept 1) Binara Full Moon Poya (Sept 5) Vap Full Moon Poya (Oct 5) Deepavali (Oct 18) Ill Full Moon Poya (Nov 3) Milad-un-Nabi (Dec 1) Unduvap Full Moon Poya (Dec 3) Christmas Day (Dec 25)

Type of Government:

Sri Lanka is a Democratic Socialist Republic. It is a “semi-presidential, sovereign state governed as a single power with the central government being supreme.” It has a president (Maithripala Sirisena) who was elected in 2015 as its head of state but is still helped by a prime minister (Ranil Wickremesinghe) and a cabinet that has been appointed by the president. Though Colombo is the capital, the administrative capital is Sri Jayawardenepura Kotte.

CLimate Factors:

Tropical monsoon; northeast monsoon (November to February); southwest monsoon (June to October).

Demographic makeup of the population: Population: About 22.235 million Median Age: 32.5 years, Male: 31.2 years, Female: 33.7 years Gender Breakdown: 0.96 males/ 1 female Education level Expectancy: 14 years, 92.6% can read and write Ethnic Composition: Sinhalese 74.9%, Sri Lankan Tamil 11.2%, Sri Lankan Moors 9.2%, Indian Tamil 4.2%, Other 0.5%

Urban Population: 18.4% of the population

Export Volume:

Sri Lanka exports the largest amount of textiles/garments, and tea. The four largest exports of Sri Lanka are broken down per year like this: articles of apparel take up about 45% broken down by, knit or crocheted (26%, $2.7B), and not knit or crocheted (18%, 1.9B), Coffee, tea and spices (14%, $1.53B), Rubbers and articles thereof (7.6%, $801.76M). The US ranks in at the largest importer of Sri Lanka’s goods taking up 27% of their exports ($2.81B). “The top import categories in 2016 [that the US imported] were: knit apparel ($1.1B), woven apparel ($869M), rubber ($247M), precious metal and stone (other stones not strung) ($89 M), and coffee, tea & spice (tea) ($65 M).” The UK comes in at second with 10% ($1.05B), while India (7.2%, $753.48M), Germany (4.9%, $509.88M), Italy (4.1%, $428.85M), and Belgium (3.2%, $338.19M) all represent the second tier of importers. As for things that Sri Lanka imports, there are four sections that it is mainly broken up into. Mineral fuels, oils, distillation products taking up 12% ($2.33B), machinery, nuclear reactors, boilers taking up 9% ($1.75B), vehicles other than railway, tramway taking up 7.7% ($1.50B), and electrical, electronic equipment taking up 7.1% ($1.38B). The main places Sri Lanka imports from are China (22%, $4.27B) and India (20%, $3.82B).

Economic Overview: GDP growth rate: 4 % GDP: $81 Billion Labor Force Participation Rate: 54.7% EMployed Persons: 8,230,208 Main Industries: Agriculture (27%, 2,221,761 people), Industry (28%, 2,306,398 people), and Services (45%, 3,702,049 people)

Budget Deficit: 9702466.00 LKR Million BUdget Revenue: 1693558.00 LKR Million Inflation Rate: 7.1% Currency Exchange Rate: 153.30 Sri Lanka Rupee to 1 US Dollar Unemployment Rate: 4.5% *All based on Sri Lanka’s 2017 First Quarter Labor Force Survey

The average apparel worker earns more than $120 per month compared to $80 per month for workers in agriculture.

Country Stability: STeep Social: Since there is a growing middle class, this creates opportunities in franchising, retail and services as well as some manufacturing throughout Sri Lanka. The average worker has between 8 and 14 years of schooling when they are in the work force. One thing that would help build more long-term economic growth for Sri Lanka, in addition to improving the government which I will talk about later, is modernizing their education even though 14 years of schooling is a great thing. Of this workforce, two-thirds are compiled of male workers. There is a shortage of labor mobility especially in the North and East because they do not want to leave their families and villages.

There is also a large migration of workers out of Sri Lanka which helps them maintain a low unemployment rate. Unemployment among “women and high school/college graduates has been proportionally higher than the rate for less-educated workers” The labor pool has been relatively small especially slim pickings of skilled workers. “Engineering, accounting, legal and architectural professions follow high standards although local design talent is still underdeveloped.”

The crime rate in Sri Lanka has been rising including both petty and violent crimes. Crimes that are more common would include theft, assault, kidnapping, and credit card theft.

The total amount of Internet users as of July 2016 is 7,126,540 which is 32.1% of population. 25,797,199 people have cell phones which is about 116 people in every 100 people.

There is a high of infectious diseases as well as about 4,000 people living with HIV/AIDS. Food or waterborne diseases are bacterial diarrhea and hepatitis A, the vector borne disease is dengue fever, the water contact disease is leptospirosis, and the animal contact disease is rabies.

technological:

The Government of Sri Lanka’s (GSL) information technology (IT) policy requires GSL agencies to use licensed or open source software.

“Software companies have reported an increased interest by large companies in improving intellectual property rights regimes. Sri Lanka does not track and report on seizures of counterfeit goods...”but I will go into intellectual property rights more in depth in the political section.

As far as technology in the apparel industry, Sri Lanka has adopted state-of-the-art technologies in the manufacturing supply chain to ensure high quality finished fabrics involving weaving, printing and dyeing processes. Though this is still in small quantities, it shows Sri Lanka is taking a modern approach. Actual technologies within clothing have also been experimented with including e-textiles, smart clothing and wearable electronics.

“The Export Development Board of Sri Lanka (EBD) and the Joint Apparel Association Forum (JAAF) endorses the use of technology in the design and inventory management processes and product life cycle management to enhance quality and efficiency of the final product.”

economic:

World Bank’s Business Report “Ease of Doing Business” *Ranking is given 1 to 190 (1 being the best) Ease of doing business:110/190, Starting business: 74/190, Dealing with construction permits: 88/190, Getting electricity: 86/190, Registering property: 155/190, Getting credit: 118/190, Protecting minority investors: 42/190, Paying taxes: 158/190, Trading across borders: 90/190, Enforcing contracts: 163/190, Resolving insolvency: 75/190 According to this report overall Sri Lanka scores in the middle ground being neither good nor bad when it comes to the “ease of doing business”. But three big categories that are definitely needing to be improved upon would be “paying taxes”, “registering property”, and “enforcing contracts”.

The Sri Lankan economy has steadily been growing throughout the last few years growing by 4.4% in 2016 and a projected 4.8% of growth in 2017.

Sri Lanka’s annual exports add up to be about $10.3 B, that being mostly tea and clothing like I pointed out before. Imports are about $19.4 billion creating an annual trade deficit of over $9 billion. As for importers to Sri Lanka, they are facing high taxes.

“Remittances from migrant workers, approximately $7.2 billion per year, are Sri Lanka’s largest source of foreign exchange and help to partially offset the external deficits.”

Sri Lanka does have quite a large foreign debt problem most of which is owed to China for infrastructure projects.

“Future growth will require structural changes to the economy, including a shift away from agriculture, as well as greater diversification of exports, improvements in productivity levels across all sectors, deregulation of land and labor markets and the establishment of a more transparent regulatory and procurement framework.”

As far as foreign exchange goes, the rupee has depreciated sharply in the last two years. The rupee depreciated by over 6% in 2016 following 9% depreciation in 2015.

Sri Lanka’s minimum wage rate is 10,000 rupees per month... this was last changed in in January of 2016.

environmental:

As far as Sri Lanka’s environmental footprint, they have a 16 million Mt of carbon dioxide emissions from consumption of energy.

“Deforestation has been identified as one of the most pressing environmental problems of Sri Lanka. Deforestation has increased soil erosion, landslides, floods, fauna and flora degradation, and damage to human lives and properties.” There have been increases in garbage and environmental pollution mostly because of the lack of trash and recycling methods. This is also a huge problem for wild animals because they begin to eat the trash as well as they have been poached. Many of the environmental problems listed are outcomes of urbanization and are somewhat expected when expanding industrially.

On a positive note, despite the pollution, 98.5% of the urban population has improved drinking water, 95% of the rural population, and 95.6% of the total population.

In addition, there has been a surge of environment friendly fabrics along with fabric treatments in Sri Lanka manufacturing.

Political:

Like I mentioned before, Sri Lanka is a Democratic Socialist Republic with a president at its head. In the Republic there are two major parties, the United National Party (UNP) who is lead by the president, and the Sri Lanka Freedom Party (SLFP). The UNP is known for being pro-business which means they are all about “expanding exports, upgrading industry, and boosting private investment and public-private partnerships.” This is great for the US because hey have benefited especially in Sri Lanka’s exporting of apparel. Another unique characteristic of Sri Lanka’s republic is the fact that the president has to juggle being both head of state and head of government. Normally the responsibilities are split between the prime minister but in this case the prime minister is more ceremonial.

What Sri Lankan government has lacked in the past is its transparency. By “international standards Sri Lanka is considered corrupt. It restricts the freedoms of movement and religion as well as influences the judiciary.” With that said, it is improving.

According to the “Political Stability Index” which measures “a country’s level of stability, standard of good governance, record of constitutional order, respect for human rights, and overall strength of democracy.” Sri Lanka measures at 5.

This means that the government can function and execute policies but corruption serves as a treat to the administration.

Though Sri Lanka has been known throughout history for being home to an electoral democracy, free press and “one of the best educated populations in Asia”; they in recent years have had armed civil conflict which has really affected the political climate. Because of this, there has been more “imposition of censorship, as well as charges of vote fixing.” Now with the change in the administration however, their is hope for a more positive political climate.

Sri Lanka has been said to follows a non-aligned foreign policy. They were in fact one of the founding members of this movement in 1976. Other things Sri Lanka is a part of is the British Commonwealth, the South Asian Association for Regional Cooperation (SAARC), the World Bank, International Monetary Fund, Asian Development Bank, the Colombo Plan, and the United Nations. In the United Nations Sri Lanka has the “desire to promote sovereignty, independence and development in the emerging economies of the world.”

The Government of Sri Lanka (GSL) is focusing on developing its economy as well as improving country relations in order to truly step into the global marketplace.

Many countries have involved themselves in Foreign Direct Investment (FDI), especially China, but as far as the US goes, their investments have not materialized. It has actually dropped 35% to about $450 M in 2016. However, “the business process outsourcing sector is growing and has strong involvement by U.S. firms.” This brings up the concern that though Sri Lanka is technically independent, many feel that they are under China’s control because of this large investments China has given them now and in the past.

What U.S. firms are weary of is the “weak and inconsistent” enforcement of laws. There are laws in place but if no one is there to enforce them, then corruption is still occurring.

A big concern in the fashion industry especially, that has to be addressed, is their enforcement of intellectual property rights. Although Sri Lanka has been improving this enforcement of intellectual property rights laws, as well as convicting several offenders, companies including those in the U.S. are still complaining that much more can still be done. The truth is counterfeit goods are still widely available which is discouraging for companies among the “recording, software, movie, clothing, and consumer product industries”. The law covers copyrights and related rights such as trademarks, patents etc. All trademarks, designs, industrial designs, and patents must be registered with the Director General of Intellectual Property.

State of the Apparel and Textile Industry today: SWOT strengths:

weaknesses:

1. The apparel industry gives jobs to “over 300,000 people and 600,000 indirectly”, most of which are women.

2. The apparel and textile industry in Sri Lanka is being recognized for their sustainable efforts and green practices. The “world’s first LEED certified Platinum rated production facility.”

3. Sri Lanka has 7 associations that are made to address any problem that may arise in the industry (those associations are listed later on) 4. They are socially responsible with their labor practices. Fair wages and the discouragement of child labor and sweatshops.

5. Sri Lanka’s key categories of apparel are sportswear, lingerie, loungewear, workwear, swimwear, bridal and childrenswear.

6. A wide range of trustworthy, well known brands already use Sri Lanka. For example, Tommy Hilfiger, Ann Taylor, Ralph Lauren, Banana Republic, Land’s End, Levi’s, Patagonia, Victoria’s Secret and many more.

7. Sri Lanka has been known to produce sophisticated, quality goods.

8. Great centralized location in the world for transporting goods.

1. Though they have laws in place to combat the selling of counterfeit goods, the enforcement of these laws are lacking.

2. There is not enough fabric being sourced internally in Sri Lanka therefore they have to import it from other countries which creates longer lead times.

3. Currently, Sri Lanka does not have the “capacity to meet the domestic clothing industry’s demand for yarns and fabrics”, their spinning and weaving sectors of production are weak and unreliable.

4. Sri Lanka is not in a Free Trade Agreement with the US, therefore duties do apply on Sri Lankan apparel.

5. They do not have a huge assortment of fashion items that they produce, compared to other countries around them, they have a limited product assortment.

opportunities:

threats:

1. “China is beginning to scale back in apparel manufacturing” giving Sri Lanka a great opportunity to gain market share.

2. They could improve their “lead times, product range and availability” 3. Expanding on the idea of improving product ranges, since they do make quality goods, they could further step into the manufacturing of more high end fashion items.

4. Though Sri Lanka does employ many workers and women into their factories, they still can work on attracting more women possibly through promoting industrial relocation.

5. They could “enter into more trade agreements to help diversify export destinations for existing products, such as active wear and intimate apparel” 6. More textile production in Sri Lanka.

1. Fast fashion calling for smaller lead times and instant gratification will continue to pose challenges for Sri Lankan manufacturers.

2. Other Southeast Asian countries are gaining market share quicker than Sri Lanka.

3. Sri Lanka’s prices are higher than their competitors. Many of the countries surrounding them are underdeveloped and can work for lower wages.

4. In general, they have many countries that they are competing with them throughout Southeast Asia, all in about the same area so they really have to make an effort to further stand out from the crowd.

Trade Agreements with the united states: Sri Lanka has been a member of the World Trade Organization (WTO) since 1995, which the US is also a part of.

Sri Lanka signed a bilateral taxation treaty with the United States in 1985, which was amended in 2002.

Some Sri Lankan exports to the U.S. qualify for duty free-privileges under the U.S. Generalized System of Preferences (GSP) program, which offers duty-free treatment for up to 5,000 products (apparel products are excluded) from designated beneficiary countries.

The U.S. - Sri Lanka bilateral Trade and Investment Framework Agreement (TIFA) provides a framework for the two Governments to discuss and resolve trade and investment issues between the two countries (this was mentioned in my current event article as well).

What was also mentioned in the current event was that even though there is a new administration in the White House, nothing is going to change between Sri Lanka and the US. With the “goal of significantly increasing two-way trade and investment between the United States and Sri Lanka, the two governments adopted a U.S.-Sri Lanka Joint Action Plan to Boost Trade and Investment” in 2016. It aims to reach its goals over a span of five years; these goals include: “reforming Sri Lanka’s trade and investment regime to world class standards; improving the competitiveness of Sri Lanka’s current exports; developing new markets...promoting greater interaction between the U.S. and Sri Lankan business communities; greater utilization of U.S. tariff preference arrangements; strengthening of worker rights and promotion of ethical and environmentally sustainable manufacturing practices...reforming the educational sector to make it more responsive to the needs of business; and increased mobilization of all sectors of society, especially women, in business and trade.”

The U.S. and Sri Lanka, along with many other countries, both also belong to the United Nations, World Bank, and International Monetary Fund.

Trade Agreements:

Other Trade Agreements: Sri Lanka participates in two regional agreements, the South Asian Free Trade Agreement (SAFTA) and the Asia-Pacific Trade Agreement (APTA), and two bilateral agreements, the Indo-Sri Lanka Free Trade Agreement (ISFTA), and the Pakistan-Sri Lanka Free Trade Agreement (PSFTA). They are also a part of the South Asian Association for Regional Cooperation (SAARC).

In May 2017, Sri Lanka regained the European Union’s (EU) Generalized Scheme of Preferences (GSP+) which gives privileges to Sri Lankan exports. “The GSP+ scheme is conditional on Sri Lanka advancing human and labor rights and working towards sustainable development.”

Sri Lankan Apparel Associations: These are all associations that “support the apparel sector by addressing the sector related issues through coordination with the government institutions.”

1. Joint Apparel Association Forum (JAAF) 2. Apparel exporters Association 200-GFP 3. Sri Lanka Apparel Exporters Association 4. Sri Lanka chamber of Garment Exporters 5. Sri Lanka Apparel Brands Association (SLABA) 6. Sri Lanka Apparel Sourcing Association 7. Free Trade Zone Manufactures Association

Country Transportation: facts about Sri Lankan Air Carriers: number of registered air carriers: 3 annual freight traffic on registered air carriers: 381,381,300 mt-km annual passenger traffic on registered air carriers: 4,911,730 inventory of registered aircraft operated by air carriers: 25

Shipping companies: Safmarine:

Level 16 ” Parkland” 33 Park Street 01000 Colombo 02 Call: +94 11 479 4866 Fax: +94 11 244 8441 Email: lk.export@safmarine.com

htl logistics:

Colombo # 112, Center Road Mattakkuleya Colombo - 15, Sri Lanka Phone: + 94 11 583 1313 Fax: + 94 11 254 6941

Mediterranean Shipping Company:

Maersk Lanka (Pvt) Ltd:

Maersk Lanka Pvt Ltd Level 16, MSC Lanka (Private) Ltd. 33 Park St, 7TH FLOOR Colombo, 193, DR DANISTER SILVA MAWATHA Sri Lanka COLOMBO 08 Call: +94 11 479 4800 Sri Lanka Email: sricsedir@maersk.com Call: +94 11 452 9000 Email: general@msclanka.lk

Sri Lanka Shipping Company Limited:

3rd Floor, Robert Senanayake Building # 46/5, Nawam Mawatha, Colombo 2, Sri Lanka.

Phone: +94112336853 Fax: +94112437479 Email: lankaship@slsc.lk

OMEGA Shipping:

Colombo Office No: 10, G-31(10 J), (Opposite port main gate) N.H.M. Abdul Cader Mawatha, Colombo 11, Sri Lanka Phone: +94 768261420

Ceylon Shipping Corporation Ltd:

NO 27, MICH Building P.O.Box 1718 Sir Razik Fareed Mawatha (Bristol Street) Colombo 01, Sri Lanka Phone: + 94 11 2328772 –3 Fax + 94 11 2449486 E-mail: cscl@cscl.lk

Overview:

Often factories would located near the Colombo harbor or airport because it would reduce transport time and cost. Pollution, traffic, little labor and higher clustered real estate soon followed because of this trend. Because of this, the Government of Sri Lanka encourages factories to locate in industrial zones which are further away from Colombo. The only trade off is that the conditions of those roads are extremely poor. Also buses, railways, ports, airport management, and airline operations are all State Owned Enterprises.

international freight Ports: Colombo Port- serves U.S., Europe, East and South Asia, the Persian Gulf, and East Africa. It is primarily a container port and is right on the Colombo harbor which is the most ideal location as I mentioned before. It is the port that is most often used for apparel.

Galle Port- this is actually currently being reinvented “to accommodate the increasing demand for freight handling for Sri Lanka as well as a international regional destination.”

Trincomalee Port- it caters more to bulk cargo including heavy industries, tourism and agriculture etc. But it is the “second best natural harbor in the world and the available water and land area is about 10 times as much as the Port of Colombo.”

Hambantota Port (MRMR) - this too is under construction but is very close to the major international east-west shipping route. Sri Lanka plans to create a China Logistics and Industrial Zone in Hambantota which is in the Southern Province that takes up 1,000 acres of land.

This would be opened specifically for Chinese investors to establish factories.

Oluvil Port- “This port will form the southeastern link in the developing chain of coastal harbors in the country and will provide more convenient and cost effective access to and from the southeastern region for goods and cargo originating on the west coast.” But is also under construction.

Kankesanthurai Port/Port of Point Pedro- this port’s repairs are more focused on the surrounding roads.

40ft container to Los Angeles: This container would leave the Colombo port and be shipped to the Long Beach port across the Pacific Ocean. This trip would take a little over a month to complete. The estimated cost for shipping apparel this route would be about $3,205.50 - $3,542.92

40ft container to Savannah:

This container would leave the Colombo port and be shipped to the Savannah port across the Indian and Atlantic Ocean. This trip would take a little over a month to complete. The estimated cost for shipping apparel this route would be about $2,820.89 - $3,117.83

Main Suppliers: 1. Brandix Apparel Ltd.

409 Galle Road, Colombo 00300, Sri Lanka info@brandix.com Phone: +94 11 4 727222 Fax: +94 11 2 575485 brandix.com

2. Hirdaramani International Export Ltd.

Level 23, West Tower, World Trade Center, Echelon Square, Colombo, Sri Lanka info@hirdaramani.com Phone: +94 11 4 797000 Fax: +94 11 2 446135 hirdaramani.com

THEIR CUSTOMERS: THEIR CUSTOMERS: The US is their top customer.

The US is their top customer.

The Gap, Sears, Old Navy, Land’s End, Polo Ralph Lauren, Diesel, Banana Republic, J Crew, Cotton On, Kohl’s, Macy’s, Levi Strauss, Calvin Klein Jeanswear, Chaps, Lands End All of these brands, for the most part, have a theme as far as quality goes. This would be that the clothes are cheap but still better quality than fast fashion.

THEIR PRODUCTS: Casualwear, jeans, sleepwear, lounge, briefs, leather goods, and bras.

Patagonia, Levi Strauss, Hugo Boss, Club Monaco, Polo Ralph Lauren, Life is Good, Adidas, Nike Inc., Ralph Lauren Childrenswear, Kate Spade & Co., Guess Inc., Wal Mart Canada Corp, Luck Brand, The North Face, Theory, Ecko, J Crew, Chaps, Donna Karan, All Saints, Nautica, Liz Claiborne, Victoria’s Secret Overall quality is nice and durable according to their customers.

Their specialty being activewear with special attention on pants.

THEIR PRODUCTS: Men’s apparel especially, pants, outerwear, shirts, and underwear.

3. MAS Intimates Ltd.

4. Smart Shirts Lanka Ltd Factory III

THEIR CUSTOMERS:

THEIR CUSTOMERS:

The US is their top customer.

The US is their top customer.

Chico’s, the Gap, Spanx, Old Navy, Hanes Brands, Sears, Lululemon, Victoria’s Secret, PINK, La Senza, Calvin Klein, Marks & Spencer, Athleta, Soma, H&M, Ralph Lauren, Puma, Patagonia, Columbia, Tommy Hilfiger, Second Skin

Smart Apparel, Jos. A. Bank, Polo Ralph Lauren, J Crew, Patagonia, Lauren by Ralph Lauren, Chaps Ready to Wear, Club Monaco, Lord and Taylor, Hugo Boss, Kohl’s, Ralph Lauren, Land’s End, Nine West, JC Penney, Sears.

Most of the brands mentioned are known for their great quality such as Patagonia, Puma, Lululemon, and Calvin Klein. Not to mention Victoria Secret is widely accepted as a leader in intimate wear, so overall this seems like a manufacturer that yields good quality in those categories.

Overall quality seems nice because Ralph Lauren trusts so many of its brands to be manufactured here, and Ralph Lauren is known for good quality. This includes Club Monaco which is considered affordable luxury. It also seems to be popular among department stores including Lord and Taylor which again is more known for luxury.

THEIR PRODUCTS: Intimate wear, sports/activewear, and swimwear.

THEIR PRODUCTS: Woven apparel ex. shirts, pants, and woven fabric.

7th Lane, Off Borupana Road, Kandawala Estate, Ratmalana, Western Province, Sri Lanka, 40120 info@masholdings.com Phone: +94 11 4 207300 Fax:+94 11 4 207366 masholdings.com

Lot 10, Off Airport Road, Investment Promotion Zone, Katunayake, Sri Lanka Sales@Smart-Shirts.com Phone: +94 11 2 252901 Fax:+94 11 2 252818 smart-shirts.com

Shipping resources: key Shipping companies:

*Contact info is on the “Country Transportation” page

Mediterranean Shipping Company

safmarine

mcs.com

htl logistics htllogistics.com

Sri Lanka Shipping Company Limited srilankashipping.com

Cost:

safmarine.com

Maersk Lanka (Pvt) Ltd maerskline.com

OMEGA Shipping omegashipping.net

Ceylon Shipping Corporation Ltd cscl.lk

As we saw with the 40ft containers to LA ($3,205.50 - $3,542.92) and to Savannah ($2,820.89 - $3,117.83) cost can vary greatly depending on what coast you are on. Generally speaking though, after plugging in US port locations from all over the US, the cost of shipping a 40ft container from Colombo, Sri Lanka’s most frequented apparel shipping port, will be anywhere between $2,500 and $3,500-low $4,000. Something else to keep in mind, is that the US does not have Free Trade Agreements with Sri Lanka. All apparel that is being imported into the US is subject to be taxed. This will ultimately jack up the overall cost. That is why on the opposite page there are a list of frequent product HTS’s that the US imports from Sri Lanka. This way it is very easy to calculate the duties.

HTS codes for key products Imported to the US: 6104: Women’s or girls’ suits, ensembles, suit-type jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear), knitted or crocheted.

6105: Men’s or boys’ shirts, knitted or crocheted.

6107: Men’s or boys’ underpants, briefs, nightshirts, pajamas, bathrobes, dressing gowns and similar articles, knitted or crocheted.

6108: Women’s or girls’ slips, petticoats, briefs, panties, night dresses, pajamas, negligees, bathrobes, dressing gowns and similar articles, knitted or crocheted.

6109: T-shirts, singlets, tank tops and similar garments, knitted or crocheted.

6110: Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted.

6204: Women’s or girls’ suits, ensembles, suit-type jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (other than swimwear) 6203: Men’s or boys’ suits, ensembles, suit-type jackets, blazers, trousers, bib and brace overalls, breeches and shorts (other than swim) 6205: Men’s or boys’ shirts.

6212: Brassieres, girdles, corsets, braces, suspenders, garters and similar articles and parts thereof, whether or not knitted or crocheted.

4016: Other articles of vulcanized rubber other than hard rubber.

Duties can range all the way from 7.4% to 32% depending on the garment and material.

Lead time in transit (time to US port):

The average estimate of how long it will take to get to a US port is around one month. Depending on where the port is located, it would take a few days to a week over a month to get the shipment in.

Lead time of Production:

Export time and distance in Port or airport supply chain: lead time (days): 1 day Distance (kilometers): 70km *Based on World Bank’s 2016 Report

Weather Factors:

The wettest time of the year in Sri Lanka’s south (where the Colombo port is located) is usually from May to September. In addition, they also experience heavy rains in the north-west during monsoonal season from November to February. This definitely could affect lead times because especially in 2017 there have been the most floods, due to downpours, Sri Lanka has seen since 2003! The flooding has caused major deaths, amounting to 194 people killed. This affects production because of the damage of property, lives lost, transportation complications and overall disruption in society. In addition to floods, massive landslides also tend to happen with that much rain and cause the same amount of drastic damage.

Export time and distance in Land supply chain: lead time (days): 4 day Distance (kilometers): 95km *Based on World Bank’s 2016 Report

The National holidays:

These are regulated under the Holidays Act (No. 29 of 1971). Though I have listed public holidays before, of those these are the ones that may affect lead time because they are national holidays meaning by law people have these days off: National Day, Labor Day, New Year’s Day, Sinhala and Tamil New Year, Prophet Mohammed’s Birthday (Milad-un-Nabi), Thai Pongal Day, Mahasivarathri, Eid-al-Fitr, Eid-al-Adha and Christmas Day. In addition, Full Moon Poya Days of every month are considered national holidays. “On every Full Moon Poya Day, workers are entitled to a paid leave, banks and all organizations remain closed on these 12 days of the year.”

How to Conduct Business:

Business etiquette: As far as business meetings in Sri Lanka go, they are pretty traditional.

Handshakes: 1. A firm handshake when meeting is custom when arriving and leaving a meeting.

2. Handshakes are normally exchanged between the same sexes but if a Sri Lankan woman does extend her hand first, a man can shake it.

3. Only use someone’s first name if they give you the option, otherwise refer to them by their professional title followed by their name.

Business Card: 1. After the handshake is normally the time when business cards are exchanged, this is why putting your professional title on the card is important. By doing this the Sri Lankan business partners will know how to address you.

2. Treat the business card with respect especially when giving it, two hands must be used when giving it.

3. Though it is not necessary, translating one side of your business card to Sinhala or Tamil would be greatly appreciated but not crucial.

Meetings: 1. Do not discuss business right away, in order to make your Sri Lankan business partners feel comfortable, first give background about yourself.

2. The first meeting with a new Sri Lankan company should be expected to represent a relationship building activity more than anything else. It would be beneficial to send information about your company prior to the meeting.

3. If a meeting is interrupted by other business of your Sri Lankan company do not interpret it as being rude.

Culture Insights: Because of the Buddhism and Hinduism influence, social order is important to Sri Lankans. Also the concept of “face” is really important. “Face can be given or lost in social situations and it is important to avoid the latter.”

GIfts: 1. Gifts are not meant to be expensive but rather symbolic on birthdays and religious holidays.

2. Like a business card, receive a gift with two hands. If you are given a gift it is customary to give one back.

3. Avoid flowers (they are meant for mourning), as well as alcohol unless you know for certain that they drink.

4. Do not open the gift when you receive it.

Dining: 1. You will most likely eat much later than the time you are told to arrive.

2. Wash hands before a meal.

3. Leave food on the plate if you are full. If you are not full, finish your plate because that symbolizes you are still hungry.

Negotiation Style: 1. Make sure eye contact is always given as well as face to face conversations. If your Sri Lankan business partners aren’t giving eye contact something has gone wrong.

2. It is also important to make sure not to criticize people or put them in an awkward position. This will be looked down upon because Sri Lankans are non-confrontational.

3. Make sure to LISTEN. Because they are non-confrontational it is important to “read between the lines” in order to understand their true feelings.

4. Be PATIENT. In Sri Lankan business only the top level person at the company is going to make the decisions so the answer might not be available as quick as you might want.

Risks: THey ask a Higher Price: Because Sri lanka does have a smaller production capacity and most of their fabrics have to be imported, this creates higher prices.

They have fewer Products: Sri Lanka is situated in a spot which makes CHina and India some of their biggest competition.

These powerhouses have such a wide range of products they can produce, while Sri Lanka’s is much smaller.

TheY need better law enforcement: Counterfeit goods create big problems for fashion companies. It is not enough to have laws against them if there is not enforcement. It looks really bad if clothing is being produced where counterfeits are widely available.

They have tropical storms: The flooding and other damage that does go on in Sri Lanka because of storms creates bigger lead times.

Benefits: THey are ethical: “Garments without Guilt”, Sri Lanka does an excellent Job of putting into place ethical practices which contributed to their Apparel industry’s success.

They Are Skilled: Sri Lanka is made up of a workforce that is skilled and literate.

They are Sustainable: Sri Lanka is the first amongst many apparel manufacturing facilities around the world to be awarded the LEED platinum rating for their notable steps towards sustainability.

They Are quality: Sri Lanka takes pride in producing high quality products that puts them well ahead of other competition in Southeastern Asia.

Conclusion:

Overall, Sri Lanka is a great choice for sourcing. It has such an impressive portfolio of well known brand already that trust their manufacturing. Though it does have a smaller product range, the products they do produce such as swimwear, sportswear, lingerie, loungewear, workwear, bridal and childrenswear are all done extremely well with sophisticated quality. What Sri Lanka is also doing well is paying attention to ethics in regards to their employees. When you manufacture in Sri Lanka you can count on the employees working in the factory to be of age, paid well, and working in a safe environment. Sri Lanka’s factories have also been implementing both sustainable practices within the workplace as well as using environmentally friendly fabrics. As far as Sri Lanka goes as a whole, the country is making important strides in the right direction. Their government is increasingly less corrupt and more stable. The new government that has been elected prides itself on focusing on “expanding exports, upgrading industry, and boosting private investment and public-private partnerships.” These are all good things for companies who want to start manufacturing there. Another thing the government is doing that is positive for the apparel industry is their abundance of apparel associations. Sri Lanka currently has seven that are made solely for the purpose of preventing and dealing with any problems that come up in the industry. Knowing that the government supports Sri Lanka’s apparel industry is a great comfort for brands hoping to expand their business to Sri Lanka.

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