Sourcing in Asia/ASEAN
During recent years we have all been witnessing many changes and ups and downs in the garment, sport shoes and consumer goods sourcing sector. And, sourcing will change even more in the years to come. The Philippines, looking at inclusive growth, will have to see to it that it develops into a sourcing destination for Europe, Japan and the US.
After costs increased in China and labor relations became more complicated, manufacturing companies are moving to other destinations in Asia, closely followed by the purchasing managers of international companies. Buyers increasingly turned to alternative markets such as Bangladesh, Cambodia, Vietnam and – more recently – Myanmar, but also other global sourcing regions. Depending on the product category and individual company requirements, this development continues to this day. ASEAN integration, kicking in next year, is a challenge and opportunity in this field. This is the reason why the European Chamber of the Philippines is hosting a forum this week called ‘Investing in Cambodia, Laos and Myanmar – in which our colleagues from the European Chambers there will present investment opportunities.
A wider portfolio of sourcing markets, and taking all relevant factors into consideration – for instance different levels of labor efficiency, wage and cost developments, supply chain infrastructure, currency fluctuation, political stability, worker unrest, etc. – makes sourcing an increasingly complex task.
In addition to these economic and political challenges, transparency is also becoming more important. Different stakeholders such as governments, NGOs, and end consumers increasingly require brands, retailers and suppliers to re-think dealing with social compliance, environmental issues, supply chain transparency, utilization of sustainable materials, corruption, and other related issues. There is no doubt that integrity and ethical business certification become essential requirements in the international supply chain. This is the reason why the European Chamber is pushing the Integrity Pledge, the common Code of Conduct, and the compliance certification.
Many major brands and retailers have already committed to this initiative and their number is rising. Numerous other topics, such as the Living Wage Initiative, product traceability & recycling, etc., are being addressed and will require a new level of responsibility and management within the sourcing industry in the future, and – more importantly –within the manufacturing companies wishing to supply globally. This topic is super important for the Philippine export industry!
As markets and requirements are changing, sourcing becomes significantly more complex and challenging. Therefore, companies will have to change the way they do business. Partnerships, long-term cooperation and commitment amongst other aspects will become even more important in the future. In this context, the implementation of the EU-Philippines Business Network initiative, co-funded by the European Commission, comes handy. This project, implemented by ECCP and partners, is designed to bring European and Philippine SMEs together to combine forces and address the global market.
If readers are interested to take advantage of the services of the ECCP in addressing the requirements to become part of the global sourcing chain, I suggest you contact us. Rosemel Calderon is running ECCP in Cebu – you can contact her under [email protected].
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