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Tips on exporting to the US | Gelvenor Textiles  | Africa
Left: SA Footwear and Leather Industries Association (SAFLIA) executive director Jirka Vymetal (right) visited former colleagues Peter Sunderland of Fram/Wayne Plastics and Clint Deist on the Jordan & Co stand at the Source Africa Expo, held in June in Cape Town. Middle:Liesl Meyer of Gelvenor Textiles demonstrated their commitment to conservation and sustainability at the Source Africa Expo by selling shoulder bags, wallets and lightweight Qantral scarves made from fabric off-cuts, with all proceeds donated to the Rhino Wines SA initiative to raise public awareness about the plight of rhinos. Rhino Wines donate R2 of each bottle of wine sold to Traffic, the wildlife trade monitoring network that supports rhino conservation. Right: The Gelvenor stand at Source Africa.
September 2014

How Africa

can supply the US

The challenges faced by African manufacturers wishing to enter the US market, and the best ways to overcome them, were discussed at the 2014 Source Africa business seminars in Cape Town in June

While most apparel and footwear are still manufactured in China and Asia, there is a significant trend to shift a lot of that production to other parts of the world due to rising costs, especially in China. This is why there are now more opportunities for producers and suppliers here in Africa.

There are, however, challenges to sourcing apparel from Africa, like problems with sourcing textiles and other supplies that may not necessarily be of the quality and quantities needed by the US or other international buyers, said panellists participating in the business seminars organised by the American Apparel and Footwear Association during the 2014 Source Africa expo in Cape Town.

Africa cannot compete with countries like Asia on price — but their company has proven that African countries can do business internationally based on quality, said Tony Wardle, COO of Kwazulu Natal manufacturer Gelvenor Textiles, who have been doing business in the US and Europe for the past twenty years.

Quality is simply not one of the challenges faced by African manufacturers, he believes. “I can tell you the quality is good,” he says.

Africa has the necessary IO associative standards, the African industry is diverse and it has the necessary equipment and technology — for example, every piece of equipment used by Gelvenor Textiles is less than ten years old and they have brand new dying equipment from the TiSS dye manufacturer in Germany, whose biggest market is Africa. The South African government have also invested a lot of money in the clothing industry.

“You’re going to get world-class stuff out of Africa,” he says, referring to the parachute material they manufacture for the world market. “Don’t give the people in Africa grants, give them business, give them jobs,” he says.

“But, AGOA is a gift that Africa is battling to accept and the reason is that we’re not big enough to fulfil those big orders that China can and supply the demands of a country like the US,” he says. “The strength of African mills are in the production of speciality orders.”

This is a view shared by US retail expert, Jeffrey Rory, MD of Business Operations at Marvin Traub Associates, the brand development arm of the company founded by the man who started Bloomingdales, among other businesses.

There are basically four retailing segments in the US, he explains:

1. Department stores, which can be broken down into luxury, moderate and lower income department stores. “It is incredibly difficult for a manufacturer who supplies a department store to make money,” warns Rory, because department stores take products on consignment and will only pay the supplier once they are paid for the product and are sure the customer won’t return it. They will want guaranteed margins, will decide which products in the range to buy and will market the product on their terms. The supplier has to ensure that he delivers on time and that he can make fresh deliveries every month — he must be prepared to take all inventory risks and ensure that he can supply sufficient product whenever the store asks for it.

2. The mass merchants like Wal-Mart, Kmart, Sears, etc. will have essentially the same system, says Rory. “They may not require twelve deliveries, but their charge back division is a profit centre.” They will charge you for every day you are late or every item missing, he warns, but generally, if you run your supply chain like a science and you do everything right, you can make a lot of money with the mass merchants.

3. The specialty stores buy fewer and the demands for them are fewer and that’s where the opportunity lies for an emerging continent’s manufacturer trying to sell to the US, advises Rory.

4. There is also ecommerce — and you can’t be in any of the other channels without an ecommerce platform, while e-channels require some hard bricks and mortar to work as well.

When looking for a sourcing partner, US stores will look for financial viability, because the last thing that a supplier wants is for the supplier to go bankrupt in the middle of the season. Following the experienced by retailers sourcing from Bangladesh, social responsibility is also very important, says Rory.

“Next, they will look at quality, and quality from Africa has been particularly good.” The US market is therefore not concerned about the quality of goods from Africa, but they worry about the capacity to produce in the required numbers.

“Price is generally a factor, and when looking only at price, Africa cannot make it, because it’s difficult to deal with a company that’s part of a society where there’s unions, where there’s rights that need to be protected, whereas in China or Bangladesh they pay the people a dollar a month,” he says.

Turnaround time is also very important. “If there are mills that can produce the materials here to deal with fast orders, to cut shipping cost so the delivery times are shorter, there is a chance. If the materials and parts have to come from another country and you’ve got two weeks to get the fabric to the plant … all of that has to be taken into account. Lead times and timing of deliveries are key.”

There are about 70 000 independent retail stores in the US and one of their primary jobs is to ensure they stay competitive by bringing in new product, says Mercedez Gonzales, owner of a global purchasing company.

“Africa will never be the new China, you want to be the new Italy,” she says. “You want quality, small production, craftsmanship, limited production,” which are what is needed by specialty stores.

If you want to export to the US, you have to know your consumer target market intimately, and you have to find out where they like to shop, she advises. Price point is important and customers need a price they can afford — you therefore have to do a price study of your consumer market and what they will be prepared to pay for it.

You also need to understand what the retailer will want to pay. “A buyer usually knows what he’s willing to spend on a reputable brand, but if someone offers a better price you would be willing to test out another order because the price is better,” says Gonzales.

“Buyers buy the brands they know, or what they have heard of.” You therefore have to become known to the people you want to do business with, she suggests. “Like their Facebook pages, get connected via social media, so they get to know you. If you become known, the agents, sales reps, etc. will come to you and that’s how you become a known brand, supplier, etc.”

Before taking on a new supplier, there are a few key questions that an American company will want to ask him, says Len Pesko, who runs the Modern Pulse Consulting Group, a global purchasing consulting business.

  • Who do you do business with? Do you do business with someone else in America?
  • How long have you been in business - because they are looking for a partner with a viable business.
  • They will want to make sure the manufacturing facility is one that they have confidence in.
  • They will need specifics like lead times, what the minimums are, what the turnaround time is, do you have existing lasts, can they work with your people if they flew down here to work on product, etc.

“These are some of the expectations that the American market will have for any manufacturer, and suppliers will have to have a response to them,” he advises. He also has to be able to follow through on them.

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