Contrary to expectation, it is the small to lower middle level exporters between the turnover group of Rs 4-25cr who have shown resilience in a time when big exporters are finding the going very difficult. Most of these exporters commit that they have either sustained business at the same level as the previous year or have in fact shown some growth (10-15%). This is indeed an interesting finding that needs closer examination.What is it that has kept these players going in these trying times is the key question.
[bleft]
- Amongst the biggest factors responsible for sustained business is the nature of exports that this section is involved in, which based more on personal relations with age-old buyers is offering products that are of value to such group of buyers irrespective of what other buyers.
- Productivity and efficiencies are not that major an issue with the small and medium exporters though the middle level exporters realize that to grow further, systems have to be built in now.
- There is the drive to work in ethical conditions but the overwhelming pressure that actually adds to the cost is missing with mutual understanding of how much is the right mix[/bleft]
Amongst the biggest factors responsible for sustained business is the nature of exports that this section is involved in, which based more on personal relations with age-old buyers is offering products that are of value to such group of buyers irrespective of what other buyers are looking for. A majority of the exporters in this category said that a consistent 80% of business is coming from a traditional buyer base and in a turnover that is not too big, 20% business with new or ‘more demanding’ buyers is easier to maintain. Similarly, the product basket is buyer driven and produced in close coordination with the buyers, leaving little room for error or rejections, which can kill an exporter.
Familiarity with the buyers is of course important but so also is the type of products that most of these exporters are working with, which are value added and cannot be manufactured under assembly line system using usual work methods. For a bigger exporter working in volumes, productivity is all supreme, more so as prices in the global market take a downward route and controlling cost is not that easy.
Productivity and efficiencies are not that major an issue with the small and medium exporters though the middle level exporters realize that to grow further, systems have to be built in now. In reality the fact that exporters are working on products that are ‘complicated’ with many operations involved to add value, also makes the price pressures less obvious though there is a thrust for lower prices even in small quantities value added categories, said most of the exporters.
Further, the buyers are mostly boutique owners, small chain stores or importers for whom larger issues of compliance are important but not ‘obsessive’ as the industry puts it. There is the drive to work in ethical conditions but the overwhelming pressure that actually adds to the cost is missing with mutual understanding of how much is the right mix. Given time to improve working environment, these exporters are systematically doing their bit without the rush. About 70% of the exporters felt that their units were compliant under basic codes of conduct, while the remaining said that they were working seriously towards total compliance.
These exporters have also been largely able to survive the rupee appreciation crisis because most of them work more with European clients or in markets that are evolving. Many are also working in the Indian Rupee which has helped. Another factor working in favour of this segment is the fact that most refrained from the urge to expand when most big exporters were investing hugely on infrastructure, confining themselves mostly to replacing old technology with new machines, which has in fact added value to their business with better stitching quality.
This is not to say that there is no challenge for this section; in fact the challenges are different and peculiar to the section. The biggest of them ironically is to provide a different product all the time. In this quest many are now looking at professional designers for the edge instead of relying on merchandisers as fashion coordinators. Some others are going in for tie-ups with international designers. A tie-up with a well-known designer from the global circuit definitely adds value to the product.
Also while the merchant is price conscious and speaks on a different wavelength, designers can understand the requirements of the buyer at once and relate to him at his level. A few of the companies at the IIGF that had foreign designers were Rupayan, IIIE, GFA and Ebid Garments.
The importance of this model of operations is obvious from the fact that even exporters who were earlier thriving on volumes and basics are changing track. A case in point is the Rs 300cr Creative group which has shifted its focus and today 80% of its business is fashion and only 20% is basic, a radical change from four years ago when it was the other way around. Fashion is the pulley on which business from India is being conducted and the middle level exporter has understood this reality, tightening systems to provide greater value within the confines of fashion.
