GLOBAL SOURCING STRATEGY

Courtney Gill

Jordan Causey

Picha Choopojcharoen

Madison White
Teng Ma

ABSTRACT

At Ecru, we strive to provide the high quality, cutting edge

garments to our consumers. Our company is based solely on

social responsibility and code of ethics. Our basics line will be
available all year round and is perfect for the trendy customer
looking to make a smart addition to their wardrobe, while still
standing out of the crowd.

Through much research in sourcing and manufacturing we

have determined the values in what Ecru is specifically looking

for. In order to meet our margins and keep our costs down
we have spent much time researching facilities all across the
world in order to determine which will best suit our needs. These
countries include, India, China, Sri Lanka, El Salvador and the
Philippines.

As an up and coming company it is very important to

minimize our risks and ultimately increase our overall opportunities

for both our company and our supplier. We have developed a
placement strategy that includes many factors such as country
and supplier analysis and ranking, costing, negotiations, and the
evaluation and analysis of the strategy development factors. This
strategy will aid us in our ability to make the best decision when

Simplicity is the ultimate sophistication

it comes to the manufacturing of the Ecru Basics garments.

Leonardo da Vinci
2

TABLE OF CONTENTS

INTRODUCTION

STRATEGY
DEVELOPMENT
PROCESS

COUNTRY
ANALYSIS

SUPPLIER
ANALYSIS

COSTING

Our Products 12
Target Market 14

CONCLUSION

APPENDIX

China 128

Why Develop a Strategy? 16

Values 18
Sourcing Guidlines 21

Countries Highlights
& Textile Industies 27

Products, Volumes,
& Seasons 22

Sri Lanka 28

Sales Plan 24

El Salvador 42
India 52
Philippines 60
China 72
SWOT Analysis 79
Country Ranking 84

Suppliers Highlights
& Textile Industies 92
Sri Lanka 93
El Salvador 99
India 104
Philippines 108

Sri Lanka 132

China 141

El Salvador 135

Sri Lanka 144

The Future
of ECRU 139

El Salvador 147
Placement
Strategy 150

Preliminary Costing vs.

Final Negotiatiated Prices 153

Conclusion 157
Preliminary Costing 122

Cost Sheets 161

Initial Costs vs
Preliminary Costs 124

Tech Packs 167

China 111
Suppllier Ranking 116

SOURCING
STRATEGY

Sales Plan 126

Company Profile 8
Who We Are 10

STRATEGY
DEVELOPMENT

COMPARISON
OF
FINAL COSTING

Sourcing Guidelines 213

Supplier Emails 220
Bibliography 234

COMPANY
PROFILE

ECRU is a high-end women sportswear retailer with its

flagship boutique in SoHo, New York. We provide women highquality sportswear with minimal, natural, and sophisticated

Vision

aesthetics and styles to our customers. ECRU also has an

Enhancing Life with Grace and Simplicity

extension line called ECRU Basics which provides basic

yet high quality garments throughout the year.

Mission
To be the ultimate house of simple sophistication and style through the creation of

ECRU incorporates its values throughout the company

and its products since the main proirity is to assure our

desire now and forever

customers receive the best quality and fashionable outfits

that reflect their lifestyles and identities.

Values
Aesthetic
Fairness
8

Competence
Integrity

Creativity

Diplomacy

Perseverance

Teamwork
9

WHAT WE
STAND FOR

ECRU is a French word for unbleached or raw. It

also means a shade of light greyish-pale yellow or beige-like

tones. This type of color appears on raw and natural yarns
and fabrics. The name reflects the companys philosophy
and core values in which we consider the pure quality and
rawness throughout the products. That is why our designs
and

aesthetics

are

rather

simple

yet

sophisticated

in

craftmanship. Ecru is the signature color palette through out

our collections and packaging, which also makes us stand out
and distinguishes our customers from other leading brands.
ECRU also concerns about sustainability and corporate social
resposibility. We take serious agreement on transparency and
integrity with our partnerships from sourcing guideline to every
process of the production.

SInce ECRU values the importance of environment

and sustainability, the products are made of 100%

natural fiber yarns and fabrics such as cotton and
linen. The company has been trying to reduce carbonfootprint by sourcing and utilsing fabrics within the
same countries. Our company is also working toward
more eco-friendly and organic fabrics in the future.

ECRU offers both fashion and basic collections. Our

products range from woven and knitted tops, bottoms,

dresses, and accessories. Though ECRU basics collections
have lower price range, we still maintain and assure our
customers the same level of quality of our products. ECRU
basics are offered throughout the whole year with new
several pieces added to the collections each season to
keep updated with current color trends for each season.

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OUR PRODUCTS

Style 1 - Latte

Style 2 - Barley

Retail Price - $120

Retail Price - $90

Style 5 - Desert Sand

Retail Price - $180

Style 3 - Ivory

Style 4 - Bisque

Retail Price - $140

Retail Price - $120

ECRU Basics
Woven Tops

Spring/Summer 2014
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CUSTOMER
PROFILE

TARGET MARKET

Grace Smith
Age: 27

Marketing Consultant

ECRU caters toward female New Yorkers within ages of 25-40. Our

From Upper East Side,

customers are considered as young digerati living in the urban and afflu-

NYC

ent lifestyles around Manhattan and Downtown Brooklyn. They are sophisticated, thoughtful, and stylish. With high level of education and career
success, our women are independent and confident with their lifestyles
and fashion choices. They are innovators and experiencers who always
look forward and keep up with new trends and styles, but yet dont want
to overdress themselves. They want to dress well enough so that people

Family Income: $308,721 (Personal - $97,000)

can appreciate their looks as well as their status. Their preference in styles

Education: MBA in Marketing at NYU

is considered clean, minimal, yet unique in design and aesthetic. Our cus-

Competitive Stores/Brands: Stella McCartney, Chloe, and Bloomingdales

tomer also value high quality and craftmanship.

Fashion Cycle: Innovation Stage

VALS: Innovator/Experiencer

ECRU Basics line serves as fundamental pieces that our women must

have and wear them in their daily lives no matter what occasions or plac-

Buying Behavior:

es they go.

Expect great customer service / Enjoy shopping experience

Best quality products
High brand loyalty

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Ecru, meaning pure, simple and clean, is a luxury womens ready to wear
brand with a mission to be the ultimate house of simple sophistication
and style through the creation of desire now and forever. Ecru has a
goal to create sophisticated and timeless pieces of womens clothing
while valuing aesthetic, diplomacy, fairness and integrity, as well as
giving back philanthropically.

STRATEGY DEVELOPMENT PROCESS

These five country profiles from El Salvador, India, China, the Philippines
and Sri Lanka is meant to overview the countries in all aspects from
their culture, to their economy to their manufacturing, to ultimately
determine which country is the best for Ecru to source their luxury
garments from.

Why Develop a Strategy?

Values

When determining which country to chose for the manufacturing of

our luxury womens woven tops Ecrus looked firstly at the codes of

Sourcing Guidlines

conduct for each of the manufacturers as well as the way the country

Products, Volumes,
& Seasons

strong value for Ecru, it is very important that the manufacturers share

Sales Plan

does business overall. Because ethics and overall conduct is such a

these similar goals. Our other considerations must obviously include

the overall cost of creating the garments, the export industry as well
as the over textile and apparel industry of each of the five chosen
countries.

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VALUES

Diplomacy
Working with foreign companies can bring its own set of challenges, but
we are dedicated to resolving conflicts and finding common ground to
benefit both ourselves and our manufactures as we wish to successfully
grow our business as well as theirs.

Creativity
At ECRU we know the best solution isnt always the most obvious and
believe in the power of creative thinking and play to be innovative.

ECRU is built upon several values we believe will allow our company

to grow and be successful. We aspire to be a brand that is looked up

Aesthetic

to and respected by our competitors and customers alike. These same

We strive to deliver garments that will be appreciated by our customer

values helped build ECRUs sourcing guidelines as we are committed to

for both the care that was put into its design and creation and for its

producing quality garments that will be worn with pride.

overall look. We believe in simple luxury and want our customers to

confident whether they are wearing our basic line or our fashion line.

Perseverance
We believe in our company and its products and we will work hard to

Teamwork

overcome obstacles in whatever form they may take in order to deliver

ECRU is more than just a team; we are a family of people who all believe

apparel that lives up to our standards.

in our product and are committed to working efficiently not only within
our company but also with our manufacturers in order to create the

Fairness

best products.

We believe in equal opportunity and rights free from any form of

discrimination.

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Integrity

SOURCING GUIDELINES

We stand by our beliefs and values and strongly believe in transparency.

We are dedicated to making sure that our employees are happy and
being treated fairly, especially those who are manufacturing for us.
We strive to give everyone a voice, free from worry, to ensure that our
standards are being lived up to.

ECRUs Code of Conduct is in line with values that are core

to its company. Fairness, teamwork, diplomacy and integrity are

Competence
At ECRU we strive to know our customer and her needs in order to meet
them. We pride ourselves on every piece of merchandise that displays
the ECRU name and go to great lengths to find manufacturers that are
knowledgeable and reputable in the products they create for us.

some of the values that come across strongest in our code, as ECRU
strongly believes in fair treatment of workers as they are more than just
employees. They are people with their own families and needs, and
we want to ensure their safety and well-being as we value them and
the role they play in our brand. Our Code of Conduct is applicable
to all suppliers, their subcontractors and other business partners that
conduct business with Ecru. Our code can be found in the appendix
and strongly details our requirements in regards to the health and
safety of the work environment, workers rights with an emphasis on
basic rights, wages and restrictions on working hours, and monitoring
and enforcement which outlines transparency requirements, our right
to make unannounced audits in addition to our scheduled bi-annual
audits, our right to appoint an external auditor, should we see it fit and
the consequences of not taking corrective action should a violation
come to light.

*See full sourcing guidelines in Appendix

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Look 3: Ivory

Products, Volumes, & Seasons

Total Annual Volume: 450,000 Units

105,000 Units
Season: Year round

Loose fitting womens 100% pima cotton,

sleeveless, collared button-down.

Look 1: Latte
76,000 Units
Season: Year round

Look 4: Bisque
85,000 Units

Loose fitting womens 100% pima cotton

Season: Year round

blouse with narrow, cowl neck and extended

sleeve openings.

Loose fitting, wide neck womens 100% cotton

poplin blouse with cutouts on sleeves.

Look 2: Barley

Look 5: Desert Sand

90,000 Units

94,000 Units

Season: Year round

Season: Year round

Loose fitting womens 100% pima cotton

Womens long-sleeved, 100% pima cotton,

blouse with length folded sleeves.

high-low, button-down shirt with princess

seam, back detailing and right breast pocket.

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SALES PLAN

Because we are a high-end luxury company, our margins, princes

and sales are quite high. In the first year after the Ecru Basics collection
launches we are projecting to do over $59 million in sales. This number
is derived from selling 450 units divided between 5 garments and sku
numbers.

Our retail prices are going to range from $90 up to $180, due to

the fact that we are a luxury brand and retailer. We are selling these
garments online and in our own flagship store solely at this current
moment, which means will not have wholesale prices. This will reflect
highly on our margins, resulting in them being between 65% and 66%
for each garment. Our average cost for production is about $5 per
garment, making our total production cost for 450,000 units, 2,250,000.

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China

India
El Salvador

COUNTRY ANALYSIS

Philippines
Sri Lanka

Our five countries, China, India, the Philippines, El Salvador and

Sri Lanka were selected by our professor, but have been selected
for a reason. During the duration of the strategy we have made
it our goal to determine which countries are the best sources of

Countries Highlights
& Textile Industies
Country Selection
Ratings Spreadsheet

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COUNTRIES
Sri Lanka
El Salvador
India
Philippines
China

manufacturing for creating our luxury, woven womens tops. There

are many determining factors, but most importantly we have looking
into the business and textile climate and industry, the costs, the
logistics as well as the manufacturers reliability and code of conduct.
Each of these five countries has something different and special to
offer to the world of manufacturing and we have taken great time
and detail in assessing which of the five will rise to the top.

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SRI LANKA

With all that this country has to offer, it has even more in manufacturing
and business practices and has been awarded in many areas of
Green business practices for their manufacturing facilities and
factories. This country is beginning to thrive and make a name for itself

Country Introduction
Endless beaches, breathtaking ruins, flavorful food and teas, legendary
temples and oodles of elephants packed into over 3000 years of history
and culture on the island of Sri Lanka.
Sri Lanka offers incredible experiences stretching from the mountains
to the sea. The country is packed with rich history, diverse wildlife, a
variety of climates and eco-systems, cultural and religious heritage,
wide-spanning beaches and offers hundreds of ancient ruins to explore
and discover. It is Southeast Asias hidden gem that is waiting to be
traveled and charted by tourists, nature lovers and history enthusiasts
alike. (Data Monitor)

on the map with tourists as well as import and trade businesses and
manufacturers. (Data Monitor)

Sri Lanka is an island country located of the southern most

tip of India. The country has a rich history documenting back over 3000
years ago. Sri Lanka has a very strong Buddhist heritage. The country
was very important during the time of the ancient Silk Road and has
continued to grow and expand their trade and exports, making
them the top contributors to Sri Lankas economy. Even though the
country is just starting to rebuild it self from a thirty-year civil war which
ended recently in 2009, Sri Lanka is beginning to thrive once again
in manufacturing and tourism, giving them a strong and growing
economy. (Data Monitor)

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Sri Lanka, also known as, Ceylon, is an island in the Indian Ocean with

The president Mahinda Rajapaksa was elected in November of 2005

a population of about 20 million people. The highest concentration of

and is part of the Freedom Party. The Prime Minister, Disanayaka

the population is located in the larger cities, particularly in Columbo,

Mudiyanselage Jayaratne, who was elected in 2010, is also a member

the countries capital, main port, and industrial center and hub. Sri

of the Freedom Party. The President is elected for six-year terms and has

Lanka is ethnically, linguistically and religiously diverse, with over ten

the power to hire and fire the Prime Minister. The day-to-day running

different languages cultures and religious beliefs being practiced.

of the government lies to the prime minister and his cabinet, which is

(Data Monitor)

drawn from the legislature. (Datamonitor)

The flag of Sri Lanka is also known as the Lion Flag. It depicts a

In July of 1983 the Sri Lankan Civil War broke out and began an on

gold lion holding a sword in its front paw, a dark red background, four

going conflict all across the island. The government rose to fight against

golden leaves, one in each corner and two vertical stripes, one green

the rebellious Liberation Tigers of Tamil Eelam (LTTE), also known as the

and one orange. The lion represents the bravery of the Sri Lankan

Tamil Tigers. The Tamil Tigers are a military organization that formed in

Nation, while the other symbols represent the countries past history,

order to break away from Sri Lanka and form an independent Tamil

culture and religious beliefs. (Data Monitor)

state called Tamil Eelam in the north and eastern region of the island.
The war led on for 26 years when the Tamil Tigers were finally defeated

Socio-Economic-political Analysis:

by the Sri Lankan military in 2009. (Datamonitor)

The Sri Lankan politics take place in a presidential representative

This war lasting almost three decades left Sri Lanka in a sheer state

democratic republic framework. This is where the president of Sri

of turmoil. Over 100,000 citizens were killed and even more were

Lanka is both the head of the state and the head of the government.

injured. The country was hurt culturally as well as economically. Much

The political make up also includes legislative power, which act under

damage was done to the country physically which has detracted

both the government and the parliament. For many decades, politics

tourists, investors and has damaged manufacturing facilities. With all

in Sri Lanka have been dominated by the Sri Lankan Freedom Party

that being said, in the 5 years that the war has been over, Sri Lanka

and the Conservative United Nation Party. (Datamonitor)

and its citizens have done all that they can to revitalize the country

and restore it to what it once was. (Datamonitor)

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The government figures in Sri Lanka have been stable for many years

The Sri Lankan governments very high debt payments have contributed

as well as their representative democratic republic political system. The

almost 100% to the countrys high budget and fiscal deficit. However,

country is swiftly able to make decisions that benefit the communities

the global 2009 recession and economic crisis actually caused a boom

and the people as a whole. However, the war has certainly affected

for Sri Lanka and nearly balanced their debt payment crisis. This has

the country significantly and even though Sri Lanka is making all efforts

given Sri Lanka the ability to now focus on their greatest assets, being

to restore and revitalize, it is still a potential drawback when looking at

their trade and exports, and agriculture. (CIA World Factbook)

prospective manufacturing locations.

The country is constantly looking for new ways to expand and improve
their most lucrative markets, apparel manufacturing and agriculture,

Economic traits:

which combined employ over two thirds of the population and bring

Sri Lanka has a world ranking of 90 from the 2014 Index of Economic

in the majority of the revenues for the country. Because the main

Freedom and a ranking of 16 in the overall Southeastern Asian

revenues and income for the country do come from trade and exports,

hemisphere. (IEF) The country is continuing to see strong economic

particularly apparel but also tea, rubber and technology, there is a

growth following the conclusion of the 26-year Civil War. During the

large incentive for the country to constantly keep up to date and

war there was much turmoil economically and the country suffered

advanced to beat out the competition across the world. Sri Lanka

greatly. It is now that Sri Lanka is making all efforts to

is currently ranked at number four of the top apparel manufacturing

reconstruct and bring back one they once had. (CIA World Factbook)

countries in the world and

The Sri Lankan governments very high debt payments have contributed

has great potential to reach number one in the upcoming years.

almost 100% to the countrys high budget and fiscal deficit. However,

(World Factbook)

the global 2009 recession and economic crisis actually caused a boom

for Sri Lanka and nearly balanced their debt payment crisis. This has

the U.S Dollar is valued at .0077 of 1 Rupee. The current Sri Lankan

given Sri Lanka the ability to now focus on their greatest assets, being

unemployment rate is at 4%, ranking #49 in the world. Revenues in

their trade and exports, and agriculture. (CIA World Factbook)

2013 reached $8.43 Billion, while expenditures were at $12.57 Billion.

Sri Lankas currency is the Indian Rupee; and as of April 2014,

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The Sri Lankan inflation rate both increased and decreased significantly

The unemployment rate has seen a significant decrease in the past

over the past 10 years. In the past 3 years the rate of inflation has gone

ten years dropping from 8.4% in 2003 down to 4.0% in 2012. The rate

from 6.11% in 2012, to 9.9% in 2013 and all the way down to current

of unemployment for men is at about half the percentage of that for

4.2% that it is today. This is very unusually for the rate to fluctuate so

women. This is a significant decrease in a short period of time and is all

drastically, but the country has been in a serious state of turmoil after

due to the ending of the Civil War and Sri Lankas ability to quickly start

the war, which directly influenced their economic structure. Looking

rebuilding the country. (Labor Force Survey)

towards the future, Sri Lanka is making all the possible amends to

even out and steady the drastically changing inflation rate. (Trading

three categories make up a large percentage of revenues for the

Economics)

country. Sri Lankan apparel manufacturing supplies a wide variety of

Due to these high rates of fluctuation in both revenues and the

garments ranging from sportswear, lingerie, and lounge wear, to ready

inflation rate, Sri Lanka does show potential risks when looking into

to wear, bridal, swimwear and childrens wear. This gives Sri Lanka the

supply and manufacturing. The country is still in quite a high amount of

opportunity to supply to many different companies and with a wide

debt and is spending significantly more than they are bringing in. This,

variety of style, quality and price points. (Labor Force Survey)

and the drastically changing inflation rate may cause serious problems

and will be a great concern if Ecru business is done in Sri Lanka.

economy in Sri Lanka, many laws have been put in place to protect

Labor and Labor Laws:

the employees and their employers. Laws, codes of conduct and rules

The Labor force in Sri Lanka is very strong and makes up a significant

of ethics are made very clear to the employees and are 100% geared

amount of the population, of both males and females. About 48.2%

towards making their careers greater and more enjoyable. Companies

of the population works in labor, 67.2% being male and 31.3% being

in Sri Lanka have very in depth laws regarding workers rights, womens

female. The labor tasks in Sri Lanka include agriculture, industry and

rights, employee legal work rights and employee termination rights

services. In 2012 30.7% of the population worked in agriculture, 26.6%

and once again these laws and how they work are made very clear

worked in industry and 42.6% worked in services. (Labor Force Survey)

to the apparel-manufacturing workers. Sri Lanka is currently close to

Sri Lankas main exports are apparel, rubber and tea. These

Since apparel manufacturing is such an important aspect to the

being the number one apparel manufacturing country in the world

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and they will be chosen so because of their incredible ethics and

the amount of integrity with which they treat their employees, their

but Sri Lanka has many attributes that make them stand out. Each

customers and of course, the environment. (Labor Legislations)

factory in Sri Lanka is 100% environmentally friendly and many have

won incredible awards including the worlds first LEED Platinum

Sri Lanka is constantly making sure that they are treating their

The apparel manufacturing industry is incredibly competitive,

employees and their customers with the utmost respect and integrity.

certification. They operate under strict ethical principles and

Because high integrity is one of Ecrus top values, the way that Sri Lanka

guidelines that are made clear to the workers as well as the brands

manages their facilities is something that really resonates with us. The

and companies. The manufacturing facilities are also highly focused

ability to have respect in the workplace is something Ecru is certainly

on innovation, giving back to their country and maintaining a strong

looking for when reviewing countries and manufacturing facilities.

reputation all across the world. (EDB)

current Textile and Apparel Industry:

Sri Lankas apparel categories include sportswear, lingerie,

lounge wear, ready to wear, bridal, swimwear and childrens wear

and the United States and the United Kingdom have been the

Sri Lankas textile and apparel export industry is the largest and

largest apparel buyers for many years. Longstanding relationships

most significant contributor to the countrys economy. The industry

with companies across the world, and a strong drive to make quality

has seen sizeable growth over the past four decades and today the

pieces, keeps buyers and brands coming back again and again to

apparel industry makes up 52% of the countries exports and economic

Sri Lanka. These relationships have made the apparel industry in Sri

stimulus. This fast growing industry also provides over 300,000 jobs to

Lanka even more reputable, stronger and more prosperous. (EDB)

Sri Lankan men and women across the country. The 350 garment

Sri Lanka is a producer of Garments Without Guilt and the Made

factories and 16 textile and fabric manufacturers are privately owned

in Sri Lanka label, both of which are synonymous with high quality,

entities but do manage well with the Sri Lankan government, seeing

reliability, social and environmental standards, code of ethics and

that they are bringing in the majority of the countries revenues. These

accountability. Each of these standards is made present in each of

technologically innovative factories play a key role in the advancement

the factories, the working environments, as well as how the garments

of the Sri Lankan apparel industry and are quickly paving the way to

are produced. Within the past three decades the country has

be the top supplier country in the world. (EDB)

evolved into creating high quality and sophisticated designs,

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allowing the country to appeal to even more companies and brands.

Logistics and importation

(EDB)

Exporting goods from Sri Lanka into the U.S. has become a very simple

Because the apparel industry makes up such a large percentage

and quick task. There are many shipping and freight companies that

of Sri Lankas economic stability and make up, all of the factories

service Sri Lanka and a large majority of the goods are going back to

and manufacturing facilities in the country take part in giving back

the Unites States. The routes are well established and there are multiple

to the community. This is a very important aspect of these facilities

to choose from depending if the goods are being delivered to west

and shows a philanthropic side that will resonate with many different

coast or the east coast. Because the majority of the manufacturing

fashion brands, again making Sri Lanka an ideal country to source

facilities are located in Colombo, the port city capital, or very close

from. Businesses and manufacturers are always looking to grow

by, getting the garments and apparel to the port is not an issue.

and expand and currently there are 10 new facilities being built. Sri

Hundreds of shipping companies travel from Sri Lanka to the United

Lanka has recently been named one of the top three countries out of

States including ZIM Shipping Line, Maersk Line and Hapag-Lloyd. The

the top 50 most important suppliers and has promise of becoming the

majority of exporting and shipping out of Sri Lanka is done through sea

top supplier in the world in a few short years. (EDB)

and there are limited airfreight companies coming to Sri Lanka. ZIM

Because the textile and apparel industry in Sri Lanka is one

Integrates Shipping Services ltd. was established in 1945 and has grown

of their top industries, they are constantly looking for new ways to

to be one of the largest container shipping companies in the industry.

improve and expand. With that being said, the manufacturers are still

The company is committed to providing their customers with reliable

incredibly focused on building strong relationships and reputations

shipping solutions around the world. An exporting container ship leaves

with customers. This in turn helps Sri Lanka keep their best customers

from Colombo, Sri Lanka every two days and takes approximately 3

coming back and gives them potential new customers for additional

weeks to arrive in New York, United States. The container ship takes two

revenues. Ecru would be happy to manufacturer in a country that is

routes: one from Sri Lanka through the Middles East and Mediterranean

focused on giving the customer exactly what they are looking for and

into southern Europe. From there it goes on to the port in New York.

making sure they have a great experience along the way.

(ZIM)

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Maersk Line is one of the top leading cargo-shipping companies in the

world and has been rising to the top of the market since 1928. Their
strong commitment to the environment as well as customer service
keeps people coming back. The ship leaves the Colombo port every
Friday at 12 pm and there is a one-day cut off period for canceling a
shipment. The vessel takes about 3-4 weeks to arrive in New York. The
line goes from Colombo to Rotterdam and then arrives in New York.
(Maersk Line)
Haypag-Lloyd is a container freight company operating in more than
300 locations across the world. The company has been in business for
over 165 years and continues to keep their values of environmental
protection, compliance and sustainability prevalent in their work.
Exporting a container from Sri Lanka to New York will take about 22
to 28 days on a Haypag-Lloyd ship. The ship leaves twice a week and
sails through the Middle East and Mediterranean, making one stop in
Halifax before then landing in New York. (Haypag-Lloyd)

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EL SALVADOR

from one of the countries within the agreement. This is not the only
tie El Salvador has to the US, as El Salvador adopted the US Dollar in

Country Overview

2001 as its currency which gives control over its monetary policy to the

El Salvador is a small Central American Country that has been gaining

United States (Coleman 63; Country Intelligence 7). This has helped

footing in the textile and apparel industries and is the closest country

to stabilize the countrys inflation rates which are now predicted to

to ECRUs New York headquarters out of the five countries we have

increase steadily around a 2% change from the previous year in the

been researching. This means that manufacturing in El Salvador gives

near future (Country Intelligence 5-6). The dollarization also has

the advantage of a short lead-time. It is also the only country we

eliminated the need to keep an eye on exchange rates between

have researched which has established a free trade agreement with

the US and El Salvador. The United States is El Salvadors main trading

the United States, through the Central American Trade Agreement-

partner, which receives half of El Salvadors exports. The United States

Dominican Republic (CAFTA-DR). El Salvador was the first Latin

has invested over $2.5 billion into the country to help boost industries

American country to sign CAFTA-DR which was implemented in March

and infrastructure. In addition, approximately 1 in 5 Salvadorans lives

2006 and would allow ECRU to import any garments we manufacture

in the US, 1.2 million of which are immigrants (Meacham).

there tariff-free, as long as the labor and all the materials originate

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Political

estimated 80.2% of the population over 15 years of age being literate

El Salvador is a Democratic Republic that has been gaining stability

(Coleman 115). El Salvador will not lack for intelligent employees in the

since its 12-year civil war. It has a president who is elected for a single

years to come as literacy has been increasing and a strong amount

five year term. Current President, Mauricio Funes will be succeeded

of the population is young. El Salvador is often listed as one of the

by his Vice President, Salvador Snchez Cern in June; both of which

most dangerous countries, having a murder rate over 40 per 100,000

are left-wing members of the Farabundo Marti National Liberation

people in 2013, wide spread gang problems (particularly with the

Front party, or FMLN (Meacham). Snchez Cern has proposed

Mara Salvatrucha and the Barrio 18), drug trafficking and corruption;

expanding rehabilitation programs, job training for convicts, and

however, it often ranks among the top ten happiest countries (Klahn;

increasing support for police in addition to adding welfare programs

Meacham).

and development projects to help strengthen the economy and

reduce poverty (Meacham).

Economy
El Salvador has had a mixed economy since the 60s and 70s when

44

Social and labor

expanded into manufacturing and it is currently one of the most

Nearly half of El Salvadors labor force is employed in agricultural

industrialized countries in Central America. Agriculture employs half

and commercial activities while manufacturing accounts for 15.5%

of the countrys work force and includes the growing of sugarcane,

(Country Intelligence 15). Men make up the majority of the workforce;

coffee and cotton. Currently El Salvador has a sluggish economic

however, women have been gaining footing in recent years. As of 2010,

performance with imports exceeding exports although the growth

there were 4.13 million people who are of working age with a labor

rate has been taking a turn for the positive and is predicted to remain

force of 2.58 million (Country Intelligence 15). The population growth

so in the medium-term. The country has low investment rates resulting

has been slowing but remains positive at 0.7% per year; however, the

in slow capital accumulation that reflect a low national savings rate,

labor-force is predicted surpass the population growth rate until 2040

a weak investment climate and poor human capital development

due to El Salvadors age structure, as there are more people entering

(Country Intelligence 10). As El Salvador adopted the US Dollar as

the workforce then there are retiring (Country Intelligence 10). Both

its currency, it no longer has control over its monetary policy which

male and female children typically attend school for 12 years with an

is dictated by the United States (Country Intelligence 7). Inflation is

45

predominantly driven by food, fuel and energy related wares and El

clearance, port and terminal handling and inland transportation and

Salvadors adoption of the US dollar has helped to stabilize inflation

handling (Doing Business). Acajutla is El Salvadors major cargo

which is expected to increase by 1.9% in 2014, a much lower rate than

seaport, followed by Puerto de La Union Central. The Cutuco Port had

surrounding countries (Country Intelligence 5).

been inactive since 1996 and underwent renovations in January 2005,

making it the most important port infrastructure project in over 30 years

as it would double the cargo holding abilities of Acajutla (Puerto). It

was inaugurated Puerto de La Union Central on June 21, 2008.
By ocean, ships can travel from one of El Salvadors ports through the

Panama Canal and on to one of many U.S. ports where it can then
travel by train or truck to its destination. Cargo can also travel across
El Salvador to either Honduras or Guatemala as both countries have

sea ports along the Atlantic coast. Crowley is a shipping company

headquartered in Jacksonville, Florida with capabilities to transport
merchandise from El Salvador to ECRUs New York City location.
Crowley would transport ECRUs cargo from El Salvador to a port in
Guatemala where it would then sail to the Fort Lauderdale Port (Port
Everglades) in Florida. Next the cargo would ship via motor rail to New

Exporting

York City. Ships travel from Guatemala to Fort Lauderdale 3 times a

Exporting from El Salvador requires 7 documents including a bill of

week with a transport time of 5 days. Trains set out daily and cargo

landing, a cargo release order, a commercial invoice, a customs export

will reach New York in 4 days. Crowley gave a quote of $5,755 for

declaration, a packing list, a technical standard/health certificate

the transportation of a filled 40ft shipping container of apparel from El

and terminal handling receipts (Doing Business). According to the

Salvador to New York City (Phone Interview).

World Bank Group, it takes 13 days and around $980 to prepare a

container for export: this accounts for document preparation, customs

46

47

Textile Industry

a focus on how to utilize benefits of the CAFDA-DR trade agreement

El Salvador has built a vertically integrated supply chain and is the

(Salvadoran Government). Due to the textile and apparel industry

only Central American country that has developed a full synthetic

accounting for 16.3% of industrial GDP (2013) and 44% of exports,

cluster, producing nylon, polyester and microfiber fabrics which ECRU

it was identified as one of the sectors with strong growth prospects

may wish to utilize at a later date (Specialized Textiles). Apparel

in the short term (Salvadoran Government; Melara). As a result, the

production cost per minute in El Salvador is $0.10; which in line with

government will develop training programs to shift human resources

many of El Salvadors neighbors including the Dominican Republic

focus to identifying new business opportunities in this sector.

and Guatemala. Mexico and Colombia on the other hand are more

48

pricy with costs around $0.12-$0.14 per minute. El Salvadors textile

Climate

and apparel association, the Chamber of the Textile, Clothing and

A variety of natural disasters affect El Salvador typically causing the

Free Zones of El Salvador (CAMTEX), makes its mission To promote,

evacuation of thousands, the destruction of infrastructure, homes,

represent and support the textile, clothing and free zones of El Salvador,

buildings and land. These natural disasters could result in the destruction

to strengthen their competitiveness, and is a valuable resource when

of manufacturing buildings or the evacuation of employees that

sourcing and learning about the industry (CAMTEX).

would render them unable to work, affecting product production and

The apparel and textile industry in El Salvador has been growing;

the ability for goods to be transported. El Salvador experiences two

production saw an increase of 4.1% in 2013, while exports grew by 9%

seasons; the rainy season occurring between June and November,

to 2.394 billion (Melara). The industry accounts for 44% of the countrys

and the dry season, between December and May. During the rainy

exports; broken down further, fabrics accounted for 64%, followed

season, flooding and landslides have proven to be risky. Deforestation

by synthetic garments and fibers at 25% and woven apparel and

has been a problem in El Salvador which increases its susceptibility to

fibers at 11% (Melara). 73,795 direct jobs were created in the industry

these occurrences as roughly 85% of the countrys natural land-cover

during October 2013: a 3% increase from October of the previous

has been removed: making 65% of the country vulnerable to landslides

year (CAMTEX). El Salvadors agency for Promotion of Exports and

(Disasters Risk 19). El Salvador has been called the Land of Volcanos

Investments (PROESA) held a seminar in November of 2013 with aims

and has over 20 volcanoes, 3 of which have been active in recent

to identify new opportunities in the textiles and apparel industry with

years and have resulted in the evacuation of thousands (Disasters

49

Risk 20). El Salvador is known for its vulnerability to hurricanes and

tropical storms as well as for earthquakes, as it is located on one of

Earths most seismically active regions (Disasters Risk 18-19).

50

51

INDIA

India is still a male-dominated society where women have lower priorities

and wages than their male counterparts. Poverty and healthcare are
still major problems in India. Many water resources are contaminated

Social
India has the second largest population in the world with around 1.2
billion people in 2012. The social environment is very stable and people
live together harmoniously since many are religious and live their lives
under the doctrine of karma (over 80.5% are identified as Hindus)
Indian cultures have been perceived as diverse and exotic. There are
18 major languages in India. However, many Indians can speak English
since it is the second official language. Hierarchy is influenced by the
caste system and still important in Indian society. Younger people
respect the elders, and lower rank employees also have to respect
their bosses and higher executives.

52

in India, and air pollution is almost the worst in the world. Many people
have diseases and are unable to obtain adequate healthcare (only
7-8% of the central budget is allocated for healthcare). Even though
the caste system was eliminated, people from lower caste ancestry
are still regarded as unclean and are given less priority and benefits
than higher-status people. There are still issues related to the large
wealth gap and disparities in the society that cannot be improved
within the short period of time (Marketline).

Economic
In 2011, Indias estimated GDP was $1.843 trillion with 7.8% growth rate.
India economy has been improving and growing steadily in the past few

53

years. Middle class populations are increasing in numbers and earning

House of People (Lok Sabha). The President of Indian is elected by an

higher disposable incomes. Foreign portfolio and direct investment

electoral collage of elected members from both houses of Parliament

inflows also have risen significantly in the recent years. Proposals for

and the legislatures of the states for a five-year term (CIA). India has

direct foreign investment are supported by the government and are

28 states and 7 union territories. President Pranab Kumar Mukherjee is

also considered by the Foreign Investment Promotion Board.

the Chief of State, and Prime Minister Manmohan Singh is the Head

US-India bilateral merchandise trade in 2008 was almost nearly $50

of Government (Global Edge). The current diplomatic representative

billion. Major US imports from India include textiles, ready-made

from US is Ambassador Nancy J. Powell (CIA).

garments, internet-enabled and IT services, gems, leather products,

and chemicals. The US is also Indias largest investment partnet with

Labor

a 13% share. India exports have also grown at a very fast pace

India has the second-largest labor force in the world, which accounts

accounting for 23.9% of the country GDP in 2012 (Marketline)

around 487 million workers. In 2013, Indias unemployment rate was 8.8%

However, Indias economic growth is constrained by inadequate

with 29.8% of population below poverty line (CIA). Textile and apparel

infrastructure (usually electricity), a cumbersome bureaucracy,

industry employs over 35 million workers and is also the second largest

corruption in service sectors and governments, regulatory and foreign

provider of employment after agriculture. Many unskilled workers

investment controls, and high fiscal deficits. The rising fiscal deficits,

are well-trained in their sectors. The current labor cost in apparel

inflation, and external debt have resulted in depreciation of rupee

manufacturing sector is $0.51 per hour; the overall wage is still higher

and negative credit rating (BBB-) Indias stage of economy has rather

than the same sectors in Bangladesh, Cambodia, Pakistan, Vietnam,

been a mixed between positive and negative aspects.

Sri Lanka, and Indonesia (Emerging Textiles). The growing number of

young population in India implies the potential and active workforce

Political

in the world which looks positive for outsourcing for skilled and talented

According to Globaledge, the Indian government is considered as

labors; more than 70% of population will be working age in 2025.

federal republic, however the central government has greater power

54

in relation to its states and also has adopted a British-style parliament

Trade Agreement

system; the parliament consists of Council of States (Rajya Sabha) and

India has no Free Trade Agreement partnership with the US. However,

55

the country has several bilateral trade agreements with other countries

discovered at the partnered suppliers

and within WTO such as AIFTA (ASEAN-India Free Trade Area) which
allows tariff liberalization over 90% of products including textiles. The

Textile and Apparel Industry

trade agreement is however beneficial to the US companies in the

The domestic apparel market in India was worth about $38 billion in

way that they can gain benefit from cost reduction if they decide to

2012. India is ranked as the sixth largest apparel exporter in 2013 with

use materials such as raw materials, fabrics, or components from one

the total estimated value of $14.4 billion. The apparel sector accounts

of the ASEAN countries, which will be delivered to India to be made

for almost 10% of the overall exports. India has been regarded as one

into final garments. India also has SAFTA (South Asian Free Trade Area)

of the best producers of cotton fabrics (especially hand-loomed) as

and with the new government recently has agree to start on bilateral

well as raw cotton exporters (ranking #2 in 2013) in womens wear,

trade ties with the EU and Canada in the future.

blouses and Indian ethnic wear comprise the largest segment with
75% share of the entire segment. The market is expected to grow at

Risks

9% for the next five years at the value of 22.3 $billion. The monthly

Though India has a potential growth in manufacturing and labor

wages of a worker in the Indian apparel industry was approximately

force. There are still some problem associated with poor infrastructure

$169.67 which was also the fourth lowest paying following Bangladesh,

and business protocol that might create risks to the production and

Cambodia, and Haiti.

company such as punctuality and discipline issue.

56

There are high risks associated with late inadequate shipment and time

The overall apparel industry is expected to grow at a compound

consuming process, which will tremendously cause the loss of profit in

average growth rate of 9% over the next decade. In 2012, there

the business. Inefficient implementation of regulations and Code of

was an introduction of 10% excise duty on branded apparel with

Conduct is also another risk. Child labor, unhealthy and unsafe working

an abatement rate of 55%. There are also differences in tax rates

environments, and unfair wages are still considered major issues. Many

depending on the states; the government in Delhi, Uttar Pradesh,

companies have a hard time identifying the transparency level of the

Punjab, and Rajasthan charge a VAT of 5% on apparel, while other

suppliers since the production is done oversea. It is a huge risk in losing

states charge 4%. The service tax was also increased by 2% in 2012

reputation of the company if any unlawful or inhumane practices are

(Gugnani) The rise in taxes resulted in increased average sales price of

57

apparel by 5-6% Most retailers had encountered a negative growth of

and environment also create problems with delivery as well. Second

4-5% in sales during the fiscal year of 2012 (Gugnani).

problem is poor atmospheric and working environment; India is

According to Indian Ministry of Textile, the textile and apparel industry

known for having very high level of air pollution and contaminated

in India have strong growth in demand and policy support, which

water resource, water is needed in production and its vital that its

has resulted in government investment schemes (TCIDS and APES)

clean before manufacturing into actual products. Dirty environment

and commitment of both domestic and foreign investments ($140

and poor air condition will also affect the workers health which

billion in value) (IBEF). The Technology Upgradation Fund Scheme

might result with problems in the future. The third issue is about

(TUFS) provides budget of $0.5 billion for modernization of the power

sourcing guideline in which many places in India still dont comply to

loom sector and stress more on mechanization (IBEF). The FY14 union

the code of conduct honestly and child labors and unfair payments

budget also provides infrastructure support and tax sops and financial

to the workers still happen everywhere. India also has no free trade

packages that help reducing duty for imported textile and machinery

agreements with the US which means it is automatically subjected

and eliminate excise duty for the cotton and manmade garments as

to 15.4% tax over every product imported to the US. Though the

well (IBEF).

suppliers that ECRU contacted are very professional and have higher
rank scores on ECRU supplier ranking, their price quotes are very high

Why we didnt choose India:

compared to ECRU initial estimated costs.

Even though India is known for cheap labor costs (in general),
ready-made apparel industry, woven and knitted cotton fabrics,
there are some factors that made us had to eliminate India over
other smaller countries like Sri Lanka and El Salvador. First problem
is poor infrastructure, especially electricity and roads; losing power
during the production process might create huge loss of time and
profits, and might also delay the production. Poor road condition

58

59

PHILIPPINES
SOCIAL
The total population of the Philippines as of June 2012 was 103,775,002,

60

INTRODUCTION

evenly divided between males and females with an average age of

There is more involved in the design process of apparel than sketches

23.1 years. According to philstar.com, about 40 million of these make

and swatches. After all of the designs and measurements have been

up the labor force while the unemployment rate stands around 6.9%

made, it is required to source a manufacturer who will be capable

and the inflation rate as of May 9, 2013, was at 3.2%. Because of their

of fulfilling production needs at the right price, in the right time,

Spanish background, religion in the Philippines mostly consists of Roman

and incurring minimal risk. The purpose of this report is to analyze

Catholics (81%) and Protestants (12%), followed by Muslims (5%) and

manufacturing opportunities in the Philippines to determine where

others (2%), which should not pose any serious restraints on conducting

ERCU will entrust its designs. We want to keep rational feasibility in

business. It is also convenient that in addition to speaking their native

mind while also not compromising our core values and ethics in the

language, Filipino, the nation also lists English as their second official

creation, distribution, and lifecycle of our proposed products.

language.

61

POLITICAL

rapid economic growth and has suffered from recurring economic

In February 1987, the Philippines adopted a new constitution that

crises. This persistent underperformance has occurred in spite of the

instituted the presidential-style republican form of democracy, which

Philippines rich natural and human resources.

resembles the U.S. model much more than the European parliamentary

The reasons are rooted partly in history, partly in policy. As a

system. One key difference between the Philippines and U.S. systems is

legacy of the U.S. colonial period, oligopolies have dominated the

that the Philippines is a unitary republic, whereas the United States is a

economy, particularly in agriculture, where farmland continues to

federal republic, with significant powers reserved for the states. In the

be concentrated in large estates. In the post-World War II period, the

Philippines, by contrast; the national government is not challenged

Philippines pursued a strategy of import substitution industrialization,

by local authority. The ratification of the 1987 constitutionthe fourth

whereby domestic goods are substituted for imports. This strategy

in the nations historyby national referendum signaled the countrys

required protectionist measures, which led to inefficiencies and

return to democracy following the autocratic rule of Fernando Marcos

the misallocation of resources. Although some trade protectionist

(196586). Politics in the Philippines is somewhat tumultuous. In February

measures were relaxed in the early twenty-first century, the Supreme

2006, the president declared a state of emergency after quashing

Court continues to support restrictions on foreign ownership of land and

the attempted coup staged by the political opposition. The current

other assets in effect since the constitution of 1935. These restrictions,

president of the Philippines is Benigno Aquino and Philip Goldberg is

plus widespread graft and corruption, have suppressed inbound

the current ambassador to the Philippines from the United States.

foreign direct investment. A historically low rate of taxationonly

about 15 percent of gross domestic product (GDP), partly as a result of

62

ECONOMY

widespread tax evasionhas led to underinvestment in infrastructure

The economy of the Philippines is an anomaly in the Asia-Pacific

and uneven economic development.

region in that it has lagged behind other economies, such as those

Although trade barriers were scaled back, industrial cartels split up,

of Singapore, South Korea, and Taiwan. From a position as one of the

and limited reform measures taken in the late twentieth century,

wealthiest countries in Asia after World War II, the Philippines is now

political instability, continuing high levels of corruption, and resistance

one of the poorest. Since the 1970s, which were a relatively prosperous

to reforms by entrenched interests have prevented the Philippines

decade, the Philippines has failed to achieve a sustained period of

from pursuing a consistent and effective economic course. The

63

industrial sector continues to decline relative to services, an economic

TRADE

bright spot in which the Philippines apparently enjoys a comparative

The United States and the Philippines have had a very close trade

advantage, although some argue that services represent an employer

relationship for more than a hundred years. According to the Office of

of last resort. As of April 13, 2014, one Philippine Peso (PHP) was equal

the United States Trade Representative, the US meets regularly with the

to $0.023 (USD). In 2005 the services sector accounted for about 53.5

Philippines under the auspices of a Trade and Investment Framework

percent of GDP; industry, 31.7 percent; and agriculture, forestry, and

Agreement (TIFA) signed in November 1989. Several additional

fishing, 14.8 percent.

agreements have been signed under TIFA auspices, including a customs

administration and trade facilitation protocol (2010), a memorandum

GEOGRAPHY

of understanding to cooperate on stopping illegal transshipments of

The Philippines are made of about 7,107 islands located off Southeast

textiles and apparel (2006), and a memorandum of understanding

Asia, between the South China Sea on the west and the Philippine

regarding the implementation of minimum access commitments by

Sea on the east. The major islands are Luzon in the north, the Visayan

the Philippines (1998).

Islands in the middle, and the Mindanao in the south. The total area

64

is about 186,411 square miles including about 185,168 square miles of

U.S.-Philippines Trade Facts

land and about 1,243 square miles of water. The Philippines consists of

The United States is among the Philippines top trading partners, and

volcanic islands, including active volcanoes, with mostly mountainous

it traditionally has been the Philippines largest foreign investor. Two-

interiors surrounded by flat lowlands and alluvial plains of varying

way goods and services trade between the United States and the

widths along the coasts. Research on the Philippines by the Library of

Philippines totaled to $22 billion in 2011. Exports totaled $9.9 billion;

Congress indicates that the islands are also prone to floods, landslides,

imports totaled $12.1 billion. The U.S. goods and services trade deficit

earthquakes, and tsunamis. This and the fact that the islands are

with the Philippines was $2.2 billion in 2011. The stock of U.S. foreign

located along the typhoon belt which experiences 15 to 20 typhoons

direct investment in the Philippines exceeded $5 billion.

a year, of which five or six may cause serious distraction and/or death,

Data from the United States Embassy in Manila indicates that the

makes the Philippines a very risky location to choose to manufacture

Philippines is currently the United States 36th largest goods trading

ECRUs woven tops.

partner with $17.6 billion in total (two ways) goods trade during 2012.

65

Goods exports totaled $8.1 billion; goods imports totaled $9.6 billion.

million), Fats and Oils (mainly coconut oil) ($532 million), and Woven

The U.S. goods trade deficit with the Philippines was $1.5 billion in 2012.

Apparel ($531 million). U.S. imports of agricultural products from the

Trade in services with the Philippines (exports and imports) totaled $5.2

Philippines totaled $2.3 billion in 2012. Leading categories include:

billion in 2011. Services exports were $2.2 billion; services imports were

coconut oil ($531 million), raw beet and sugar cane ($107 million),

$3.0 billion. The U.S. services trade deficit with the Philippines was $827

processed fruit ($131 million), tree nuts ($97 million), and fruit and

million in 2011.

vegetable juices ($68 million). U.S. imports of private commercial

services (i.e., excluding military and government) were $3.0 billion in

Exports and Imports

2011, up 12.2% ($324 million) from 2010, and up 94% from 2000 levels.

The Philippines was the United States 33rd largest goods export market

Other private services (business, professional and technical services)

in 2012. U.S. goods exports to the Philippines in 2012 were $8.1 billion, up

travel and passenger fares categories account for most of U.S. services

4.6% ($355 million) from 2011, but down 8.3% from 2000. The top export

imports from the Philippines.

categories (2-digit HS) in 2011 were: Electrical Machinery ($2.7 billion),

Machinery ($867 million), Cereals (wheat) ($618 million), Flour and

Investment

soybean meal ($511 million), and Aircraft ($453 million). U.S. exports of

U.S. foreign direct investment (FDI) in the Philippines (stock) was $5.3

private commercial services (i.e., excluding military and government)

billion in 2011, a 1.1% decrease from 2010. Reported U.S. FDI in the

to the Philippines were $2.2 billion in 2011, 8.7% ($173 million) more

Philippines is mostly in the manufacturing sector.

than 2010 and 38% greater than 200 levels. The other private services

Philippines FDI in the United States (stock) was $114 million in 2011, up

(business, professional, and technical services) and travel categories

10.7% from 2010. The distribution of Philippines FDI in the United States

accounted for most of U.S. exports in 2011.

is not available. The Office of the United States Trade Representative

The Philippines was the United States 35th largest supplier of goods

also indicates that sales of services in the Philippines by majority U.S.-

imports in 2012. U.S. goods imports from the Philippines totaled $9.6

owned affiliates were $3.3 billion in 2010 (latest data available), while

billion in 2012, a 4.8% increase ($436 million) from 2011, but down 31.3%

sales of services in the United States by majority Philippines-owned

from 2000. The five largest import categories in 2012 were: Electrical

firms were $37 million.

Machinery ($4.0 billion), Machinery ($1.1 billion), Knit Apparel ($617

66

67

US & PHILIPPINES TRADE AGREEMENT

of focus of recent U.S.-Philippine cooperation. The two sides agreed

The United States and the Philippines have had a close trade relationship

to establish a new work program on labor affairs under the TIFA to

for more than a century. The two sides meet regularly under the

further our efforts. In addition, the United States and Philippines held

auspices of the TIFA, which is the coordinating mechanism for trade

detailed discussions of agricultural trade, including related to rice and

and investment policy discussions between our two governments.

meat, and these discussions will continue in the coming weeks.

Total goods trade between the United States and the Philippines is

In response to Philippine interest in the Trans-Pacific Partnership (TPP)

about $18 billion, up 41 percent since 2009. Services trade is growing

agreement, the United States briefed the Philippines on the goals and

rapidly and exceeded $6 billion in 2012, also up 41 percent from

objectives that the twelve TPP countries are seeking to achieve. The

2009. U.S. foreign direct investment in Philippines is roughly $5 billion,

two sides began a program of technical consultations to provide

concentrated in manufacturing.

the Philippine government the detailed information it will need to

consider whether to seek to join the TPP agreement. The Office of the

The United States and the Philippines today concluded a two-day

United States Trade Representative also found that the United States

meeting under the Trade and Investment Framework Agreement

and Philippines also agreed to intensify cooperation on U.S.-ASEAN

(TIFA), agreeing to a program of expanded engagement in coming

issues and on the trade and investment agenda for APEC, which the

months on bilateral, regional, and multilateral issues.

Philippines will host in 2015.

The meetings

were chaired by Assistant U.S. Trade Representative Barbara Weisel

and Philippine Undersecretary of Trade Adrian Cristobal. In addition,
senior officials from other agencies on both sides participated in the
meeting, including Philippine Agriculture Department under Secretary
Segfredo Serrano and Edgardo Albon, Chairman of the Philippine
Tariff Commission.
On bilateral issues, the United States recognized the considerable
efforts the Philippines has made to strengthen its intellectual property
regime and overall framework for protecting worker rights, two areas

68

69

CONCLUSION

as long as we manage the amount of product being manufactured

There are many benefits to come of manufacturing in the Philippines,

at that time, however there are also active volcanos, earthquakes,

however there are great risks, specifically the unpredictable nature

and tsunamis that could make product investment more of a risk

of their numerous natural disasters. The quality of their manufacturers

than affordable for a small company like ECRU.

is still unclear as far as meeting the standards of ECRU, however, I

Finally, of the five countries researched, the Philippines had

am very interested in the technology of creating eco-friendly and

great potential in their manufacturing facilities, however there

sustainable fiber from pineapple and banana, which would certainly

was little information to be found and contact was very difficult

coincide with the ECRU values. In closing, the Philippines may not

to establish. The selection highlighted more disposable bag

be a viable first candidate in our search for a manufacturer, but it

manufacturers, weavers, and sports bag manufacturers. Of the

cannot be overlooked given its recent advances in technology and

seemingly suitable manufacturers, none replied to ECRUs emails.

sustainability.

The emails were either invalid or kicked back due to a full inbox.
When phoned, the manufacturers failed to answer. Of those who

Why we didnt choose Philippines:

had voicemails, none of the calls were returned - even when we

The Philippines was eliminated for many reasons. First, the political

provided our country code in the telephone number and spelled out

environment is not very assuring. More specifically, the ease of

our email address. All of these reasons, when compared to the other

corruption makes for a disheartening business climate. If the

four countries, presented us with a situation where we saw it best to

Philippines government is unreliable to their own business climate,

move on without the Philippines.

they surely will not be flexible to foreign businesses. Also, the textile
industry is not supported by the government and there are currently
no trade agreements in place between the Philippines and the
United States.
In addition, the natural disasters in the Philippines are numerous and
would not support ECRUs need to have a steady flow of product for
our Basics line. There is a monsoon season that could be tolerable

70

71

CHINA
Unployment Rate
Current unemployment rate is 4.1%
Economic Climate

Stable near 4% since 2008

Economy Structure and History

Market socialism economic system
GDP-real growth ranked 14 and GDP-purchasing power ranked 3
The economic development started since the economy reform in 1978

Currency
Use Yuan /RMB as currency unit

Labor Cost
Minimum monthly wage is $293, $0.085 per minute in Apparel
Industry
Rising minimum wage for couple times in past years
Labor cost will continue in growth
Reform and Promoting

Current currency 1 USD= 6.25 Chinese Yuan

Reform in 1978, joined WTO in 2001, Free Trade Zone in Shanghai

Currency rate is controlled by the government

2013
Chinese governor state China rules out strong economy stimulus

Inflation
Inflation rate has a increasing tend
72

73

Political Climate

Trade Agreeements

Voice and Accountability

Government controls over the freedoom of expression

Name

Government lack of accountability

China-ASEAN FTA

Political Stability

Taiwan and Tibet Indpendence issue

Xinjiang Violence against government

China-New Zealand
FTA

Government effectiveness rated 60.7 (100 is highest) is at an

Effective Date

January 1st
2005

Apirl 13th 2008

China-Peru FTA

Mainland-Macau
CEPA Arrangement

China-Costa Rica FTA

Counterfeiting

Chinese government lack of protection of Intellectual property

China-Iceland FTA

Counterfeiting is a big isssue in Chinese Apparel industry

China-Switzerland
FTA

The Asia-Pacific Trade

Agreement (APTA)

April 28th 2009

2003

2003

Mainland-Hong Kong
Closer Economic and
Partnership
(CEPA)Arrangement

Goverment is corrupted

avoiding punishment

October 1st
2008

China-Singapore FTA January 1st 2009

Some companies violate the regulation and bribe the governors for

July1st 2007

acceptable level

China-Pakistan FTA

China-Chile FTA

Government Effectiveness and Corruption

The Media is controled by the government as well

China's Free Trade Agreements

Nov-08

April 15th 2013

July 6th 2013

1975

Countries
Indonesia,
Brunei,Malaysia,Vietnam,
Singapore, Burma,
Thailand,Cambodia,
Phillipines,Laos

Using "negatvie list" method for FTA for goods. Goods not on the negative list are
regarded as regular goods. ( woven apparel falls into the regular goods category)
Tariff to the old members of ASEAN was removed since 2010 Jan 1st ( for regular
goods) and Tariff to the new members of ASEAN will be removed in 2015.

Pakistan

Chile

Most of the woven fabric falls in the list of "Zero Tariff to Pakistan"
Detail on fta.mofcom.gov.cn -"zero tariff list to Pakistan"

No tariff for apparel and textile

New Zealand will remove all the tariff for leather garment, knitting apparel, shoes in
2016 Jan 1st (part of them was removed in 2014 Jan1st) Since 2009 China has
signed the preferential agreement for all wool and wool products imported from
New Zealand and no tariff

New Zealand

Singapore

Textile and Apparel Related Regulation

No tariff for goods export from China to Singapore since January 1st 2009
No Tariff for 97.1% goods import from singapore since January 1st 2012

Peru

Mainland-Hongkong

"One country, Two system" No tariff

Mainland- Macau

"One country, Two system" No tariff

Costa Rica

The goods were divided into 5 different categories and most of the apparel and
textile products fall into the first two categories and the tariff would be removed
within 5 years after the FTA signed.

No tariff for 90% of the goods (both export and import) since August 1st 2011,
Textile and Apparel falls into the 90%

Iceland

Switzerland

China,Bangladesh,
India, Republic of
Korea, Lao People's
Democratic Republic
and Sri Lanka

No tariff for 99.7% of the goods export from china to Iceland, and no tariff for
81.56% of the goods import from Iceland to China. Textile and Apparel falls into
these categories.

Reduced the tariff for textile and apparel that export from China to Switzerland

1767 Tariff lines originating from Bangladesh and the Lao People's Democratic
Republic are given conventional tariff rates for exports to China. These countries are
trading with a preferential tariff 0.5% to 5.0% lower than the applied MFN tariff for
50-63 HS

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Textile Industry

the release of open door policy. Since then, China gained a substantial

The Apparel/industry was one of the industries that Chinese government

market share in the international apparel and textile trade. In 1980,

choice to start for the open door policy (the reform in 1978) and it

China was accounting for 4.6% of the worlds total exports, and ranked

is one of the essence industry since then. The industry had a sign of

as number nine and then since 1995, it ranked number 1 in the world

continuing growth since 1979, the average annual growth rate of

and the growth steadily continued. (Qiu) From China National Textile

total value of textile and clothing output was 13.2%, the total industrial

and Apparel Council statistics, the value of China exported garment

value increase about 7% every year from 1997 to 2002 (except the year

and textile products worth $42.4 billion in first two months of 2013 and it

Asian financial crisis,1998). And after 2002, the year China joined the

was 34.1 percent higher than the same period in 2012 and 8.3 percent

WTO, most of the products in this industry grow even faster. (See detail

higher than the general export growth in the country. (Xinhua) All

in the image 4.7) Currently, China is the biggest player in producing

these data showed evidence of the importance of apparel/ textile

apparel and textile including cotton, yarn, wool fiber, cotton fabric, silk

industry in China and its steadily growing trend.

fabric, garments, chemical fibers and knitted goods. (Detail data in

the size section) It has a trend of reduced employment in the apparel/

Government Support &WTO

textile industry, however, it is a sign of development in productivity and

There are three major supports to the apparel/textile industry from

efficiency. The industry will be continuing in growth, and with the rise

government, since the release of 11th

of labor cost and advancing technology it has a trend of entering the

Industry in 2006 by the State Development and Reform Commission.

high-end market section.

These policies are, develop the innovation and building Chinese brand

The Chinese textile market has a total value of 161.7 billion dollars (2012)

to the world market, and improve the technologies and equipment

and in the past five years the CAGR is 10.8 %. The Fabrics account

and restricting inefficient polluting. (Qiu) Another important action

76.5% of the total and yarns account for 23.5%. In Asia-Pacific industry,

made by the government was being member of WTO. Since WTO

it accounts 41.0% of the total. (Marketline)

allow Members to seek resource in WTO organization, it benefited

5-Year Plan for the Textile

Chinese Apparel/Textile industry because of the limitation reduction

Position in the Country

on exporting.

Apparel and Textile industry is one of the pilar Industry in China since

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Reasons for Business

China is known as the biggest manufacturer in the world especially in

COUNTRIES - SWOT ANALYSIS

apparel industry. There are several reasons made China to be the first
choice of manufacturing for their garments. First, China has the biggest

SRI LANKA

textile industry, which is the nature advantage for manufacturing

apparel. China produces bulk amount of silk, cotton, and wool. Besides,
China has Free Trade agreement with Australia (known for best quality
wool) and could import wool from Australia without tariff and FTA with
Peru for high quality cotton, Thailand for high quality silk as well.
Second, China has abundant experience of exporting. China is the
biggest exporter and second largest importer. Since the revolution in
1979, Chinese government started to support international trading.
Nowadays, they are really experienced in trading internationally and
strong government support. Thirdly, Sophisticated logistic system and
various choices of suppliers are other advantages of manufacturing
our garments. China has more than 1500 apparel manufacturers and
many of them also provide P.O service and clear customs for customers.

SWOT ANALYSIS

Strength
- Green Conscious
-Sufficient Labor Force
- Strong Connections
with Customers
- High Standards For
Quality and Craftsmanship

Weakness
- 30-Year Civil War Ended in
2009

- Sri Lankan People Lost

Trust in Government

- Strict Business Etiquette to
Follow When Conducting
Business

This could bring convenience to us for avoiding extra process to bring

the merchandise into U.S

Opportunity
- Becoming Number One

Apparel Exporter in World

- Political and Economic
Stability
- Leaders in Green and
Sustainable
Manufacturing

Threat

- High Amount of Debt

- Losing Revenues After War

- Much Competition
Throughout the World

- Monsoon and Typhoon

Season 9 Months/Year

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EL SALVADOR

SWOT ANALYSIS

Strength
- Dollarized

- Close ties to the US

- Stable labor force
- $0.10 /min manufacturing
cost
- Government support for
apparel and textile industry
- Part of CAFTA-DR

Weakness
-

Gang violence
Corruption
Costly transportation
Weak accountability
of government
- Apparel focus is
predominantly on
knitwear and
synthetics

INDIA
INDIA
SWOT ANALYSIS

Strength

- Skilled and specialized labors in

apparel sector.
- Second largest young workforce
in the world
- The largest cotton producer as
well as cotton products.
- Supportive foreign policy
- Many English spoken
professionals
- Cost advantage

Weakness

- Poor infrastructure
- Inadequate discipline and
management
- Corruption
- Weak implementation on
compliance in code of conducts
- Unclean environment
- Uncertain time management

Opportunity
-

Elimination of tariffs with

CAFTA-DR
Government held conference to
identify opportunities in Apparel
sector
Close proximity could result in
receiving product quicker
Recently rebuilt port may
become a hub for
transportation

Threat

- Prone to natural disasters

- Political uncertainty with
newly elected president

Opportunity
- Ease of investment
- New government supporting Free
Trade Agreements and other
policies
- Improving economy
- Readymade garments dominate
exports
- Rising incomes and growing
middle-class
- Increase in exports

Threat

- Low proportion of high technology

exports
- Increasing air pollution
- Recent terrorisms discourage
investors

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Philippines

SWOT ANALYSIS

Strength
-High growth potential
-Young & growing labor
force
-Developing textile
technologies
-Logistic convenience

Weakness
-Corrupt government

-Long lead times

- Limited product placement

-No Trade Agreements with

the U.S.

CHINA

Opportunity
- Free Trade Zone, remove
trading barriers
- Continuing trend for
industrialization
- Opportunity for
investment

SWOT ANALYSIS

Strength
-High growth potential
-Sufficient Labor Force
-Leading position in the
industry
-Government support for
apparel and textile industry
-Logistic convenience

Weakness
-Unstable government

-Lack of Intellectual
Property right protection

- Weak accountability of
government

-High tariff

Threat

-Natural Disasters

-High inflation rate

-Currency manipulation
allegation

-Government Restriction

Opportunity
- Free Trade Zone,

Remove trading barriers

- Continuing trend for

industrialization
- Huge market for
investment

Threat

-Increasing labor cost

-High inflation rate

-Currency manipulation
allegation

-Government Restriction

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COUNTRY RANKINGS

We broke down 6 factors, including communication convenience,

textile industry condition, labor cost, trade agreement, overall
atmosphere in trading apparel and location, to evaluate the benefits
for each country. Based on this evaluation chart, we rated China, India
and El Salvador to be the higher ones. China has the most sophisticated
textile industry and FTA with many other countries could with the textile-

The factors we took into consideration to compare the countries

for placing our products are listed in the chart. Overall, El Salvador
has the highest score, follow by China and India, Sri Lanka, and

supplying sources. India has the cheapest labor cost compare to other
countries, and communication convenience. El Salvador is the nearest
country to the United States and has assigned CAFTA with the U.S.
Philippines and Sri Lanka have fewer benefits.

Philippines was rated to be the lowest.

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Cost
India has the lowest labor cost among these five selected countries,
which is $0.080 per minute for apparel industry, and $200 dollars per
month for general minimum wage. China is the second lowest, $0.085
per minute and $240/month minimum wage, however because of
the continuing growth of labor cost recent years, China was rated
the same as Philippines and Sri Lanka (around $0.10 per minute). El
Salvador was rated slightly higher than China, Philippines and Sri Lanka
because of the exemption of tariff that lower the total cost.

Government
Generally, these five countries government overall are not in positive
We evaluated countries business climate based on 5 aspects, the
logistic performance, lead time to export, ease of doing business,
government support, opennes to foreigners. China and Sri Lanka were
rated to be highest countries, India and El Salvador were slightly lower,
Philippines has the lowest score majorly because apparel industry is not
supported by government and people are more likely to make money
in other industries.

position, and each country has its own issues. The Chinese government
has a lack of accountability, over control of media, lack of transparency
and has some corruption issues as well. Sri Lanka just ended the Civil war
in 2009, the government lack supports by citizens and has corruption
issues as well. The Philippines government is heavily corrupted and has
many embezzlement issues. El Salvador has a newly selected president
with anti-US associates, and the government has foreseen instability
concerns. So, these four countries were all rated as 5. Comparatively,
India has a more stable government. India has a new government
with promising bilateral trade ties but some corruption issues still exist.

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Location
India, Sri Lanka, and the Philippines are all located in southwest Asia

and have long lead-times for shipping merchandise to the U.S. China
is closer to the U.S and has a more sophisticated logistic system which
made Chinas rating 1 point higher than the other three countries. El
Salvador, located in Central America, has the advantage of having
the shortest leading time.

The comparison factors of risks for selected five countries are listed
in the chart above and evaluated threats from these aspects. Each
country has its own issues and generally China, India and El Salvador
have fewer risks for conducting business.

Social Stability
Factors such as, the happiness of people in the country, uprisings, war,
gang violence, population growth were taken into consideration to
evaluate social stability of the selected countries. Chinas biggest
concern for social stability is the internal terrorist threats, and the
Xinjiang violence. The Tibet independence issues are also influencing

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the Chinese society in a very negative way. India has internal and
external terrorist as well. In Sri Lanka, citizens are not happy with the
new government that just established after the civil war. The major
concern for El Salvadors social stability is the gang violence, and
the crime and violence is threatening the social development. The
Philippines has a more stable society with no big threats compared to
other four countries.

Sourcing Guidelines
Sri Lanka, the Philippines, and El Salvador companies all have
acceptable sourcing guidelines that match with ECRUs, especially Sri
Lanka which known for green production. Chinas sourcing guideline
is not matching international standard and had several issues while
trading, but the latest news indicate the government is enforcing the
labor laws and trying to improve the current condition. India has child
labor issues but the overall sourcing guidelines control is not as bad as
China.

Textile Industry

industry is in a high growth condition. The supply for raw material in Sri
Lanka is not as strong as China and India, but they have many factories
and textile/ apparel industry is their biggest industry in the country.
El Salvador is specialized for producing knits and synthetic textile but
lack of raw materials and versatile for production. The Philippines was
rated to be lowest because of the textile and apparel industry, which
is not supported by the government and in a slow development pace
especially in infrastructure.

Trade Agreements
El Salvador is the only country that has a Free Trade Agreement with
U.S. The CAFTA-DR gives free trade if all parts of product are sourced
in a participating country. No quotas on imports to U.S. China has 12
FTA with other countries, like Australia, Peru, ASSEAN (south east Asian
countries) that could bring benefits for sourcing materials from other
countries with lower costs. India only has FTA with ASSEAN and
negotiation FTA with Canada and EU countries. Sri Lanka has FTA with
Pakistan and India. Philippines has no trade agreement could benefit
apparel and Textile industry

Among these five countries, China has the biggest strength in textile
industry with abundant raw materials like silk, cotton and wool. Besides,
the Chinese government has also invested large amounts of money
in purchasing high quality facilities with new technology. India is the
second strongest, it has abundant raw materials as well and the overall
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SUPPLIER ANALYSIS
Supplier Selection
Suppliers Highlights & Textile Industies
Country Selection
Ratings Spreadsheet

Countries with Top 3 Suppliers

India
Sri Lanka
Brandix Lanka Limited Pvt. Ltd.

Karle International Ltd.

Eam Maliban Textiles Pvt. Ltd.

El Salvador

Vexsal, S.A. De C.V.

exports as well as the countries over all economy. The manufacturing

industry has grown significantly in the past three years and now employs
600,000 workers. Sri Lanka benefits highly from its positioning at the

Eves Fashion

intersection of the major trade routes between Africa, South and East

Philippines
Reliance Apparel & Fashion Manufacturing, Inc.
Hamlin Industrial Corporation
Excellent Quality Apparel Inc.

Industrias Merlet S.A. de C.V.

Picacho S.A. DE C.V.

Sri Lankas apparel industry is the highest contributor to the Sri Lankan

Mira Exim, Ltd

Hirdaramani International
Export Pvt. Ltd.

SRI LANKA - SUPPLIERS

Asia, Europe and the Persian Gulf. The manufacturers and factories in
Sri Lanka have won numerous awards for their Green practices and
are setting the bar very high for other top manufacturers in countries
around the world. Sri Lanka manufactures apparel for companies
ranging from high end to low end, including Burberry, Fifth and Pacific

China

Companies, Ralph Lauren, Levi Strauss, Nike, Patagonia, Guess, Gap,

SC International Garment & Accessories Ltd.

Banana Republic and many more. (Panjiva)

Jiaxiang Jingle Fashion

Hangzhou Ourun Fashion Co. Ltd.
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above and beyond to make the customer, as well as their employees

1) Brandix

Lanka Limited Pvt. Ltd.

409 Galle Road, Colombo 3

happy is something that certainly resonates with Ecru. (Panjiva)

(brandix.com)

Sri Lanka
Phone: +94 11 4727222

2) Eam

Maliban Textiles Pvt. Ltd.

Fax: +94 11 2575485

261, Siri Dahmma, Mawaatha

Email: [email protected]

Colombo, Sri Lanka

www.brandix.com

Phone: +94 1268 6391

Specialization: Woven, Knitted Garments, Intimates and Activewear

Fax: +94 1269 9513

Email: [email protected]

Brandix is the largest apparel exporter in Sri Lanka. The company

www.maliban.com

opened its first plant in 1972 and they now operate 42 plants across

Specialization: Blouses, Shirts and Bottoms

the island and employ over 47,000 individuals. The company sends

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about 80 shipments a month and they also create their own buttons,

Eam Maliban Textiles opened 38 years ago in 1976. The factory

thread, fabric and hangers in house. Brandixs customers include Gap,

delivers anywhere from 20 to 200 shipments each month and produced

Old Navy, Lands End, Banana Republic, Lucy Active Wear and Diesel

a total of 1200 shipments in 2012. Their customers include Gap, Lands

USA. (Panjiva)

End Joseph A. Banks, Banana Republic, Burberry, Brooks Brother and

The company has very strong ties to creating green, environmentally

Ralph Lauren. The company is part of the Garments Without Guilt

friendly factories and have created the worlds first even LEED

Organization and adheres to a strict code of ethical guidelines and

Platinum rated manufacturing facility. Brandix values integrity,

practices to develop their products economically. (Panjiva)

teamwork, customer service, learning and development, ownership

and commitment. The companys values and commitment to the

and maintains sustainable levels of water, chemical and energy

environment match Ecrus company make up seamlessly. The

usage, practices safe waste disposal and continuously acts to improve

fact that this company has worked with well known brands and goes

their carbon footprint. Eam Maliban contributes much of its efforts

This manufacturer takes part in corporate social responsibility

95

to improving the country, community and lifestyles of its employees

but the facility mainly specializes in woven garments. Their customers

and offers them and their families many benefits outside of the work

include, Levis, Patagonia, The North Face, Guess, Fifth and Pacific

environment. (Panjiva)

Companies, Liz Claiborne, Ralph Lauren, Nike, Eddie Bauer and many

more. (Panjiva)

Eam Maliban is committed to producing world class products,

and again they would be a great manufacturer for us to work with.

The companys main focus has always been on fit, style and quality

They have supplied to top retailers, on the same level, quality and

and they have been called the pioneers in the apparel industry.

price points of our garments. But, they also

Hirdaramani has a high focus on corporate social responsibility and

have a strong social, economically and philanthropic commitment to

has become the first carbon neutral factory in Asia. They are constantly

their country, their community and their workers, which is very important

looking for new ways to cut back to improve their carbon footprint

to Ecru. (Panjiva) (maliban.com)

and help the environment. Hirdaramani also adheres to a strict ethical

code of conduct and standards. The company offers free

3) Hirdaramani

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International Export Pvt. Ltd.

healthcare to their employees and their families, they offer free training

Level 23, West Tower, World Trade Center

programs

Echelon Square, Colombo, Sri Lanka

and leadership opportunities for staff members and are constantly

Phone: +94 77 7744180

investing back into the community in local sports and schools to help

Fax: +94 11 2446135

further the country as a whole. (Panjiva)

Email: [email protected]

This manufacturer would be perfect for Ecru. Their amazing

www.hirdaramani.com

sustainability act and their motivation to cut back on emissions and

Specialization: Woven Garments

help save the environment is something Ecru is very passionate about

Hirdaramani International Export has been in business for 120 years

as well. Creating a business that has strong integrity and gives back

and operates 28 factories in Sri Lanka, Bangladesh and Vietnam. The Sri

to the community is what Ecru has made it our mission to do. Creating

Lankan Factory opened in 1954 and has grown to reach a capacity of

garments with such a sustainable and philanthropic manufacturer

1 million garments per month. The facility delivers about 250 shipments

like Hirdaramani is exactly the right partner to have on our mission.

each month. Their customers again range from high-end to lower end

(Panjiva) (hirdaramani.com)

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Why we selected these manufacturers:

When looking at these manufacturers it is clear that they are all very
concerned with the quality and craftsmanship of their garments as well
as their ethical standings in the workplace and with the environment.
Because both Sri Lanka and Ecru very invested in keeping the
environment safe, this country and its apparel facilities is a very strong
contenders for manufacturers Ecrus womens woven tops. Due to the
fact that not all of these manufacturers specialize in woven wear, we
have narrowed down the selection to the top three; Hirdaramani, Eam

EL SALVADOR - SUPPLIERS

Maliban and Trendy Wear.

El Salvador has 62 suppliers that manufacture apparel, 15 of which
manufacture womens apparel. Many of the manufacturers lack a
website and several show inactivity in recent years on Panjiva. Although
El Salvador produces both woven and knit apparel, the woven apparel
is predominantly for bottoms, childrens wear and mens button down
shirting while knit apparel has greater diversity and is produced in
much larger quantities.

1) Industrias Merlet S.A. de C.V.

Merlet was established in 1980 and specializes in knitwear, loungewear
and active-wear but also produces women, misses and juniors blouses
(Merlet). They are located at Industrias Merlet, S.A. de C.V. Calle

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100

Circunvalacin, Polgono A #3, Urbanizacin Industrial La Laguna,

established in 1992 with a mission to become the regional leader in

Antiguo Cuscatln, La Libertad, El Salvador, C.A. and can be found

quality dress shirt manufacturing. In 2006 Picacho merged with BVM

online at http://www.imerlet.com/. Merlets Vision is To become

which has their corporate headquarters in New York. Picachos

a leading international apparel company, providing integrated

website can be found at www.picacho.com.sv/home.htm and more

production capabilities, design and commercialization services with

information can be found at www.B-W-A.com under manufacturing.

the highest quality standards; thus satisfying our customers demands in

Picachos customers include Ben Watcher Associates which has

a prompt, efficient and reliable manner, which permits us to enhance

ordered over 900 shipments primarily of mens poplin shirts, Liz Claiborne,

and support the economic and social development of our associates

LL Bean, Dillards, DKNY and Izod. The majority of their orders have

and Country (Merlet). They are well developed in knit apparel

been cotton shirting although products include woven sport shirts

and capabilities include design, development, manufacturing and

and blouses, high end security uniforms, sleepwear and loungewear.

distribution of fabrics and apparel. Customers include Levi Strauss,

Although their orders are predominantly mens wear, they produce

Tailgate Clothing Co. and Carhartt. Merlet has experience with over

womens and childrens wear as well as their main goal is to be

1,754 shipments and is able to produce 400,000 units/week, while lead

flexible, to respond quickly and efficiently, making sure that your order

time varies between 2-12 weeks (Technical Profile).

is processed promptly and according to your exact specifications

Merlets values appear to be in line with that of Ecrus as they practice

(Products and Services). Their capacity is 350,000 units a month and

nondiscrimination and equal opportunities and value safety and

50,000 units per week specifically in woven shirts (Manufacturing

hygiene through the conduction of internal and external audits.

Specs). Lead times for garment production are 30 days from date of

They do not employ anyone under the age of 18 and abide by all

fabric received at the factory and garments are shipped FOB from El

government laws including hours of work, overtime compensation,

Salvador or LDP from BVM public warehouses in Miami Florida (http://

minimum wage and fringe benefits.

b-w-a.com/manufacturing-2/ ).

Production facilities include a sewing room, a cutting room, a

2) Picacho S.A. DE C.V.

trims warehouse, a fabric warehouse, a product development office

Picacho is a woven apparel manufacturing company located at

and an administrative building. The company strongly believes in in the

Km. 26.5 Carretera a Santa Ana La Libertad, El Salvador which was

well-being of their employees and invests in them through the offering

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of a healthcare clinic where employees and their families receive free

While El Salvador has been making advancements in the

medical attention, a community school for the children of employees

apparel and textile industry, it is knitwear and synthetic textiles that

ages 5 through 17, a free daycare open to the community as well as

they predominantly produce. Some woven apparel is made but it is

employees staffed by trained nannies, a cafeteria and bakery and

almost always for bottoms. In speaking with some of the manufacturing

a discount store in addition at having recreation facilities such as a

companies, it became very apparent that El Salvador is not the place

soccer field and volleyball court (Social Responsibility).

for ECRU to manufacture its woven tops as they could only direct me
to 2 companies that produce woven tops, and one of them only makes

3) Vexsal, S.A. De C.V.

woven shirts for men. If for some reason none of the other countries ECRU

Vexal is a manufacturing company which specializes in mens woven

is sourcing are a better option, I would recommend manufacturing

shirts. Of the 242 shipments that appear on Panjiva, 170 utilized cotton

with Picacho as they already work with several American companies

fabric, while 53 included woven shirts. Clients include Wal-Mart, Nu

and their values seem align with those of ECRU. I would suggest visiting

Image Fabrics, Paris Accessories Inc and Ben Elias Industries Corp.

the factory and talking to the owners and employees prior to making

Vexal is located at Carretera Panamericana Ote Km 15 San Martin and

any decision if ECRU does decide to manufacture in El Salvador.

although they lack a website, they were recommended to me by the

Vice President of Pro Dept, Ali Gitomer. In speaking to Roberto Bonilla,
I learned that Vexal has been in business for 22 years and produces
60,000 units/week with a 2.5 week lead time. The company values
their employees and only hires those ages 18 and above although
most employees hired are age 20 and above. Employees work 44 hour
weeks, earn minimum wage plus a bonus and are subsidized food. In
the same phone interview I learned that Vexel strives to be ecofriendly
and recycles bi-products and all cartons and gives left over fabric to
recycling companies for reuse.

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to produce ECRUs products. Not only these suppliers can make

womens woven tops but also their customers are notable and highend US retailers that provide similar products to ECRU. They provide
other services and capability that will help ECRU grow as a company
in the future.

Ecru looks for suppliers who have these following criteria:

INDIA - SUPPLIERS

1) Karle

International Ltd.

This supplier can produce any type of garments from basic to

fashion. It can also manufacture casual wear, activewear (seam
sealed jackets, rain gear, jogging suits, swim shorts), and refined

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India has almost 850 suppliers that manufacture and specialize in

collections. Products offered range from tops (shirts/blouses),

woven apparels. Women apparel industry in India is very competitive

bottoms (pants/skirts/crop), and outer wears (jackets/blazers/

and many companies contact and information are available online

overcoat) The supplier not only specializes in womenswear but also

through individual and trade websites. However, many companies

have abilities to make menswear and childrenswear as well. The

dont provide valid information about their customers, product

most important thing is that Karle International is able to produce

quality, and sourcing guidelines; some produce only knitted clothing,

women woven tops from cotton fabrics for ECRU. The factory locates

some dont have adequate services, and some dont even do

in Bangalore where its known for IT hub and woven apparel area.

businesses with the US companies. ECRU was able to find several

There are over 6500 employees working in four manufacturing

suppliers that meet the criteria in terms of ability in making quality

units. The company has annual turnover around $55 US million and

womens woven cotton tops, valid customers, services, production

manufacturing capacity of 450,000 units monthly. Its customers

capability, and management. Among the 5 suppliers we initially

consist of notable retailers such as Ann Taylor, J. Crew, Esprit, Express,

selected, we narrowed down to 3 potential suppliers that are able

Ralph Lauren, American Eagle Outfitters, Eddie Bauer, Nordstrom,

105

Superdry, and Coldwarer Creek. The supplier provides multiple

environment, as well as opposing child labor, forced labor, or any

services from design development, raw material sourcing, sampling,

unethical practices. All these qualities are relevant to Ecrus business

lab test, cutting, sewing, finishing, and washing. The company takes

practices and sourcing guidelines as well.

approximately 90 days for the lead time. The factories are audited
and approved by nominated auditor for Compliance and Social

3) Eve

Fashion

accountability. The company has participated in conservation of

The supplier is specialized in womens woven tops, readymade

Environment and prepare Environment policy, waste management

garments, and accessories. Its customers consist of notable retailers

& rain water harvesting. The supplier is highly committed to new

like Benetton, DW Shop and Primark. The company has annual

innovation and creativity. Its core values consist of excellent quality,

turnover around $3 US million and manufacturing capacity of 125,000

corporate social responsibility, transparency, and sustainability. The

units monthly with approximately 75-90 days lead time. The company

products are also very well constructed and professional made.

has adequate quality control such as fabric inspection, cutting

control, fabric process control, and In-house inspection. The factory is

2) Mira

Exim, Ltd

fully equipped with updated technology and modern manufacturing

The supplier are specialized in womens woven and knitted

facilities. The company also operates with integrity and has concern

clothing. Its customers consist of high-end retailers such as JP Boden,

over social environmental responsibility and sourcing guideline

Sugartown Worldwide Inc, Stella McCartney, Nicole Farhi, Bebe,

such as air cooled and well lit facilities, fire safety measures, water

Burberry, Diane Von Furstenberg. The supplier takes approximately 90

treatment plant, prohibition of child labor, first-aid facilities, recycling

to 120 days for the lead time. The supplier offers the highest standard

of resources, and energy efficient devices.

of quality and punctual delivery at competitive prices. Mira Exim

Ltd is also an ISO 9001:2008 and SA 8000:2008 certified organization
in which it follows international standards and regulations. The
company emphasizes its sourcing guideline which include ethical
business practices, sustainability concern, safe and healthy

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107

Producing 200,000 pieces per month, Reliance Apparel seems to be

the most qualified and skilled manufacturer in the Philippines regarding
woven apparel. Reliance has a commitment to pursue excellence
and always invests in new machinery, upgrades their technology,
and improves processes, systems, and procedures in order to be in
the forefront of the industry. Out of the five manufacturers researched
in the Philippines, Reliance would be the best facility to entrust with
creating our products.

PHILIPPINES - SUPPLIERS
1)

2)

Hamlin Industrial Corporation

Reliance Apparel & Fashion Manufacturing, Inc.

Hamlin offers various capabilities in product assortment and quality

for mens and womens contemporary sportswear. According to the
information available, they are able to produce about 50,000 items
per month. Hamlin has potential to be a good manufacturer for ECRUs
woven tops.

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109

3)

Excellent Quality Apparel Inc.

CHINA - SUPPLIERS
Excellent Quality Apparel promises a lot in its name, however very little
is delivered as far as available information. Although EQ conducts

1) Jiaxiang Jingle Fashion

business with reputable brands, the lack of information available is

disheartening and may not be viable for ECRU to do business with.

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111

Evaluation

Evaluation

The biggest advantage of Jiaxing Jingle is their high quality of

SC is not as experienced as other companies since it has only been in

garments, as well as their specialization in tops. The company has had

business for 8 years. However, they do specialize in shirts and have a

much experience supplying to high-end brands such as Burberry, CK

great deal of experience in working with American customers such as

and Guess. The only issue may potentially be the longer lead time.

Tommy Hilfiger. SC may be a very good choice for our manufacturing

Since we do not have sufficient experience with scheduling, the long

because they do accept small quantity orders. Furthermore, they

lead-time might pose a problem for the release of new collection.

provide a very in depth code of conduct matching very closely to

that of Ecrus.

2) SC International Garment & Accessories Ltd.

3) Hangzhou Ourun Fsshion Co. Ltd.

Evaluation
Ourun could be considered as a very internationalized company.
According to their company introduction, they are able to produce

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113

garments with consistent quality and in short lead-time in bulk. The

and quality control is view their previous customers. Companies

company has a significant amount of experience, especially for

and brands that have good reputation and abundant experience

international customers and language barriers will not pose problems

sourcing manufacture internationally are more likely to build

when conducting business. However, most of the products they make

relationship and conduct cooperation with reliable suppliers. In the

are for mass-market or fast fashion, the quality control could be a

chosen 3 suppliers, especially Jiaxing Jingle, they all have a strong

major issue.

customer list consists reputable brands like Burberry, Guess and

Adolfo Dominguez.
Besides the quality and sourcing guidelines of the suppliers we

In the initial process of selecting suppliers in China the first

also evaluated their capacity, lead-time, customers, experience,

factor we took into consideration are the sourcing guidelines from

focus, whether they could produce satisfactory level woven

the suppliers and their quality because these are the core value

garments. Based on these evaluations we selected Hangzhou Ourun

of our company. China has a very negative reputation in the past

Fashion Co., Ltd, because of its shortest lead-time and high efficiency

years following the government policy and obeying the sourcing

customer service; SC International Garments and Accessories Co.

guidelines. The sourcing guidelines established by companies in

Ltd. since its code of conduct highly matches with ECRUs, they are

China are lower than the international standard. Even Chinese

also very experienced in producing woven garments and they have

government is trying to reinforce related labor laws and policies,

work with Tommy Hilfiger for many years; Jiaxing Jingle is the best one

investigate suppliers sourcing guidelines is an important process for

among three suppliers not only because of their excellent customer

selection.

portfolio but also their well-organized company management system

Besides, as a high end store in NYC quality is our key competence

and great customer services.

especially for our basic items (woven tops), which need to be worn
year round by customers. In order to avoid loosing customers, we
need to select the suppliers that have strict quality control on their
produced products.
One of the strategies we used to evaluate their code of conduct

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115

SUPPLIER RANKINGS

116

In order to make a better selection for our final placement strategy,

The abilities of manufacturing are mostly based on the range and

we broke down the suppliers rating into 12 aspects to evaluate the 15

variety of their products. For example, companies like Jiaxing jingle,

suppliers, 3 from each country selected earlier. And as the total and

SC, Karle Int. Eam Maliban could produce both men and womens

average scores shows, Jiaxing Jingle from China, Karle Int. from India,

apparel, woven, knitting, tops, buttons and jeans..etc. In comparison

and Eam Maliban from Sri Lanka are the best suppliers among the 15

companies like Hirdaramani, Industrials Merlet, Vexsal have much

and where our final placement could be.

narrower focus, and some of them only provide knitting products,

117

which made them rated to be much lower than other companies.

also willing to build relationship with different kinds of new companies.

We evaluated the capacity of suppliers by view how many pieces they

Companies that tend to produce for mass market or lower level brand

produce monthly. Industrias Merlet and Hirdaramani have the largest

were rated lower since ECRU is considered as a high-end brand in the

capacity among 15 suppliers, Industrias Merlet produces around

market position.

1600,000 pieces per month and Hirdaramani produces 100,000 pieces

per month. Companies produce 100,000 pieces per month or lower

We evaluated the flexibility of a company by how fast the company

were rated to be comparatively lower.

could turn from one category of products to another. Other factors

we took into consideration to evaluate the flexibility is how many

We received price quotation from Jiaxing Jingle and Karle Int. and

production lines suppliers have and the variety of categories they

Eam Maliban, the price offered by these three suppliers are all higher

produce. Based on the information provided by the suppliers, lead-time

than our estimated costs. Karle Int. is the company gave the highest

for manufacturing generally ranges from 2 weeks to 120 days. Ourun

price offer, which almost doubled our estimation. Jiaxing Jingle and

has the highest score because they could make sample within 24 hrs

Eam Maliban provided comparatively reasonable costs and Jiaxing

and has the shortest lead-time compare to other suppliers. Vexsal was

Jingle is lower than Eam Maliban. From the communication process

rated to be the lowest since they need 120 days for manufacturing.

with the suppliers we evaluated and scored their customer services

based on their attitude of conducting business, whether they reply

The way we evaluate the level of management for suppliers based on

emails on time and the information provided by their customer service

how they organized the structures of their companies. Whether they

officers.

have sophisticated method to mange the producing chain and how

they organize the production teams. For example, companies like

Companies such as Jiaxing Jingle, SC, Karle Mira Exim, Eam Maliban,

Jiaxing Jingle, Karle Int. provide image and word description of how

Reliance have a long list in their customer portfolio and they have been

the process of production was organized and function as a big team.

worked with many reputable brands like Stella McCartney, Burberry,

Besides, they are also vertical integrated could provide convenience

Guess, Ralph Lauren..etc Besides, they are very versatile as well, they

for sourcing fabrics.

have established long term cooperation with reputable brands and

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119

We evaluated the suppliers quality based on the quality level of their

previous customers and how they organize the quality control team
and process. The companies offer other services after production are
evaluated to have higher score. And companies offer sewing and
cutting service only were scored to be lower. Jiaxing Jingle, and Karle
int. have their own mills and they have FOB destination, could cover
the freight, insurance and clear the customs for products importing to
U.S.

We compared companies sourcing guidelines to ECRUs and evaluate

COSTING

whether they match with ours. The companies have more strict control
of their sourcing guidelines and matches ECRUs code of conduct
best were rated to be highest. The companies do not provide code of
conduct or with very limited info about it were rated to be lower. We
evaluated the strategic outlook of companies based on the direction
they are tending to lead their companies to, whether the companies

Preliminary Costing
Initial Costs VS Preliminary Costs

are looking for growth in the future and how much their growth space
is.

120

121

PRELIMINARY COSTING

ECRU Initial
ECRUCost
Initial
Comparison
Cost Comparison
by Countries
by Countries
Sri LankaSri Lanka
Philippines
Philippines
El Salvador
El Salvador
Style Name
Style Name
Style # Style
Retail
# Price
RetailChina
PriceCost
China
Margin%
Cost Margin%
India Cost
IndiaMargin%
Cost
Margin%
Margin%Margin%
Margin%Margin%
Margin%Margin%
Cost
Cost
Cost
Cost
Cost
Cost

dsion)

Latte

Latte WS#3100 WS#3100

$
120.00
$
$120.00
4.19
$ 96.51%
4.19

96.51%
$ 4.16
$ 96.53%
4.16

96.53%
$ $ 4 .33
96.39%
4.33

96.39%
$ $ 4 .41
96.33%
4.41

96.33%
$ $ 3 .78
396.85%
.78

96.85%

urtney)

Barley

BarleyWS#3202 WS#3202
$
90.00
$
$ 90.00
4.27
$ 95.26%
4.27

95.26%
$ 4.23
$ 95.30%
4.23

95.30%
$ $ 4 .43
95.08%
4.43

95.08%
$ $ 4 .52
94.98%
4.52

94.98%
$ $ 3 .86
395.71%
.86

95.71%

ha)

Ivory

Ivory WS#3400 WS#3400

$
140.00
$
$140.00
4.92
$ 96.49%
4.92

96.49%
$ 4.86
$ 96.53%
4.86

96.53%
$ $ 5 .20
96.29%
5.20

96.29%
$ $ 5 .35
96.18%
5.35

96.18%
$ $ 4 .59
496.72%
.59

96.72%

dan)

Bisque

BisqueWS#3500 WS#3500
$
120.00
$
$120.00
4.35
$ 96.38%
4.35

96.38%
$ 4.30
$ 96.42%
4.30

96.42%
$ $ 4 .52
96.23%
4.52

96.23%
$ $ 4 .61
96.16%
4.61

96.16%
$ $ 3 .94
396.72%
.94

96.72%

Desert Sand
Desert Sand
WS#3600 WS#3600
$
180.00
$
$180.00
7.25
$ 95.97%
7.25

95.97%
$ 7.11
$ 96.05%
7.11

96.05%
$ $ 7 .74
95.70%
7.74

95.70%
$ $ 8 .04
95.53%
8.04

95.53%
$ $ 7 .04
796.09%
.04

96.09%

g)

Average Price
Average Price

Average Cost
Average Cost
Average Margin
Average Margin

130.00
$

130.00

5.04
$
$ $ 5 .24
5.24
$ $ 5 .39
5.39
$ $ 4 .64
4.64
$ 5.04
5.00
$ 5.00
$ 4.93
$ 4.93
96.12% 96.12%
96.16% 96.16%
96.21% 96.21%
95.97% 95.97%
95.86% 95.86%
96.43% 96.43%

In looking at initial costing figures for each country, El Salvador

countries. Overall, the cost ranged between $4.19 and $7.25 in China,

offered the cheapest average cost with an average margin of 96.43%.

$4.16 and 7.25 in India, $4.33 and $7.74 in Sri Lanka, $4.41 and 8.04

India and China were close behind with average costs of $4.93 and

in the Philippines and $3.78 and $7.04 in El Salvador. In all countries,

$5.00 respectively. With an average cost of $5.39 and an average

every look is expected to exceed an average margin of 94.98% when

margin of 95.86, the Philippines is by far the most costly country to

looking at initial cost comparisons.

manufacture in and has the lowest average margin between the

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123

INITIAL COSTS VS. PRELIMINARY COSTS

ECRUCost
Initial
V.SCost
Prelim Cost
ECRU Initial
V.SCost
Prelim
Style
Style #
Name

Style
Name

INITIAL INITIAL
Style
# Price
Retail Price
Retail
China

WS-3100
$
$
120.00
Barley
$
Barley
WS-3202 WS-3202
$
90.00
Ivory
$
Ivory
WS-3400 WS-3400
$
140.00
Bisque
$
Bisque
WS-3500 WS-3500
$
120.00
Sand WS-3600
$
Desert Sand Desert
WS-3600
$
180.00
$
$
130.00
Average Price
Average Price
$
$ Cost 4.96
Average
Average Initial
Cost Initial
$
$ Cost 5.62
Average
Average Prelim
CostPrelim
Latte
WS-3100

Latte

Average Margin
Average Margin

$ 120.00
4.19 $
$ 90.00
4.27 $
$ 140.00
4.92 $
$ 120.00
4.35 $
$ 180.00
7.25 $

130.00
$ 4.96
5.00 $
5.62

95.88% 95.88%

PRELIM PRELIM

China
Margin% Margin%
China
4.19
96.51% $ 96.51%
4.81
4.27
95.26% $ 95.26%
4.69
4.92
96.49% $ 96.49%
5.75
4.35
96.38% $ 96.38%
5.00
7.25
95.97% $ 95.97%
8.56

96.16%

$
5.76 $

96.16%

PRELIM PRELIM

INITIAL INITIAL

PRELIM PRELIM

El
El
El
China Margin%
Lanka Margin%
Lanka Margin%
Sri Lanka SriMargin%
Sri Lanka Sri
Margin% Margin%
Margin%
Margin%
Salvador
Salvador
Salvador
$
4.81
4.33
5.20
3.78
95.99% $ 95.99%
4.33 $
96.39% $ 96.39%
5.20 $
95.67% $ 95.67%
3.78 $
96.85% $ 96.85%
3.78
$
4.69
4.43
5.53
3.86
94.79% $ 94.79%
4.43 $
95.08% $ 95.08%
5.53 $
93.86% $ 93.86%
3.86 $
95.71% $ 95.71%
3.86
$
5.75
5.20
6.24
4.59
95.89% $ 95.89%
5.20 $
96.29% $ 96.29%
6.24 $
95.54% $ 95.54%
4.59 $
96.72% $ 96.72%
4.59
$
5.00
4.52
5.65
3.94
95.83% $ 95.83%
4.52 $
96.23% $ 96.23%
5.65 $
95.29% $ 95.29%
3.94 $
96.72% $ 96.72%
3.94
$
8.56
7.74
9.68
7.04
95.24% $ 95.24%
7.74 $
95.70% $ 95.70%
9.68 $
94.62% $ 94.62%
7.04 $
96.09% $ 96.09%
7.04

5.00
$

INITIAL INITIAL

5.24 $

5.24

5.76

95.57%

$
$

95.57%

95.97%

6.46 $

95.97%

4.64 $

4.64

6.46

95.03%

95.03%

El
Margin% Margin%
Salvador
$
3.78
96.85% 96.85%
$
3.86
95.71% 95.71%
$
4.59
96.72% 96.72%
$
3.94
96.72% 96.72%
$
7.04
96.09% 96.09%

96.43%

4.64 $

96.43%

4.64

96.43%

96.43%

After sending tech packs to potential suppliers, we were able to

cost which averages $4.64 per unit with an average margin of 96.43%.

compare ECRUs initial cost sheets with the manufactures preliminary

The average margin when looking at the preliminary costs of ECRUs

costs. Chinas average cost grew by 15.2%, bringing its average

top countries is 95.88%. In looking at the preliminary costs, we believe

cost up to $5.76 and its average margin down to 95.57%. Sri Lankas

that ECRU has great opportunity for profiting due to the high margin

average cost increased by 23.28% decreasing its average margin

predictions. The high margins also allow ECRU to have some wiggle

down to 95.03% and raising the average unit cost to $6.46. El Salvadors

room if it is necessary when conducting negotiations to settle on final

manufacturers did have yet to respond with their quote for ECRUs five

costs.

looks, and so the preliminary cost is merely a reflection of the initial

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125

STRATEGY DEVELOPMENT

When looking at Ecru Basics sales plan one can see that it is

broken down by garment and then by month. Our top selling woven

tops are the Ivory and the Desert Sand. Ecru feels that these two

and the holidays, making selling quantities higher between the months

garments are going to be the most versatile as they do have a collar

of May, June and July and then again during December. However, this

they can be worn to work, they can also be dressed down, and even

is our basics line and we anticipate a steady sales flow all year round.

layered to be worn in the colder months. We see these pieces to be at

Ecru has very high hopes for this Basics line and we feel that is it just

or over 100,000 units over the course of the first year. Our other pieces,

what our loyal customers are asking for, which is why we are projecting

while they are not the top sellers are still going to make up a large

large volumes of sale.

Of course, our garments are going to fluctuate with the seasons

portion of sales for the first year and range from 76,000 to 90,000 total
units for each look.
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127

suppliers offer customer service in up to 15 languages and could cover

CHINA

freight, insurance, and clear the customs for buyers. Since the reform
in 1979, the Chinese government started to reinforce laws and policies
to support international trading. The business etiquette is not hard to

In the country-ranking chart, China was ranked second among 5

countries and China is

known as worlds biggest manufacturer. For

a new company like Ecru choosing a sophisticated market to source

manufacturing is definitely a wise choice.
Overall, China has better socio-eco-political climate in general
compare to other countries, as well as business climate. China has
very flexible business etiquette and it is easy to conduct business.
China is the second biggest country in economic standing, after U.S.
In recent years it has tended to have a slower growing rate but it is still
in a positive shape.

However, the wage of employer is growing up as well which means

the cost of manufacturing in China will be drive up as well. From the

research, China has a tendency to switch from manufacturing bulk
products in low quality and low cost to high quality and the government
has invested large amounts of money to purchase upgraded
technologies and new facilities. This could benefits companies like us
aiming to source high quality products in the long run.
China is ranked No.1 for exporting especially apparel and textile,
which means China, is the one of the most experienced traders. Many

128

follow as well, and since most Chinese people are atheist religion and
suspicion issues would not need to be taken into consideration like
many other countries.
Chinas apparel and textile market size is ranked as NO.1 as
well. There are total of over 15,000 apparel manufacturers in China.
Because of this fierce competition Chinese manufacturers are more
likely to work hard on making deal and the high pressure from the
market could avoid them to overprice the manufacturing. China also
has the largest amount of workforce in the world. The majority of the
population in China is still at the working age, there are some concerns
for aging population in the future because of the one-child-policy,
however it will not influence the industry within five years.
China has and abundance of resources of raw materials. As we all
know, China produces the largest amount of silk every year and
they have wool, and cotton as well. The Chinese government has
signed 12 Free Trade Agreements including with Australia (where has
the best quality wools), Peru (well-known pima cotton productions),
and Thailand (ASSEAN) (worlds best silk). These could benefits buyers
to source high quality raw materials in a lower cost since the tariff is
eliminated. However, the inflation rate has a trend to going up, which

129

could lead the increase of cost for raw materials in the future.

reputable brands in their customers lists, such as Ralph Laruen, Burberry,

Another major concern for conducting business in China

Guess, Tommy Hilfiger etc. Jiaxing Jingle is much more flexible even they

is governments weak control over the labor laws and policies

have less employer but their capacity is much bigger than SC which

reinforcement. Manufacturers are generally lacking awareness of

means their manufacturing process might be more well organized

the importance of sourcing guidelines. In recent years, the Chinese

and efficient. Jiaxing Jingle has more production lines as well so that

government started to focus on improving the market conditions,

they could switch from one to another easier. Both SC and Jiaxing

however, Rome was not build in one day, Sourcing guidelines need to be

Jingle are vertical integrated, they have own mills could provide dying

ensured to match with our companys while selecting manufacturers.

services, and weave the fabrics the way customers wanted. This could

After we went through the elimination process we selected three most

highly reduce the lead-time and cost on sourcing fabrics and much

qualified suppliers for our companies. We analyzed the three suppliers

more convenient to the buyers.

in depth by focusing on their quality, previous customer lists, customer

In addition, Jiaxing Jingle is a full package manufacturer and could

service, sourcing guidelines and service offered. Since our company

provide FOB destination service, and will clear the customs for buyers.

believes in quality over quantity, the capacity of manufacturers is not

They also have excellent customer services. All emails were replied

our biggest concern and the selected manufacturers are all capable

in one day and their customer officer called us to ask for detail of

of manufacturing our products within an acceptable time period.

the order. They provide step-by-step guides for customers to know

Overall, the biggest strength for Ourun is their short lead-time. They

their manufacturers better large amount production pictures were

can manufacture the sample within 24 hours and finish the entire pack

shown on their factory introduction brochure. SC is not as good as

of merchandise with 20 days. However, compare to other two, it lack

Jiaxing Jingle in the aspects list above, however, SC has much shorter

of brands with high quality products in their customer list. Most of their

lead time than Jiaxing Jingle (Jiaxing Jingle need 70 days and SC only

previous customers were fast fashion brands such as forever 21, H&M

needs 30 days), and SCs sourcing guidelines is more detailed, and

and ZARA, so that their standard of quality might not meet with ours.

they took environment protection and intellectual property protection

Further more, the information they provided on sourcing guideline is

into consideration for their company.

very vague and does not contain much information.

SC and Jiaxing Jingle has very similar strengths, both of them have

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131

SRI LANKA

Sri Lankas textile and apparel industry generates the most

revenues for the country and for its government. The Sri Lankan
manufacturers are well renowned all over the world for their top
customer service, high quality garments and strong commitment to the
green manufacturing processes. At the end of 2013 it was announced
that Sri Lanka was on its way to becoming the top garment exporter in
the world in the next five years.

The manufacturing facilities in Sri Lanka have been evaluated

and ranked based on twelve different categories; abilities, capacity,

costs, customer service, customers, flexibility, lead time, management,
quality, service offered, strategic outlook and sourcing guidelines. It
was very important for Ecru to deeply look into each one of these
categories for potential manufacturing opportunities in Sri Lanka.
Each of these twelve categories had very strong ratings and Ecrus
top concerning categories such as quality, customer service, costs,
and current customers had very strong numbers and near perfect
scores making Eam Maliban the winner out of the top five proposed
Sri Lankan manufacturers.

Risks:
-

Long distance from the U.S.

Potential high lead times and freight costs

Country is in a lot of debt

Lower capacities than other larger countries are capable of

Typhoons and Monsoons 9 months out of the year

Benefits:
-

Over 100 years of apparel manufacturing experience as a country

Top green manufacturer ranking country in the world

Won LEED Platinum Rated Manufacturing award

Well known, high-end, reputable customer base

Apparel is the countrys main export and brings in the highest revenues

Updated technology

In depth code of ethics and conduct for factory workers

Takes pride in the quality and craftsmanship of their work

After much deliberation and ranking it has been determined

that Eam Maliban is the top apparel supplier in Sri Lanka with many
benefits and attributes outweighing its competitors. These benefits
include there high focus on quality craftsmanship, their corporate
social responsibility and their code of ethics describing and showing the
fair and upstanding treatment of their workers. Eam Maliban focuses
much of its efforts on the well being of its staff as well as practicing

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133

green manufacturing techniques all throughout the facility. It is no

EL SALVADOR

wonder that this facility has been ranked to high and is sought after
by many name brands clothiers.

Eam Maliban Textiles is known for their commitment to creating

world-class products. Customers include Gap, Lands End, Joseph A.

Banks, Banana Republic, Burberry, Brooks Brothers and Ralph Lauren.
Eam Maliban is also a major part of the Garments Without Guilt
Organization, which contains a group of manufacturers all adhering
to a strict code of ethics and conduct, who develop their products
economically and environmentally friendly. The customer and
company ethics align seamlessly with our luxury fashion brand, Ecru
giving us piece of mind knowing that Eam Maliban will provide us with
the quality and ethical standing that we are ultimately looking for.
Sri Lanka is a wonderful country to do business with; the people are
very friendly and welcoming and the manufacturing facilities are
very up to date and are able to produce a large variety of garments
and styles. There are many mills close by the Eam Maliban facility, so
outsourcing fabric will not be an issue. Even though Sri Lanka is quite
far from New York labor and freight prices are very competitive and
reasonable and Ecru feels very comfortable working with Sri Lanka on
their new Basics Collection

Manufacturers were selected based on many factors, including

their abilities, flexibility, lead-time, capacity, customer service, value

added services, management, quality, customers, their values and
how well they align to ECRUs sourcing guidelines, and their outlook
towards the future.

In evaluating manufacturers it was important to look at the range

of apparel that can be developed as well as the ability to product the

products we intend to make at the quality we find acceptable. As
a relationship develops, ECRU will benefit most from a manufacturer
that is flexible in its abilities and diverse so that ECRU can grow into new
product categories and lines. Capacities, lead-time and distance were
weighted against each other. The weighing of risks and benefits was
utilized to compare manufacturers. Looking at how long a company
has been in business and the clients that they work with will help to gain
insight into how experienced and knowledgeable a company is, how
secure their business is financially, the level of quality a manufacture
provides and the level of customer service offered. The location also
needs to be considered as different times of year bring different
weather patterns, some of which can cause devastating natural
disasters that could interrupt production if a factory is destroyed or if
evacuations are ordered.

134

135

-Risks

For El Salvador, Picacho ranked highest among the potential

El Salvadors climate is a risk as it is prone to earthquakes, volcanic

manufacturers. Although Picacho has a lower capacity, producing

activity, hurricanes, flooding and mud slides.

50,000 woven apparel units per week, its close proximity to the US

Slow economic growth

and 30 day lead-time from when fabrics are received at the factory

Corruption and gang violence, although no more risky than other countries

make up for the lower production abilities: as product will be received

Low capacity- 50,000 woven apparel units/week

more regularly and quicker than more distant manufacturers. Picacho

Uncertain political environment with a new left? Wing president

ranked highly in the category of meeting our sourcing guidelines.

The company puts such a great emphasis on the heath and safety

-Benefits

of its employees, providing them with a cafeteria that subsidizes its

Over 20 years experience

prices, recreational areas such as volleyball courts and soccer fields

Free trade with CAFTA-DR if materials are sourced for an included country.

to encourage teamwork and a healthy lifestyle. Picacho also offers

Short lead time- 30 days

employees and their family free, on-site medical care, free daycare

Close proximity to the US- quick transportation of goods

and free schooling for their children. In working with customers such

Same time zone, conversations can take place in real time

as Liz Claiborne, LL Bean, Dillards, DKNY and Izod, we can be assured

The US dollar is the official currency- no currency exchange fluctuations

that Picacho produces quality garments that also meet sourcing

Democratic

guidelines.

No terrorist threats

Apparel is the countys main export

to product an array of products, the machines utilized and the value

Well known customer base

they place on their employees were taken into consideration. Picacho

Takes pride in its employees

which was found in 1992 has been around for over two decades, which

Updated technology

has allowed them to develop specializations in the woven apparel

Versatile in product capabilities

industry. Picacho merged with the American company, BWA, in 2006

In evaluating future requirements, the companys history, ability

which benefited the companys growth by strengthening and creating

connections with mills in other parts of the world and by creating a

136

137

stronger link between El Salvador and the US. The company is also

THE FUTURE OF ECRU

experienced in utilizing CAFTA-DT to eliminate tariffs. Picacho has also

expanded into the knitwear sector, allowing them to create a broader
range of apparel styles and now manufactures clothing for men,
women and children. Should ECRU decide to start a menswear line or
an intimate line in the future, Picacho would be a great manufacturer
to work with as it is well known in both areas and allows ECRU room to
diversify its products all in one location. Picacho also puts great value
on their employees and in doing so; they are investing in their trained
workforce, which allows for fewer mistakes and greater productivity.

The future of Ecru is very bright, with many possibilities for growth

and expansion. The brand plans to extend into accessory design and
production in the following year, as well as leather goods. Our goal
is to create a lifestyle for the customer and a brand where she feels
comfortable wearing a look from head to toe, as well as mixing and
matching with other pieces from her wardrobe.

We are currently in the works with creating a specialty line for

Bergdorf Goodman, giving our company a chance to grown and

expand even further. Ecru has had much press and industry exposure
in magazine and articles that has contributed largely to the brands
success and it is our goal to continue as much as possible down that path.

With 2014 projected sales at over $59 Million, we hope to see

over $85 Million in the year 2015. Our company has great potential for
high amounts of growth. With 40% of sales online, we plan to keep all
of our sales channels cohesive and user friendly to bring in as many
customers and sales as possible. The most important thing for Ecru now
and moving into the future is to be true to our brand, while making
our customers happy and satisfying our companys strong ethical
standards.

138

139

CHINA SOURCING STRATEGY

For our final sourcing strategy, we decided to choose China to

be our number one supplier. In our country-ranking chart, China was

rated to be second and Jiaxing Jingle was rated to be the best among

SOURCING STRATEGY

15 suppliers.

Overall, Chinas Scio-eco-political climates are in comparatively

stable position and China also has a very positive business climate

#1

China
#2

especially in Apparel and Textile industry. The suppliers are well trained
for conducting international business. Manufacturing our products in
China could provide our company, Ecru, several benefits.

First of all, since 1995 China was ranked Number one in exporting

Sri Lanka

and China also has worlds largest apparel and textile industry. Ecru

#3

in foreign countries, by placing products in China Ecru could reduce

El Salvador

the risk of countering some unexpected accidents. Besides, Chinas

is a brand new company and lacks experience conducting business

business etiquette is very easy to follow which could avoid the failure
caused by cultural gap.

Placement Strategy
140

141

Second, China has abundant resources of raw materials and many

increase the cost of raw materials and the increase the increasing

suppliers have their own mills could customize the fabric for buyers,

labor cost could drive up the overall cost to be high which could

like Jiaxing Jingle where we decided to place our Ivory and Desert

directly lead to lower our margin.

Sand. We want to provide comfort for our customers and most of our
products are made in natural fibers, place the products in China could
avoid extra concerns about sourcing fabrics.

Second, even Chinese government is supporting the apparel industry,

however lack of transparency and intellectual protection could be
influence the industry in a very negative way. We need to be more

Besides, the price quotation offered by Jiaxing Jingle is acceptable

cautious for conducting business with suppliers and make sure they

and we could maintain average margin around 95% and they have also

will not make counterfeits for our products, which could bring bad

been worked with companies like Burberry, Guess, and BCBG, which

reputation for our company and influence our sales performance.

means the quality of products could be guaranteed as well. We place

our style WS#3400 (Ivory), and WS#3600 (Desert Sand) in China, Jiaxing
Jingle fashion. Since they provided the lowest price quotation, and
Ivory is planned to be our best seller with largest needed quantity our
cost could maximize the margin. WS#3600 has very similar construction
as WS#3400 could make the production easier if we place these two
styles in same supplier and could shorten the lead-time as well since
Jiaxing Jingles biggest weakness is their long lead-time.

One of the major risks for choosing China is the tendency of

increasing inflation rate and Chinese government has the control
over the currency. Even overall Chinas Scio-eco-political climate
is comparatively positive compare to other countries, there are still
some future risks need to be aware. The increasing inflation rate could

142

143

however they are still pause for some concern. Sri Lanka is a long

SRI LANKA SOURCING STRATEGY

distance for the United States and shipments take about 3 weeks to
reach our destination port in New York from Colombo. These lengthy
shipping times may result in high freight costs and loss of margin from

When looking further in depth at all that Sri Lanka has to offer it is

clear that they have the potential to be a top manufacturing country

for Ecru basics. Apparel manufacturing and export brings in the top
grossing revenues for Sri Lanka as a whole. It has also recently been
announced that Sri Lanka is on its way to becoming the number one
garment exporter and manufacturer in the world within the next five
years. Ecru sees a big opportunity with doing business with Sri Lanka
and is excited about the potential to work with top manufacturers in
the country.

We have ranked Sri Lanka in second place, just behind China

and just in front of El Salvador. While the country has so many positives
to offer our company they are still not as developed as China when
it comes to garment manufacturing, which results in us placing Sri
Lanka in second place. There are many positive attributes as well as
some limited risks that still may pose a concern when doing business.
However, the country has three very highly ranked manufacturing
facilities that Ecru would be happy to negotiate and work with.
The benefits of doing business in Sri Lanka certainly outweigh the risks,

144

the lengthy lead-time. Sri Lankas facilities also have lower capacities
than other much larger and more established countries like China.
The benefits of the country and of its manufacturing processes and
facilities are certainly very striking and cause the ranking for Sri Lanka
to be quite high. Overall the country has had over 100 year of apparel
manufacturing and export experience, which has paved the way for
them to become such strong members of the current manufacturing
market. The country creates garments for hundreds of well know, top
brand name and high-end clothiers around the world, giving Sri Lanka
a reputation for quality craftsmanship.

Sri Lanka as a whole takes great pride in the way that their

workers are treated and make their code of conducts very clear
to their employees as well as any new clients. The treatment of
employees is all very ethical and safe, wages are fair, facilities are
clean and up to date and code, there are no children employed and
the health, safety and education of Sri Lanka factory workers families
is of the utmost concern as well. Sri Lanka is also the leader in green
and environmental manufacturing practices in the world. They have
paved the way for other facilities to follow in their footsteps and have

145

won numerous awards for the never-ending efforts to help save the

EL SALVADOR SOURCING STRATEGY

planet and the earth.

Although ranked number two, Sri Lanka is certainly a country that

Ecru would be happy to do business with. Their values and beliefs on

how business should be done are synonymous with that of Ecrus. Ecru
values ethical manufacturing practices and treatment of employees,
keeping the environment safe, and high quality garments above
all else, and that is just what Sri Lanka spends their time and energy
towards as well.

In evaluating El Salvador, it became apparent that El Salvador

has a lot to offer ECRU as a country to manufacture in. El Salvador has

one of the most developed apparel industry in Latin America and is
known for its synthetic branch and knitting capabilities, in addition,
apparel is the countrys top export. El Salvador is also in close proximity
to the US, shortening transportation time and also allowing for real
time communication and updates. One of the greatest benefits from
working with El Salvador is being able to enjoy duty free importing
into the US as long as materials are sourced from the surrounding
countries that are a part of CAFTA-DR. El Salvador has also adopted
the US dollar as its own currency eliminating the need to worry about
currency exchange.

We ranked El Salvador in third place, behind China and Sri Lanka.

Like Sri Lanka, El Salvador is a small country and not as developed as

China when it comes to manufacturing; however, El Salvador does offer
many benefits and high quality manufacturing facilities. Unfortunately
many of the manufacturers specialize in knit wear rather than woven
apparel, but a select few do exist and are highly reputable.

146

147

Certain risks and downsides do come with manufacturing in El

Salvador. The climate is risky as the country has a long rainy season
making it vulnerable to hurricanes, flash floods, and mudslides. Due
to its location earthquakes and volcanic activity also occur. Natural
disasters have proven devastating in the past and have caused large
scale evacuations and damage. Although El Salvadors economy
remains in the positive, it has been growing at a decreased rate.
There are issues with corruption, laws not being strictly enforced, gang
violence and drug trafficking, but these things occur in the other
countries we sourced as well, although some countries are not as open
about it. There is also some politically uncertainty surrounding the new
president that will take office next month as he is very left wing and
has been affiliated with Cuban spies.

In choosing El Salvadors manufacturer, Picacho has over 20

years experience with the woven apparel industry and a short lead
time of only 30 days. In addition, El Salvadors close proximity to the
US allows for quick transportation of goods. Picacho has a strong
customer base, versatile product capabilities and state of the art
technology. The company also and puts great emphasis on quality
as well as on its employees well-being. Picacho also has introduced
knitting capabilities which allows for new product categories for ECRU
to grow into in the future.

148

149

PLACEMENT STRATEGY

ECRU
FINAL PLACEMENT
& MARGINS
ECRU FINAL
PLACEMENT
& MARGINS
China

China

Sri Lanka

Sri Lanka

El Salvador El Salvador

IvoryDesert
#WS-3600
Desert
SandLatte#WS-3100
Latte
#WS-3500
Bisque Barley
#WS-3202
Barley Ivory#WS-3400 Ivory
#WS-3400 Ivory#WS-3400
#WS-3600
Sand
#WS-3100
#WS-3500
Bisque
#WS-3202
#WS-3400

450,000
Total Units
Total Units
Retail Price perRetail
unit Price per unit
Cost per Unit Cost per Unit
Margin
Margin
%
%
$
59,040,000
$
Total Purchase Total Purchase
$
2,073,360
$
total Margins total Margins
$
56,966,640
Total Retail

Total$Retail

%
Avg Retail
Avg Retail
$
$
Avg Purchase Avg Purchase
$
Avg Margins Avg Margins
%

Avg Margins % Avg Margins %

$
Avg Cost/Unit Avg Cost/Unit

150

96.49%
$
131.20
$
4.61
$
126.59

96.49%

4.53$

$
$
$
$
$

450,000
55,000
$
140.00
$
4.52
$
135.48
96.77%
59,040,000
$
7,700,000.00
2,073,360
$
248,600.00

$
$ 56,966,640
7,451,400

96.49%
96.77%
131.20
4.61
126.59

55,000
94,000
94,000
76,000
140.00 $ 180.00 $
180.00
120.00$
$
4.52 $ 6.95 $
6.953.96$
$
135.48 $ 173.05 $
173.05
$
116.04$
96.77%
96.14%
96.14%
96.70%
7,700,000.00
$
16,920,000.00
$
16,920,000.00
$ 9,120,000.00$
$
$ 248,600.00 653,300.00
$ 653,300.00
300,960.00$

76,000
85,000 90,000
85,000
120.00
$ $
120.00 $90.00
$
120.00
3.96 4.00
$ $
4.00 $ 3.55
$
116.04
$ $
116.00 $86.45
$
116.00
96.70%
96.67% 96.06%
96.67%
9,120,000.00
$ 10,200,000.00
$
$ 10,200,000.00
$
8,100,000.00
$ $ 340,000.00
$
$ 300,960.00
340,000.00
319,500.00

90,000
50,000
50,000
90.00
$
140.00
$
140.00
3.55 4.22
$
4.22
$
86.45
$
135.78
$
135.78
96.06%
96.99%
96.99%
8,100,000.00
$ 7,000,000.00
$ 7,000,000.00
$
211,000.00
$ 319,500.00
211,000.00

7,451,400 16,266,700
$

96.77%

96.14%

$
$ 16,266,700
8,819,040

96.14%
96.70%

8,819,040
$
9,860,000

96.70%
96.67%

9,860,0007,780,500
$

96.67% 96.06%

7,780,500
$
6,789,000

96.06%
96.99%

6,789,000

96.99%

96.49%

4.53

Ecru has decided to place their five woven womens tops

Two looks will be placed in China at the start of the manufacturing

in manufacturing facilities in China, Sri Lanka and El Salvador. The

process. These looks are both collared button up shirts. Ecru feels that

garments are separated into each of these countries based on style,

china is the best country to manufacture these garments as the country

technicalities and quantities. We have also looked at the strengths

is well established in the industry and is highly capable to creating a

and weaknesses from each country to better create a final placement

well fitting, quality garment. We will be placing the full order of 94,000

plan for our products.

units of Desert Sand and half of the Ivory order at 55,000 units. We will

151

be splitting up the Ivory piece because it is anticipated to be one of

our top sellers and we do not want to risk any malfunctions by placing
all of the order at one facility.

Two pieces will also be manufactured in Sri Lanka. Sri Lankas

manufacturing facilities have very high-end clientele and we feel that

it is the perfect place for Ecru to make their more fashion forward and
technologically made tops; Latte and Bisque. 76,000 units of the Latte
will be manufactured and 85,000 units of Bisque will be manufactured.
These pieces are going to be much more suited for a client who is
looking for a piece that is a little more fashion forward and out of the

COMPARISON OF FINAL COSTING

box, which is why Ecru does not see the highest sales numbers for these
looks.

Finally in El Salvador we will be placing the second half of the

order for Ivory as well as our take on the basic tee, the Barley. 90,000
units of Barley will be manufactured as well as 50,000 units for Ivory.

Preliminary Costing vs.

Final Negotiatiated Prices

These two pieces are anticipated to be our top sellers due to their
silhouette as well as their functionality in a clients wardrobe. We will be
placing these looks in El Salvador because of the ability for incredibly

Preliminary Margins vs.

Archieved Margins

short lead-times of under two weeks. This may be very helpful for us as
orders grow and Ecru needs new pieces within a short amount of time.

Our final average cost per unit comes out to be $4.53. The

average retail price between our five luxury womens tops is $131.20.
The average purchase price for each unit is $4.61. Ecru is very happy
to have such high margins at over 96%, which equates to $126.59.

152

153

INITIAL COST vs PRELIMINARY COST vs FINAL COST

ECRU Initial Cost

ECRU
vs Prelim
InitialCost
CostvsvsFinal
Prelim
Cost
Cost vs Final Cost
INITIAL

INITIAL
PRELIM

PRELIM
FINAL

FINAL
INITIAL

INITIALPRELIM

PRELIMFINAL

FINAL INITIAL

INITIAL PRELIM

PRELIM FINAL

FINAL

Retail
China Retail
ChinaChina
China
China
China
Sri Lanka
Sri Lanka Sri Lanka
Sri Lanka
Sri Lanka
Sri LankaEl Salvador
El SalvadorEl Salvador
El Salvador
El Salvador Margin%
El Salvador
Margin%
Margin%
Margin%
Margin%
Margin%
Margin%Margin%
Margin%Margin%
Margin%
Margin%
Margin% Margin%
Margin% Margin%
Margin%
Style
# Name
Style #
Style Name
Style
Price
Cost Price
Cost Cost
Cost Cost
Cost Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
$4.81 3.83 95.99% 96.81%
$ $ 3.83
$
3.96
$
$3.78
3.78
96.85%
$
3.78
96.85%
Latte
WS-3100
Latte
$ 120.00
WS-3100
$
4.19
$ 120.00
96.51%$
4.19
$
4.81 96.51%95.99% $
4.33 96.81% 96.39%
$
4.33
$
96.39%
5.20
95.67%
$
5.20
95.67%
96.70%
$3.96
3.78
96.70% $96.85%
96.85%
$
3.45
97.13%
$
3.45
$4.69 3.93 94.79% 95.63%
$ $ 3.93
$
4.08
$
$3.86
3.86
95.71%
$
3.86
95.71%
Barley
WS-3202
Barley $
90.00
WS-3202
$
4.27
$
90.00
95.26%$
4.27
$
4.69 95.26%94.79% $
4.43 95.63% 95.08%
$
4.43
$
95.08%
5.53
93.86%
$
5.53
93.86%
95.47%
$4.08
3.86
95.47% $95.71%
95.71%
$
3.55
96.06%
$
3.55
$5.75 4.52 95.89% 96.77%
$ $ 4.52
$
4.78
$
$4.59
4.59
96.72%
$
4.59
96.72%
Ivory
WS-3400
Ivory $ 140.00
WS-3400
$
4.92
$ 140.00
96.49%$
4.92
$
5.75 96.49%95.89% $
5.20 96.77% 96.29%
$
5.20
$
96.29%
6.24
95.54%
$
6.24
95.54%
96.59%
$4.78
4.59
96.59% $96.72%
96.72%
$
4.22
96.99%
$
4.22
$5.00 3.85 95.83% 96.79%
$ $ 3.85
$
4.00
$
$3.94
3.94
96.72%
$
3.94
96.72%
Bisque
WS-3500
Bisque $ 120.00
WS-3500
$
4.35
$ 120.00
96.38%$
4.35
$
5.00 96.38%95.83% $
4.52 96.79% 96.23%
$
4.52
$
96.23%
5.65
95.29%
$
5.65
95.29%
96.67%
$4.00
3.94
96.67% $96.72%
96.72%
$
3.49
97.09%
$
3.49
$8.56 6.95 95.24% 96.14%
$ $ 6.95
$
7.42
$
Desert Sand
WS-3600
Desert Sand
$ 180.00
WS-3600
$
7.25
$ 180.00
95.97%$
7.25
$
8.56 95.97%95.24% $
7.74 96.14% 95.70%
$
7.74
$
95.70%
9.68
94.62%
$
9.68
94.62%
95.88%
$7.42
7.04
95.88% $96.09%
$7.04
96.09%
7.04
96.09%
$
7.04
$
96.09%
6.75
96.25%
$
6.75
$ 130.00
$ 130.00
Average Price
Average
Price
$ Initial
4.96 Cost
$
4.96 $
$
5.00
5.00
$
5.24
$
5.24
$
4.64
$
4.64
Average Initial Cost Average
$ Prelim
5.62 Cost
$
5.62
$
5.76
$
5.76
$
6.46
$
6.46
$
4.64
$
4.64
Average Prelim Cost Average
$
4.85
$
4.85
$
4.59Cost
$
4.59
$
4.62
$
4.62
$ 4.29

$ 4.29

Average Final Cost Average
Final
Average Margin
Average
Margin
96.18%
96.18%
96.16%
96.16%
95.57%
95.57%
96.45%
96.45% 95.97%
95.97% 95.03%
95.03%96.27%
96.27%
96.43%
96.43%
96.43%
96.43% 96.70%

Margin%
97.13%
96.06%
96.99%
97.09%
96.25%

96.70%

All the prices quoted from suppliers are all higher than our estimation

and most of them squeezed the margins to be approximately 1% lower

Barley WS-3202

than our planned cost. The final negotiated prices are actually lower

Barley is planned to be one of our best sellers, because of its simple

than we expected and drive up our margins about 0.5% higher for all

silhouette and could be easily accepted by majority. It has short sleeves

five styles.

and could be easily wear year round. Since Barley was planned to be
sale in large amount we planned our margin per unit to be lower so

Latte WS-3100

that we could achieve the higher margin by selling larger amount.

Latte is one of our basic items with high neck and were planned to

Besides, in order to turn out the products faster we will manufacture

be comparatively sale in a lower volume since it might not be widely

the Barley in El Salvador for the shortest lead-time. The prelim price

accepted by majority. In both prelim cost and final cost, Latte has the

were planned to be $3.86 with 95.71% and the final negotiated price

highest margin among 5 styles. The Latte will be manufactured in Sri

is $3.55 with 96.06% margin.

Lanka and the quoted price is $5.20 per unit, with 95.67% margin, and

Ivory WS-3400

the final negotiated price is $3.96 with 96.70% margin.

154

155

Ivory is considered as another item would sale year round, and it has
the largest planned quantity, so we split the amount for manufacturing
into two countries. The unit price for Ivory in China was quoted to be
$5.75 with 95.89% margin, and negotiated down to $4.52 with 96.77%
margin.

Bisque WS-3500
Bisque is similar to latte, and was planned to be a more fashion items
with lower quantity and will be manufactured in Sri Lanka. The quoted
price for Bisque is $5.65 with 95.29% margin, and the final negotiated
price was lower to $4.00 with 96.67%

CONCLUSION

Desert Sand WS-3600

Desert Sand is a button up shirt and has similar construction techniques
to Ivory and it does not need to be turn out as soon as the best sellers
so that we decided to place Desert Sand in China for manufacturing.
The quoted price from China for Desert Sand is $8.56with 95.24% and
negotiated to$6.95 with 96.14%.

156

157

During the final strategy process we eliminated India and the

away from their standard big name companies by adding luxury,

Philippines from our potential manufacturing locations. Each of these

fashionable garments from a small privately owned brand to their

countries presented risks that were very difficult for Ecru to overlook in

portfolio. Both Ecru and the manufacturers in China, Sri Lanka and

the process of manufacturing the Ecru Basics Collection. These factors

El Salvador have the ability to benefit from this new partnership and

overall for both countries include unstable government and economic

grow with Ecru as it expands into new products and lines in the future.

positioning, the restricted size of the textile and apparel industry, high
manufacturing costs, low quality and craftsmanship and unethical
work and labor environments.

Due to the fact that Ecru focuses highly on their ethics, code

of conduct, craftsmanship and quality as well as the safety of the

environment, we have chosen to focus our manufacturing in three
potential countries, China, Sri Lanka and El Salvador. Prices are
very strong and competitive in these three countries and Ecru feels
comfortable working with each of them to negotiate a fair deal that
will benefit both Ecru and the manufacturer.

Our products will be placed in each of these three countries

to minimize our risks and to maximize our opportunity to protect our

products if something were to happen to the facility. This not only
benefits us but it also gives Ecru a chance to learn more about each of
these factories and potentially increase our quantities and ultimately
give the facilities more business in the years to come.
These manufacturers are looking to expand their portfolios and branch

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APPENDIX

Cost Sheets
Tech Packs
Sourcing Guidelines
Supplier Emails
Bibliography

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COST SHEETS

Style 1 - Latte
Style 2 - Barley
Style 3 - Ivory
Style 4 - Bisque
Style 5 - Desert Sand

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STYLE 1 - CHINA

162

STYLE 1 - EL SALVADOR

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STYLE 1 - INDIA

164

STYLE 1 - PHILIPPINES

165

STYLE 1 - SRI LANKA

166

STYLE 2 - CHINA

167

STYLE 2 - EL SALVADOR

168

STYLE 2 - INDIA

169

STYLE 2 - PHILIPPINES

170

STYLE 2 - SRI LANKA

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STYLE 3 - CHINA

172

STYLE 3 - EL SALVADOR

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STYLE 3 - INDIA

174

STYLE 3 - PHILIPPINES

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STYLE 3 - SRI LANKA

176

STYLE 4 - CHINA

177

STYLE 4 - EL SALVADOR

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STYLE 4 - INDIA

179

STYLE 4 - PHILIPPINES

180

STYLE 4 - SRI LANKA

181

STYLE 5- CHINA

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STYLE 5 - EL SALVADOR

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STYLE 5 - INDIA

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STYLE 5 - PHILIPPINES

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STYLE 5- SRI LANKA

TECH PACKS

Style 1 - Latte
Style 2 - Barley
Style 3 - Ivory
Style 4 - Bisque
Style 5 - Desert Sand

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STYLE

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STYLE

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STYLE

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STYLE

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STYLE

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CODE OF CONDUCT
This Code of Conduct is applicable to all supplier, their
subcontractors and other business partners that conduct business
with Ecru.

We require that parties which wish to conduct business with Ecru sign
a completed vendor compliance agreement to acknowledge and
abide by our Code of Conduct.

It is the responsibility of Ecrus suppliers and other business partners to

inform any subcontractors about Ecrus Code of Conduct to ensure
that the requirements are abided by in every factory and workplace
that contributes to Ecrus merchandise.

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1. Legal Requirements

3.2 Fire Safety

1.1 All of Ecrus suppliers and business partners must abide national

Ecru requires emergency exits be well lit and clearly marked on

laws in all activities in the country of operation.

every floor. All employees must receive training in regards to how to

respond to fire or other cases of emergency. Fire extinguishers must

1.2 Ecrus requirements may go beyond the national laws

be available for emergency use and their location made known

requirements

during training exercises.

2. Child Labor

3.3 Accidents and First Aid

Ecru does not permit child labor and no person under the age of 16

First aid equipment must be available and its location know to all

shall be employed even if the legal age for employment is less than

employees.Textiles). The growing number of young population in

16 years of age.

India implies the potential and active workforce in the world which
looks positive for outsourcing for skilled and talented labors; more

3. Health and Safety

than 70% of population will be working age in 2025.

3.1 Working Environment

4. Workers Rights

Suppliers must adhere to all laws regarding health and safety.

4.1 Basic Rights

Suppliers shall provide workers with a clean, safe and healthy work
environment. No exposed wires will be permitted.

4.1.1 All workers are to be treated with respect and dignity, free from
humiliation, corporal punishment or abuse of any kind.

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4.1.2 No discrimination of workers based on sexual orientation,

4.3.2 Each employee is allotted a 30 minute lunch break and 2 15

gender, religion, political opinion, race, ethnic origin, disability,

minute breaks each day.

pregnancy or age will be tolerated. Employees have the opportunity

to anonymously report noncompliance with the Code of Conduct.

4.3.3 Ecru requires that all its business partners and Suppliers
communicate the Code of Conduct with employees and supervisors

4.1.3 Forced labor is prohibited as is the use of illegal and prison labor.

in their native language.

4.1.4 All employees have the right to organize and join associations.

5. Housing Conditions

4.2 Wages

If employee housing facilities are provided by a company the health

and safety requirements under clause 3 must be followed.

Wages are to reflect the experience, qualifications and performance

of an employee and are to be paid regularly and on time. Each

6. Environment

employee will be paid at least legal minimum wages as determined

by local government.

Suppliers must comply with all laws regarding the environment in their
country of location, this includes having any relevant environmental

4.3 Working Hours

permits and licenses for its operations.

4.3.1 Ordinary working hours shall not exceed the legal limit and shall

6.1 Water Management

never exceed 48 hours per week. Overtime must be both voluntary

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and compensated and hours shall not exceed the legal limit and

Wastewater from wet processes must be treated before disposal and

shall never surpass 8 hours per week.

meet requirements of local legislation when it comes to quality.

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6.2 Waste Management

7.2.2 We reserve the right to appoint an independent third party to

conduct audits in order to evaluate compliance with Ecrus Code of

Waste and hazardous materials must be disposed of in accordance

Conduct.

with the law of the country in which the company operates.

7.2.3 Suppliers may not coach employees on how to answer or
7. Monitoring and Enforcement

respond to inquiries from Ecru representatives during audits.

7.1 Transparency

7.3 Corrective Action

Ecru expects the companies it works with to keep accurate records

Failure or unwillingness to correct violations of Ecrus Code of

so that the company may be accurately assessed without the

Conduct and local law with in an allotted amount of time would

falsification of documents. We expect all business partners and

damage the suppliers relationship with Ecru and could lead to

suppliers to be transparent and to not purposefully mislead auditors.

reduced business or termination of business between the two parties.

7.2 Monitoring

7.2.1 Ecru will schedule 2 audits per year and reserves the right to
make unannounced visits for purposes of auditing to all parties
producing goods or services for Ecru.

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SUPPLIER EMAILS & CALLS

SRI LANKA

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EL SALVADOR

222

INDIA

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PHILIPPINES

CHINA

*None of the suppliers replied the emails, but we managed to call them.

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"Sri Lanka: Introduction." GlobalEDGE: Your Source for Global Business

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"Trendywear Pvt Ltd.", 459/1, Kandy Road, Ranmuthugala, Kadawatha, Sri Lanka.

Ramaya Holdings, 2014. Web. 11 Apr. 2014.
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ZIM. "Overview." ZIM. Cargo Services, 2014. Web. 25 Apr. 2014.

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BIBLIOGRAPHY - El Salvador
Melara, Gabrela. "Textiles recorded 44% of Salvadoran export industry." La Prensa Grafica.
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CAMTEX: Chamber of the Textile, Clothing and Free Zones of El Salvador. CAMTEX. Web. 12
Apr. 2014. http://camtex.com.sv/.
Coleman, Denise Youngblood. El Salvador Country Review (2013) Business Source Premier.
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Country Intelligence Report: El Salvador. El Salvador Country Monitor (2014): 1-17. Business
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Dutriz Hermanos SA de CV , 10 Apr. 2014. Web. 9 May 2014.

<http://www.laprensagrafica.com/2014/04/10/textiles-registraron-el-44-de-lasexportaciones-salvadoreas-de-la-industria>.
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