As a sector which has developed within the preference dependent framework, the textiles and garments export-manufacturing industry in Mauritius has been under increasing pressure from the forces of globalisation and liberalisation. The operational word for any plan to create a future for the textiles and garments industry in Mauritius will be competitiveness. The definition we attach to competitiveness is that it is the ability to convince customers to choose a particular source of supply over competing alternatives on a sustainable basis. To achieve such competitiveness, we will propose a business model based on the benefits of focus, concentration and networking.

In a small economy far from its main markets one of the main obstacles to development of the industry is co-ordination and informational failures. Explicit industrial policy is needed to overcome such constraints. To confront the new conditions created by the end of the Multi-Fibre Agreement and the emergence of countries such as China and India on the global market, we should position ourselves as a differentiated sourcing base. This can be achieved by a process of up-gradation of the industry and by re-positioning it in the Global Commodity Chain (GCC) in the more knowledge-information intensive value segment of the global market.

The share of total expenditure of households in developed countries on sports and leisure activities has been constantly increasing over the past decades, even in times of otherwise difficult economic conditions generally. This trend is not fashion related and is very unlikely to change in the foreseeable future since it is steeped in profound sociological transformations related to the lifestyles of families, with spending power, in developed countries.

Recent observations have shown that the spending behavior in the markets for sports and leisure products are less price sensitive and more responsive to innovation and research. These are the market characteristics which most lend themselves to the development of a niche market approach and would therefore fit in our general strategic approach for repositioning Mauritius in the GCC. On the supply side, Mauritius is well positioned to take advantage of this market because of its existing vertically integrated production process in this area.

● <B>Mauritius as a source of supply in the global market</B>

Mauritius’ reputation as a source of supply in the global market has been seriously dented by the recent mass migration of some of the most important companies, which had been established in the country for a long time. This can prove to be damaging if no action is taken to revamp the country’s image as a reliable source of supply. Among the criteria, which are important for buyers in the selection of sourcing countries, are sea and air connections, (tele)communications infrastructure and levels of political stability and, more and more often, the human rights situation.

While Mauritius will score well on all these points, the principal concern of buyers still remains the capacities of individual suppliers. If one or several potentially interesting suppliers are present, then this makes a country interesting. This is why we are proposing the sort of specialisation that will position Mauritius as an important source of supply and maintain its reputation as an important player in the global market for textiles and garments.

The critical value proposition which we are making is about turning what is viewed as an intrinsic weakness – the small size of Mauritius – into a strength. For this to happen, government will have an important role to play in shaping the context and institutional structure surrounding companies and in creating an environment that stimulates companies to gain competitive advantage.

In this context the concepts of networking and clustering are fundamental to the extent that they provide the mechanism through which a number of small and medium enterprises can each leverage the economies of scale resulting from the sharing of information and knowledge. In Mauritius, the emphasis on clustering and networking would not be so much geographical or spatial homogeneity but rather the institutional mechanisms and policy framework which will allow the sharing of knowledge about market trends and technology innovations.

●<B> A systematic up-gradation of the processes and products</B>

Gary Gereffi first developed the concept of GCC in 1994 in his seminal work on the geographical distribution of the global garments manufacturing industry. In this approach clothing is seen as a sector dominated by a governance structure in which profits and control are concentrated in the functions of marketing, distribution and retailing, while production is globally outsourced on the basis of a buyer driven network of independent manufacturers, located mainly in developing countries.

Gereffi observes that while, initially outsourcing was simply cut-and-sew work from the United State to manufacturers in Hong Kong, Taiwan and Korea, manufacturers in these countries later set up their own networks of producers, distributed among other developing countries including Mauritius. Success of exports from Mauritius by these mostly Hong Kong based companies, depended on the presence of a particular mode of operations.

This was characterised by scale, specialisation in long runs of a narrow and basic product range and specialisation in an equally narrow range of functional activities: a description which incontestably captures the activities of the largest foreign manufacturers who had invested in Mauritius and have for the most part abandoned the country with the quasi disappearance of preferential market access and the market liberalisation following the end of the Multi-Fibre Agreement.

It is on the basis of the above that we can safely argue that the “worst is behind us” in terms of the departures of large manufacturing units. Those for whom Mauritius no longer fits have gone to look for other manufacturing bases more appropriate to their requirements. The way forward for the textiles and garments industry will depend on our ability to reposition the textile and clothing industry of Mauritius in the global commodity chain through a systematic up-gradation of the manufacturing processes and products.

The companies which have chosen to stay on invest in modernisation, restructure their processes and are gearing themselves for such a totally new business model based on competitive market penetration in different market segments with more value added products and capacity to meet the requirements of the new market conditions, such as short lead time and lean retailing.

In Mauritius, it would seem that the presence of an established entrepreneurial community, together with a number of favourable social and cultural conditions have facilitated a rapid movement up the learning curve and provided the right conditions for such an up-gradation to happen.

We propose that Mauritius should position itself to be a key world player in beachwear and fashion leisurewear. Following many interviews with operators, we are convinced that there are many synergies which can be realised between the two lines of products along the supply chain. Given these synergies, this will also create the critical mass that is necessary to validate our approach.

The main rationale behind this proposition is, of course, the need to focus and concentrate our efforts in the use of scarce resources such as specialized labour with appropriate skills, marketing and design expertise as well as research and development. Many success stories are testimony to the principle that growth is obtained by concentrating one’s strength in markets where a competitive advantage can be obtained by doing so. Such an approach, of course, also responds to the critical need for defining the product and the market segment to create a sustainable business.

Deciding which groups of customers are going to represent the focus of our attention on the basis of some specific appeal and then designing a combination of tactics that will give us a definite competitive advantage in the well-defined market, constitute an important strategic choice.

<I>“Government and private sector will need to work hand in hand to build the international profile and awareness about the proposed industry clusters”</I>

● <B>The road map</B>

1. Vision and approach: Success stories are always characterized by a combination of visionary leadership, long term determination, sensible government policy, effective co-ordination among a wide range of stakeholders, risk-taking by those in the best position to take it, and a lot of hard work. These characteristics are precisely the strong points of Mauritius and a hallmark of its strategic approach to successful development over the past 30 years or so.

2. Branding: Mauritius is well known today as a high class tourist destination and is already positioned in the minds of large numbers of Europeans as the destination for sand, sun and sea.

This should facilitate the branding exercise, which is a necessary condition for the successful implementation of the project. Creativity, research and development and innovation will be necessary to leverage this reputation and produce the fashion products, which are in line with demand in the targeted markets.

3. Value chain integration: T-shirts have proven to be the most resilient products during the most difficult years of the Export Processing Zone. This is not by accident but rather a reflection of the fact that the industry is vertically integrated and we have more control on the pre-production stages of the value chain. A few companies in the sector have already started experimenting with their own design and marketing. Such backward and forward integration, by providing further control on supply, distribution and marketing, further integrates the value chain. Up-gradation of the product lines in fashion leisurewear will be based on the acquired strengths of backward integration but will require systematic efforts into forward integration – design, marketing and distribution.

4. High value addition: In its post-MFA survey report entitled “The global textile and clothing industry post the Agreement on textiles and clothing”, the World Trade Organisation has this to say concerning sportswear: “The textile and clothing industry has high-value segments where design, research and development are important competitive factors. The high end of the fashion industry uses human capital intensively in design and marketing. The same applies to market segments such as sportswear where both design and material technology are important.”

5. Size and networking (clustering): This is a great opportunity for operationalising the concept of “small is beautiful” and turning it into a competitive advantage. The small size of Mauritius is a “weakness” which can be turned to our best advantage by providing the ideal geographical space for the most effective co-ordination and networking policies for a competitive industry to thrive. Co-ordination and networking are meant to provide the advantages of scale to an industry constituted of small and medium enterprises with the nimbleness and flexibility to compete in demanding competitive conditions of short lead times and lean retailing. It is well known that in the garment industry the economics of the process are such that economies are achieved at relatively modest volumes, leaving plenty of rooms for the small producers.

Accordingly, we see the following critical implications for success:

– the need for an environment which shall promote “innovation and creativity” in the areas of specialisation

– focussed Research and Development in Design and Fashion to respond to the need for differentiating our offer to meet the expectations of the selected market segments

– the development of networking and clustering which should be facilitated in a situation where the roadmap is being defined in consultation with all industry stakeholders

– the need to give serious attention to branding the industry, preferably within a larger exercise of country branding for Mauritius as a nation.

●<B> Scarce resources should be invested</B>

Potent competitive advantage will materialise only to the extent that an appropriate context and institutional environment are present. As far as the role of the government is concerned we would like to quote from Michael Porter’s Competitive Advantage of Nations: “Government’s proper role is as a catalyst and challenger, it is to encourage – or even push – companies to raise their aspirations and move to higher levels of competitive performance, even though this process may be inherently unpleasant and difficult. Government cannot create competitive industries; only companies can do that. Government plays a role that is inherently partial, that succeeds only when working in tandem with underlying favourable conditions.”

We are not in the game of picking winners. Government must not intervene to “tilt the market” in favour of specific firms, but in a small developing economy like ours, engaged in a process of integration in the global economy, scarce resources should be invested where they are most likely to yield attractive returns.

Government and private sector will need to work hand in hand to build the international profile and awareness about the proposed industry clusters that we are proposing. The concept of seamless branding between industry and the country image will be critical in creating the kind of synergy that will support the development of the industry.

Finally we must emphasize that the success in implementation of the road map is not realisable in a policy vacuum. Important questions concerning trade policy issues or the delocalisation of a substantial part of the “basic production” capacities to neighbouring countries will have to be dealt with. These issues will be important because they will seriously impact on the critical mass and consequent economies of volume and scope that is needed to make a success of the proposed road map.

<I>Courtesy of Conjoncture, a publication of Pluriconseil</I> Rajiv SERVANSINGH</B>