SMART Myanmar hosts Yangon Chief Minister & EU Ambassador

SMART Myanmar was honored to be requested by Chief Minister of the Yangon Region, U Phyo Min Thein, to facilitate visits to the factories whom the project has worked with. Through SMART Myanmar, the EU supports Myanmar’s garment industry to increase its competitiveness, environmental protection standards and social responsibility – in order to make the sure the label “Made in Myanmar” stands for sustainable production and fair working conditions.
Out of 23 factories that have completed the intense factory improvement program, the SMART Social Compliance Academy™, SMART decided to organize tours of one locally factory and one JV factory, to demonstrate the variety of production, the opportunities and the challenges which the industry faces.

Myanmar Synergy was the first factory of the two that were visited by the Chief Minister on 11th January 2017. This factory is a joint investment from Korea and Myanmar, with exports to Europe, Japan and Korea. Myanmar Synergy has worked with SMART Myanmar and several of the project’s programs since 2014 and achieved a milestone by expanding its exports to the European market in 2015/16. The second visited factory was Shweyi Zabe garments from Shwe Pyi Thar, a fully locally owned factory, which also started working with European brands after participating in SMART’s social compliance program. Both the local factory and the JV factory presented and explained the challenges they face as manufacturers, difficulties in improving the industrial zones and governance procedures in the industrial zones in general.

The SMART team also shared their insights regarding the limitations of industrial municipal waste disposal services in areas such as waste collection and categorization of the waste effectively (eg: how/where to dispose of solid waste and hazardous wastes in a safe manner).

Factory owner Ms. Aye Aye Han guides the EU Ambassador and Yangon Chief Minister on a tour of her company.

The EU Ambassador and Yangon Chief Minister both offered remarks agreeing to continue to promote the continued responsible and sustainable development of Yangon’s industrial zones.

Smart Myanmar Export Promotion Guide

Promotion Guide Cover PageThis 2015 Export Promotion Guide has been specially designed to assist Myanmar manufacturers who wish to export garments to the European Union (EU), a market encompassing 28 nations and more than 500 million consumers.

Myanmar’s garment manufacturers have, for the past several years, primarily exported to Japan and South Korea. This has provided dependable business opportunities for the industry and there is a tremendous potential for garment manufacturers in Myanmar to discover new opportunities exporting their products to the EU.

Whether you are a manufacturer seeking to better understand EU trade procedures, laws and documentation, or perhaps, you are trying to re-configure your production set-up to better cater to the needs of European buyers. Whatever present situation you are in, this guide explores and maps out the various technical and procedural considerations essential for engaging with European buyers.

SMART Myanmar Export Promotion Guide – Myanmar Garment Sector

High interest from Europe to place orders in Myanmar garment factories

photo 1In addition to the reinstated GSP system on EU imports from Myanmar, whereby no duties are imposed on the imports into Europe, investments from foreign countries like China and Thailand have been pouring into Myanmar to set up production facilities. Such forces, when combined, have attracted a steady stream of interested garment buyers from Europe who have been visiting Myanmar on sourcing missions. Smaller production factories, such as family-owned local businesses, have their own niche attraction for EU buyers seeking longer term sourcing partnerships and high-quality, smaller volume orders.

SMART Myanmar was fortunate to be an early entrant in Myanmar’s garment sector re-emergence, recognizing early on the potential for sector growth and the risk from non-compliance that European buyers would face. SMART Myanmar’s matchmaking service has become one of the most effective services in Yangon for European companies wanting to source responsibly in Myanmar. The SMART team has facilitated sourcing trips for dozens of European brands & retailers both small and large. Several of these companies have started sourcing garments in Myanmar as a result of the SMART project.

second photo of the articleOne recent visitor was the CWS-boco Group, an internationally leading textile service provider and with its integrated CWS-boco Supply Chain Management organisation one of the largest producers of workwear and business fashion. Like other European buyers, CWS-boco is currently looking at possibilities to cooperate in Myanmar and requested SMART Myanmar organize a visits to factories after conducting preliminary market research with SMART’s Project Manager for Marketing & Finance, Su Tayar Lin. This company sees potential in the market and will follow-up with factories visited to see their willingness to cooperate with them. They have expressed a desire to work with the factories in building up long-term relationships based on consistent quality and responsible business practices. Mr Peter Taylor, Chief Operating Officer of CWS-boco said, “We saw at least 3 factories that have promising facilities and world class potential. Overall the quality of the factories that we have visited was very good” after visiting a mix of local and foreign invested garment factories.

3rd photo of the articleEarly this year SMART Myanmar organized a visit to Europe with nine different garment manufacturers (Local) to attend the Trade Fairs in Berlin and Paris. This trip has also given the participants the better insight of the multi layered European market. During the visit SMART Myanmar has also arranged a business-to-business (B2B) meeting between international retail chains/brands, professional investors and factories from Myanmar in Berlin to make new potential contacts to support Myanmar factories to access EU markets again.

4th photo of the articleThe B2B meeting in Berlin resulted in valuable contacts between EU buyers and suppliers from Myanmar. One of them was a German work wear company (prefers to remain anonymous) who visited Yangon for further assessments at the end of June to follow-up on the Berlin B2B meeting. They have expressed an appreciation of Myanmar as a wonderful country with nice and polite people with challenging but decent infrastructure. One of the main difficulties this company mentioned after visiting Yangon is the inconsistent electric supply. They had a chance to visit two local factories during their trip but none of the factories visited had enough experience in working with the free-on-board (FOB) business model. However, the buyer’s workwear products are not seasonal and have repeated styles and requirements so they are exploring working with cut-make-pack CMP producers to let them practice an FOB, and they are willing to support the factory with recommendations on the fabric and accessories suppliers and by making advance payments to pre-finance the order. They are a family owned business and prefer the sustainability of working with local family owned smaller businesses, helping them grow together via long-term sourcing partnerships. This has strong potential to benefit both the local producers in Myanmar and the buyer from Germany.

5th photo of the articleThe trade mission conducted by SMART Myanmar last March with 17 EU buyers and more than 20 Myanmar factories was also successful in the eyes of the European participants and the manufacturers from Myanmar. Following up with all participants from the EU and Myanmar 3 months after the mission it was generally agreed that all participants were either satisfied or highly satisfied with the results of the trade mission. Indeed, a few of the European buyers have already placed orders in Myanmar factories which they visited during the visit.

6th photo of the articleThe European buyers appreciated meetings and the expert briefings arranged by SMART Myanmar and AHK. Most of the buyers have set dates in their agendas to revisit Myanmar soon. Many of the EU buyers from the trade delegation visit expressed their interest to participate in another future trade mission. One of the participants, Stephan Fricke from Baumhueter International said “My expectations were met, because I came to learn about the country and the opportunities and challenges. And so I have! I did not expect to find a new sourcing paradise and will be able to place a lot of test orders in the factories straight away”.

Networking dinner, ANITA Asia Ltd., March 24th 2015

TAnitaAsianetworkingdinnerhe delegation has been invited by ANITA Asia Ltd. for a Networking Dinner at their production facilities in Yangon. ANITA, a German family owned lingerie producer, has set up an own production plant with about 250 employees in Yangon in 1999. Since then, lingerie is being sewn and finished from pre-cut fabrics and accessories from Germany and Thailand. Great-Grandchild of the founder and today’s owner of ANITA, Georg Weber-Unger as well as Managing Director of ANITA Asia Ltd., Stephan Seidel, personally welcomed and showed the group around in the production facilities. The production site of ANITA Asia, fully equipped with a new machine park, air conditioning systems and LED light systems is a best-practice example for production in Myanmar. During the networking dinner-buffet in their own staff canteen, the company representatives had the chance to better get to know each other and to exchange views with about 60 external participants from local and international organizations, companies and many local factories.

Business matchmaking factory visits, March 23rd –26th

in-factoryadvisoryonsocialstandardsThe main part of the Trade Mission was individually organized factory visits in Yangon’s adjacent industrial zones North and West of the city, Hlaing Thayar township and Shwe Pyi Thar. The factories visited comprised both the SMART supported factories and other, mostly foreign owned factories that have been previously visited and assessed by the SMART team. Alltogether the SMART team made 120 appointments in Myanmar factories! Each EU buyer received an individual matching report, the factory profiles of the factories to be visited as well as an individual visit agendas.

The factory visits enabled the EU companies to get a better understanding of the productive capacity, quality level and working conditions in the garment factories and to gauge whether placing orders for manufacturing of their products is possible or other cooperation opportunities may arise. The delegation has been divided into several groups according to their specific business interests retrieved beforehand. After a conversation with the factory owner, participants could have a look at the samples and were then guided through the production halls. Considering traffic and travel distances in Yangon, the participants visited on average 2, with a maximum of about 4 factory per day.

Overall, the participants have been satisfied with the arrangement of factory visits. The majority of participants stated that they were able to identify factories for cooperation and that they will take up or continue sourcing activities within the next 12 months. Some companies envisage an investment by starting up an own production site or transferring know-how or technical support. Some companies, especially smaller EU companies, were not able to find a match regarding product segment, minimum order quantity or price which can be ascribed to the fact that the Myanmar garment industry is currently specialised on simpler products and larger order quantities. Currently, mainly FOB-able foreign owned manufacturers are considered qualified suppliers, as the medium-sized local industry still needs to catch up in terms of productivity after a decade of sanction-related negative growth and production is mostly restricted to CMP (Cut, Make and Pack). Some locally owned companies are already processing FOB-orders, e.g. with procurement offices in China, Hong Kong or Singapore. Inputs for export production currently have to be exclusively imported, as productive preproduction stages (textile industry, manufacturing of intermediate products) are mainly lacking so far.

According to the participants of the mission there is still need for progress with regard to communication, productivity and the sourcing of fabrics and accessories. Local factories need support by international buyers in the form of know-how transfer and contacts to quality suppliers.

With regard to working conditions and social standards, it became clear that the issue is anchored in the factory owners’ awareness and that the factories are making great efforts to fulfil the requirements of the buyers. Some factories have already passed BSCI audits or are currently undertaking corrective actions. In regional comparison, Myanmar factories are scoring comparatively well in terms of social compliance.