Professional Documents
Culture Documents
Silk Sub-sector
On behalf of
Institute for Science and Technology
Research and Development
Chiang Mai University
November 2007
Table of Contents
Table of Contents
1.
Introduction
1.1
1.2
Project Approach
2.
2.1
2.2
10
2.3
12
2.4
Features of Silk
17
2.5
26
2.6
28
3.
Market Analysis
32
3.1
32
3.2
35
3.3
42
3.4
Future Trend
48
4.
Industry Structure
51
4.1
52
4.2
Rearers
55
4.3
Reelers
59
4.4
60
4.5
Dyers
60
4.6
Weavers
61
4.7
Printers
62
4.8
62
4.9
64
64
65
66
68
5.1
Institutions
68
5.2
Private Organizations
75
5.3
78
6.
80
7.
84
7.1
84
7.2
Competitive Analysis
91
7.3
Summary of Competitors
94
7.4
Competitive Strategy
99
8.
102
8.1
Rearers
102
8.2
Pre-processors
106
8.3
108
8.4
109
8.5
Sector-wide Issues
111
9.
117
10.
Intervention Design
120
10.1
120
10.2
121
10.3
127
11.
Annexes
138
11.1
List of Interviews
138
11.2
139
11.3
145
11.4
Term Description
150
11.5
151
11.6
154
11.7
155
11.8
Sources
156
Table of Contents
5.
Abbreviations
4
CBI
CDD
CDSC
CIF
CMU
CTS
Customs
DEP
DIP
DOA
DOAE
DSS
EC
EFTA
EU
EU-HT
EUR
FAO
FAOSTAT
FBA
FDI
FGM
FLO
FMC
FOB
FTA
GAP
GDP
GMO
Ha
HS
IBEF
IFAT
IP
IPC
ISO
IST
JICA
KENAN
Kg
KPI
Million
MM
MOAC
Millimetre
Ministry of Agriculture and Co-operatives
MOC
Ministry of Commerce
MOST
MRL
MTEC
NEED
NESDB
NEWS
NGO
Non-Governmental Organisation
NSO
NSTDA
OAE
OBM
ODM
OEM
OIE
OTOP
PR
Public Relations
QSIS
R&D
SGS
SME
TCDC
TFIA
THTI
TTC
UAE
UK
United Kingdom
UNCTAD
US
United States
USDA
VC
Value Chain
WB
World Bank
WTO
Abbreviations
MIL
1.
Introduction
mobilize the concerned stakeholders for cooperation with the project and
for the validation of findings.
The study will be the basis for proposing interventions designed to overcome
the identified gaps and implementing those interventions decided upon jointly
with stakeholders.
Introduction
2.
Step 1
The analysis of the silk home textiles value chain was conducted based on a
combination of:
reviewing primary and secondary material;
conducting Bangkok-based meetings, interviews and discussions with
industry stakeholders, representatives of public agencies and institutes,
yarn/fabric producers, home textiles producers, traders/exporters, and other
key informants;
performing site-based interviews in the Northeastern provinces with chain
actors (rearers, reelers, yarn dyers, handloom weavers, home textile
producers, traders/exporters), local authorities and representatives of the
academic sector.
Step 2
The main results of the value chain analysis were presented to stakeholders
from Bangkok, Nakorn Ratchasrima, Khon Kaen, Chaiyaphum, Roi Et, Buriram
and Surin to:
validate the main findings of the sector map, the value chain analysis on
national and local trends;
develop a sub-sector strategy together with the stakeholders;
and
Key term descriptions used in the context of this report; niche markets, organic
and fair trade, are provided in Annex 11.5.
Introduction
Rapid changes began to occur during the 1950s and 1960s, a retired secret
service agent named Jim Thompson, who had permanently settled in Thailand,
began working with local silk producers. He identified key designs, imposed
strict quality control and began marketing Thai silk to the tourist and export
markets. He established large-scale production facilities using fly-shuttle
handlooms and high-quality white
warp yarn in setting his looms.
Since then a number of other
private companies have committed
themselves to promoting and
developing Thailands silk industry,
and several government
departments, provide sericulture
farmers with support in the form of
technical training, improved
varieties of mulberry and
silkworms, and improved
equipment such as reeling
machines (NEED, 2006).
The Ministry of Agriculture and Cooperatives (MOAC) has formulated its fiveyear strategy plan for 2005 - 2009. There are four strategic issues for silk
handcrafted development, which are discussed below.
10
Given the potential of the sector, these strategies alone will not help to improve
the silk sub-sector. However, the collective contribution of expertise and
financial support will contribute to further growth of this sub-sector and realize
the actual potentials.
To ensure the promotion and strength of the sector the MOAC will emphasize
the following:
11
12
The exports of Silk and Silk products from Thailand fluctuate and compared to
2001, export volumes decreased from 813 tons to 698 tons in 2006., the value
of these silk exports, during these same years, reduced from 25.30 million EUR
to 22.94 million EUR.
13
Production
Area
Mulberry
Planted
Area (ha)
Cocoon
Production
(ton)
Number of
Silk Yarn
Holdings
Production
of Silk
Yarn (ton)
20,752
5,310
1,535
126,984
1,080
North
2,457
1,254
697
985
19
West
1,130
612
402
139
Other
543
240
112
1,360
Total
24,882
7,416
2,746
129,468
1,108
Northeast
14
Number of
Cocoon
Holdings
15
16
Figure 4 shows the production in tons for each year for each respective
production method. According to the Department of Agricultural Extension
(DOAE), Thailand produces about 1,480 tons of silk yarn per year. In
Thailand, there are two main production methods used to manufacture Silk
yarn; hand reeled (which comprises about 77% of the market) and machine
reeled (about 23%) (DOAE, 2005).
Hand reeled yarn volume is rather stable as it increased only marginally from
1 ,1 0 0 tons in 2 0 0 1 to 1 ,1 5 0 tons in 2 0 0 4 . Machine reeled yarn volume
decreased moderately from 410 tons in 2001 to 330 tons in 2004. Overall,
the production volumes and shares have been quite stable with marginal
increases or decreases year by year.
Silks fall into two main types; the Mulberry and the non-Mulberry silks. This
classification is based on the preferred food material the silkworms are
reared on. Almost all the varieties of Mulberry silk are derived from the
domesticated silkworm Bombyx mori. The non-Mulberry silks, often called
Wild Silks, are derived from silkworms, which initially were not
domesticated. These non-Mulberry silks generally come in natural colours:
cream, beige, brown and gold. They are both user-friendly and healthy owing
to their porous texture and thermal properties.
* The ancient trade route linking China and the Roman Empire.
17
Mulberry Silk
Mulberry silk is the most important type and contributes to as much as 95%
of worlds silk production. All Mulberry silkworm varieties reared at present
belong to the species Bombyx mori and all are reared on Mulberry leaves. All
varieties produce cocoons with a continuous silk filament, which therefore
can be industrially reeled. The varieties are mainly differentiated according to
the number of generations produced annually under natural conditions. Also
hybrid Mulberry silkworms of various kinds have been developed.
Non-Mulberry Silks
Eri Silks
Photo 6 & 7: Eri Silkmoth (Philosamia ricini) & Eri Silk Cushions
Eri silkworms have two varieties. A wild variety, Philosamia cynthia, and a
domesticated variety, Philosamia ricini, which can be reared on variety of
food plants. Eri silkworms prefer Castor leaves and when reared on these
leaves they will yield large size cocoons, rich in silk content. Also Tapioca
leaves can be used to rear Eri silkworms although the produced cocoons will
be somewhat smaller and less rich in silk content. An Eri silkworm spins an
open-mouthed cocoon with discontinuous and not uniform filaments.
Because of this an Eri silk cocoon can only be spun and not reeled. As an Eri
cocoon is open-mouthed there is no need to kill the pupa inside the cocoon
as the moth can be allowed to emerge through the open-mouth without
damaging the cocoon. Because of this, Eri silk can be called a peace or
vegetarian silk. Eri silk is a fine silk which is almost as white in colour as
mulberry silk. It has the look of wool mixed with cotton but the feel and
softness of silk.
19
Tasar Silks
Tasar silkworms have several varieties: some wild and three main
domesticated varieties. The three domesticated varieties are; Antheraea
mylitta, feeding mainly on the leaves of trees of Terminalia species, A.
pernyi, a Chinese Tasar silkworm variety feeding mainly on the leaves of Oak
trees (Querus species) and A. yamamai, a Japanese Tasar silkworm variety
also feeding mainly on the leaves of Oak trees. Processing Tasar silkworm
cocoons is basically done the same way as processing Mulberry cocoons.
Therefore Tasar silk is not a peace or vegetarian silk as it is necessary
that the Tasar silkworm pupae are killed inside their cocoons before they
emerge as adult moth.
20
Muga Silks
The semi-domesticated variety of Muga silkworm, Antheraea assama, feeds
mainly on the leaves of Machilus bombycine and Litsae polyantha. Muga
silkworms produce a strong, golden yellow silk, which is renowned for its
glossy fine texture, durability and natural golden amber glow. Reputed to be
a costly fabric, Muga silk looks like spun gold. Muga silk is naturally stainresistant and is never bleached or dyed. It is naturally organic and untouched
by chemicals, but it is also not a peace or vegetarian silk because also
Muga silkworm pupae are killed inside their cocoons.
Photo 10 & 11: Muga Silkmoth (Antheraea assama) & Muga Silkyarn
After Mulberry silk cocoons are gathered and sorted they are stifled with the
aim to kill the pupae inside their cocoons without interfering with the structure
of the cocoons. This stifling can be done with hot wet steam or hot dry air.
After stifling, the cocoons are dried for storage. Before reeling, stored
cocoons are boiled in water to dissolve the gummy substance that holds the
filament in place. During reeling a cocoon is immerged in hot water to loosen
the filament in the outer layer first. As one filament is very fine, the filaments
of five to eight cocoons are reeled together to get raw silk yarn. After twisting,
de-gumming and eventually dyeing, this raw silk yarn is woven into fabrics.
Silk is made up of protein fibres, which are triangular and so reflect light like
prisms. These protein fibres are spun in layers to give silk its characteristic
pearly sheen and sensuous feel. The protein in silk is very close in makeup
to human skin, which is why it feels so beautiful to touch - "Natures second
skin". It absorbs and transpires moisture far more than synthetic fibres. In
winter, silk provides thermal protection against the cold and in summer the
transpiration and evaporation of moisture through the silk makes it feel cool
against the skin. Table 2 gives a summary of the properties of silk fabrics.
21
Property
22
Definition
Abrasion
resistance
Absorbency
Draping
Durability
Dyability
Elasticity
Flame
resistance
Electrical
Insulation
Lustre
Mildew/mould
resistance
Resilience
Ability to resume an
original shape after being
stretched
Size
reduction
Strength
Weight
Warmth
Mulberry silk production is both very labour and land intensive. One silkworm
produces very little usable silk. It takes approximately 650 cocoons and 100
labour hours to produce sufficient silk fabric to make one scarf. One mature
mulberry tree will produce enough foliage for 100 silkworms. Silk is
environmentally friendly. The environmental impact of silk processing is
relatively minor in its initial stages when compared to cotton or wool.
Currently the silk production in Thailand is almost 100% mulberry silk. Three
major varieties of mulberry silkworm are used in the Thai silk sub-sector;
polyvoltine (producing multiple generations in a year), poly-bivoltine hybrids,
and bivoltine (producing 2 generations in a year). The main technical
characteristics of the 3 types of Mulberry silkworms are summarized below.
23
Silk yarn can be categorized according to its weaving use. For weaving two
major types of yarn can be distinguished; warp yarn and weft yarn. Warp
yarn represents the yarn lying lengthwise in a weaving loom. This type of
yarn needs to be of uniform thickness with some flexibility. Weft is the yarn
used crosswise in the weaving process.
24
The Department of Agriculture (2004) defines Thai silk yarn into three grades
as follows:
1. First grade silk yarn (locally known as Mai Noi) is the silk yarn resulting
from reeling the filament from the inner layer of a cocoon after all the
floss and the filament of the outer layer have been removed. It is a fine
yarn, recognized as having the best quality and it is usually used as warp
yarn because of its fine and smooth texture.
2. Second grade silk yarn (Mai Loei) is the silk yarn resulting from a
reeling process, which combines, after removing the floss, the filament
from the outer layer and the filament of the inner layer of a cocoon. The
resulting silk yarn is not as fine as first grade silk yarn. This silk yarn can
be used for weft only.
3. Third grade silk yarn (Mai Leub) is the silk yarn resulting from reeling
the filament of the outer layer of a cocoon after all the floss is taken. The
resulting silk yarn is coarser than second grade silk yarn. Similar to
second grade silk yarn, this silk yarn can also be used for weft only.
Mulberry
25
26
The power loom sector dominates the production of fabric in the country,
accounting for more than 90% of the total fabric production. The massive
growth and utilisation of power looms has replaced handlooms at a rapid
pace.
Northeastern home textiles are made mainly from local handloom woven
fabrics. The major raw material used in this sub-sector is silk. It is estimated
that the sub-sector consists of approximately 300, home textile producing,
SMEs (groups, companies and cooperatives). The entire silk sub-sector
employs about 100,000 people region wide, including a considerable number
of support people (rearers, reelers, bleaching and dyeing specialists, input
suppliers, weavers etc.).
Product-wise, the handloom weavers in the Northeast can be basically
categorized into two groups; those who weave high value-added luxury silk
fabrics with unique traditional designs, and those who weave low valueadded standardized silk fabrics. The high value-added luxury silk fabrics
account roughly for a quarter of all handloom fabrics and have their niche
markets where neither mills nor power looms can compete.
27
Textile products can be categorized according to their use; those, which are,
used as raw material for further processing (e.g. yarn and fabrics), those for
final usage by industry as a semi-finished or pre-product or (e.g. technical
textiles), and those which serve as end product to the consumers (apparel*
and home textiles). The markets for these products differ in terms of duration
of product life cycles, expectations regarding chemical product safety and
technical performance.
28
29
2.
Producers in the first group are open to new developments, education and
training and have a high level of interest in seeing and learning modern
techniques and design improvements.
Producers in the second group are mainly women. Home textile production
is a source of additional income for them. Securing jobs in the home textile
sector for the people in remote areas has an important economic impact as
well as important social and cultural significance. A majority of producers
work from their own home, thereby controlling their time and output and, in
many cases, allowing them considerable input into on-going family life.
30
Basic materials vary in the different market segments. Certain types feature
more predominantly in the mid to high-ends of the market (e.g. silk and
cotton) others feature more in the low end (e.g. chemical fibre). In
Northeastern Thailand, silk is the most popular material overall.
At this moment, it is difficult to trace the various inputs into the Thai home
textile chain. Most producers and exporters do not have any means to find
out where inputs (e.g. silk yarn) for their products came from and under what
ecological or social conditions products were produced.
31
3. Market Analysis
3.1 World Production & Trade
Silk represents a tiny percentage of the global textile fiber market. Globally,
cotton accounts for 40% of the world fiber consumption, wool accounts for a
mere 2.5%, and silk accounts for a tiny 0.2% (WTO, 2006). Yet, the actual
trading value of silk and silk products is much more significant than this
volume would suggest. Silk is a premium priced agricultural commodity; the
unit price of raw silk is roughly twenty times that of raw cotton (FAOSTAT,
2007).
Market Analysis
World production of raw silk stood at 135 thousand tons in 2004, a 20%
increase relative to 1995, when production stood at 113 thousand tons. The
global production of raw silk from 1995 to 2004 is shown in Figure 8.
32
China is by far the worlds biggest raw silk producer, with a 70% share of the
world production in 2004, followed by India, Vietnam, Turkmenistan, Brazil
and Thailand respectively (FAOSTAT, 2007). In terms of exports, China also
tops the list (90%). India and Vietnam currently export only a small
percentage of their overall production.
Market Analysis
Figure 10: World Raw Silk Imports and Exports in 2005 in million EUR
33
Four major textile producers India, Italy, Japan and Korea import raw silk
for their textile industries (FAO, 2007). India is the largest importer,
accounting for 32% of world raw silk imports, followed by Italy (22%), Japan
(14%) and Korea (9%) respectively.
Thailand is the sixth largest raw silk producer with about 1% of the world
production and is ranked seventh in term of raw silk imports (about 3% of the
world imports). Thailand, being one of the worlds leading textile producers, is
dependent on imported raw silk to meet the demands from the textile industry
due to limited domestic supplies. Compared to other global players in the raw
silk sub-sector, Thailand exports only a small quantity of raw silk, which is
declining over recent years due to its high price and a lack of lustre.
Market Analysis
34
Current estimates for all types of home textiles suggest that the worlds global
home textiles sector can be valued at approximately 95 billion EUR with the
US and EU together accounting for more than 60 billion EUR. With projected
increases in the US market of 5% and the EU market of 9 to 10%, they
together stand for about 70% of the worlds total home textiles imports.
According to a survey by TFIA, the value of the global trade in home textiles
is projected to increase from about EUR 18 billion in 2005 to more than EUR
25 billion in 2010. Annual demands for home textiles have been increasing
over the last 10 years at an average growth rate of 6%. It is not possible to
separate out handloom and/or handcraft products trade trends from the
overall trade trends because of the way in which the trade data is captured.
The trends therefore only give an indication of the overall dynamics within the
world home textiles market as a whole.
There are, for the Northeastern home textiles sector, only a few published
sources of baseline data across the value chain. Acquiring data is further
complicated by the fact that a large part of Northeastern home textiles trade
occurs informally and the fact that the sector is not disaggregated into official
sector statistics for employment and revenue or customs and export
statistics, which are aligned with the Harmonised Standards (HS) coding
system. This system does not record handcrafted/handloom items separately
from other manufactured items.
Market Analysis
35
Market Analysis
36
A price analysis reveals that table linen, curtains and other furnishing textiles
fetched higher prices than bedspreads and bath/kitchen linen. Consequently,
these products had stable prices in the period 2001-2005. Both premium
prices and the higher and stable demands of these products suggest that
emphasis should be given to produce and export table linen, curtains and
other furnishing textiles products.
In terms of suppliers, the role of developing countries increased strongly,
from a share of 50% in 2001 to share of 58% in 2005. At the same time the
imports from developing countries rose by 20% and intra-EU trade by 24%,
whereas imports from countries outside the EU (excluding developing
countries) fell dramatically by 62%. (CBI, 2006).
Market Analysis
37
Market Analysis
38
Product
Criteria
Store Choices
Brand
Names
Fashion
Criteria
Price
Criteria
High Price
Luxury
Segment
Market
Share
5-10%
Exclusive
luxury high
quality
material
(designer-)
brand name
goods with
image effect
Exclusive retail
stores, designer
stores, special
departments in
department
stores, special
mail order
companies
Donna
Karen,
Nicole
Farhi,
Georgio
Armani,
Joop!
Fashionable
colors,
changes
every
season,
special
designs and
exclusive
artworks
Price less
important
Upper
middle
Price
Segment
Market
Share 1520%
Brand name
goods, high
quality
materials,
fashionable
collections,
broad rage in
design
Good quality,
trend
following or
classical
assortment,
brand name
goods
Independent
shops, shop in
shops,
manufacturers
direct stores,
Department
stores
Zucchi,
Bassetti,
Van Dijck,
Vossen,
Freyte
Acceptance
of price for
fashionable
collections
and
consumer
brands
Independent
shops,
Department
stores, mailorder interior
department
stores
Cinderella
Irisette,
Habitat
Many colors
available,
exclusive
designs but
with fewer
colors than
luxury
segment
Standard
colors and
each
season
fashionable
colors,
common
designs
Low to
middle
Price
Segment
Market
Share 4540%
Basic quality,
limited range
of colors and
designs,
fashionable
Interior
department
stores, variety
stores, value
retailers
Price
labels like
Ikea,
Marks &
Spencer,
Hema
Price
important
Low or very
low price
segment
15-20%
Basic/low
quality,
special sales/
offers,
inexpensive
products
Variety stores,
discounters,
super- and
hypermarkets,
streetmarkets
No brands
Standard
collections
with less
variations
per season,
limited
number of
designs
Standard
products
without
special
fashion
requirement
Middle to
high Price
Segment
Market
Share 2025%
Price
threshold
must be
observed
Special
(low) prices,
price is
decisive
Market Analysis
39
Market Analysis
The trend towards looking for higher quality and more expensive products
has increased in recent years, but an even more important trend is the priceconscious consumer who is looking for fashionable trends as well as good
quality materials. Value for money is still the most important purchasing
criterion for most consumers.
40
Market Analysis
41
Market Analysis
Although policy makers highlighted the importance of textiles and entitled the
textile sector as one of the five priority sector for national growth, local textile
production, in fact, is stagnating at relatively high levels. Market shares and
competitiveness are gradually eroding since the end of nineties, mainly due
to lower cost supplies from China, India, etc. Overall, most Thai home textile
exports are commodity products subject to intense foreign competition and
low prices.
42
2004
2005
2006
143.47
179.78
190.78
220.60
67.20
46.8%
83.03
46.2%
84.32
44.2%
95.01
43.1%
Export to Japan
Value (Mil EUR)
% share of total value
26.42
18.4%
38.21
21.3%
29.11
15.3%
36.43
16.5%
Export to the EU
Value (Mil EUR)
% share of total value
7.40
5.2%
9.05
5.0%
9.93
5.2%
11.07
5.0%
Export to Australia
Value (Mil EUR)
% share of total value
2.30
1.6%
4.33
2.4%
5.88
3.1%
7.89
3.6%
3.22
2.2%
4.70
2.6%
5.21
2.7%
6.92
3.1%
Export to China
Value (Mil EUR)
% share of total value
0.96
0.7%
1.93
1.1%
3.88
2.0%
6.80
3.1%
35.98
25.1%
38.52
21.4%
52.46
27.5%
56.48
25.6%
The US accounts for the largest percentage (43.1% in 2006) of the total
value, followed by Japan (16.5%) with the EU accounting for the third largest
percentage (5%). With the total value of the US market for home textiles
increasing yearly by 5 to 7%, the US continues to rely on a significant import
volume to meet local demand. This means that there is still huge potential to
penetrate the US market. Also the EU (mainly the UK, Germany and
Sweden) is fairly important market for Thai home textiles as it accounts for
about 5% of the total value of home textile exported from Thailand with the
value increasing yearly by 10 to 15%.
Market Analysis
2003
43
In 2005, silk waste, silk yarn and silk fabric exported from Thailand
represented 350.83 and 9,784.18 and 14,030.27 thousand EUR,
respectively. Over the same period, cocoon, silk waste, silk yarn and silk
fabric imported to Thailand represented 186.43, 1,753.00 and 11,533.20 and
5,149.77 thousand EUR, respectively. For silk yarn in particular, the
simultaneous import and export of yarn is partly due to the difference in yarn
quality. Thailand is producing and exporting yarn mainly for weft use and
importing warp-suitable yarn. While silk yarn has the largest share in import
and export value, it is silk fabric that has more than two times the value per
ton compared with silk yarn.
Market Analysis
44
Rearing
Reeling
Cocoon
Silk Waste
359.83
9,784.18
14,030.27
98.40
413.00
220.00
3.57
23.69
63.77
186.43
1,753.00
11,533.20
5,149.77
34.00
576.00
579.00
97.00
5.48
3.04
19.92
53.09
Year 2005
Weaving
Silk Yarn
Silk Fabric
Main export markets for Thai silk are the EU, Korea, the US, and Japan.
2003
2004
2005
2006
18.24
21.91
24.16
22.94
5.25
5.10
5.75
5.84
28.8%
23.3%
23.8%
25.4%
1.33
3.66
6.82
4.59
7.3%
16.7%
28.2%
20.0%
4.87
5.18
5.23
4.58
26.7%
23.6%
21.7%
20.0%
3.87
4.85
3.00
3.55
21.2%
22.1%
12.4%
15.5%
2.92
3.12
3.36
4.38
16.0%
14.3%
13.9%
19.1%
The EU (mainly Germany and the UK) accounted for the largest percentage
(25.4% in 2006) of the total value of silk exported from Thailand. Korea and
the US accounted both for 20% of the value, followed by Japan with 15.5%.
Thailands silk export to the EU was 5.84 million EUR in 2006, an increase of
11% compared to 2003.
Market Analysis
45
Market Analysis
46
Figure 19: Product Types Shares of Silk Exports from Thailand in 2006
in value in million EUR
(Source: Customs, 2007)
In 2 0 0 6 , there were three product types of silk sharing the export market;
intermediate products (e.g. silk yarns, silk fabrics) (6 3 .7 %), garment and
accessories (2 3 .8 %), and home textiles (1 2 .5 %). More Detailed information
according to HS Code is given in Annex 11.3. Customs reported in 2007 that
for the year 2006, silk home textiles had an approximate 1.3% share in the total
exports of Thai home textiles.
Figure 20: Percent Share of Silk Home Textile Exports in 2006 in million
EUR
(Source: Customs, 2007)
Market Analysis
47
Market Analysis
48
All these factors will lead to new demands and new consumer behaviour.
The outlook is distinctly brighter in Eastern Europe, where needs justify
substantial investments in all areas including home textiles. Other factors are
recovery of and/or further growth in the economic situation, despite
limitations such as rising unemployment and low consumer confidence, as
well as fashion developments. Negative developments are based on
intensive price competition on trade level and economic developments such
as unemployment.
Market Analysis
49
Market Analysis
50
4. Industry Structure
The Northeastern home textiles sector is not at all well integrated and the silk
sector is relatively complex. Some farmers raise silkworms and sell cocoons
for processing in factories; some raise silkworms, reel the cocoons and sell
silk yarn, either to other villagers or to weaving factories; some villagers buy
yarn and concentrate on dyeing and weaving; and some complete the whole
process from planting and maintaining their mulberry plots for silkworm
rearing up to selling dyed woven fabrics and products.
(Sources: QSIS, DEP, 2007 and Stakeholder interviews and Analysis by the Survey Team, 2007)
Industry Structure
Figure 21: Sector Map of the Northeastern Home Textiles: Silk subsector
51
Industry Structure
Small rearers usually breed their own silkworm eggs from their own selected
silk moths. Most rearers do not have access to formal breeding stocks from
extension services but there is some informal trade in breeding cocoons
between rearers. As a consequence, disease transmission is relatively high
because of the use of non-certified stock. Silkworm eggs are often infected
with diseases such as Pebrine and Flacherie. Most native polyvoltine
silkworm varieties are, however, more tolerant to diseases and produce
more silk than poly-bivoltine and bivoltine varieties under comparable high
disease exposure levels.
52
Industry Structure
53
Silk Variety
1. Native
varieties
(Polyvoltine)
Advantages
Disadvantages
Lower yield
Cause of disease
infestation
Tolerant to diseases
2. Thai Hybrids
(Poly-bivoltine)
Silkworm eggs
Susceptible to diseases
(occasionally)
Extension services
unhygienic conditions
Unreliable quality
Inconsistent supplies
Free input from QSIS
(silkworm eggs, chemicals,
etc.) might discourage
rearers to develop
themselves.
Industry Structure
54
High yield
Susceptible to diseases
High prices
High investment
4.2 Rearers
Rearers are engaged in hatching silkworm eggs and rearing silkworms until
they spin their cocoons. They are responsible for retaining the quality of
cocoons by giving proper nutrition and care in the early silkworm stages.
Most rearers also have their own small mulberry plantations to grow fodder
for their silkworms. Rearers link to silkworm egg suppliers for obtaining
silkworm eggs and they also link to reelers by supplying them with cocoons
for further reeling processes.
Silkworm rearing can be divided into two main types; rearing for home
handicraft use and rearing for industrial use. The two types use different
varieties of silkworms. At the farm level, there is however a certain degree of
substitutability between silkworm types. This means that the value chains for
native varieties, Thai-hybrids and Foreign hybrids are not completely
separated. Farmers who rear silkworms for home-use usually undertake this
as a secondary activity, while their main occupation could be growing rice or
field crops, rearing livestock, or working as hired labour. Cocoons are
generally reeled by hand when polyvoltine varieties are reared. When polybivoltine varieties are reared the cocoons can either be reeled by hand or by
machine or even can be sold to a reeling factory. Farmers who rear bivoltine
varieties are usually contracted directly by reeling factories and are therefore
often not engaged in producing yarn. A list of advantages and disadvantages
of contract farming is given in Annex 11.6.
Industry Structure
One of the primary inputs in silk production is the mulberry leaf, used to feed
silkworms. The mulberry planted area in Thailand is estimated at over 24,000
hectares, of which 20,000 hectares (83%) are in the Northeast. Mulberry
production in the Northeast is mainly concentrated in the provinces of
Mahasarakham (22.4%), Khon Kaen (14.7%), Surin (11.4%), Chaiyaphum
(9.1%) and Buriram (9.0%) respectively.
55
Jim Thompson has set up a network of contract farmers to which they will
supply poly-bivoltine silkworm eggs, rearing room fumigation services and
finally they will purchase back the cocoons. Drying facilities have been
constructed in Khon Kaen and Nakorn Ratchasrima provinces. Contracts are
made with farmers in a limited number of villages surrounding the drying
centres. In order to participate in the network, a farmer has to have a rearing
room separate from his house and a minimum of 0.3 hectare of mulberry.
Industry Structure
56
To become a contract farmer of Chul Thai Silk Co., Ltd. (CTS), a farmer has
to commit himself plus two other family members to work in the silk
production on a full time basis and he must plant at lease 2 hectares of
mulberry. In order to guarantee a reasonable return for the family labour and
to repay the production loans, a rearer must achieve an average yield of 25
kg. of cocoons per eggsheet which has about 20,000 silkworm eggs. CTS is
closely involved in the selection of farmers, who are screened for
creditworthiness by commercial banks. Technicians from CTS will survey the
proposed land area of every farmer who wants to join the scheme. These
technicians concentrate on confirming the suitability of available land, soil
physical structure and drainage. Farmers are also sent for training at the
CTS Training Centre. During the first two years of production, CTS
technicians supervise fumigation on the farm. This process is essential to
ensure success. The farmers are provided with second instar worms, which
are transported in air-conditioned vehicles. All outputs of cocoons must be
sold to the company. If they are discovered selling cocoons to any other
company they are immediately excluded from future participation in the
scheme. When the farmers deliver their cocoon they meet with officials of
the company to discuss problems. On delivery of cocoons, a farmer receives
10% of the value in cash. The remainder is paid through a bank account
from which the loan repayment is subtracted.
Industry Structure
57
Commercial Rearers
Items/Type of Rearers
Traditional
Rearers
Small Scale
Commercial
Scale
Polyvoltine
Poly-bivoltine
Bivoltine
(Native variety)
(Thai hybrid)
(Foreign hybrid)
1. Silkworm variety
2. Farm size
Small farmer
Small farmer
0.48 ha/farm
1.6 ha/farm
6 x 8 m2
8 x 16 m2
0.5
12
18
30
33.9
960 (cocoon)
1.82
2.16
2.73
18.18
20.45
36.36
681.82
2,618.18
454.55
1,420.45
1,636.36
0.08 Ha/farm
Medium farmer
Empty space
under the
house
3. Cocoon production
Industry Structure
- Rearing (crop/year)
58
4.3 Reelers
Reelers buy cocoons from rearers and reel raw silk from these cocoons. The
quantity and the quality of raw silk largely depend on the amount and the
quality of cocoons and the used reeling technology. There are two types of
yarn produced in Thailand; hand reeled and machine reeled. These two
technologies correspond with the variety of cocoons to be reeled. Polyvoltine
varieties can only be hand reeled as the filament is not strong enough to be
reeled by powered reeling
machines. When hand
reeling, a reeler will put a
handful (about 20) cocoons
at a time into a pot of
boiling water. The filaments
of these cocoons are
gathered together and by
pulling the gathered
filaments the filaments will
unwind from their cocoons
and form a single multistrand thread. Most hand
reelers still pull the thread
by hand, but simple handpowered and motor-driven
reeling machines are
increasingly used as a way
to speed up the process
and produce a more even
yarn.
Basic hand reelers usually produce around 200 gram of yarn per day.
Reelers using a simple hand-powered wooden reeling machine can produce
up to 500-1,000 gram of yarn per day depending on size of the reeling
machine. The silk yarn produced by hand reelers is typically uneven. As
polyvoltine cocoons can only be reeled by hand it is difficult to standardize
the production as reelers have different capabilities and levels of skill for the
reeling process.
Industry Structure
59
Industry Structure
Besides yarns and fabrics, other raw materials or inputs such as dyes and
accessories related to dyeing, weaving and home textile production are also
provided by the yarn and fabric traders. Powerful traders usually establish
long-term relationships with their suppliers. They also provide delivery
services to far-away customers and offer credit for long-term customers.
60
4.5 Dyers
There are more than 200 dyers in the Northeast who are responsible for
dyeing the yarn. Silk colouring involves operations such as de-gumming,
bleaching and dyeing. Non-processed yarns are derived from three sources:
hand reelers, reeling factories (machine reelers) and yarn traders. Natural
dyes generally come from fruits, leaves, roots, etc. which are available
locally. Chemical dyes are also applied in the dyeing process due to the
scarcity of natural dyes and their drawbacks in terms of colour fading, limited
colour palette, etc. Chemical dyes can be obtained from yarn traders or local
input suppliers. After the process of yarn dyeing is completed, dyed yarns will
be distributed to weavers to be used in the weaving process.
4.6 Weavers
Silk weaving is done on handlooms as well as power looms. There are 5
different types of weavers involved in the weaving process in the Northeast;
handloom weavers, power loom weavers, handloom weavers with yarn
dyeing facilities, handloom weavers with yarn dyeing and printing facilities
and power loom weavers with yarn dyeing and printing facilities. The first two
types obtain dyed yarns from dyers while the last three types receive nonprocessed yarns from traders or directly from reeling factories (mainly CTS).
Generally most yarn producers tend to specialize in one of the three different
varieties of silkworms. As a result, only a small number of producers produce
both weft and warp yarns. Consequently weavers often have to purchase
warp yarn from reeling factories or yarn traders. As a result, most of the
fabrics produced by the traditional sector are a mix of yarn from local
(polyvoltine or poly-bivoltine) and foreign (bivoltine) silkworm varieties. The
few that are producing 100% Thai silk fabrics (without bivoltine yarn) are
primarily small-scale weavers.
Industry Structure
61
4.7 Printers
Printing is a method of colouring fabrics. Small-scale weavers generally do
not have a printing capability because of the high investment costs. If fabrics
need to be printed they will be sent to printing factories. There are more than
30 fabric-printing factories in the Northeast. They charge for printing
according to pattern and number of yards. Printed silk fabrics will then be
distributed to home textile producers for sewing and finishing.
Industry Structure
62
There are more than 300 home textile producers in the northeast who
undertake sewing and finishing in two different ways. One type of home
textile producer controls most of the supply processes starting with silkworm
raising, yarn making, yarn dyeing, hand weaving, until the final production of
home textile products such as
scarves, placemats, bed covers,
pillow cases, etc. The specific
designs and colours, as well as
weaving techniques reflect the
cultures of different rural
communities. The second type
of producer is producing home
textiles from materials acquired
in the market. These materials
include fabrics from handloom
weavers, fabrics from weaving
factories and fabrics from fabric
traders. As stated previously,
home textile producers require
proper professional design input
to cope with changing fashion
trends. In order able to adapt
quickly to changing demand, a
continuous development of
designs is required. Additionally,
a strong link with markets is
needed to understand customer
demands and preferences.
Photo 29: Silk Cushions
Figure 22: The process steps from silkworm rearing to home textile
products
Industry Structure
Although producers may have direct links with consumers in the chain, there
are many layers of middlemen/traders that clutter the supply chain. Forward
and backward linkages are weak and information is not freely shared among
the participants in the chain. Most producers do not get market information
and are thus unaware of the requirements of exporters regarding size and
quality. This is because most of their products are traded through informal
contract buyers, wholesalers, and wholesaler-retailers. The producers
situation is further aggravated by a lack of implementation of product grades
and standards that leave the producers with minimal control over the price of
their products.
63
Industry Structure
64
There are more than 300 traders/domestic wholesalers who service local
retail outlets as well as traders/domestic wholesalers in other regions. These
markets receive fair to good quality products from home textile producers
with prices that are similar to those offered to trading agencies/exporters.
Traders/domestic wholesalers link producers to local retail outlets, provide
market access for producers, supply finished products to domestic chain
retail outlets and act as an information broker between the two. The
relationship between producer, trader and retailer is normally long-term and
informal, often with no written contracts. Business dealings are done based
on trust. Traders/domestic wholesalers buy home textile products from their
producers and pack these products according to orders from local retailers.
Industry Structure
65
Industry Structure
Pre-production Stage
66
Acid dyes are the most commonly used chemical dyes for dyeing silk. Acid
dyes are used both commercially as well as by studio dyers to dye protein/
animal fibres such as silk, wool, mohair, angora, alpaca but also some
nylons and other synthetics. Acid dyes require the use of an acid such as
vinegar, acetic acid or sulphuric acid to set the colour. There is only one
European company (Dystar Thai Co., Ltd.) that supplies chemical dyes for
silk in Thailand. Other supplies in the market are mainly imported from
China and Japan. Chemical dyes can be obtained from yarn/fabric traders
or local input suppliers.
Production Stage
Washing is normally applied to natural dyed fabrics to remove excess colour
and to soften the texture. This washing will help to remove excess colour
but it is not an effective way to stop colour bleeding.
EU legislation restricts the use of arylamines (from AZO dyes) in textile
products marketed in the EU as arylamines pose a potential cancer risk.
This legislation is applicable to all textile products that may come into direct
and prolonged contact with human skin. Testing for AZO dyes is, at the
moment, often not required for Thai home textile products exported to the
EU but might be needed in the future.
Retailers and customers in the silk trade are often connected through postal
services and air transportation links, including international airfreight
forwarders like DHL, TNT and UPS. Depending on the export destination,
volume and time required and the relationship with an airfreight carrier,
outbound transportation costs ranges from 5-10% of the total costs.
There is no official quality standard (e.g. colour fastness, shrinkage by
washing, water absorption, etc.) for home textiles in the EU. Despite EU
harmonisation, which enables free trade between the EU member states,
individual markets have different requirements regarding quality, type of
fabric, standards, sizes, colours, etc. Accurate information is best obtained
from national importers. Most importers work with certain minimum
requirements. In this respect, they have often formulated and stipulated
minimum quality requirements for materials and make.
Industry Structure
67
5.1 Institutions
The table on the following pages lists the names and the major functions of the
prominent institutions that are presently involved in the Thai silk sub-sector.
5.1.1
68
(www.qthaisilk.com)
Name
1 Queen Sirikit
Institute of
Sericulture
including 5 regional
offices and 21
provincial Queen
Sirikit Sericultural
Centres
Type
Government
Major Functions
Government
3 Department of
Industrial
Promotion
Government
4 Department of
Export Promotion
Government
Government
6 Thailand Textile
Institute
Government
69
Name
Major Functions
7 Textile Testing
Centre, Thailand
Textile Institute
Government
8 Thai Silk
Association
Association
9 National Metal
and Materials
Technology
Centre
70
Type
Government
71
5.1.2
(www.cpd.go.th)
5.1.3
(www.dip.go.th)
72
5.1.4
(www.depthai.go.th)
5.1.5
(www.cdd.go.th)
(www.thaitextile.org)
to coordinate within the private sector and between the public and private
sectors to align Thailands textile industry development with the master
plan, and
to follow the assigned directives under the master plan for an operational
continuity and efficiency.
5.1.7
(www.thaitextile.org/ttc-lab)
The objectives of the institute are to upgrade the entire textile industry to
enable Thailand to become a quality textile manufacturing country in line with
the market rather than a low-cost one, and to equip the Thai textile industry
with the readiness to enter a value-adding age under the same free-trade
system as in developed countries
73
5.1.8
(www.thaitextile.org/TSA)
The Thai Silk Association has been established by a group of leading silk
producers since October 2005 when Thai silk began to be recognised as a
significant sub-sector, both local and aboard. The objectives of the association
are to promote the production and trade of silk through such joint undertakings
as cooperation with relevant government agencies, exchange of knowledge
and technical information among members, and maintenance of standards and
improvement of quality.
5.1.9
74
(www.mtec.or.th)
5.2
Private Organisations
Name
Chul Thai Silk
Co., Ltd.
Private
company
Major Functions
Private
company
1.
Type
75
There is an important difference between the two companies. Chul Thai Silk
Co., Ltd., which is part of the Chul Group, specializes in yarn production, while
associate companies of the group specialize in the supporting activities for
yarn production (silkworm eggs production, training for farmers, de-gumming
and dyeing). In contrast, Thai Silk Company is a more vertically integrated
business, that combines production activities from contract farming to
specialized silk retail stores; this company has established a successful brand,
Jim Thompson, which has been successfully used to market a wide
assortment of silk products (fabrics, garments, and home textiles) on the
domestic and international market. A concise description of the two
businesses is presented below.
5.2.1
76
(www.chulthai.com)
Chul Thai Silk Co., Ltd. (CTS) is the largest Thai company in the Bivoltine silk
yarn sector and other silk related businesses. CTS only produces and supplies
Bivoltine yarn. The company was first established as family business in 1936.
During that period, the company was known as The Chul Cunvong Farm and
was the largest tangerine farm in the country. In 1967, the tangerine trees
were affected by a serious virus disease, which disrupted the production. The
company then turned to the silk business. In 1968, Chul Thai Silk Co., Ltd. was
founded. The development of the company was facilitated by the national
policies in place at the time, which encouraged domestic silk yarn reeling as a
substitute for yarn imports. During the establishment of the Chul-Thai Agro
Industries Co., Ltd, CTS also created a joint venture with two Japanese
companies. During the first 15 years the company experienced continuous
difficulties but eventually was able to find suitable technology and development
began to take place.
In 1987, the Dutch Government through the Netherlands Development
Finance Company (FMC) donated a grant for the amount of 8 million Baht
(approximately 180,000 EUR) to CTS. This finance support was aimed at
establishing a non-profit organisation called Chul Thai Silk Foundation, which
became a Sericulture Training Centre for farmers. To date, the company
estimates that over 7,000 farmers have been trained by the foundation. The
courses cover both mulberry and silk cocoon production and the farmers
trained by the foundation become Chul Thai Silk contract farmers. Estimates
provided by the company indicate that its contract farmers earn a combined
income of over 7 million EUR annually.
At present Chul Group has grown to include 5 companies and one foundation
that are deeply rooted in the silk business, and cover all aspects of the subsector from silkworm egg production to silk yarn reeling. To ensure diversity,
one company within the group remains outside the silk business and is
involved in growing citrus fruits and fish products. It is estimated that the
company employs about 2,200 people directly, in silk yarn reeling and related
activities, and contracts around 6,000 farmers for cocoon production. In 2005,
Chul Thai Silks yarn represented about 75% of the domestic production of
bivoltine varieties. Its silk yarns are sold in both domestic and export markets.
Chul Inter-Silk Co., Ltd manages the export markets.
5.2.2
(www.jim-thompson.com)
The business grew over the million-dollar mark in the 1960s and had a further
rapid expansion in the 1980s. According to the data provided by the company,
in 1967 (the year in which Jim Thompson disappeared under mysterious
circumstances), the companys turnover was approximately 1.3 million EUR.
The annual turnover expanded by 60% in a 5 year period in the mid 1980s as
the company responded to the renewed popularity of silk in international
markets and growth in the domestic economy accompanied by a dramatic
increase in the local tourist market. Currently the company ownership
comprises 51% Thai nationals with the remaining 49% owned by foreigners.
The company is a successful case of vertical integration in silk production. It
supplies silkworm eggs, purchases yarn from smallholders for processing (degumming and dyeing), and undertakes weaving, fabric designs and printing
and tailoring in its factories. All products are marketed through specialized silk
retail stores owned by the company under the brand name of Jim Thompson.
The main retail store is located in Bangkok where products are sold principally
to tourists. There are many competitors now, but Jim Thompsons name
remains synonymous with Thai silk. His Thai house still stands and is now a
museum run by the Jim Thompson Foundation that is popular among
international tourists.
James Harrison Wilson Thompson, a US born citizen, established the Thai Silk
Co., Ltd. in 1948. It is undisputed that Jim Thompson made a major
contribution to the Thai silk sub-sector, introducing distinctive quality, colours
and designs, and establishing a reputation for Thai silk in the international
markets. Major awards with which Jim Thompson was honoured are evidence
of the relevance and appreciation of his work. In 1962, in recognition of this
contribution to Thailand, the Royal Thai Government awarded Jim Thompson
The Order of the White Elephant.
77
5.3
OTOP project
78
OTOP stands for One Tambon One Product. The government initiative
launched in 2001 to identify and promote unique products made by a
particular sub-district as a means of expanding the countrys domestic and
international trade as well as improving incomes of villagers.
The OTOP logo created by the Department of Export Promotion is a symbol
of excellence. It is awarded to those handcrafted items, including silk,
produced in village communities that reach the standards set by the OTOP
National Committee and have good potential for export. The Ministry of
Commerce plays an important role in marketing the unique OTOP products
by introducing the very best to local and international markets, besides
providing advice to local communities on design, packaging and quality
control.
Queen bestows quality emblem for Thai silk
Figure 24: Peacock Emblems used for different Thai silk qualities
79
6.
The value chain splits for products going to export and domestic market.
Consequently, two value added tables were prepared as follows:
Table 11: Generated Value in the Export Silk Home Textiles Chain
(Source: Stakeholder interviews and Analysis by the Survey Team, 2007)
Chain Actors
Cost
Sales
Value
Added
Include
Retailer
80
Exclude
Retailer
Rearers
43
56
13
0.43%
1.56%
56
84
28
0.93%
3.39%
Handloom Weavers
84
319
235
7.84%
28.46%
Home Textile
Producers
319
526
207
6.92%
25.10%
Exporters (FOB)
526
868
342
11.43%
41.49%
Foreign Retailers
868
3038
2170
72.45%
Remarks:
1. Value addition is calculated based on one square metre of high-end silk fabric
2. Value addition is calculated for a simple silk home textile supply chain
3. Value addition is not necessarily representative for all home textile products value chains
4. Value added for rearers is approximately 30%
5. Value added for reelers and dyers is approximately 50%
6. Value added for handloom weavers is approximately 380%
7. Value added for home textile producers is approximately 65%
8. Value added for exporters is approximately 65%
9. Value added for foreign retailers is approximately 350%
10. Value addition at each stage can be improved by design, style, tactic, expertise, brand e.g. a
special design table linen will sell for EUR 200 against the same quality with simple design selling at
EUR 50
11. Rearers are highly depend on amount and effective use of labour (paid or family) and chemical
inputs and the impact on yield.
Expressed in a pie chart, rearers, reelers and dyers add less than 5% per
square metre of the value for silk home textiles, while handloom weavers,
home textile producers and exporters contribute 28%, 25% and 41%
respectively (excluding foreign retailers). Foreign retailers were not integrated
in order to more clearly show how much of the value each of the domestic
actors is retaining. Taking into account that home textile producers and
exporters are in many cases different branches of the same companies, this
group controls a majority portion of 67% of the value added.
Figure 25: Percent Value Added in the Export Silk Home Textiles Chain
81
Table 12: Generated Value in the Domestic Silk Home Textiles Chain
(Source: Stakeholder interviews and Analysis by the Survey Team, 2007)
Chain Actors
82
Cost
Sales
Value
Added
Rearers
43
56
13
2.23%
56
73
17
2.90%
Handloom Weavers
73
204
131
22.74%
204
265
61
10.60%
Wholesalers
265
344
79
13.78%
Retailers
344
619
275
47.75%
Remarks:
1. Value addition is calculated based on one square metre of silk fabric
2. Value addition is calculated for a simple silk home textile supply chain
3. Value addition is not necessarily representative for all home textile products value chains
4. Value added for rearers is approximately 30%
5. Value added for reelers and dyers is approximately 30%
6. Value added for handloom weavers is approximately 280%
7. Value added for home textile producers is approximately 30%
8. Value added for wholesalers is approximately 30%
9. Value added for retailers is approximately 80%
10. Value addition at each stage can be improved by design, style, tactic, expertise, brand etc.
11. Rearers are highly depend on amount and effective use of labour (paid or family) and chemical
inputs and the impact on yield.
The following actors control the following shares of the value generated in
the chain from production to retail consumption:
Figure 26: Percent Value Added in the Domestic Silk Home Textiles
Chain
(Source: Stakeholder interviews and Analysis by the Survey Team, 2007)
83
7.
84
There are low barriers to entry in the sector for a number of reasons. Home
textile production does not require high investment, the bargaining power of
buyers depends on consumer preferences. Silk home textile products from
different regions are unique. The threat of substitution, therefore, does not
come from other product type but mainly from other production areas.
New chemical fibres are more refined and similar in terms of look and feel as
that of silk and are easier to care for. Therefore, consumers of silk products
may switch to substitutes which look alike but where cost is lower.
Due to the high level of competition in domestic markets and also the low
switching cost for substitute products, buyers have power to dictate prices.
This is partially due to an increase in domestic production along with steady
demand. In general, buyers are able to source home textile products that
provide good quality and design at the lowest prices.
The supply industry, including yarns, fabrics and other accessories, has
moderately high bargaining power. This is because the majority of home
textile producers in Northeastern Thailand are small-scale producers who
invariably buy local available inputs in order to produce home textile
products. Hence, the increasing input costs force producers to use greater
amounts of capital. Producers have expressed their concerns regarding
rising production costs against the downward trend in the market price of
home textiles. As producers need inputs and buy them in small amounts,
suppliers have strong power. If producers adopt collective purchasing
initiatives, their bargaining power would increase however has not yet been
systematically capitalized.
85
86
Like the polyvoltine yarns, the poly-bivoltine and bivoltine yarns are not
internationally competitive against imports of Chinese and Vietnamese silk
yarn. Labour costs also form the majority of the costs along the chain, but the
composition of labour cost varies between the different chains; for example,
in the bivoltine yarn production chain, the major labour cost is for reeling,
while in the poly-bivoltine chain, the major labour cost is for cocoon
production. The World Bank (2006) indicated that labour costs would have to
reduce by 66 and 62% respectively in order for the production to become
competitive internationally. Like the case of the polyvoltine chain, reduction in
wages for the poly-bivoltine and bivoltine production would have negative
implications for the sustainability of the two yarns.
Possibilities for niche marketing do exist but it is essential for Thai products
to be well differentiated, correctly labelled and well branded.
87
88
Sector
Producers
markets
Improved ability to develop informed
long-term planning and foreign market
access strategy
Sales/Pricing
Product Identification
Market Identification
Production
Industry Marketing
89
Exporters
90
The Northeastern home textile sector does not have a clear strategic
direction or marketing strategy. Despite the existence of various exporters,
they are fragmented, with self-interest and short-term profit maximization as
a prevailing behaviour. Well performing silk enterprises, such as Jim
Thompson, are self reliant with no desire to undertake collaboration outside
their own spheres. Clear public policy is also lacking. In terms of marketing
(and branding) in particular, the Northeastern home textile sector is still
weak. Awareness of international (including EU) trends and issues,
particularly beyond the medium-sized exporters, is limited.
91
High-end Segment
Italy and France dominate the high-end segment of the market. Branding is a
key component of the high-end products, as it promotes exclusivity. Both
Italy and France have successfully branded their products.
92
Italy has been traditionally the largest producer, as well as importer and
exporter of silk products in Europe. Italy produces 91% of all the silk
products produced in Europe and is well known for highly developed skills in
silk processing (finishing, dyeing and printing silk fabrics). Processing of silk
is highly clustered in a single industrial district, around the city of Como
located close to Milan covering almost 80% of silk production and
processing in Italy. In Como, the annual production totals 3,200 tons of the
silk products, (materials for clothing, upholstery, decorating fabrics, scarves,
ties and shawls). This production for silk products generates export value of
about 1 billion EUR per year.
France is another country with a considerable silk processing industry. As is
the case in Italy, the industry in France is geographically concentrated and is
located around the city of Lyon. This industrial district is producing silk
fabrics of the highest quality for domestic consumption and for export.
Traditionally, more than 70% of the silk fabrics in the French market have
been used for apparel. France exports top quality silk fabrics to the US
market, with unit prices reaching 20 EUR per square meter.
As mentioned before, the price trends in the EU market indicate that most
Thai home textile producers are unlikely to be able to compete in the low end
of the market. Thai exporters therefore need to position themselves in the
medium to high end of the market in order to be able to compete and make
exporting worthwhile. Generally, medium to high end market requirements
include:
Quality of materials
Reliability of supply
Excellent design application
Branding much of the high-end market for home textiles in the
mainstream retailers is depending on brand names and designer labels, or
acceptance as a supplier of own brand/private label goods.
Goodwill and consistency are essential for survival in this sector. The
competition faced within this sector must be conducive to innovation and
creativity with regard to silk products. So, product design, development and
constant improvement become even more important as these are the
parameters that determine the market demand, facilitate the brand image
and generate higher profit margin.
The market for home textiles Silk sub-sector has weathered competition
from lower cost countries. Countries well known as exporters of silk home
textiles to EU markets include China, India and Vietnam. All of them seem to
be the main competitors of Thai home textiles.
Quality of workmanship
93
China
94
With the changing production pattern over time, China has emerged as the
world's largest producer (90%) and exporter of raw silk, accounting for 90%
share of global exports. China was the birthplace of the production of raw silk
and silk weaving. The fibre produced was so treasured that it became a
measure of currency and reward. The imperial courts in China even
established factories to weave silk fabrics for ceremonial use and for gifts to
foreign powers.
Chinas silk trade is being challenged by its foreign counterparts including
India, Vietnam and Thailand. The stylish silk fabrics of Thailand and India,
and the low-priced raw silk of Vietnam also pose a great threat to Chinas silk
trade. The lack of well developed silk brands and poor promotion of Chinese
silk products has also hampered the sectors exports. Sometimes, Chinamade silk products are made from raw domestic silks and packaged as part
of Italian brands, which are then sold at international prices. This scenario
has done little to help raise the profile of Chinas silk products.
India
India produces and exports an impressive
range of home textile products and has a wide
range of product capabilities, production
capacity, quality management and product
development skills. India held about 10%
share in the EU market with export revenues
of about 614 million EUR in 2005. Indian home textile handcrafts are in
demand globally, with home textile exports expected to increase from about 1
billion EUR in 2006 to about 4 billion EUR by 2010.
Besides large turnover and exports in home textiles, China has not identified
itself with the production or branding of any famous home textile brands in
the global market. This is due to the lack of fine designers in the home
textiles field and less aggressive approach by many domestic textile
manufacturers especially compared with other overseas regions. But, still
China is trying to increase its market share worldwide in the home textiles
segment. The Chinese domestic home textiles industry has been undergoing
great changes. Additionally, manufacturers are also attempting to set up
close co-operative relationships with textile institutes to develop more
capable and specialized designers.
95
With its large supply of relatively low-cost labour, India is known for its
capacity to provide relatively labour-intensive embellishments to home textile
products such as hand embroidery.
96
Compared with Thailand, there are several favourable factors that make
India one of the most threatening competitors for Thailand in the
international market. Beside factors mentioned above, particularly for
European markets, the country is a threat due to a good relationship with EU
markets especially the UK. Nevertheless, Thailands inbound transportation
is better than Indias.
India is the world leader in raw silk imports, holding a 33% market share.
India has become the largest importer of raw silk, despite the fact that it is
now the second largest producer (13%) of raw silk after China (70%). In India
local demand greatly exceeds supply, which limits export growth potential.
India has the unique distinction of being the only country in the world
producing all the commercially known varieties of silk - Mulberry, Tasar, Eri,
and Muga. Growing demand for traditional silk fabrics and exports of
handloom products drives raw silk demand in India.
Vietnam
97
Key
Competitor
China
98
Thai Advantages
Competitor Advantages
Higher volume
Cheaper prices
Big market share
Higher volume
Cheaper prices
Big market share
Availability of cheap labour
Relations with the UK market
Design expertise
Higher technology
Vietnam
Smoother logistics
Higher volume
Better standards
Cheaper prices
More consistent labour supply
Initial benchmarks and a full explanation of the scoring system of silk home
textiles for Thailand and other key competitors are provided in Annex 11.2.
The major challenges to the silk sector in Northeastern Thailand are how:
to improve its position in the world handloom silk trade,
lower costs,
99
The sector will need to upgrade its adherence to standards and quality
(e.g. design) in order to build a solid reputation.
100
Very Relevant
Product Innovation / Upgrading
Relevant
Quality Improvement
Medium-term relevant
Cost Reduction
Based on the findings of this study, the Northeastern home textiles sector
should focus on the following issues to increase its exports to EU markets.
Thailand will only be able to expand market shares and challenge the EU
markets if product innovation and quality upgrading are successfully merged
in highly competitive value oriented pricing strategies.
101
8.
8.1
Rearers
Polyvoltine Varieties
102
Poly-bivoltine Varieties
Dependency
Besides the contract farmers of a few private companies, poly-bivoltine
rearers are dependent on the QSIS as the sole egg supplier. The need to
procure silkworm eggs from the QSIS means that they are vulnerable to
supply shocks if the QSIS cannot provide enough silkworm eggs for all
the rearers that demand them.
Bivoltine Varieties
Dependency
Almost all bivoltine rearers are contract farmers. Bivoltine rearers are
dependent on the contracting company as the sole buyer of their
products. The company dominating contract arrangements in the
Northeast is Chul Thai Silk Co., Ltd.
8.1.2
Common Constraints
Apart from specific constrains all rearers face also several common
constrains.
Mulberry shortage
Mulberry disease
Root-rot is the most common disease that affects Mulberry in Thailand. It is
one of the major problems faced by rearers as the spread of mulberry root-rot
is gradually wiping out large stands of mulberry. The disease spreads very
easily and contaminates the soil. The DOA, DOAE and QSIS are trying to
overcome this problem through a special mulberry-breeding program but so
far there has no certified root-rot resistant mulberry variety been developed.
There appear to be however two varieties with some level of resistance; an
improved variety called Buriram 60 and a local variety call Khun Pai.
103
104
Limited knowledge
Often rearers have limited understanding of the importance of good rearing
practices such as disease control and rearing techniques for cocoon yield
and quality. There is an apparent lack of information and dissemination of
production technologies.
105
8.2
Pre-processors
8.2.1 Reelers
Inconsistency of supply
Silkworms and mulberry leaf quality depends largely on natural conditions
such as weather and rainfall. If there is natural disaster such as a flood,
yields will be very low affecting market supply and also impacting reelers.
Lack of planning as well as inconsistent labour supplies during periods that
coincide with the time of rice growing/harvesting can also cause inconsistent
supplies. Throughout a typical year there are limitations at all levels in the
capacity to effectively plan and manage supplies in this sector.
Inconsistency of quality
106
8.2.2
Dyers
8.2.3 Weavers
Absence of development & design
As mentioned previously, there is a high diversity of weaving techniques and
fabric patterns. But not all Thai styles and patterns appeal to international
customers. There is a tendency to produce too much product with too much
variation in fabric patterns that cannot be sold, leading to large product
stocks. The product mix is not properly managed; products with mis-matched
designs are difficult to sell in the export market and will lower the productivity,
particularly with input/output ratios.
107
8.3
108
Develop design skills and knowledge about colours, style trends, etc.
* OEM is a business model, which focuses on the manufacturing process rather than on
design or branding.
** ODM is a business model, which focuses on design rather than on branding or
manufacturing.
***OBM is a business model, which focuses on branding rather than on design or
manufacturing.
8.4
Trading Agencies/Exporters
109
Thai exporters experienced difficulties in obtaining export orders not only due
to the market or quality of products but also because of the transaction and
fluctuating exchange rate risks. The profit margin of exporters can be
seriously affected by currency fluctuations. This is a common risk with
international business.
110
Diversify markets.
Establish direct linkages with foreign buyers and develop stable trading
relationships with those buyers.
8.5
Very few home textile producers and exporters appreciate the importance of
product design and development. Designers work principally with colours,
shadows, illusions, shapes, proportions, feelings, moods, and trends.
Exporters need to understand how buyers in foreign markets look at a
product so they can adopt suitable product development strategies. This has
an effect on the blend of fibres, to the yarn counts, fabric design, finishing
and composition of collections.
Notably home textiles is yet another market in which design capacity and
expertise are of great importance, especially in the case of the more upmarket items such as co-ordinated product lines for the bedroom and
bathroom. Absence of market information has reduced the competitiveness
and bargaining power of producers forcing them to be price takers.
111
112
113
Chemical residue
114
Photo 39: Dyed Eri Silk Cocoons using Natural Dye Stuff
(Workshop on Eri Silk)
Smuggling yarn
Smuggling silk yarn not only causes sizable losses in selling prices, but also
adversely affects the volume of local yarn trade. Several survey informants
advised that significant volume of silk yarns are smuggled into Thailand and
is sold at relatively low price at the moment. The smuggling of Vietnamese
and Chinese silk yarn has resulted in a reduction in local yarn production.
The existing border controls are weak and it is believed by informants that
informal imports are sizable even though clear estimates are lacking.
Weavers use the imported yarn because it is cheaper and it is relatively
difficult to distinguish from Thai yarn. The price of informal imports in 2007
was around 6 EUR per kg. lower than the domestic price. The cost of silk
yarn for weft (150-200 denier) at the village level is around 18-19 EUR per
kg. and in order to make a profit, producers have to sell at 21-22 EUR per
kg. while the imported yarn is only 14-16 EUR per kg. As a result, the
domestic silk yarn buyers can reduce the buying price of the local yarn to buy
at the same price as that of smuggled yarn.
115
116
9.
The study team used the following matrix to categorize the constraints on the
basis of the variable factors.
Variable 1:
Variable 2:
117
The identified constraints were assessed on the basis of all the factors
mentioned above. In the table below, each of the constraints was rated
according to the degree of their impact on the given factors. The rating was
done on the basis of the outcome with key informants, available secondary
information and the impression and experience gathered during the field
survey by the study team. The last column of the table, illustrates the
probability for the programme to address constraints directly or through
service providers.
118
Constraints
25
%
6
25
%
7
Total
Program
Intervention
Possibilities
6.25
Partly
50
%
6
Mulberry shortage
6.00
Partly
Mulberry disease
6.00
Partly
6.50
Yes
6.00
Partly
4.50
Partly
6.25
Yes
5.25
Partly
5.25
Partly
10
7.00
Partly
11
6.50
Partly
12
6.00
Partly
13
7.00
Partly
14
10
9.50
Yes
15
9.00
Yes
16
9.00
Yes
17
6.00
Partly
18
8.75
Yes
19
9.00
Yes
20
6.00
Partly
21
Chemical residue
6.50
Partly
22
Smuggling yarn
6.00
Partly
23
7.00
Partly
Based on the output of the exercises, the following selection matrix was
developed by the study team. The constraints were plotted on the basis of
their rating against the variable set. To simplify the process of plotting the
constraints in the matrix, the serial number of each of the constraints has
been used. The matrix has nine quadrants to classify the constraints.
The following constraints match with the programmes objective and may
also create a moderate impact on the targeted entry to EU based niche
markets.
119
10.
Intervention Design
10.1
The crucial themes to focus in the Northeastern home textiles are as follows:
Intervention Design
120
The existing linkages between stakeholders along the value chain need to be
strengthened and new linkages developed. If there is no coordination along
the chain it is difficult for fine silk products to be produced, transformed or
processed, marketed and then ultimately sold. Feedback between
consumers and producers (and all stakeholders along the chain) is vital for
both sales of existing product (matching supplies with demands both spatially
as well as temporally) as well as the development of new products to cater
for changes in demands. It is clear that any intervention in the marketing
system is ultimately unsustainable unless there is a strengthening of the
linkages between stakeholders. A lack of linkages between non-adjacent
levels of the chain perpetuates a situation where there are multiple
middlemen handling the silk product from farm gate to consumers, with the
attendant increase in losses and financial inefficiencies from multiple
handling, packaging, storage and transportation. Also, a lack of trust between
stakeholders has a dampening effect on transactions, particularly in an
environment where there are no enforceable contracts.
Developing Markets
The reliance on a few main markets leaves the home textile sector
vulnerable and is limiting expansion of the sector. Producers and exporters
would like to access more markets but lack the skills/knowledge in this area.
The limited existing services for EU markets need to be expanded whilst
exploring the development of innovative new models. In addition, there is a
potential opportunity to capture more profits with niche target groups such as
non-mulberry silk home textiles and natural dyed home textiles. Marketing
and promotion of Thai products and correct branding will improve the sector
standing and increase its market share in the EU market.
The provision of and satisfaction with existing services were explored with
stakeholders in interviews, discussions and at the validation workshop on
24th April 2007. The tables on the next pages contains a summary of the
findings.
Intervention Design
10.2
121
Service
Provider(s)
Awareness /
Access
Satisfaction
Cost
Coverage
Intervention Design
122
Inputs &
Farming
System
Advice
DOAE,
DOA,
QSIS, a
few
companies
50%
50% (farmers
request more
know-how,
labour-saving
techniques)
Commercial,
some
subsidized
extension
training /
service
A documented
traceability system to
track the registered
product must be in
place. Record
keeping is vital. It is
important to note that
chemical used must
comply with EU MRL
regulation
Supply of
Silkworm
eggs
Internal,
QSIS, a
few
companies
100%
60% (more
reliable, could
improve
quality and
higher yield)
Commercial,
some
subsidized
extension
training /
service
Document to show
origin and/or
guarantee is
important.
Irrigation
Internal,
numerous
private
providers
100%
80% (could
improve
efficiency and
effectiveness)
Commercial
Suitable irrigation
systems could
improve efficiency
and effectiveness.
Testing,
Inspection,
Certification
Internal,
foreign
consulting
agencies
i.e. SGS,
Textile
Testing
Centre,
DSS
20%
50% (not
thorough
coverage)
Commercial
Certification is the
key tool to provide
credibility,
transparency, and
integrity of quality
assurance systems
for high-end/niche
markets. Consumer
health and safety are
very important
throughout the textile
chain, from farming to
processing to the end
market. For this
reason, the need for
good quality
management takes
on increasing
importance.
Service
Provider(s)
Awareness /
Access
Satisfaction
Cost
Coverage
70% (need
more
consistent
and reliable
labour force)
Commercial
Appropriate labour
practice is a very
important determinant
of consistency and
high quality supply,
which is essential for
maintaining customers.
40% (cost
could be
lower and
more
thorough
coverage)
Commercial
Handloom Weavers
Provision
of labour
Internal
Testing,
Inspection,
Certification
Internal,
foreign
consulting
agencies
i.e. SGS,
Textile
Testing
Centre,
DSS
100%
20%
Intervention Design
123
Service
Provider(s)
Awareness /
Access
Satisfaction
Cost
Coverage
Intervention Design
124
Packaging
Internal,
several
companies
100%
70% (made to
order; could
improve
efficiency &
effectiveness)
Commercial
Testing,
Inspection,
Certification
Internal,
foreign
consulting
agencies
i.e. SGS,
Textile
Testing
Centre,
DSS
20%
40% (cost
could be lower
and more
thorough
coverage)
Commercial
Service
Provider(s)
Awareness /
Access
Satisfaction
Cost
Coverage
Air Freight
Several
companies
100%
70% (cost
could be
lower)
Commercial
Exporters should
position themselves as
reliable suppliers who
can commit to delivery
times. The logistic
concepts aim at having
the right goods at the
right time, in the right
volumes at the right
place and all that at a
minimum of costs. Due
to its great importance,
delays are not
tolerated.
Sea
Freight
Several
companies
100%
80% (cost
could be
lower)
Commercial
See above
Marketing
to
Importers
Internal,
DEP
100%
40%
(supporting
function;
basically rely
on their own
competitiveness)
Commercial,
some
subsidized
Europe is a continent
and not one market,
but a patchwork of
markets with different
characteristics. For
that reason a selection
of target countries has
to be made for
marketing purposes.
The general approach
is to choose a limited
number of countries:
and classify them as
primary and secondary
targets.
Packaging
Internal,
several
companies
100%
80% (could
improve
efficiency &
effectiveness)
Commercial
Exporters
Intervention Design
125
Intervention Design
Handloom Weavers
126
Handloom weavers note that there is still a limited supply of skilled labour to
respond to increasing labour demands for production. There is no reliable
and consistent labour force other than family members. The satisfaction rate
for provision of labour is ranked at 70%.
Testing for chemical residues is sometimes required in order to ensure
exporters will purchase finished products. Satisfaction is ranked at 40% to
reflect the need for more thorough coverage in testing services and the
desire for lower costs of testing services.
Home Textile Producers
The satisfaction rate for packaging is ranked at 70%. The high costs and
made-to-order nature of current packaging could be improved with more
suppliers and greater innovation and/or buying schemes.
The study indicates the limited scope for intervention in the sector particularly
in terms of immediate intervention to enhance export opportunities to EU
markets. However, the opportunity of intervention to enhance domestic
operations with an intention to increase future potential clearly exists.
Intervention is needed to strengthen the entire value chain and the following
areas have been identified as critical success factors for the development of
a sustainable home textiles sector in the Northeastern region and its
transformation from a supply driven focus into a demand led sector.
Intervention Design
127
Design
EU Market
Production
EU Market
Demand
Input
EU Market Demand
Design
Intervention Design
128
Input
Enable widespread and efficient access to cost effective raw materials
Co-ordinated research and development leading to availability of new
materials, new technologies and new applications
Production
EU Market
Intervention Design
129
Intervention Design
130
Support services to enable the right product to the right market at the
right time
Enabling Environment
Ideas for interventions came primarily from the constraints in the sub-sector
as depicted in the map as follows on the next page:
Intervention Design
131
Intervention Design
132
IV 1
Intervention 1
IV 2
Intervention 2
IV 3
Intervention 3
IV 4
Intervention 4
Intervention Design
133
Service solution
Coordinator
EU-HT
Partners
FGM
Home textile poducing SMEs
Home textile exporters
Funding of
intervention
Clients
Role of EU-HT
Intervention Design
FGM
134
Measures
Duration of
engagement
8 months
Exit strategy
Producing SMEs and exporters intensify and scaleup engagement in niche markets and related
exhibitions
DEP integrate information on niche market into their
exhibition promotion policy
Service solution
Coordinator
EU-HT
Partners
FGM
TTC/THTI
Funding of
intervention
Clients
Role of EU-HT
FGM
Measures
Duration of
engagement
6 months
Exit strategy
Intervention Design
Expected impact
135
Intervention Design
136
Expected impact
Service solution
Coordinator
EU-HT
Partners
Funding of
intervention
Clients
Role of EU-HT
FGM
Measures
Duration of
engagement
12 months
Exit strategy
FGM
Research units
Pre-processors
Home textile producing SMEs
Service solution
Coordinator
EU-HT
Partners
FGM
IVN
THTI
Funding of
intervention
Clients
Role of EU-HT
FGM
Measures
Duration of
engagement
Exit strategy
18 months
Intervention Design
137
11. Annexes
Annexes
138
Respondents
Organisations/Companies
K. Phongsuda Nilbanjong
K. Umaporn Chansirichoke
K. Nuntana Tangwinit
K. Suwadee Salmon
K. Stephen Salmon
K. Siladda Tabpinthong
K. Kwanruthai Puengthamsakda
K. Nuengruthai Saesangseerueng
K. Ladawan Silppothakul
7
8
9
K. Kamolluck Panthasane
K. Akkarin
K. Pilan Dhammongkol
Thanapaisal R.O.P.
Double Star Industry Co., Ltd.
Thanapaisal R.O.P.
10
K. Chanpen Taagamnerd
Sankangpla group
11
K. Jiraporn Tulyanond
12
K. Apisith Promyannont
13
K. Sakchira Wiengkao
14
K. Sumate Phunkaew
15
K. Nataya Boonvanno
16
K. Virat Thandaechanurat
K. Peeraporn Palapleevalya
K. Kanyanuch Sinsuwannakul
17
K. Surachai Jinarakpong
18
19
K. Peerapan Weerapong
20
K. Tidarat Tiyajamorn
SilkNet
21
K. Sangduen Aomthaisong
22
K. Prakong Pasatiti
23
24
K. Jaranya Wongprom
K. Sangwarn Teemui
Praepan Group
Ban Reng Khai Foundation
25
K. Amnuay Khusiricharoenphanit
26
K. Pongpeera
27
K. Pareuhat Tamcharoen
K. Surachot Tamcharoen
28
29
K. Lakkana
K. Ratta
30
K. Poonsub Tulapun
HomeNet
Production
1.1
1.2
1.3
1.4
1.5
1.6
2.
2.1
Scores
2
(Fair)
3
(Good)
a) Air (hours)
b) Ship (days)
2.2
3.1
3.2
Thailand
China
Source: Own analysis based on interviews carried out with sub-sector stakeholders and resource
persons in March- May 2007
Annexes
3.
139
Benchmarks
1
(Poor)
1.
Production
1.1
1.2
1.3
1.4
1.5
1.6
2.
2.1
Scores
2
(Fair)
3
(Good)
a) Air (hours)
b) Ship (days)
2.2
Annexes
b) Seafreight
140
3.
Market Features
3.1
3.2
Thailand
India
Source: Own analysis based on interviews carried out with sub-sector stakeholders and resource
persons in March- May 2007
Benchmarks
1
(Poor)
1.
Production
1.1
1.2
1.3
1.4
1.5
1.6
2.
2.1
Scores
2
(Fair)
3
(Good)
a) Air (hours)
b) Ship (days)
2.2
3.1
3.2
Thailand
Vietnam
Source: Own analysis based on interviews carried out with sub-sector stakeholders and resource
persons in March- May 2007
Annexes
3.
141
Benchmarks
1 (Poor)
2 (Fair)
3 (Good)
Less than 10
10-20
More than 20
Less than 15
15-30
More than 30
Less than
100,000
100,000500,000
More than
500,000
More than 9
7-9
Less than 7
Less than
500
500-800
More than
800
More than 2
1-2
Less than 1
More than 60
hours
40-60 hours
Less than 40
hours
More than 25
days
15-25 days
Less than 15
days
a) Air freight
More than 3
2-3
Less than 2
b) Sea freight
More than
0.3
0.2-0.3
Less than
0.2
Less than 10
10-15
More than 15
Low cost
Medium cost
High cost
1. Production
1.1 Raw silk production (% of world
production)
1.2 Mulberry yield (tones per ha per
year) (vary widely by variety)
1.3 Mulberry planted area (ha)
Annexes
3. Market Features
142
Benchmarks
China
India
Vietnam
Thailand
1. Production
1.1 Raw silk production (% of world
production)
71.13
11.33
9.15
1.14
15-22
35-65
34-63
37.5-67.5
626,000
280,000
250,000
35,000
5.55-6/1
8.77/1
7.5/1
10/1
7001,300
(Hybrid)
8001,000
(Multivoltine)
7001,000
400
(Hybrid)
a) Air (hours)
b) Ship (days)
a) Air freight
b) Sea freight
(Native)
2. Supplies/Logistics
2.1 Distance to EU Retailers shelf
Annexes
3. Market Features
143
11.3
HS. Code
Annexes
0.03
UK (100%)
0.60
0.39
0.03
9.14
0.22
12.53
144
Export
Value
(EUR
million)
11.4
Term Description
Descriptions of key terms as used in the context of this report are given
below.
Niche Markets
Niche markets are specialized export markets for a particular product or
service. Niche markets, where primary demand is for differentiation or
uniqueness, are understood as an opportunity for home textile exporters to
exploit a particular economy.
Niche products can be defined as items whose primary value lies in
differentiation and their particular suitability for a relatively small number of
purchasers. Typically niche products are perceived by purchasers as high
value and differentiated, and are priced accordingly.
Niche markets are often contrasted with mass markets. Niche products have
a special differentiated appeal to a limited numbers of purchasers. Mass
products have a broad appeal to the undifferentiated mass of consumers.
Mass products for mass markets usually rely on economies of scale and cost
efficiencies, and compete largely on the basis of price. Consumers of interest
in niche markets are those who want specialized, differentiated products.
Price is not the most important consideration to these consumers. These
niche markets provide potentially profitable opportunities for small producers.
Annexes
The key to success in this context is to understand what the market wants, or
may want, and ensuring to produce what the market wants. Critical to this is
the use of information. Producers need to understand what they can produce
as well as that the customer wants. Producers need to identify and
understand all of the steps between production and purchase of a product, to
ensure that products can meet customers needs at a competitive price.
Although niche markets are price inelastic, it is still an important
consideration in any exporting decision.
145
Organic
The USDA defines organic as An ecological production management
system that promotes and enhances biodiversity, biological cycles and soil
biological activity. It is based on minimal use of inputs and on management
practices that restore, maintain and enhance ecological harmony. When
choosing organic products, it is important to know if the product was made
from Certified Organic base materials and any potentially harmful finishing
processes used to produce the final end product.
Annexes
146
Fair Trade
Fair trade is a trading partnership based on dialogue, transparency and
respect that seeks greater equity in international trade. It contributes to
sustainable development by offering better trading conditions to, and
securing the rights of, marginalized producers and workers. The fair trade is a
movement promoted by non-governmental organisations from all over the
world, which are engaged in the commercialisation of the products, which
come from the Third World. It aims at changing the unfair commercial
transactions between the developed and developing countries. This
movement is promoted by important organisations such as the International
Federation for Alternative Trade (IFAT), the European Fair Trade Association
(EFTA), the Fair Trade Labelling Organisation (FLO), the Network of
European World Shops (NEWS), etc.
Producers receive a fair and stable price, which covers the costs of
sustainable production and a Fair trade premium for investment in social
development projects.
Annexes
147
11.5
Brief overview :
Child Labour: No workers under the age of 15; the company shall not
expose young workers (age over 15 and under 18 years) to situations in or
outside of the workplace that are hazardous, unsafe, or unhealthy.
Forced Labour: No forced labour, including prison or debt bondage labour;
no lodging of deposits or identity papers by employers or outside recruiters.
Health and Safety: Provide a safe and healthy work environment; take
steps to prevent injuries; regular health and safety worker training; system to
detect threats to health and safety; access to bathrooms and potable water.
Freedom of Association and Right to Collective Bargaining: Respect the
right to form/join trade unions and bargain collectively; where law prohibits
these freedoms, facilitate parallel means of association and bargaining.
Annexes
148
Farmers
Advantages
Particularly when growing new crops, farmer face the risk of both
market failure and production problems
Annexes
149
Testing List
Unit Price
3,000.00
Annexes
Polyester Blend
150
PH Value
Formaldehyde Content
Heavy Metal
5,000.00
400.00
1,350.00
Pb
600.00
Cd
600.00
Cr
600.00
Cr(VI)
800.00
Co
600.00
450.00
220.00
300.00
400.00
370.00
390.00
320.00
350.00
600.00
310.00
Total
13,660.00
Vat 7%
956.20
14,616.20
11.8 Sources
A Handbook for Value Chain Research, Institute of Development Studies,
University of Sussex, 2001
A Practical Market Access Guild for the Western Cape Crafters: Home
Textile & Soft Furnishings in the USA & UK Markets, Prepared for CCDI
(Cape Craft & Design Institute) by Kaiser Associates, 2003
A Unique Village Silk Weaving Project in Thailand, Ban Reng Khai Website,
2007 (http://www.banrengkhai.com/pages/village.html)
A Unique Silk Production in Thailand Ban Reng Khai Website, 2007 (http://
www.banrengkhai.com/pages/silk.html)
A Unique La Silk Product in Thailand Ban Reng Khai Website, 2007
(http://www.banrengkhai.com/pages/lea_silk.html)
Adjusting to a New Era for Textile and Clothing, Asia-Pacific Human
Development, 2006
AUTEX Research Journal, Vol. 3, No. 4: Environmental Indicators of Textile
Products for ISO (Type III) Environmental Product Declaration, Institute of
Fibre Materials Science, Tampere University of Technology, 2003
CBI Market Survey: The Household and Furnishing Textiles Market in the
EU, CBI Market Information Database, CBI, August 2006
Chemicals Policies in Europe Set New Worldwide Standard Registration,
Evaluation and Authorization of Chemicals (REACH), Lowell Centre for
Sustainable Production, 2003
Chinas Textile and Clothing Industry, Larry D. Qiu, 2005
Clothing for People with Sensitive Skin, Disabled Living Foundation, 2006
Countdown to REACH, Deloitte, 2007
Craft Industry Development Strategy, Newfoundland and Labrador, 2002
Annexes
151
Annexes
152
Annexes
153
Annexes
The Importance of Public Investment for Reducing Poverty in MiddleIncome Countries: The Case of Thailand, Fan, Shenggen, Somchai
Jitsuchon and Nuntaporn Methakunnavut, International Food and Research
Institute, 2004
154
Annexes
World Distribution and Utilization of Mulberry and its Potential for Animal
Feeding, Manuel D. Snchez, Animal Production Officer Animal Production
and Health Division FAO, Rome (www.fao.org/docrep/005/X9895E/
x9895e02.htm)
155
Websites:
www.cbi.nl
www.customs.go.th
www.depthai.go.th
www.dip.go.th
www.doae.go.th
www.doa.go.th
www.fao.org Agriculture Statistical Database (FAOSTAT)
www.ibef.org
www.industry.go.th
www.qsilk.net
www.thaitextile.org
www.usda.gov
www.wto.org
www.salamaithai.com
www.thaitextile.org/TSA/
www.qthaisilk.com
Annexes
www.jimthompson.com
156
Acknowledgements
Publisher
Institute for Science and Technology Research and Development (IST)
Chiang Mai University
The study was produced by contributors
from IST, Chiang Mai University, namely:
Assoc. Dr. Chesada Kasemset
Dr. Astrid Faust
Mrs. Nittaya Mahachaiwong
Mr. Wim Bloemen
Mr. Surachai Leewattananukul
Ms. Siripun Charleanchaimonkon
Ms. Usakorn Wattanakool
Mrs. Duangtar Novacek
Ms. Nipasak Kongngam
Mr. Amnuay Wattanakornsiri
Ms. Piyachat Kriwanit
Mr. Rattapon Panjaruang
Ms. Nanthana Kongkamin
Ms. Juthamas Suparatwarakul
Ms. Phakwilai Sahunaru
Ms. Ketsuda Karakan
and from FBA, Chiang Mai University, namely:
Photography
Ms. Kotchakorn Moonta
Mr. Worn Donchai
Mr. Nakorn Sarawana
Funding
The project was co-financed by the European Union
Proofreading
Mr. Chris Catto-Smith
Layout
Ms. Petra Erbe
Print
Blue Print Design
Acknowledgements
157
Disclaimer
This document has been produced with financial assistance of the European
Commission.
The views expressed herein are those of the Institute for Science and
Technology Research and Development, Chiang Mai University, and can
therefore in no way be taken to reflect the official opinion of the European
Commission.
On behalf of
Institute for Science and Technology Research and Development (IST)
&
Faculty of Business Administration (FBA), Chiang Mai University
Address
Institute for Science and Technology Research and Development (IST)
Chiang Mai University
239 Huay-kaew Road, Tambon Suthep, Amphoe Muang, Chiang Mai 50200,
THAILAND
or
Address
P.O. Box 111, Chiang Mai University, Chiang Mai 50200, THAILAND
158
Tel.:
Fax.:
+66 53942476
E-mail:
eu-ht@ist.cmu.ac.th
cotton@ist.cmu.ac.th
Website: www.thaihometextile.net