| Research Abstract |
The Thai government has hammered out a plan to turn Bangkok into a "fashion city," allocating a special budget of 1.82 billion baht for the project. In the area around Bangkok's Ratchaprasong crossing (about 67,000 square meters) are concentrated the largest commercial facilities in the city, including Amarin Plaza, Erawan Sogo, Gaysorn Plaza, and Peninsula Plaza. Under the plan, the Bangkok International Fashion Academic (BIFA) was opened on the 20th floor of the Siam Discovery Center as a fashion human resources development center, and the Fashion Trend Center was constructed on the 6th floor of the Central World Tower.
While the Thai Ministry of Industry is creating 11 fashion industry enhancement programs to give shape to the plan, the Ministry had previously formulated an industrial restructuring action plan in June 1998, making efforts toward restructuring and enhancements to international competitiveness in 13 specially-recognized industries. The three fashion industry pillars of
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textiles and apparel, shoes and leather, and gems and jewelry have also been designated as specially-recognized industries, with strategies to restore competitiveness and foster industry flexibility being adopted. These can be seen as a response to the rise of China, which casts a shadow over Thailand's prospects for continued development based solely on contract manufacture of low-tech products. For example, in the textile and apparel industry an AFTA agreement reducing intra-regional tariffs to from 0 to 5% beginning January 2000 is causing Thai products to lose market share to low-cost goods manufactured in other countries in the same regio, such as Indonesia and Vietnam. Furthermore, a WTO agreement enforced free competition in the textiles industry from 2005, meaning that Thailand could no longer depend on a quota market based on export quotas. Hence the Bangkok Fashion City plan is also an industrial measure aimed at strengthening international competitiveness in three segments of the fashion industry.
The first chapter of this report looks into what the Bangkok Fashion City plan is. First the background and history of the plan are explained. In January 2002 the Textile Industry Development Institute, an independent corporation of the Ministry of Industry, held a seminar in Kanchanaburi Province on the subject of what steps would have to be taken to make Thailand into the epicenter of the regional fashion industry. It was at this seminar that the framework for the Bangkok Fashion City plan was conceived. After receiving approval at a Cabinet meeting in July 2003, the Bangkok Fashion City plan moved into contract tasks with businesses for the 11 sub-projects.
The 11 sub-projects are divided into three categories: Human Creation, Business Creation, and City Creation. "1. Fashion Human Resources Development Plan" falls under the category of Human Creation, while "2. World Fashion Trend Collection Plan," "3. Textile and Apparel Industry Competitiveness Enhancement Plan," "4. Shoes and Leather Industry Competitiveness Enhancement Plan," and "5. Gems and Jewelry Industry Competitiveness Enhancement Plan" make up the Business Creation category. Finally, City Creation encompasses "6. Exhibition Plan," "7. Fashion Trend Creation Plan," "8. International Fashion Design Contest Plan," "9. Target Market Cultivation Plan," "10. Thai Designers' Fashion Achievements Collection Plan," and "11. Bangkok Fashion City Image Creation Plan."
This report indicates the goals and challenges for these 11 sub-projects and explains how these matters are currently being addressed. Having looked at the current status of the plan, the following assessment has been made as to the progress so far: Tienchai Mahasiri, president of the Thai Garment Manufacturers Association states, "It is impossible to bring up a fashion capital in a short time period; rather it is something to be built up steadily over time." As this comment indicates, there can be no immediate judgment on the success or failure of the Bangkok Fashion City plan. It depends on how the Human Creation aspect plays out and how creatively-gifted designers emerge. Hence it is not something that can happen overnight, but rather something that will have to be assessed over time.
The Bangkok Fashion City plan is not just about Human Creation and City Creation; most of all it concerns Business Creation. Business Creation refers to plans aimed at strengthening the competitiveness of three core segments of the fashion industry: textiles and apparel, shoes and leather, and gems and jewelry. Chapter 2 deals with the textiles and apparel industry, giving an overview of the international market conditions in this sector.
Nearly all of Thailand's apparel manufacture is commissioned from leading global companies or subcontracted internationally. Leading global companies scatter manufacturing hubs across the globe in a constant effort to reduce costs; they have no loyalty to Thailand. Hence the only way for Thailand's textiles and apparel industry to stay in the game is to create its own designs and compete with its own brands. The country can only do that by surveying global market trends, researching the unique cultural characteristics and selling points of each area, and manufacturing and selling products in anticipation of market demands. This will require the apparel industry to improve its supply chain and implement other structural reforms necessary to operate in this age of globalization. The Ministry of Industry must also work on improving basic infrastructure for the apparel industry through Plan 3 of its Bangkok Fashion City Plan.
In Chapter 3 we take up the current status of the gems and jewelry industry and plans for its competitive enhancement. The export of Thailand's gems and jewelry industry mainly comprises of jewelry (genuine) going to the United States market, jewelry (genuine) and diamonds going to the EU market, and jewelry (genuine) and diamonds as well as other jewelry items going to the Israeli markets. Gems and jewelry are expected to trend toward items that reflect the lifestyle and raise the spirits of their wearers. This points toward a likely increase in demand for custom-made gems and jewelry in the future. However, Thailand's gems and jewelry production centers on internationally sub-contracted manufacture and commissioned manufacture and does not respond directly to consumer demand. To sensitively respond to annually changing consumer demands it is important for the nation to develop gem and jewelry design capabilities and break into the consumer market with its own brands. This is why the Thai government is improving basic infrastructure through its Bangkok Fashion City plan.
The sub-projects Plan 5 and Plan 10 of the Bangkok Fashion City plan aim to enhance the competitiveness of the gems and jewelry industry. The plans to enhance industry competitiveness place special emphasis on cultivating human resources with the idea that this will lead to greater design capabilities and brand development. This is an attempt to develop Thailand's own design capabilities and brands and deliver them directly to consumers, since the country's gems and jewelry industry will soon no longer be able to survive on sub-contracted and commissioned manufacturing. However, these plans will not foster sufficient human resources on their own. It seems the country will need to make more consistent efforts by establishing new colleges or departments in the fields of gems and jewelry as well as opening gem designer schools or the like.
Chapter 4 examines the shoes and leather industry. The value of the Thai shoes and leather industry's exports in 2004 was about 70 billion baht, with leather articles accounting for 7 billion baht, shoes and shoe components accounting for 34 billion baht, and bleached and compressed leather articles accounting for 28 billion baht. The shoes and leather industry development projects focus on raising the standards of these products. In particular, the projects aim to move the industry out of commissioned manufacturing for leading global companies and into manufacture and sale of its own brands, or to enhance the brand power and business structure of manufacturers that already have their own brands in place. The projects further aim to transmit an understanding of the current fashion trends to manufactures of raw materials and components so that their manufacturing methods are more in line with the trends surrounding the finished products. This could lead to a reduction in or replacement of raw material imports.
A feature of the shoes and leather industry competitiveness enhancement programs is hence their objective of moving Thailand away from being an international sub-contracting center toward having Thai companies create their own designs and brands and having specialists propose individual business plans. In contrast, the competitiveness enhancement programs for the gems and jewelry industry and the textiles and apparel industry focus on cultivating human resources, putting together a training curriculum, and attending to the education of trainees. This indicates that the manner in which the specialist-proposed individual plans are implemented at each factory-or how structural reforms are carried out-will likely be determining factor in the feasibility of these projects.
Finally, I have translated materials relating to the Bangkok Fashion City plan and three reports from the Thai Development Research Institute (TDRI) that consider the impact of AFTA. The Federation of Thai Industry (FTI) commissioned a survey through the TDRI on how AFTA's coming into effect will impact the Thai fashion industry. The TDRI broke down the fashion industry into 1) the textiles and apparel industry, 2) the gems and jewelry industry, and 3) the leather industry. The institute surveyed the manufacturing conditions and international competitiveness and reported the findings to the FTI in 1996. This report contains translations of all three reports.
In the "Materials Relating to the Conception of Bangkok Fashion City" the following four articles are also translated and presented: an essay and an interview from a journal of the FTI, a special essay from "Turakij Khawna" magazine, and an essay from the Department of Industrial Promotion's "Utsaharakam Sam" magazine. These articles shed light on the expectations placed on the Bangkok Fashion City plan by the Thai manufacturing industry as well as the problem consciousness of the Minister of Industry at the time, Mr. Somsak Thepsutin, who promoted the plan. The special essay from "Turakij Khawna" magazine was written when the plan was still in its infancy, while the essay from the Department of Industrial Promotion's "Utsaharakam Sam" magazine was written one year after the plan's inception. Both essays take up the plan's 11 sub-projects and assess their execution status. I believe these essays and the interview article will enable the reader to grasp the basic content of the Bangkok Fashion City plan. Less
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