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.