This research examined the current state of Thailand's apparel industry and investigated the factors relevant to sustaining its competitive advantages in a global market. To our knowledge, this paper is one of the first to provide insights into the competitive advantage of the country's apparel industry. Analyses of primary and secondary data established the existence of the four determinants necessary for competitive advantage: factor conditions; demand conditions; related and supported industries; and firms' strategy, structure, and rivalry. These factors are central to Porter's (1990) Theory of Competitive Advantage of Nations and support the industry's competitiveness. It can therefore be concluded that the potential for its continued success in the global arena is positive.
Thailand possesses sufficient “factor conditions” related to the country's natural and human resources, which are necessary to enhance the country's competitive advantage in the apparel industry. Particularly, the generalized factor of unskilled and semiskilled rural workers can be transformed to skilled and educated workers through appropriate and rigorous training without having to relocate them to urban areas where the majority of apparel companies are located (i.e. Bangkok, Nonthaburi, and Samutsakorn). The government‐supported OTOP project is just one example of this educational approach. In addition, Thailand's infrastructure – its transportation, technology, and telecommunication – is strong compared to neighboring countries like Vietnam and Cambodia. As such, global apparel buyers sourcing from Thailand can expect efficient lead times and on‐time shipments (Kunz and Garner, 2007).
Westernization and the country's economic development have impacted the “demand conditions” factor of Thai market, resulting in a high level of consumer sophistication and demand for product diversification within the domestic market. Thai consumers are not only price conscious, but also value conscious as well as variety seeking when it comes to apparel shopping (Watchravesringkan et al., 2008).
Turning raw textiles into garments that can serve multiple functions has become important in the Thai market. Global warming concerns have received considerable attention among Thai consumers, pointing to the likelihood that apparel firms will continue to use natural fibers such as cotton for apparel products (TTIS Textile Digest, 2008). Finally, creating apparel brands that reflect a national “Thai‐dentity” could become an innovative way of ensuring Thailand's competitive advantage.
Thailand's related supporting industries assist apparel businesses in international competitiveness. The presence of interdependent economic agents that support the Thai apparel industry creates synergy effects that result in innovation. The willingness of one industry (e.g. apparel manufacturing) to cooperate with other industries (e.g. fabric producers) to develop and implement innovative ideas could become a new source of competitive advantage for the Thai industry. Research and development‐related institutions (such as the Thailand Textile Institute and universities) should cooperate closely with private sector textile and apparel enterprises and engage in activities like technology transfer and innovation diffusion to reinforce Thailand's competitive advantage.
Fierce global and local competition in the apparel industry has altered the strategy and structure of Thai apparel firms. Many have adopted agility as a strategic approach in response to unforeseen apparel market demands. A cluster network initiative sponsored by the Thai government, has proven to be beneficial to the industry, resulting in lower production costs, a high degree of productivity, and continuous innovation. Consequently, Thai apparel companies can transform themselves; from engaging in the simplest production operations (OEM), to more complex operations involving design and manufacture (ODM), to, ultimately, full‐fledged product development of their own brands (OBM). Intense domestic competition has also forced these apparel firms to constantly improve the quality and design of their products in order to maintain a competitive in the market.
This study revealed the important role of the Thai government in assisting the apparel industry to sustain its competitiveness, as supported by Porter's (1990) framework. The Thai government has long recognized the potential of the textile and apparel industry and has thus been committed to enhancing its efficiency and effectiveness by providing support through capital, knowledge resources, and infrastructure. The government has revisited the possibility of launching the Bangkok Fashion City Project as a means to promote Thai apparel industry domestically and internationally, and has provided capital investment to boost research and development through the Thailand textile Institute, which will improve the quality of export goods and develop new products (e.g. functional and technical textiles). In addition, the government has foreseen the importance of marketing and entrepreneurial knowledge, therefore, educational seminars are provided to private enterprises to enhance their marketing (e.g. branding) and entrepreneurial knowledge so that the industry can move from being predominantly OEM focused to more OBM driven.
Despite the competitive advantages of the Thai apparel industry and continuous support from the government, the industry should be aware of new international commercial laws related to regulations of chemicals and their safe use in fabrics and apparel exported to EU markets (Registration, Evaluation, Authorization and Restriction of Chemical Substances, or REACH) and the US market (The Consumer Product Safety Improvement Act of 2008 or CPSIA). An ongoing project using traditional Thai herbs on fabric through a “microencapsulation technology” process (e.g. the use of lemon grass to prevent fungus) instead of traditional pesticides is an example of an innovative way of complying with new guidelines. Also, such projects may offer Thailand a competitive advantage among the environmentally conscious Western consumers. This, in turn, may help the Thai companies to gain effective access to the US and EU market.
In sum, regardless of fierce competition in the global apparel market, application of Porter's (1990) Theory of Competitive Advantage of Nations to the Thai apparel industry illustrates that, even despite rising production costs, the industry can remain globally competitive with continued support from the government. Porter's “diamonds” (i.e. determinants) suggest that competitive rivalry and capable business management can help Thailand's apparel industry develop new skills and resources to sustain its competitive advantage. These diamonds show how, by creating favorable conditions, Thailand can remain competitive in the global apparel industry for many years to come.