Fashion waits for no one

Myanmar’s economy is expanding rapidly as it emerges from isolation and trade sanctions. Supporting its growth, the Maersk Group is helping to connect the Southeast Asian country to the rest of the world.

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Garment makers need reliable connections both to import textiles from China and export finished shirts, skirts and suits from Myanmar for shoppers in the US and Europe.

Just five years ago, Myanmar was a country in almost total isolation and under international embargo. 

Today, the Southeast Asian country of more than 50 million inhabitants is undergoing an economic, social and political revival as it reaps the benefits of openness and a strategic location between China and India and on trade routes to Europe, capped by its 2015 election.

To support its emergence onto the world stage, its nascent industries – such as the garment business – need the links to the rest of the world to maintain their supply chains and capitalise on Myanmar’s advantages.

“We are only seeing the tip of the iceberg for the potential that Myanmar holds for businesses, but a good way to pave the road forward for this emerging market is to expand its connectivity within Asia and to the rest of the world,” says Søren Toft, Chief Operating Officer for Maersk Line.

Shirts, skirts and suits

After extensive work with NGOs, local companies and diplomats, Damco became one of the first companies to offer logistics services in Myanmar. With a new office and 4,000 square metre container freight station opened in 2014, it has sealed its status as the biggest logistics provider in the country.

Following Damco, Maersk Line gained its licence to operate in the country last year along with its intra-Asia regional carrier MCC. Their links are supporting the burgeoning garment industry, with more and more companies relocating factories to Myanmar and its lower costs and location.

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Myanmar exported USD 1.56 billion worth of garment products in 2014, representing a near doubling of production in just two years.
We are only seeing the tip of the iceberg for the potential that Myanmar holds for businesses, but a good way to pave the road forward for this emerging market is to expand its connectivity within Asia and to the rest of the world.
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Søren Toft, Chief Operating Officer of Maersk Line

Garment makers need reliable connections, both to import textiles from China and export finished shirts, skirts and suits to the US and Europe. MCC’s Shanghai/Ningbo service to Yangon in Myanmar is one that the garment supply chain relies on.

The direct route between China and Myanmar cuts short the shipment time by almost half, to just 14 days, where previously there would have been a transshipment service using the port in Singapore or Tanjung Pelepas, Malaysia. Maersk Line then ships completed garments out of Myanmar to global retail destinations.

“The Shanghai/Ningbo – Myanmar product has proved popular with many clients, and our volumes between China and Myanmar have grown substantially compared to a year ago,” says MCC CEO Tim Wickmann.

Connecting the dots for growth

While the garment industry is small compared with those in neighbouring Bangladesh, China and Thailand, it is experiencing robust and sustained growth, according to the Myanmar Garments Manufacturers Association, whose members employ about 230,000 workers. It estimates that two new garment factories are opening for business every week.

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Myanmar exported USD 1.56 billion worth of garment products in 2014, representing a near doubling of production in just two years, and the figure is expected to approach USD 2 billion in 2015, according to the Manufacturers’ Association.

“We definitely need a direct service, and went with MCC because they committed to what we needed,” says Dorothy Tao, Global Shipping Manager for Taiwanese garment manufacturer Gen International, which makes clothing for casual fashion lines such as Kirbi, Primark and H&M. “We expect this business to grow with the opening up of Myanmar’s economy.”

Responsible business

After decades of political and economic isolation, human rights have been at the forefront of discussions for foreign investors. Before entering the country, the Maersk Group partnered with NGOs, local companies and diplomats to mitigate risks with suppliers and thereby help customers to do the same. 

There is often little awareness of issues such as health and safety, the environment and labour rights in emerging markets. Approaches such as more customer audits and questionnaires to prove commitment and an increasing focus on compliance regarding anti-corruption and facilitation payments can help.

“An important part of the entry strategy has been to assert the importance of responsible conduct in our operations, and educate and train selected suppliers in internationally recognised responsible business practices,” says Renata Frolova, Head of Responsible Procurement.

After sanctions were lifted, a business plan was developed for the Myanmar Centre for Responsible Business, which was supported by a range of governments participating at a meeting held in the United Nations in December 2012.

It was developed together with the Danish Institute for Human Rights and the Institute for Human Rights and Business so that all businesses and customers can lean on it. The centre aims to give investors the background they need and help local institutions and companies to use established best practice. 

Using practical examples and a self-assessment to see which processes were already in place, a training workshop for local trucking, warehousing, terminal and service suppliers in Myanmar introduced them to why responsible business is important to the Maersk Group.

“Maersk was essential in helping us access Myanmar at a time when it was very hard for human rights organisations to get visas into the country,” says John Morrison, Executive Director at the Institute for Human Rights and Business. “With Maersk, we were able to have our first roundtables in Yangon and visits to Naypyidaw, and to start a dialogue with government ministers and a range of local businesses.”

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