With growing trade wars with China, American garment importers are looking for new sourcing destinations and Sri Lanka hopes to benefit from this. Sri Lankan apparel manufacturers, some of whom are considered the world’s in terms of quality and technology utilization, have extensive operations in South and Southeast Asia, potentially allowing Sri Lankan firms to capitalize on the opportunity to a great degree.

The US currently sources one third of its apparel imports from China, and just 2.4 per cent from Sri Lanka. However, Sri Lanka doesn’t have the economies of scale that China has and can’t deliver the size of orders. So, the country will produce partial orders, around 20 per cent of regular order sizes, while other countries like Bangladesh and Vietnam which have cheaper costs will produce the rest.

Some Sri Lankan apparel exporters have already been approached by top US clothing buyers to partially manufacture some of the orders currently being serviced by China. The impact from the US-China trade war would most likely be reflected in Sri Lanka’s export figures in another four to five months’ time. However, the hurdle Sri Lankan apparel companies would have to overcome would be the acute labor shortage in the industry.