Regional location decision for thai garment industry: An AEC perspective

Abstract

Thailand may encounter both opportunities and crises when the ASEAN Economic Community (AEC) is implemented by the end of 2015. AEC will open more opportunities to enterprises in both trade and investment, which will create a competitive market of over 600 million people, as well as enhance the competitive advantage. As such, it may be necessary for enterprises to redesign their supply chains via finding a new production base which has low labor cost, high labor skill and numerous of labor available. This strategy will help companies especially for garment industry in order to maintain a competitive position in the global market. Therefore, location decision play a key role in achieving corporate competitiveness, and as a result of this, selecting the right country is a critical issue of these new strategies. Hence, this research aims to 1) investigate factors affecting location decision for garment industry, 2) select countries in ASEAN region which has potential for establishing or expanding a production base of Thai garment industry, and 3) propose a generic model for location selection decision using Fuzzy Analytical Network Process (FANP). The results from the empirical study reveal that according to the entrepreneurs’ opinion, key criteria affecting location decision for garment industry are 1) raw materials factors, 2) labor factors, 3) logistics system, 4) infrastructure, 5) government policies and 6) economy factors, respectively. The top four subcriteria of those main factors are also taken in consideration in this research as their important details. Three outstanding countries i.e. Myanmar, Cambodia and Vietnam are mentioned for alternative location decision from interviewing expert persons. Due to both tangible and intangible criteria are included in the problem, Multi Criteria Decision Making Approach (MCDM) is then employed to this research. The generic model for regional location selection decision is proposed using Fuzzy Analytical Network Process (FANP) technique. This model contributes to planning practice for top management by suggesting a more comprehensive decision making tool in location selection.