The textile industry has been handed a blow after the European Union and the United States moved last week to further relax Chinese import quotas.
A looming trade war with China forced the EU and US to relax the quotas agreed in May, which were meant to protect their domestic producers.
Industry players have warned of further job losses in the textile industry, arguing that high production costs in Kenya are likely to price local products out of the export market.
Jaswinder Bedi, chairman of the Kenya Apparel Manufacturers Association, expressed fear that the sector faces the risk of collapse in the wake of Chinese onslaught, stressing that the industry should brace for further job cuts unless the Government moves to protect the industry.
"It? very difficult for the textile industry in Kenya to make it in a quota free world," Bedi said.
Sundar Swarma, the Managing Director of Mirage fashion wear, a textile firm in Athi River, said: "We have lost many orders because of high production costs which cannot be matched with those of China and India. With these huge losses we are going to lay off more workers as the prospects are bleak."
In recent months, apparel firms in the Export Processing Zones (EPZ) have been feeling the heat as competition climbs a notch higher.
The firms have been losing business to players from the Far East because of low production costs as they struggle to meet demands of the price-sensitive EU and US markets.
Bedi says the economies of scale that Chinese producers have access to and the low wages paid would make it difficult for Kenya to penetrate the EU market.
Swarma says factories across the EPZ are operating at 50 per cent or less capacity following a drop in demand.
And an audit report of the industry by the Kenya Association of Manufacturers says 14 factories have closed down since the beginning of the year.
About 7,000 jobs have been lost over the same period. The report warns that other firms could relocate.
This, Bedi says, is a blow to an industry that was last year touted as the main source of employment opportunities and the driver of the economy.
Experts say the industry has to cut costs by about 30 per cent or invite Government subsidy to rescue its flagging fortunes.
