Company: COLLY COTTON
State: NEW SOUTH WALES
COLLY COTTON IN INDIA
Colly Cotton, based in New South Wales, is one of Australia’s largest exporters of raw cotton. For over a decade, Colly has exported cotton to India, which is now Colly’s fifth largest customer taking about 10 per cent of total export volume. Australia supplies about 25 per cent of India’s cotton imports; the other major competitors are West Africa and the United States.
Although India is a large cotton producing country, largely outdated harvesting and processing equipment reduces the quality of harvested cotton, causing problems for the quality conscious textile and dying industries, particularly exporters. Consequently, mills increasingly import high quality foreign cotton over time for blending purposes. Colly Cotton’s strategy targets export oriented firms that typically use high proportions of foreign yarn in order to meet overseas customers’ quality requirements.
Colly’s India considers its strategy of running its business through a single agent is critical to the success of its business venture in India. The agent connects well with the mills, is a long established trader in a variety of commodities and came with excellent recommendations. As a result of this strong relationship, Colly has had minimal problems in expanding its business in India. However, Colly notes that not every trader has had the same positive experience; less reputable and inexperienced agents are not uncommon; delivery and contract difficulties can be frequent. It advises interested exporters to research the market and potential agents closely, build strong agent relationships and identify key customers and likely hassles very early on in the business operation; a conservative approach to business management pays dividends.
Colly Cotton considers the future of their Indian exporting operations to be very good. They note the low cost base and recent industry reforms should further increase the competitiveness of Indian textile mills, expanding demand for cotton and creating future export opportunities for Colly.
Source: Colly Cotton, 2001.