Ask someone who reads the apparel trade press a bit how brands and retailers in rich countries have changed their sourcing over the past few years — and you’ll hear something very different from the reality most buyers live with every day.
If you’re not a buyer, you’d say something like this: It all moved to their poorer neighbors (Mexico and Central America for North American buyers; Eastern Europe or the Mediterranean if they’re European) 15 or so years ago; then it moved to China. And just about when the recession hit in the West, it started to leave China for other countries in Asia. And aren’t they copying Zara now and buying their fast fashion nearer home?
But that’s not quite how it is.
Not all production left neighboring countries for Asia after 2005, when quota restrictions on imports from Asian nations were officially removed.
Women’s jeans was a category that did move to Asia. Their “nearshore” producers (mainly Mexico and Turkey) saw their share of rich-country markets fall from 56 percent of all pairs of jeans imported in 2004 to just 18 percent in 2014, according to Clothesource Tradetrak — and lost their share of men’s jeans almost as fast.
Blouses, though, are probably the category most affected by the move to Fast Fashion’s shortened order cycles, which you’d think would persuade buyers to source nearby. So nearshore’s share of their imports scarcely moved (from 11.9% in 2004 to 10.8% in 2009). But China (with 36 percent in 2014) remained the largest single supplier throughout the decade between 2004 and 2014. In fact its share of almost all garment categories has held far more than is popularly thought: it accounted for 42.7% of all garments rich countries imported in 2009, and still had 40.7% in 2014.
A lot of that is the result of extraordinary improvements in productivity. Another reason its share has held up while order cycles have shortened is the currently fashionable philosophy of “fabric platforming.” If you want fast reaction, having a garment factory near the mill helps — and China dominates fabric supply more than it dominates garment making.
Another is that different businesses behave differently. China’s share of rich-country bra imports soared when quotas went from 40.3% in 2004 to 63.2% in 2009. It’s actually increased slightly since (to 60.4% in 2014) because there have been two self-cancelling trends. Non-Asian manufacturers continued consolidating production in China for quite some time: Triumph moved bra production there from the Philippines and Thailand in 2009 and 2010 — just as manufacturers based in Taiwan, Hong Kong and Korea started worrying about rising Chinese wages. HK-headquartered Top Form, for example, announced in late 2014 that its bra production in recently opened Thai factories was now about the same as in its longstanding Chinese production bases.
That’s typical of many East Asian manufacturers. Taiwan-based Tainan Enterprises planned expanding its capacity in Indonesia to 16.8 million pieces a year and in Cambodia to 9.6 million pieces a year by the end of 2014 — both overtaking the group’s 8.4 million capacity in China. But, like Top Form and many others, they’re not relocating from China — or even reducing capacity there: they’re just spreading their risk as they expand. Somehow the myth’s got about that everyone manufacturing clothes in China is getting out. The reality’s more complicated: everyone’s looking at alternatives to China — but almost no one’s taking production away.
Spain’s Inditex also has a more complex operation than artiocles in then business press imply. It’s widely characterized as become the world’s largest chain apparel specialist by making garments in its own, Spanish, factories.
These days, though, Inditex says only that “over 50 percent of production” takes place “in close proximity to the Group’s’ head offices and logistics platforms in Spain” Between 2008 and 2014, the volume (defined as the cash value, deflated by industry inflation each year) of Spain’s apparel manufacture has fallen 39.6%. But the volume (in square meters of apparel) of apparel exported from Spain has grown 53 percent.
Half of Inditex’s production is made thousands of miles away from its world headquarters in La Coruna. Over the past five years, more and more of the other half has been made in Tunisia, Morocco or Portugal, trucked to DCs near its central offices and flown round the world from Spanish airports.
Onshore, nearshore, or previously unexplored territories: sourcing keeps coming up with solutions few people had previously thought about. Apparel buyers operate in a much more complex world than single-sentence summaries of supply chains ever grasp properly.
Mike Flanagan, CEO Clothesource. Clothesource offers consultancy on the world garment industry using the wide resources of The Clothesource Knowledge Base – the most comprehensive collection of information anywhere about sourcing for the apparel industry. He can be contacted at Flanagan@clothesource.net.