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Sourcing Countries Talk Contingency Plans Amid Global Trade Tensions

While President Trump hasn’t set what most would consider a positive tone in trade, apparel manufacturing countries out of the direct line of China-U.S. fire are touting their appeal as Plan B, or alternative sourcing options.

At a global sourcing panel at Texworld USA Monday, panelists pointed out that while each country comes with its own challenges, some may still prove more stable than those caught in a tariff war that changes by the tweet.

Demand in Central America, for one, has ramped up in the last year, both as companies look to better accommodate speed to market and as they look to dodge trade bullets.

“We are definitely seeing this year, 2018, an increase in customers,” said Diego Cuenca, sales representative for Mercardo Internacionales, S.A. de C.V., which promotes business in the region. Companies, Cuenca continued, “don’t want the risk of having big volumes in places like China where this commercial war is going on.”

As such, the region has been stepping up its efforts to accommodate the increased demand. In El Salvador in particular, factories all along the synthetic supply chain collaborate in a synthetic cluster to give customers the kind of vertical sourcing experience that keeps things quick and efficient. Each link in the synthetic cluster—from yarn to garment—is within one hour’s drive from the other, which also keeps the country’s carbon footprint down.

“Central America is like Plan B for America,” Cuenca said.

But perhaps the biggest benefit of a Central America sourcing strategy is that the region enjoys a duty free relationship with the United States under the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). For now, at least, the agreement has remained more or less untouched by the Trump administration.

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In Bangladesh, manufacturers are rallying around ways to deliver quicker turns and improved sustainability as value adds for brands and retailers sourcing there.

“Some factories have turnaround time as little as 20 days for knit,” said Fatima Anwar, founder and CEO of Sustainable + Ethical Apparel Sourcing, which connects brands in North America with leading manufacturers in Bangladesh. “We’re moving toward cutting down that lead time.”

Bangladesh has been plagued with a poor reputation since the Rana Plaza building collapse cast a light on subpar working and building conditions there, but the country has been working its way out of that negative shadow and working on ways to improve transparency for companies that may still be uneasy about doing business there.

And according to Anwar, blockchain may be the technology that gives Bangladesh a leg up in traceability and transparency—and the country is looking into ways to incorporate it into supply chains.

“You can’t change [something in blockchain] once it’s inputted,” Anwar said. “So if someone’s put in some fraudulent information, you’re going to see who it was and when it was.”

Turning to India, where sustainability has been a driving factor in setting the country apart from other sourcing locales, Marci Zaroff, founder and CEO of Metawear, which operates one of its key international manufacturing platforms in India, said the country has “incredible verticality,” an “astronomical” workforce and opportunities in sustainability—particularly where cotton is concerned.

Though there’s been a challenge to secure organic cotton seeds in the country, and the weather has posed problems for the crop, the government is getting involved in sustainability as a competitive offering for the country.

“There’s a wakeup now, there’s a focus on sustainability. The government is actually starting to step up and recognize organic cotton,” Zaroff said. “India is very well positioned when you think about the Trump rollercoaster. For risk mitigation, we need to start looking at other countries that have that good labor force and have that verticality.”