As the CEO of the Hong Kong Research Institute of Textiles and Apparel (HKRITA), Edwin Keh has pushed to make Hong Kong a leader in textile and apparel manufacturing. With a focus on materials, technology, labor standards and supply chain solutions, HKRITA works to keep the city’s manufacturing sector on the cutting edge of innovation.
Through his work with global brands like Walmart, Payless and Donna Karan, Keh has come to understand and anticipate the changing demands of the modern consumer, as well as the challenges that brands face when it comes to fluctuations in the market.
Brands must constantly monitor the cost of raw materials, labor and inventory and the way that those factors impact their delicate margins. And, in today’s political climate, trade tensions could pose a very real threat to their bottom lines.
When it comes to sourcing, “there are big headwinds ahead,” Keh warns. “Uncertainty about sourcing strategies, higher duty impact, fluctuations in raw material costs, and the general exodus from China all makes for an anxious season ahead,” he told Sourcing Journal.
Brands are currently facing the sobering reality of increased tariffs, and “this coupled with more demands for material traceability and transparency in social compliance will all drive up costs and constrain supply.”
The possibility of a recession “or a correction” in the economy as a partial result of these painstaking negotiations could reduce demand from consumers, who will be tightening their purse strings in response. For large global brands especially, these new realities could prove costly.
“Meanwhile there are also more and more startups and small digital native brands that are providing lots of competition for the consumer’s dollar,” Keh offered.
Political turmoil has undoubtedly exacerbated the uncertainties that brands are grappling with. Those uncertainties are “driving unintended and unknown consequences” for the industry, Keh said, and making it “difficult to make long term supply chain decisions.”
Hear Keh speak on the Sourcing Summit New York panel, “Margin Outlook: Raw Materials, Labor and Inventory Levels.” Visit our event page for more info and to buy tickets.