Will Asia Lose its Crown as the Apparel Sourcing Destination of Choice?

Asia Pacific is currently the world’s number one destination for apparel manufacturers. However, in recent years the region experienced a number of issues that caused significant problems for apparel companies.

A flood of complications within the Asian supply chain

In addition to devastating floods in August 2010 in one of the world’s most important manufacturing countries, Pakistan, there were a number of other extreme problems for Asian manufacturing countries over the past few years. Several Western brands experienced huge delays in deliveries due to problems with the supply chain.

In 2010, China reached its manufacturing capacity and UK-based retailers Next, Primark and Reiss experienced delays in the delivery of their autumn 2010 collections. Delays were also caused by power cuts affecting factories in a number of Asian countries such as Pakistan.

The issue of working conditions is also an increasing concern. Garment worker strikes and even riots affected production in important sourcing countries such as Vietnam, Bangladesh and Cambodia.

In addition, consumer confidence in ethical standards in the apparel industry has been bruised due to exposés of the poor working conditions in Asian factories and even the use of child labour, although some allegations shown on the BBC were later proved to be untrue. However, increased consumer awareness of issues surrounding garment factory working conditions resulted in a large proportion of consumers becoming sceptical about cheap clothes manufactured in Asia.

However, despite the large number of complications, Asia remains the leading manufacturing destination. In 2010, 45% of imports to the Western world came from China and Vietnam alone, according to sourcing consultancy Clothesource. Even the fact that garment worker wages soared in China over the past 10 years did not result in the majority of apparel companies moving away from the country.

Meanwhile, in Vietnam, garment exports were up 22% in 2010 according to the Vietnam National Textile and Garment Group, despite garment workers going on strike in October that year. The majority of leading global apparel companies have such a large proportion of their goods sourced from Asian countries that it is extremely difficult for significant shifts to be made overnight.

However, as the supply chain in the region becomes increasingly unreliable, many leading apparel companies started to re-evaluate their sourcing strategy.

Local emerging countries may offer a practical solution for fast fashion companies?

Regions such as the Middle East and Africa and Latin America can already offer a sizeable apparel manufacturing base and are becoming increasingly popular as low cost alternatives to the Asia Pacific region. For example leading US-based apparel company Gap is currently looking into manufacturing its women’s swimsuits, activewear and men’s suits in Colombia and possibly Brazil.

Shifting manufacturing to countries that are closer to the final retail destination offers other advantages. The continuing spike in oil prices made long haul transportation costs increasingly expensive.

In addition, as the trend grows for fast fashion chains that continuously update their collections reducing the factory-floor-to-shop-floor timescale is an additional attraction. Even as far back as 2005, the head of the UK’s Arcadia Group Sir Philip Green stated that he wanted to move production away from China and closer to home to Turkey and Eastern Europe.

Turkey in particular is one of the most popular sourcing countries for European and international apparel companies. For the year to August 2010, Turkish clothing exports rose by 11% to US$9.5 billion.