Blog: Leonie BarrieNavigating potential risks ahead of TPP

Leonie Barrie | 28 September 2015

As the second largest footwear supplier to the US, Vietnam is already an important part of the production portfolio for many US footwear companies. But with growth being fuelled by the possible Trans-Pacific Partnership (TPP), companies eyeing the country as a sourcing destination should also be navigating potential risks.

The advice coincides with a meeting of chief negotiators of the 12 countries involved in the TPP, for what could be the final negotiating sessions for the deal. The talks come as the US released a detailed summary of its negotiating objectives.

As Wal-Mart ramps up its efforts to reshore more US clothing production, the recipient of a $2m grant from the retailer’s Innovation Fund talks about progress in developing systems to automate apparel-making.

Nothing less than industry-wide collaboration will work when it comes to creating living wages in the garment industry, unions say, as talks get underway in Cambodia to try to change the way companies source garments to ensure higher wages can be paid.

Also in Cambodia, Hong Kong based garment manufacturing giant Crystal Group is hoping to replicate the success of its “Chinese role model sustainable denim jeans factory” with a new facility in the country.

Security bills that expand the role of Japan's military overseas could result in China ramping up investments to protect its supply routes and domestic growth. But Mike Flanagan suggests this is also likely to have ramifications for the funding of garment projects overseas.

And Swedish fashion group Hennes & Mauritz (H&M) saw earnings edge up just 0.2%in its third-quarter, with the negative impact of the strengthening US dollar on sourcing costs largely to blame.

Deflationary pressures, the rise of Amazon and the expansion of off-price and fast fashion chains all have the potential to disrupt traditional US apparel retailers - but it is the athletic players that are “well positioned” to come out on top, analysts suggest.

And in other news, the chief executive and head of finance at UK footwear retailer Clarks have both stepped down; a reshuffle of the merchandising team at JC Penney has seen John Tighe promoted to chief merchant; Adidas has filed a trademark lawsuit against Skechers; and PVH Corp has launched a “game changer” in men's dress shirts.

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