Blog: Leonie BarrieRising costs drive sourcing search

Leonie Barrie | 20 August 2013

Apparel sourcing costs in the US are set to rise at a low single-digit rate in 2014, with key concerns including rising labour, compliance and energy costs, a new survey suggests.

Indeed, changes in China, where several decades of apparel price deflation have come to an end, continue to drive discussions about new sources for apparel production.

Pressure to improve the sustainability of China's textile sector in line with goals set by the new administration is another cause for concern, a conference hosted by leading apparel group Esquel was told last week.

But time and time again we've heard that no single country can replace China, the world's biggest clothing maker with a 38% share of the garment export market.

Even Bruce Rockowitz, president and CEO at Li & Fung, told analysts last week that: "China continues to be number one. A lot of people talk about the end of China, it's not true."

And David Birnbaum points out that garment sourcing involves much more than finding the place with the lowest labour rates. A benchmark study comparing garment exporting industries in Bangladesh and China illustrates why China wins every time in almost every category.

Pressures on sourcing are also on display in Turkey, where some 12,000 textile and clothing workers have gone on strike over wages. The strike covers around 30 major manufacturers where workers are seeking better pay and conditions.

Fashion retailer H&M is also looking to expand its supply chain to new countries that can support its growth. H&M, which sources around 80% of its products in Asia, says it may begin to source clothing from Ethiopia this autumn.

And the renewal of the African Growth and Opportunity Act (AGOA) before its expiry in 2015 dominated the US-Sub-Saharan Africa Trade and Economic Co-operation Forum. While helping boost trade over the past dozen years, governments on both sides of the Atlantic recognise it has also fallen short of its aims and aspirations.

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