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Brands shifting out of China face numerous challenges in new countries

"It is not easy for these brands to move their production out of China as the country has an incredibly robust manufacturing infrastructure. The quality of goods produced in China and also the expertise of local manufacturers in the country is quite high. Other nations don’t have the same level of quality manufacturing that China does"

 

Brands shifting out of China face numerous challengesTraditionally known for its cheap and low quality products, China gradually became a major hub for brands manufacturing everything from fast fashion to high luxury. However, recent US-China trade war has compelled many brands to shift their focus away from China to other countries like Vietnam and Cambodia.  Rather than remain at the mercy of tariff laws, these brands prefer to relocate their manufacturing bases to smaller countries.  A case in point is Bangladesh whose exports increased from $29 billion in 2017 to over $40 billion this year. 

American brands are shifting their bases to these smaller countries to avoid the impacts of increasing tariffs. One such brand is BBC International, which licenses out Champion footwear. The brand traditionally manufactured its products in China but now is searching for new partners in other countries.  An emerging lucrative option for the company is Vietnam, which recently signed the EU-Vietnam Free Trade Agreement with the EU. The deal would enable both the countries to cut tariffs on their clothing exports. 

Robust infrastructure, ethical labor standards prevent exodusBrands shifting out of China face numerous challenges in new countries

However, it is not easy for these brands to move their production out of China as the country has an incredibly robust manufacturing infrastructure. The quality of goods produced in China and also the expertise of local manufacturers in the country is quite high. Other nations don’t have the same level of quality manufacturing that China does.

Also, countries with less robust manufacturing infrastructures may also have less ethical standards for workers and the environment. This compels brands to stick to its partners in China even as manufacturing costs go up. Also, the cost of setting up production facilities in any new country is quite high and requires a high amount of resources just like Outerknown a small sustainable fashion brand that manufactures in six different countries, including China, Thailand and Vietnam. According to Meg Stoneburner, the brand’s director of sourcing and sustainability, each of these regions adds to their total manufacturing costs. Also, since the company focuses on sustainability it has to visit each facility and oversee all materials. This is challenging for larger brands too as they shift such a large volume of product and require a huge bandwidth of labor.

Overall, even though countries like Vietnam and Bangladesh seem attractive alternatives to China at the moment, they have their own set of drawbacks which makes it difficult for fashion brands to successfully navigate between manufacturing, tariffs and international trade. 

 

 
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