Official Show Guide - director-e

This time last year, when I made my
presentation at the Workwear and
Corporate Clothing Conference, I listed
some concerns that I believed would
impact sourcing in 2008/9. These
concerns included a shortage of labour in Eastern
European countries such as Romania, and resulting
higher prices, increased concern on the part of
consumers for ethical and environmental issues,
wage inflation in China, and the possibility of antidumping
legislation being invoked.
Events in the past six months in the world’s financial
markets have to a large extent overshadowed these
concerns. There are many rumours flying around
about factories being forced to close, about
workers not having jobs to come back to after
Chinese New Year, and about the effect that the
decline in the value of sterling is having on our
buying power. The global apparel market is suffering
in the same way as many other markets, but it is
important to get our facts straight - not least
because, if we don’t, we risk missing out on some
opportunities that are opening up. So to what
extent are the issues that I flagged up a year ago
still important?
Largely due to the economic downturn in the UK
and the Eurozone, the shortage of labour in Eastern
Europe appears to be less acute now than it was
then, as Eastern European nationals are returning
home. Chinese wage inflation is not the issue that it
appeared to be at that time. The environment
continues to be a major concern, but the new
American administration seems to be taking a very
different attitude and working with China on this,
and there have been no instances of anti-dumping
rules having to be invoked in the clothing sector - in
fact, the World Trade Organisation is on record as
saying that across all categories of trade, there have
been fewer cases of dumping in the past six
months than at any time in the past.
So, let’s look in greater detail at what occurred in
the second half of 2008, and the impact that this
may have on business in 2009.
Who’s up, who’s down
As I write, the most up-to-date information we have
for imports into the EU is for the third quarter of
2008, before the effects of the global economic
downturn really started to bite. But, in spite of this,
what these figures show us is that, compared with
the same quarter in 2007,
there have been some
significant shifts in the
marketplace, with
countries such as
Bangladesh, India and
Pakistan showing a
decline in sales and, at the
same time, sales from
Vietnam, Indonesia and
Cambodia improving quite
significantly . China, the
world’s largest exporter,
remained stable.
Among those countries
that border the EU, we
see a similar picture, with
some countries up and
others down. Most
significantly, Turkey lost
sales, as did Romania,
Morocco and Tunisia,
some of the more traditional neighbour sources,
while the emerging markets of the Balkans such as
Serbia, Albania and Macedonia saw their exports
grow, as did Egypt.
What appears to be happening is that buyers in
search of lower prices are becoming more confident
operating in countries that, until a couple of years
ago, would have been considered risky. Now that
some of the more adventurous have established
factories in these countries, the opportunity for
others is opening up in much the same way as it did
in Romania and Bulgaria in the early to mid 1990s.
What might the future hold?
For many buyers in the corporate, workwear and
PPE sectors, the ability to react quickly to change is
top of the list of priorities, especially in the current
economic climate. Being able to turn production on
and off is far easier when you do not have to
contend with long lead times, so sourcing
production closer to home becomes more
desirable. In the past couple of years, however, the
cost of production in nearby countries, in particular
those that have recently joined the EU, has
rocketed. For example, Romania, for many years
one of the most important sources of tailored
garments, blouses and outerwear, has suffered
from labour shortages, due to widespread migration
of workers into the EU. During 2008, Romanian
factories struggled to find enough trained labour to
Winners and
Losers in the
New Global
Order
Liz Leffman, director of Clothesource, looks at the way sourcing has changed in the
past 12 months, and what the future may bring.
There have been some
significant shifts in the
market place, with
countries such as
Bangladesh, India and
Pakistan showing a
decline in sales and, at
the same time, sales
from Vietnam,
Indonesia and
Cambodia improving
quite significantly
fill their vacancies, with the
consequent problem of
severe wage inflation. But,
as jobs in Western Europe
have dried up thanks to
the credit crunch and
workers have started to
drift back home,
Romanian factories have
started to find it easier to
recruit. And, as retail
buyers cut back their
orders, opportunities are
emerging, with factories
actively seeking new
customers for the first
time in many years.
Add to this the fact that
the Romanian currency
inflated less against
sterling than the
currencies of all other major producing countries,
and suddenly Romania looks more attractive. For
buyers, it will be a case of balancing speed of
response against price but, as demand shrinks,
many factories will be open to negotiation, and it is
likely that we will see a slow-down in price inflation
right across the Euromed region.
Looking further afield, China will remain the most
important supplier, but canny buyers will make sure
that they spread risk by moving some of their
production elsewhere. The most likely countries to
benefit will be Vietnam and Cambodia, both of
which are attractive for being politically stable and
having a wide range of well equipped factories.
Bangladesh will continue to offer the lowest prices,
but here price will need to be balanced against the
possibility of disruption as the country has had a
series of strikes recently.
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