Clothing makers find it hard to break with China’s supply chain

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Global apparel and footwear giants, Adidas and Nike, initially shifted their supply chains out of China, lured by geopolitical considerations and cost advantages. However, these companies are encountering challenges in alternative production hubs and, in some instances, are reverting to China. The mature ecosystem in China, cultivated over decades, not only ensures competitive pricing but also delivers stable quality at a mass production scale that is challenging to replicate elsewhere, as noted by Laura Magill, the Global Head of Sustainability at Bata Group.

Efforts to diversify production to countries like Vietnam faced setbacks during the Covid-19 pandemic. Lin Feng, a businessman with apparel factories around China, started a production line in Hanoi in 2020 but faced a significant reduction in orders from overseas customers. Disheartened, he returned his focus to Guangzhou, citing weak demand rendering low labor costs and tariff exemptions meaningless.

This shift back to China poses a risk to the substantial investments made in exploring alternative manufacturing bases. Even as Vietnam and Thailand have seen increased exports to developed nations, the allure of China's quality, quantity, and price competitiveness remains unmatched. Kee, a manager of an apparel factory in Guangdong, shares a similar sentiment, emphasizing that expanding production in Southeast Asia is not currently a rational decision due to anticipated business slowdown.

China's centrality to the global apparel supply chain persists, with attempts to diversify reducing reliance only marginally. Challenges such as language barriers, cultural differences, and a less experienced workforce in Southeast Asia contribute to the complexity of efforts to diversify.

While some manufacturers have sought refuge in countries like India, uncertainties prevail regarding whether any other nation, even one with a population as substantial as China's, can compete with its vast manufacturing ecosystem. The dilemma intensifies as customers express a desire for products from other countries but expect them to be as cost-effective as those from China. In essence, the apparel industry grapples with the intricate challenges of diversification, underscoring the enduring significance of China in the global supply chain landscape.

Article Courtesy: Fashion Network

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