Apparel Sourcing Intelligence - Worldwide

Learning from Others’ Mistakes

I’ve probably learned more about our industry from Rachel Louise Snyder’s new book Fugitive Denim (published by WW Norton: 978-0-393-06180-2) than from anything else I’ve read, seen or done in the past year.

Ms Snyder, for the benefit of colleagues who don’t read many recently published new books (and there are far more colleagues in that group than I think is healthy) is a columnist who splits her life between Cambodia and the US. She’s just published an account of the people – from Azerbaijan, through Cambodia, China and Italy, to a New York design studio – who contribute to the development of a pair of jeans from an Azeri cotton bush to life on a stand in a US apparel chain. Far from expert in the intricacies of our industry (as Ms Snyder is just about the first to point out), she gets hopelessly confused about the past few years’ changes in rich countries’ rules restricting and encouraging apparel imports.

But as a human-interest writer, she’s full of unprejudiced insights into the way the apparel industry has transformed (mostly for the better) the lives of its thousands of Cambodian workers – from workers’ unprecedented ability to pour money back into their native village to the hundreds of competing Cambodian trade unions who make it tougher for businesses to develop of for workers to create consistent pressure for better conditions. Her interlinked account of Cambodia’s attempts to lobby for better access to the US market while organising itself to compete better with China gave this reader insights into the way suppliers are organised that make me see the future in an altogether different way.

Snyder’s general approach is based on one fundamental misapprehension about our industry: she massively overestimates the importance of the US to manufacturers overall and as a result misunderstands the impact of American legislators and buyers on the life prospects of emerging-market cotton and garment workers. But – crucially – so do many of the workers, businesses and government officials she talks about.

America’s share of the world apparel market is in decline. While the US market is now beginning to fall back, retail clothing sales in two key emerging markets, Russia and China, are growing at annual rates up to 30%. So too, by the way, are sales in the other two main emerging economies, Brazil and India, but from such a small base they’re still minnows. By some time in the middle of this year, the value of China’s domestic clothing market will overtake Japan’s. And the value of the EU market is already greater than America’s.

As Snyder shows, though, that doesn’t stop people from investing time and money in activities that make sense only if it’s America you’re targeting. The Cambodian workers whose lives she documents are often forced to change jobs – but almost always to companies concentrating on the US market. The Cambodian government and trade union officials she follows round the world spend years chasing duty-free access to the US market – a status they already enjoy for the EU, though Cambodia’s manufacturers seem to do nothing to exploit it. In 2007, according to Clothesource Tradetrak, Cambodia – still liable to full duty when exporting to the US – accounted for just 0.8% (and falling) of EU clothing imports. But it got 3.1% (and growing) of America’s.

When Snyder follows Gap compliance monitors to a factory in China, it’s clear the factory has made immense investments in the ability to produce on a scale only US customers really need. For, in spite of their size, the retail markets in Japan, China and the EU are spread across a far larger number of different customers than America’s. US customers have been particularly desirable because they give such big orders. Taken together, they spend less on clothes than Europe’s brands and retailers. But their scale seems to offer all kinds of production economies that orders for Europe don’t attract.

“Seems”, though, is the operative world. Because, as India’s Gokaldas Exports have recently explained, if sales to the US stutter, there really aren’t other sales destinations that offer order sizes to match. If a factory’s cost structure is built on orders in the tens of thousands of dozens, even customers like Sweden’s Hennes or the UK’s Marks & Spencer have few SKU’s that generate volume at that level – and average order sizes to the Indian or Chinese markets don’t even begin to compare.

Trouble is, of course, that the only people trying to sell in to the Chinese market are other Chinese businesses. Selling to Wal-Mart or Nike, a manufacturer is competing with tens of thousands of other businesses all over the globe. Those big orders come at a price.

Could over-dependence on the US market turn out to be today’s fashionable mistake for manufacturers – just as over-dependence on Chinese suppliers is turning out to be for Western customers?

Hard to tell. But it’s insightful books like Fugitive Denim that shake your views up and make you review your preconceptions. And if Rachel Louise Snyder picks this blog up – please let me know the next time you publish.