Mackenzie & Co., a well-known consulting firm, recently released their latest report on the global apparel sourcing map. The report is drafted based on a 2013 summer survey with 29 chief purchasing officers (CPOs) in Europe and the U.S. who were responsible for an annual total sourcing value of $39 billion USD. According to the report:
First, the global apparel sourcing cost is expected to rise modestly in the next 12 months (1.7% increase on average). Labor cost is tagged as the No.1 driving force of the rising sourcing cost.
Second, companies are sourcing less apparel from China, but they move in a very cautious way. In the meanwhile, Asia is still seen as the world hub for apparel manufacturing & exports in the years to come. Such a pattern reflects the exact criteria for sourcing decisions: a balance of price, quality, capacity, speed and risk. Particularly, “proximity sourcing” is becoming increasingly important according to the surveyed CPOs. This rule shall also apply to China which has emerged as one of the world’s fastest growing apparel retail markets.
Third, despite the frequent reported corporate social responsibility problems, a combined consideration of labor cost advantage, free trade agreement benefits and capacity make Bangladesh remain the No. 1 hot pot for apparel sourcing for the next 5 years. 83% of surveyed CPOs plans an increase of apparel sourcing from Bangladesh in the years ahead.
Overall, sourcing will continue to be one of the most critical success factors for the global apparel industry. The survey results reflect a more structural shift in the industry, while the traditional apparel company “caravan journey” becomes more complex.
FASH455 Global Apparel & Textile Trade and Sourcing 
Did anyone see this lately? Turkey completes underground tunnel to connect Asia and Europe. http://www.usnews.com/news/articles/2013/10/29/turkey-completes-marmaray-underground-tunnel-connecting-europe-to-asia?s_cid=rss:turkey-completes-marmaray-underground-tunnel-connecting-europe-to-asia
It is now expected to take 4 minutes to commute?! crazy! Talk about being able to transport goods even that much easier between Europe and Asia. They will continue to get imports more from Europe now rather than the US now that it will be made that much easier for business to be done between them!
Very interesting!! Thank you for sharing~ Isn’t globalization is deepening, thanks to the improvement of transportation and advancement of technologies? Personally, I believe the movement of goods, capital, services and people around the world will become even freer in the future. Just like our industry– produce globally and sell globally nowadays. I hope after taking TMD433, students will have a global sense and big picture vision in mind.
First of all I am not surprised at all that the global apparel sourcing cost is expected to be raised within the next 12 years, mostly because of labor costs. I feel like labor costs are going to increase all over the world eventually, and there is no way of stopping that. It is inevitable. I was however surprised to read that retailers are moving away from sourcing from China, but I am happy to see that proximity sourcing is becoming more popular. I am a big supporter of thinking more locally. Finally, I was not taken back that Bangladesh was named the number one hot pot for apparel sourcing for the next five years. Combined with what we learned in class and this article I think that Bangladesh has a very bright future in the apparel industry, but it also needs to straighten out a few kinks in the system before it gets there.
great thought! I kinda have different thoughts with your point that “there is no way of stopping the rising labor cost”. first, if labor comes too expensive, it creates incentive to further use machines to replace labor input in manufacturing; second, productivity is growing which will offset the rising labor cost on the total cost of manufacturing. Third, still in many places in the world, people are waiting to get a job–implying the supply of labor, especially unskilled labor may prevent the rising of wages.
This article personally makes me wish we could make a difference and change the CPO’s of U.S and Europe’s thought pattern when it comes to the projected apparel sourcing countries in years to come. After completing case study 1 and learning all about the harsh, horrible working conditions in the Bangladesh factories, I wish we would ban production there entirely. It truly is disappointing that the United States as consumers would rather purchase the cheapest clothing items that are made in horrible working conditions in countries like Bangladesh and Vietnam. Say the consumer paid 10$ more for a shirt, knowing the garment was made in clean, fairly treated working condition where the workers are paid decent money and are safe working there. Then we wouldn’t hear stories, or barely hear them, about awful factory fires in poor developing counties. It makes me sad that most Americans look the other way when it comes to finding the cheapest products to better their own personal needs. If China is recently dwindling down by an average 5.7% in their apparel exports, it leads me to think about our future in the Textile and Apparel industry. China was the absolute center of apparel production for years, and now suddenly it’s slowing down? Now another country is going to become to rising star in the T&A industry? So what happens in the next 100 years when all of these countries have their moment of fame in the Apparel industry and then follow the same path of slowing down their exports? Then what will our country do to find the cheapest apparel imports?
I am not surprised that the global apparel source cost is supposed to be raised within the next 12 years. I agree with Tina in that I think that labor costs will continue to increase within all countries and that will be hard to stop overall. I was not surprised to see read that retailers were starting to stop outsourcing from China. I think that domestic sourcing should be more prominent in this country regardless. I think that the part of this article that talks about Bangladesh and how it is the number one hot pot for apparel sourcing for the next five years does not surprise me. I think that Bangladesh’s economy and country as a whole looks like it is going to have an intelligent future in the apparel industry and in order to do so will improve its imperfections that is is facing now.
I am interested in your argument that “I think that domestic sourcing should be more prominent in this country regardless.” Why do you think so and what do you mean “regardless”?
Even though companies are beginning to source less from China over time, it is very important to still keep China ranked high under apparel manufacturing but, as things continue to grow and developing countries continue to expand their markets, it is understandable to see sourcing costs and labor wages to rise. Its a scary thought though because as those costs rise so will all other countries costs rise; it is a double edged sword. It is a good thing though for this article to predict what may be the case in the upcoming years and to keep an eye on where the T&A industry is taking the worlds economy.
why do you think the cost rise is a “double edged sword”?
I am not surprised to read that the global apparel sourcing cost is expected to increase in the next 12 months, especially labor costs. As demands for production continue to increase as the global market expands, labor is going to demand an increase in cost as well. It is also not much of a surprise to me that companies are beginning to source less from China. For decades countries such as the United States have spoken about domestic production and sourcing. Proximity sourcing sounds like a create way to stay close to home and encourage domestic sourcing. While China is one of the world’s fastest growing apparel markets, I think it is smart to reduce sourcing from this country and begin allowing the developing countries to further improve their markets. It is interesting to read that Bangladesh will be the number 1 hot spot for apparel sourcing for the next 5 years. While I believe that Bangladesh has many issues that need to be worked out, including unsafe factories and unfair/unsafe labor, I do believe that the country has a bright future. They have great potential to further strengthen their global apparel market.
Good thinking. We did a similar study earlier this year which surveyed 29 largest US fashion brands and retailers. Very interesting, respondents told us that even they may increase sourcing from USA, they won’t reduce sourcing from overseas. http://tmd433.wordpress.com/2014/06/12/2014-usfia-benchmarking-study-released/
Labor has an impact on demand, which very clearly impacts cost. As the markets of developing countries expand, global apparel source cost will rise. I I think it is important for the United States to reduce sourcing from China, seeing as how its market is greatly expanding. I think that Bangladesh has a great deal of harbored potential and that it will have a successful and expanded market given the appropriate sources.
I think it is obvious that the global apparel sourcing cost will be rising. Prices cannot remain low in Asian countries forever because that would mean that their economy would not be improving, which isn’t the case. In terms of “proximity sourcing” I believe that this will continue to be a growing trend that will be of wide focus for apparel companies. Along with rising sourcing costs are the rise of fueling costs, and in order to ship apparel and textile to manufacturers and retailers fuel is a major cost for apparel companies. If companies are to source closer to home they will be saving money while also still playing a role in the global economy.