LexisNexis(TM) Academic - Document
Financial Times (London, England)
August 30, 2005 Tuesday
Europe Edition 1
SECTION: INTERNATIONAL ECONOMY; Pg. 2
LENGTH: 698 words
HEADLINE: Textile production moves away from China as taste for fast fashion grows
BYLINE: By CLARE MACCARTHY, MARK MULLIGAN and ELIZABETH RIGBY
DATELINE: LONDON, COPENHAGEN and MADRID
BODY:
Some retailers were shifting production from China to eastern Europe, Turkey and India even before the recent EU-China textile row broke out, as customers' appetite for "fast fashion" has forced a fundamental rethink of supply chains.
The sourcing shift has been reinforced by the European textiles crisis, which has prompted large clothing retailers, such as Sweden's Hennes & Mauritz, to find alternative sites that do not face import restrictions.
But it began months ago, triggered by retail chains' need to keep up with stores such as Primark, Zara and New Look, which have defied the consumer slowdown and continued to trade robustly by rushing the latest trends on to display rails faster than their rivals.
Speaking before the Chinese textiles crisis blew up, Philip Green, the retail billionaire who owns a swathe of high street clothing chains in the UK, told the Financial Times he had been moving production away from China since last December.
Mr Green said: "I have been taking quite a lot of stuff out of there for a while because we want to be nearer to home for speed to market. So we are going to Turkey and east Europe.
"In China, price and quality are excellent, but in terms of the fast fashion, some of these things are too far away for what the market is demanding."
A German retailer said Turkey was an attractive alternative supplier in the short term but other Asian suppliers were important in the longer term.
Next, one of the largest retailers in the UK, is also moving production closer to Europe, according to retail sources, though the retailer declined to comment.
If price alone is the yardstick, China wins hands down. According to AT Kearney, a consultancy, a typical blouse costs Pounds 6.50 (Euros 9.50) to manufacture in China, against Pounds 7 in eastern Europe, Pounds 8 in Turkey and Pounds 10 in the UK.
Faced with consumers no longer prepared to wait for their favourite designs, retailers are aware there is a far higher price to be paid from failing to get new designs to their customers quickly enough.
Meanwhile some textile companies cannot afford to wait for the EU to stitch together a solution to the current textile crisis.
Henrik Holbech, who owns a lingerie company in the Danish town of Skanderborg, caught the first flight to Asia when the bra quotas ran out last week.
"We have moved production to Hong Kong and Macau. It wasn't easy to find an alternative manufacturer because we weren't the only ones looking," Mr Holbech said.
"It cost us about DKr1m (Dollars 165,000, Pounds 90,000, Euros 135,000) but we couldn't wait for the EU to react or not to react."
News of the plan by Peter Mandelson, trade commissioner, to re-impose the quota regime some time in the future drew derision in Denmark, one of two countries that voted against the June 10 accord.
"This is just the worst sort of protectionism and in the strongest possible terms I urge the Danish government to get rid of quotas," said Paul Larsen of the Danish Bestseller group.
In Spain, large retailers such as Inditex, Cortefiel and Corte Ingles have been largely unaffected by the blockade because of what one industry official yesterday described as "logistical flexibility".
"Sure, they may encounter problems in one or two items," said Salvador Maluquer, secretary general of the Consejo Intertextil de Espana, which represents manufacturers, "but the whole world is a marketplace for the big retail chains".
"Textile production isn't all about China. We've worked out that there are 150 low-cost exporter countries in the world."
He said figures from the first four months of this year showed that Morocco, India, Turkey, Bangladesh, Tunisia, Pakistan, Cambodia, Bulgaria, Romania and Sri Lanka were already established as important source markets for Spanish clothes importers and distributors before the Chinese quotas were agreed.
The list of alternative suppliers partly reflects a trend among Spanish producers to shift production offshore in an effort to compete with cheap Chinese imports. This had been concentrated in nearby northern Africa, but producers had started moving further afield, mainly to eastern Europe but also to countries such as Bangladesh, said Mr Maluquer.
LOAD-DATE: August 29, 2005
August 30, 2005 Tuesday
Europe Edition 1
SECTION: INTERNATIONAL ECONOMY; Pg. 2
LENGTH: 698 words
HEADLINE: Textile production moves away from China as taste for fast fashion grows
BYLINE: By CLARE MACCARTHY, MARK MULLIGAN and ELIZABETH RIGBY
DATELINE: LONDON, COPENHAGEN and MADRID
BODY:
Some retailers were shifting production from China to eastern Europe, Turkey and India even before the recent EU-China textile row broke out, as customers' appetite for "fast fashion" has forced a fundamental rethink of supply chains.
The sourcing shift has been reinforced by the European textiles crisis, which has prompted large clothing retailers, such as Sweden's Hennes & Mauritz, to find alternative sites that do not face import restrictions.
But it began months ago, triggered by retail chains' need to keep up with stores such as Primark, Zara and New Look, which have defied the consumer slowdown and continued to trade robustly by rushing the latest trends on to display rails faster than their rivals.
Speaking before the Chinese textiles crisis blew up, Philip Green, the retail billionaire who owns a swathe of high street clothing chains in the UK, told the Financial Times he had been moving production away from China since last December.
Mr Green said: "I have been taking quite a lot of stuff out of there for a while because we want to be nearer to home for speed to market. So we are going to Turkey and east Europe.
"In China, price and quality are excellent, but in terms of the fast fashion, some of these things are too far away for what the market is demanding."
A German retailer said Turkey was an attractive alternative supplier in the short term but other Asian suppliers were important in the longer term.
Next, one of the largest retailers in the UK, is also moving production closer to Europe, according to retail sources, though the retailer declined to comment.
If price alone is the yardstick, China wins hands down. According to AT Kearney, a consultancy, a typical blouse costs Pounds 6.50 (Euros 9.50) to manufacture in China, against Pounds 7 in eastern Europe, Pounds 8 in Turkey and Pounds 10 in the UK.
Faced with consumers no longer prepared to wait for their favourite designs, retailers are aware there is a far higher price to be paid from failing to get new designs to their customers quickly enough.
Meanwhile some textile companies cannot afford to wait for the EU to stitch together a solution to the current textile crisis.
Henrik Holbech, who owns a lingerie company in the Danish town of Skanderborg, caught the first flight to Asia when the bra quotas ran out last week.
"We have moved production to Hong Kong and Macau. It wasn't easy to find an alternative manufacturer because we weren't the only ones looking," Mr Holbech said.
"It cost us about DKr1m (Dollars 165,000, Pounds 90,000, Euros 135,000) but we couldn't wait for the EU to react or not to react."
News of the plan by Peter Mandelson, trade commissioner, to re-impose the quota regime some time in the future drew derision in Denmark, one of two countries that voted against the June 10 accord.
"This is just the worst sort of protectionism and in the strongest possible terms I urge the Danish government to get rid of quotas," said Paul Larsen of the Danish Bestseller group.
In Spain, large retailers such as Inditex, Cortefiel and Corte Ingles have been largely unaffected by the blockade because of what one industry official yesterday described as "logistical flexibility".
"Sure, they may encounter problems in one or two items," said Salvador Maluquer, secretary general of the Consejo Intertextil de Espana, which represents manufacturers, "but the whole world is a marketplace for the big retail chains".
"Textile production isn't all about China. We've worked out that there are 150 low-cost exporter countries in the world."
He said figures from the first four months of this year showed that Morocco, India, Turkey, Bangladesh, Tunisia, Pakistan, Cambodia, Bulgaria, Romania and Sri Lanka were already established as important source markets for Spanish clothes importers and distributors before the Chinese quotas were agreed.
The list of alternative suppliers partly reflects a trend among Spanish producers to shift production offshore in an effort to compete with cheap Chinese imports. This had been concentrated in nearby northern Africa, but producers had started moving further afield, mainly to eastern Europe but also to countries such as Bangladesh, said Mr Maluquer.
LOAD-DATE: August 29, 2005
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