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| Cheaper than China |
Jun 2nd 2011
The Economist
BANGKOK
“FASHION is a form of ugliness so intolerable that we have to alter it every six months.” Oscar Wilde’s quip now sounds hopelessly out of date. Fashions change far more often than twice a year. And the rag trade is as footloose as its customers are fickle. It goes wherever clothes can be made cheaply and reliably. Until recently, that meant China. But as Chinese wages soar, buyers are looking elsewhere. South-East Asia could be the next big thing.
China still dominates the business. It supplies nearly half of the European Union’s garment imports and 41% of America’s. But more orders are shifting to lower-wage economies such as Cambodia and Vietnam, where garment factories are mushrooming. Vietnam is already the second-largest supplier of clothes to America.
The new tigers are still cubs. They often have to import fabrics from China to stitch into clothes, so their transport costs are high. For buyers in a hurry, it is hard to beat China’s mix of scale, speed and flexibility. Suppliers in South-East Asia “are all clearly behind [China],” says Pablo Isla, the chief executive of Spain’s Inditex, which owns Zara, a retailer of “fast fashion” (the rag trade’s equivalent of fast food).
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