Han Bekke, president of the International Apparel Federation, is worried about the recent geo political tensions, polarisation and populism in a growing number of countries. “This could easily lead to protectionism and import duties and with that it will not only affect the world exports in clothing (approx.$ 450 billion), but also the position of many companies and workers worldwide. The Trans Pacific Partnership deal (TPP) was blown up by the US President, TTIP (EU-USA) is in the freezer, NAFTA (US-Canada-Mexico) might be renegotiated, CETA (EU-Canada) was signed but not after strong opposition at the end and we can only guess about the final effects of the Brexit”, Bekke said in his opening speech at the China-Asia Textile Forum 2017 today in Shanghai. “For sure this all leads to uncertainty for entrepreneurs, which is not a good business environment”, Bekke stated. “Brands and retailers might start to change their sourcing in anticipation of higher import duties that may never come. In this way uncertainty will equal waste of resources.”
A competitive market
“The apparel industry is currently working under volatile global macro-economic conditions. The fashion market has become a very competitive market with high pressure on margins”, Bekke said. He sees two developments. On the one hand, a race to the bottom where one could question whether this will be profitable in the end or if it will improve the living and working conditions of workers in low wage countries. “The pressure in the supply chain to be really transparent and be accountable for these conditions increases”, Bekke analysed.
On the other hand he sees a movement from focus on price to focus on quality, more value for money, sustainability and speed to market. This could make local manufacturing or re-shoring based on new technology (robots, 3D) attractive. IAF is analysing several re-shoring initiatives like Re-shoring USA, Made in Germany 4.0; Industrie du Futur (France), La Fabricca del Futuro (Italy), Denim City Amsterdam (Netherlands), NY Fashion Campus etc. IAF has started a working group on industry development in high cost economies, combining good ideas from industry associations from across the world.