Most Recent Articles In Financial
Latest Financial Articles
- Puig Acquires Penhaligon's, L'Artisan Parfumeur
- Unilever Full-Year Net Gains 4.9%
- Beiersdorf 2014 Sales Rise 2.3%
More Articles By
WASHINGTON — In their push to drive efficiency and lower costs, brands are manufacturing apparel in a host of politically unstable countries where they have to not only manage their supply chain, but the possibility of sudden and sometimes violent political change.
Pakistan, Indonesia, South Korea, Jordan and Israel are all political hot spots important to the fashion world. Then there's China, which accounts for about a third of apparel and textile imports and is run by an autocratic regime trying to maintain control as the country of 1.3 billion awakens to market forces with a series of sweeping demographic shifts.
A major disruption to commerce with any one of these countries would test the flexibility of brands' diversification strategies and ability to deliver goods to stores in a pinch.
Sometimes, change comes with little disruption. Last year, Thailand incurred its latest in a string of coups and switched to military rule, with little disruption of trade. Manufacturing in Israel also showed little deviation from the norm last year during its skirmish with Lebanon.
But producers have not always been so fortunate.
In 2001, a disputed presidential election in Madagascar led to violence and business in some areas of the country ground to a halt, costing the local economy hundreds of millions of dollars and forcing some producers to write off losses there.
Personal safety is also a big concern in some countries, particularly as sentiment about Americans around the world has shifted with the war in Iraq, the war on terrorism and other foreign policy moves.
The hottest of the hot spots right now is Pakistan, the second-largest apparel and textile importer to the U.S. In addition to sharing borders with Afghanistan and Iran, Pakistan used to be a part of India, with which it has had three wars, a nuclear arms race and an ongoing dispute over the Kashmir region. President Pervez Musharraf seized power in a 1999 coup and has been the target of several assignation attempts.
Despite the instability, David Ford, senior vice president of manufacturing for Caribbean Joe, said Pakistan offered "substantial" price savings and produces a lot of cut-and-sew knits.
"Unfortunately, the business is about price, so you have no choice but to go to these countries and to chase the price," said Ford, who has traveled the world to source apparel for various brands, including Kellwood Co.'s Sag Harbor, since 1982. "A lot of the time, it's what I call 'price and a prayer' because you pray you get the delivery at the price you negotiated. So it becomes very dicey, at best. I do as little business in Pakistan as possible because it's a country I won't go to."