Europe's Embargo Crisis Brings Balance

When millions of sweaters, bras, trousers and blouses were seized and held hostage in European customs warehouses last August, it hardly resembled the end...

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"Natural catastrophes or political instability can also present a risk," added a spokesman at Puma, which has increased its Asian sourcing from 81 to 89 percent of its whole. "We want to increase the number of Asian countries where we manufacture. This diversification is meant to decrease dependence on any one individual supplier."

Countries from India and Bangladesh to Vietnam and Thailand are sure to profit.

"Indians are faster [than China], they are more flexible and have a better fashion sensibility," said Franca Mocali, woman's apparel manger for Italy's Upim department store chain.

Other Italian manufacturers increasingly are turning to sourcing partners closer to home, including North Africa and Eastern Europe.

For instance, denim label Meltin' Pot has focused much of its production in the Mediterranean region, namely Italy, Tunisia, Egypt and Albania. Augusto Romano, Meltin' Pot's general manager, said quality can be better controlled at those closer-to-home countries.

Accelerating lead times also has prompted some companies to search for so-called proximity partners.

Italy's Coin SpA, which owns the Coin and Oviesse retail chains, sources about 60 percent of its private label apparel in Asia. But the retailer currently is evaluating the possibility of boosting production in Turkey, North Africa and other Mediterranean countries.

"We are working hard to speed up all aspects of the [production] process," said Antonio Margotti, Coin's manager for sourcing and supply.

Nonetheless, some companies are moving to consolidate their sourcing in Asia.

Germany's KarstadtQuelle department store and mail-order group is working on an agreement with Li & Fung Ltd. in Hong Kong to serve as a procurement provider for all global imports.

The partnership is expected to save Germany's largest textiles retailer up to 10 percent in purchase prices, improve payment conditions from 20 days to 120 days and thus reduce working capital by 500 million euros.

At present, the group imports about 60 percent from Asia, the remainder from Europe.

KarstadtQuelle previously worked with midsized importers in Germany as well as KarstadtQuelle International Services AG, based in St. Gallen, Switzerland. The Swiss company employs 1,100 people on location in factories all over the world and will be sold to Li & Fung as part of the deal.

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