Global Apparel Sourcing: Options for the Future

Intense competition has placed garment retailers in higher income countries under constant pressure to reduce costs. This has encouraged buyers to favour low cost countries and, in particular, to seek out locations which offer ever lower labour costs. But few countries today have lower labour costs than major suppliers such as Bangladesh or India. Moreover, our analysis shows that the pursuit of ever lower labour costs has little impact on total manufacturing costs. In fact countries with the lowest labour costs do not always produce the best value. More important is the skill of individual manufacturers in being able to meet buyers? needs at competitive prices.

For buyers in higher income countries, the balance between foreign and domestic sourcing has changed: making clothes in a lower-wage foreign country is now the norm. With that change, the major garment-making countries have developed increasingly sophisticated infrastructures to support garment production. As a result, many buyers now find it more productive to seek appropriate partners in a limited number of countries. Furthermore, this tendency will be reinforced in 2005 and beyond as the elimination of quota restrictions opens up the world market to a growing number of manufacturers in the leading Asian supplying countries.

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