Do you ever wonder how it’s possible to buy a cute sweater at H&M for $40, but you can’t find one for under $300 at Bergdorf’s? On the other hand you also question how China can keep manufacturing inferior goods and get away with it? Maybe our insatiable appetite for cheap goods are to blame. Low prices are coming at a cost that consumers and fashion companies can no longer ignore.
According to an article in today’s WWD, globalization and relentless retail competition among the likes of Wal-Mart, Target, H&M, Kohl’s, Gap and Macy’s might have turned supply chain "efficiency" into a high art, but the pressure on factories has spurred a slew of sweatshops, industrial pollution and consumer safety concerns that many expect ultimately will increase prices.
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At the same time, rising wages in China are only increasing pressure on manufacturers there as they strive to maintain the nation’s status as the world’s low-cost factory across a variety of product categories. This could result in even more shortcuts being taken by suppliers as they subcontract out more of their production which could spell greater dangers.
Recent safety recalls of Chinese-made toys, bibs and toothpaste prompted consumer outcries and governmental reviews in both the U.S. and China that could lead to new regulations in both countries. The misery and human toil of sweatshops and the green issue has gained traction in the last year, especially with tales of industrial pollution making front-page news.
Yet, what is becoming clear in these scandals is the relentless drive toward lower and lower prices — whether it’s a toy or T-shirt — it comes at a price, be it greater pollution, displaced populations or possible safety hazards.
While these issues rarely impact the luxury or high-end designer world, they could for those designers and celebrity designers who are tying to broaden the reach of their brands. Think Karl Lagerfeld for H&M, Vera Wang for Kohl’s or Sarah Jessica Parker for Steve & Barry’s.
Paul Charron, former chairman and chief executive officer of Liz Claiborne Inc., said China has had such incredible growth, it’s "like the Wild, Wild West." "There’s a lot of pollution in the Pearl River Delta," Charron said. "There has been unbridled growth without appropriate checks and balances. I think that period of unbridled, undisciplined growth is about to be over."
As a result, fashion companies are starting to take a broader look at ethical standards in their sourcing practices. So far, apparel hasn’t been caught up in the product safety scandal beyond an investigation by the government of New Zealand into unsafe levels of formaldehyde reportedly found in some Chinese-made apparel. There seems to have been some interest on the part of fashion companies to make sure their goods don’t contain harmful substances.
Big changes, though, are going to require some kind of buy-in from the consumer/voter. Yet, this will all mean higher prices. Consumers have indicated that they are willing to pony up more money for goods produced ethically, or for products labeled organic. Just look at all the fashion lines cropping up claiming to be "green."
Bruce Raynor, general president of apparel union UNITE HERE, said the spate of tainted products from China is a serious blow to the sourcing status quo. "This is not going to go away," said Raynor. "This is the biggest major development since the sweatshop issue."
Raynor pointed to Wal-Mart and said the company was being impacted by campaigns highlighting its business practices to consumers. Wal-Mart, the world’s largest retailer, has come under fire for its antiunion efforts, its health care benefits and conditions at overseas factories.
"I’m seeing a rapid trend toward long-term sustainable enterprise that may increase costs somewhat," said Steven Jesseph, ceo of Worldwide Responsible Apparel Production, a nonprofit organization specializing in certification of ethically sourced goods.
"When you start imposing systems at a factory, is there a cost involved? Yes, but there are also efficiencies that are gained," said Jesseph, who retired from Sara Lee Branded Apparel in 2005 as vice president of compliance and risk management. "It therefore becomes an investment and there is a return on investment."