The globalisation of apparel industry

Globalisation we experience physically. The etiquettes in our apparels tell us that the majority is not produced in Europe. Made in Bangladesh, China and Vietnam is nothing special anymore.

Particular Bangladesh gains in importance as clothing supplier while China is starting to lose its attractiveness in this branch. Bangladesh began as a garment industry in the latest 1970s. Famous brands like H&M, Wall Mart, Gap, Next and Marks & Spencer import their clothes from Bangladesh. Today the label “Made in Bangladesh” is present in nearly every tenth apparel in Europe. Around nine textile imports to Europe are from Bangladesh. Thus, Bangladesh is now the third largest exporter to Europe. In 2004, textile and clothing industry account for 75% of the country’s total export earnings and 80% of manufacturing export earnings.

A survey of the business consulting McKinsey & Company underlines the growing importance of the country Bangladesh. According to this survey 89% of the interviewed CEOs see Bangladesh as top sourcing hotspot in the next five years. The countries Vietnam and Indonesia get second and third place.

But why is Bangladesh so successful in apparel industry? The success of Bangladesh’s garment industry mainly results from low production costs, especially its cheap labour. A garment factory worker gets in average a wage of $43 per month. In contrast China offers an average monthly wage of over $100 which is also of course far too little. In addition, Bangladesh benefits from various preferential trade agreements. For example in January 2011 the EU allowed duty-free access to clothes from Bangladesh.

European and US apparel buyers benefit from decreasing purchasing costs by producing in low-cost companies. It helps them to get a competitive advantage and finally to increase profit. End-consumers want to have cheaper and cheaper clothes and mostly do not care about the source.

One way to reduce this exploitation is as end-consumer to buy fair trade clothes. One example is the German company Trigema which only produces in Germany. It is necessary to set a signal and show that as consumer human working conditions are more important than cheap clothes.

Sources:

http://www.bbc.co.uk/news/business-14971258

http://www.mckinsey.de/downloads/presse/2011/2011_McKinsey_Bangladesh%20Case%20Study.pdf

http://www.mckinsey.de/html/presse/2011/20111213_bangladesch.asp

http://www.rp-online.de/wirtschaft/unternehmen/trigema-setzt-auf-die-deutsche-masche-1.2346428

Advertisements

2 thoughts on “The globalisation of apparel industry

  1. I think, the proposed solution of the problem in the post is a bit problematic. For sure there is no question that the quality of life of a human being should have a higher priority than cheap clothes, but should the people from Bangladesh profit, when suddenly everybody would only buy Fare-Trade products produced in Germany?
    Of course it would be better for the people from Bangladesh and all developing countries if there would be fairer wages for the service of working, but I think this can not be achieved by no importing more goods from these countries any more.

    One reason for example why Germany is so strong export force is as follows, that wages in Germany compared to other countries stagnated after the crisis. As a result, prices for the products are also lower than in other countries, leading to a fortuitous export and thus also leads to economic growth.

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s