The China sourcing conundrum
In conversations with U.S. and European retailers and brands, ELEVATE – a company formed in 2013 to support corporate social responsibility – finds that apparel buyers rate diversifying away from China as one of their top three sourcing goals.
This is not to suggest that there is a desire to exit China – which currently holds by far the largest share of global apparel trade, at 41 percent – but rather a need to significantly reduce dependence on product from China, owing to rising costs, factory closures, unenthusiastic second generation family ownership, new attitudes about working in factories, and a perception that China wants to move to higher-value manufacturing. Sourcing and procurement organizations feel uncertain, and uncertainty is not a friend of supply chains.
The problem is that for all its uncertainty, China still has a huge base of factories, a well-developed transport infrastructure, and a comprehensive eco-system that supplies cut-and-sew operations, and management that has matured with years of experience. Even if a buyer would like to give another country an opportunity, many corporate risk managers view certain countries or regions as quite challenging for doing business.
South Asia could seize this opportunity by better meeting requirements – besides competitive costs – that are vital to global buyers. These include: (i) quality, which is influenced by the raw materials used, skill level of the sewing machine operator, and thoroughness of the quality control team; (ii) lead time and reliability, which are greatly affected by the efficiency and availability of transportation networks and customs procedures; and (iii) social compliance and sustainability, which has become central to buyers’ sourcing decisions in response to pressure from corporate social responsibility campaigns by non-governmental organizations, compliance-conscious consumers, and, more recently, the increased number of safety incidents in apparel factories.
Surveys of global buyers show that East Asian apparel manufacturers rank well above South Asian firms along these key dimensions, as noted in a new World Bank report on apparel, jobs, trade, and economic development in South Asia, Stitches to Riches (see table). So, what can South Asia, which now accounts for only 12 percent of global apparel trade, do to become a bigger player? An encouraging recent development is that buyers have started collaborating to facilitate new sourcing possibilities – as the case of Bangladesh illustrates.
Summer is a time for reflection, for taking stock and seeing what is trending. So far this year, the Jobs Group has published 39 blogs on a wide range of topics. But what blogs have resonated most with our readers? Below you will find our most-read blog posts. In true top ten style, they are presented them in reverse order.
Each month People, Spaces, Deliberation shares the blog post that generated the most interest and discussion. In July 2016, the featured blog post is "Abdul Sattar Edhi – One man can change the world" by Sonia Jawaid Shaikh.
India and Pakistan are urbanizing at remarkably rapid rates. India’s urban population has increased from less than 20 percent of its overall population in 1951 to more than 30 percent today. In Pakistan, the share of the urban population—well under 20 percent in the 1960s, is more than a third today.
It is almost impossible to think of a welfare system without state resources and intervention. But one man, Abdul Sattar Edhi, is single-handedly responsible for creating an unparalleled mini-welfare state system within the state of Pakistan.
In the early 1950s, a young Edhi started begging on the streets of Karachi to buy a battered old van to be used as an ambulance. In 2016, the non-profit Edhi Foundation had over 1800 ambulances stationed across Pakistan – all via public donation. Most Pakistanis will call an Edhi ambulance, rather than a private or state run service in case of an emergency. Edhi’s air ambulances were the first responders when an earthquake struck northern Pakistan in 2008. The reach of Edhi services during emergencies also extends to other parts of South Asia such as Nepal after the recent earthquake.
Over the years, Edhi expanded his work across many areas. His foundation runs homes for women, rehabilitation centers, workshops for skills based learning, dispensaries, soup kitchens, orphanages, welfare centers, missing persons services, refugees assistance, animal center, morgues and burial services including graveyards, child adoption services, and homes for mentally challenged across the country. Thousands of Pakistani children have Edhi and his wife Bilquis Edhi as parents on their official documentation. Edhi services are accessible and open to all but devoid of religious and governmental support in any monetary form.
In Pakistan, more people will trust the Edhi Foundation with their money than the state with their taxes. Donations come in different forms and from many economic strata of the Pakistani society. Many individuals who enter the job market will donate from few rupees to thousands from their first salaries as an initiation to economic and civic life – this pattern continues for many. It is not unusual for children to donate money to Edhi services out of their pocket monies or eidi (money given to children on Eid by their parents and relatives). Edhi single handedly inspired a culture of kindness, giving, volunteering, and civic mindedness in society often marred by economic or political plights.
Daw Aung San Suu Kyi, state counselor of Myanmar and Nobel Peace Prize winner, told representatives from governments rich and poor at a meeting this week in Myanmar that reducing poverty and ensuring that everyone benefits from economic growth calls for a deep focus on addressing the challenges of fragility and conflict, climate change, gender equality, job creation, and good governance.
Suu Kyi was speaking at the opening session of a meeting of the International Development Association (IDA), the World Bank’s fund for the poorest, where donors, borrower representatives and World Bank Group leadership are brainstorming ways to achieve these goals. She said that Myanmar’s real riches are its people, and they need to be nurtured in the right way.