Global clothing supply chains are complex, varied entities. But they all have several needs in common: for raw materials, such as cotton; for inexpensive labor that can sew the clothing, so that they can keep their retail prices low enough to appeal to consumers; and a means to transport materials from production sites to retail markets.
Considering these demands, Africa is rapidly emerging as a location of great interest for clothing companies. First, many areas in Africa are able to grow their own cotton, so the raw material is available and locally sourced for factories that transform the cotton into clothing. In contrast, Asian locations that currently are among the most prominent sites for manufacturing, such as Vietnam and China, lack the proper environmental conditions for growing cotton.
Second, due to shifting trends and social norms, many Asian countries have implemented minimum wages and required safety protections for unskilled labor forces. For example, in Bangladesh, the site of several tragic factory incidents in recent years, a $67 monthly minimum wage has been instituted, along with stricter requirements for factory safety. In China, with its reputation for efficient and effective manufacturing, minimum wages range around $200 per month. But in Ethiopia for example, there is no minimum wage, so clothing companies can hire workers for far less.
Third, unlike several Asian nations, many African countries have free trade agreements in place with several Western nations, including the United States. These agreements facilitate trade across their geographic boundaries. In Ethiopia, the national government also has invested in manufacturing facilities in an attempt to attract more companies to locate there. However, Ethiopia lacks a port, and in much of Africa, the infrastructure, including roads, remains underdeveloped. In this sense, it lags behind most Asian sites for manufacturing.
Although Africa thus appears poised to emerge as the most popular location for manufacturing, it still has some ground to make up when it comes to competing with the locations that already are popular with clothing companies.
- Why might more apparel be made in Africa now than in the past?
- Check the labels of the garments you are wearing today. Where were they made? How does the knowledge of where your garments are made impact your buying behavior? (This is known as the “country-of-origin effect.”)
Source: Christina Passariello and Suzanne Kapner, The Wall Street Journal, July 12, 2015