FBI Summit Tackles Key Apparel Issues
The benefits and challenges of producing in China were on the agenda at a recent panel discussion hosted by Fashion Business Inc. and held at the California Market Center in Los Angeles. Panelists at the Dec. 8 FBI mixer and industry summit discussed key issues, ranging from sourcing and production to transshipments and legal issues. Ken Wengrod of FTC Commercial Corp. moderated the panel, which included Ann Fong of Trina Turk, Steve Maiman of Stony Apparel, Lonnie Kane of Karen Kane, Noel Massie of UPS, Rob Greenspan of Greenspan Consulting and Karalynn Sprouse of MAGIC International.
Maiman, whose company produces all of its garments in China, said Stony Apparel would never leave that country, despite the rising costs of labor and cotton and retailers’ reluctance to raise prices. “Prices in China go up, but we refuse to leave because of the reliability of delivery,” he said. Disturbing his supply chain is not an option, he said. “That’s a bigger risk than increasing prices for us.”
Kane, who has kept some of his production domestic, said capacity issues in China—due in part to factory closures and in part to a growing middle class there that is, for the first time, gobbling up factory capacity—are making it less attractive to brands such as his. “China is very complicated,” Kane said. Capacity issues, he said, “mean [Chinese factories] get to raise prices. Some things, like rayon items, for example, are cheaper to make in L.A.”
Diversification is an area of key concern for brands that produce overseas. Panelists warned about “getting stuck” in China and missing the boat as other countries, such as Vietnam and Indonesia, become more viable production hubs. “When costs are going up and you can’t shift production to another [less expensive] country, you can get stuck in China, and that means you may make less money,” Greenspan said. To avoid that sort of situation, manufacturers should have an escape plan and seek out alternate locations for production. Trina Turk’s Fong advocated diversification but added that “fleeing” China in favor of a less expensive but unfamiliar supply chain could save money in the short-term but could cause brands to incur unforeseen costs and difficulties.
The topic of transshipment, which can be used to disguise the country of origin or the nature of goods, was met with somber warnings. Maiman simply said, “Don’t break the law.” Lack of knowledge of transshipment does not exempt an importer from responsibility. “Use your common sense. If a price is too cheap, something is going on,” Greenspan said. “Use your street smarts, and don’t be greedy.”—Erin Barajas
