The USA Textile Sector Seeks Alternatives to Chinese Factories Due to the Coronavirus

The USA Textile Sector Seeks Alternatives to Chinese Factories Due to the Coronavirus

The textile sector, with large companies such as Inditex, Mango, or Desigual, is observing with attention and concern to the evolution of the coronavirus epidemic. The Chinese Government has decreed the closure of part of the factories that supply the fashion industry and only some of them are now beginning to start production with a dropper and half gas after more than a month of stoppage and I guess there is a good role of products inspections company in the textile sectors in China.

The uncertainty has led numerous firms to draw up contingency plans if the paralysis of Chinese factories is prolonged. They analyze the possible impact on the supply chain and look for manufacturing alternatives in other countries, confirmed from the Modacc textile cluster.

The president of the Catalan Desigual, Thomas Meyer, did not hide his concern on Wednesday. In an appearance to explain the future plans of his company, he admitted that the fashion industry faces the "challenge" of the coronavirus. "We still don't know when the factories will open normally," he noted. Desigual has half of its manufacture in the Asian country and a powerful market in neighboring.

The Production Could Be Transferred To Turkey, Morocco, Portugal, or Spain Itself

The objective is that the emergency situation in China and the closure of the factories affect the company as little as possible and that the stores do not remain empty. According to Meyer, Desigual is studying transporting part of the merchandise by plane instead of by boat to speed up the arrival at its stores and prevent possible shortages. He is also thinking of transferring part of the production that he now has in China to other countries where he already works, such as Morocco, Turkey, or Spain itself. A whole process that will have “an economic impact”, Meyer underlined from the Desigual headquarters in Barcelona.

In Mango they also, confirm that they monitor the production situation in China "day by day" but, for the moment, their supply is not compromised. The Chinese production stoppage has come at the worst moment for the fashion industry, which in Spain accounts for 2.8% of GDP, according to the latest Economic Report on Fashion in Spain.

The collections that will hit stores next winter are produced now - most of the spring-summer the collection is already delivered - and can significantly affect fast fashion firms, which launch new collections and models every few weeks, like the Swedish H&M or the Irish Primark, point to Modacc, which brings together more than 140 companies in the textile sector. "There is a concern in the sector and alternative production centers are being sought in North Africa, Egypt, Portugal or Spain," they say.


The Stoppage of Chinese Factories Affects The Collections of Next Winter

In the case of the giant Inditex, which also continually renews collections - it sells 65,000 references a year - production is more diversified. 95% of its manufacture is produced in twelve countries, although China is its main supplier, with more than 1,800 plants working to fill Zara, Bershka, or Pull & Bear stores. However, more than 50% of the production is in closer countries, such as Spain, Morocco , Portugal or Turkey. The company founded by Amancio Ortega has not commented on whether the closure of Chinese factories has impacted its supply.

China is also Mango's main supplier, although in recent years it has followed Inditex's model and diversified the manufacture of its garments. Large companies, however, may be more responsive if factory closures are maintained. The biggest problem, sources in the textile sector explain, is in small firms with a strong dependence on China and little capacity to take their production to other countries.

The uncertainty of the coronavirus and its impact on the industry could also have geopolitical consequences, beyond the strictly economic ones. Voices from the world of fashion begin to suggest that the distribution chain "must be rethought".

First, because being overly dependent on a single country leaves companies too exposed to the conjuncture of third parties. And second, because the long journeys to transport the merchandise are in question due to their climate impact. The president of Desigual pointed out this Wednesday: "The fashion industry is one of the most polluting in the world and it has to change." The transport by plane instead of by boat that both Desigual and other companies study to have clothes ready will leave a greater ecological footprint.

The butterfly effect of the coronavirus crisis could also affect the income statement of the textile industry, with numerous businesses in the area of ​​the epicenter of the pandemic that today remain empty.

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