Supply chain disruption, rising costs and fears of geopolitical risks are forcing European and US companies to reconsider their investments in China. For US companies, escalating trade tensions between Beijing and Washington are a strong factor, while for European companies, China’s close relationship with Russia is adding to anxiety over a heart attack in China. supply chain. So many European fashion industry drastically reduce its dependence on Chinese factories and move production to European countries or neighboring countries. Among them, the country that seems to be winning for the moment is mainly Turkey, which has already attracted many Western firms, presumably also because of the customs union that links it to the EU. So it’s a popular destination for European industry and they already have units there. Hugo Boss, Adidas, Nike and Zara.

According to a related Financial Times report, the Swedish-German fashion industry Marco Polo since 2021 has moved its production units to Turkey and Portugal. Speaking to the British newspaper, its CEO Dieter Holzer stressed that its goal is to “avoid risks in our supply chain and make it more resilient”. He added, moreover, that many industries are doing the same. Other big fashion brands such as mango And Dr. Martens either have already transferred, or are planning to transfer their units from China or Southeast Asia as a whole. And, as Dr Martens CEO Kenny Wilson noted, “The point is to reduce our dependence on China.” Since taking over as head of the footwear industry in 2018, Wilson has moved 55% of all production out of China.

Speaking to the US network CNBC, Richard Martin, general manager of IMA Asia, made the case for the European industry, emphasizing that “we lost clothing sales in Russia because we had to close the business and leave, but it could have happened to China, so let’s Let’s try to mitigate the consequences.”

Many European companies are moving their production to European countries or neighboring countries.

Also telling is the recent announcement by Tony Ruiz, Mango’s CEO, that he is considering buying fewer goods from China, “but we will be vigilant and monitor developments.” He also added that his industry is “exploring to what extent all this subcontracting, all this product that has been transported around the world and developed over many years in the global market, could return to our region.”

As Richard Martin points out, “The problem is geopolitical risk, as American business is much more cautious than when the Donald Trump administration launched the trade war.” However, this trend has accelerated due to the pandemic and the resulting supply chain heart attack, which has led to a sharp increase in the cost of transportation, as well as long delays that have occurred when workers in his factories fell ill or were forced to work. Asian isolation. An industry insider even revealed that one specialty retailer has ordered last season’s ski gear and apparel for summer 2022. only in China, and transportation to other places is now a thing of the past.”

However, in addition to geopolitical risks, there are also purely economic factors, since problems in the supply chain have significantly increased the cost of transporting finished products. At the same time, the incentives that industry had in the past to produce in China are diminishing: the cost of production has risen significantly in the factories of the world, as characterized in China, following changes in wages. According to China’s National Bureau of Statistics, the industry’s average wage has doubled from 2013 to 2021 and is now approaching $14,000 from $6,689. However, the process of ending dependence on China will be slow. So far, China and Vietnam, as well as other countries in Southeast Asia, account for the lion’s share of textile exports. More than 50% of the goods purchased by the largest clothing retailer Inditex remained in Asia in 2021 and decreased slightly from 2018 levels.