In 1980s, people would be joyful when they found the tag “Made in the U.S.A.” inside of his jacket lapel, because it meant what it really stood for.
Twenty years later, things have changed, the concept of buying clothes mass-produced in the U.S. seems foreign at best. Though the locally designed grown made with U.S. cotton still have charm, most of people have accepted the fact that the clothes were mainly produced in somewhere else — typically, in China.
Quality and Price Rule
At present, consumers concern less and less about where things are made as long as they are cheap, fashionable and of good quality. Milton Pedraza, chief executive of the Luxury Institute, a New York-based research company focusing on high-net-worth individuals, gives an example of a gentleman he spoke with recently who was wearing a Hermès sweater under a Hennes & Mauritz (H&M) suit. “He noted the high quality of the suit,” says Pedraza. “He was proud that was able to find such a good product for such a low price.”
Therefore, it is hardly to see the wards “made in the U.S.A” stamped on the tag of your shirt, or “Made in Italy” sewn on the inside of your luxury handbag, or “Made in France” imprinted on your perfume box, unless you are a 19-year-old with a wardrobe filled with American Apparel items. It is the price and quality that they really care about but not where the product was made.
Why? Because cheap labor doesn’t always produce cheap-looking clothes. Josh Green, chief executive of Panjiva.com, a Web-based service with offices in New York and Shanghai, said there were manufactures in China that employed highly-skilled employees who could produce goods that measured up against what’s made in the U.S.A. or Western countries. Panjiva provides detailed information on over 40,000 apparel and textile manufacturers in over 140 countries, and a ratings system that measures everything from efficiency to ethical codes.
Many higher-end labels such as American leather brand Coach realized that they could create fine handbags in China for a significantly lower cost. Coach’s loyal customers believe in the product without caring about where they are made.
Further Cost Cutting
But more sophisticated manufacturing facilities–and a growing Chinese middle class demanding higher pay–have forced many companies off the coast of China, their traditional stronghold. Some have retreated inland to poorer, work-strapped areas, while others have moved out of China entirely.
However, the lower-end brands, not the fine-goods companies, are the ones departing, says Green.
He also says that the Chinese government has been more vigilant in enforcing label regulations, which is driving up costs; that some can move further inland or to another country and get lower costs, but the labor force is less skilled and the merchandise is lower-quality.
In particular, fast-fashion retailers–those that push new product onto the floor frequently–like H&M or billionaire Philip Green‘s Top Shop–manufacture goods in places such as Istanbul and Vietnam.
But some retailers are finding less traditional ways to cut costs that don’t include country-hopping. For example, Inditex, owner of fast-fashion emporium Zara, manufactures almost all of its goods in La Coruña, Spain. But unlike its competitors, Inditex has complete control over quality. Because the company does its own manufacturing, it has cut out the middle man. The clothes reach the sales floor more quickly and efficiently, thus serving more consumers.
A business model such as Zara’s comes to a question: Could what goes around still come around? As fast fashion’s finest going on looking for ways to escape high labor costs–and as luxury retailers rely more and more on the East to produce quality goods–will we ever desire that Made in the U.S.A. label again?
Green believes that’s just not a viable option today. He said that they saw declining transportation costs between countries, declining communication costs and easier border control; and people spotted the opportunity to save money by manufacturing abroad, went after it and never looked back.