How will Covid-19 shape Asian garment production?
Asian countries exported US$341bn worth of garments in 2018, accounting for about 64.7% of global exportsThe Asian garment sector is at a critical juncture, having been left reeling from the impact of the Covid-19 pandemic. While industry experts expect the region to continue to dominate global garment production in the future, they say the crisis will shape manufacturing in Asia for years to come.
Asia is home to seven of the world's top ten garment exporting countries, including the top three – China, Bangladesh and Vietnam. Asian countries exported US$341bn worth of garments in 2018, accounting for about 64.7% of global exports, according to data from the United Nations Conference on Trade and Development (UNCTAD).
A recent study by the International Labour Organization (ILO) questioned 16 industry experts on how the pandemic will affect garment production systems and practices on the continent, with the initial forecasts outlined in the report 'What next for Asian garment production after Covid-19? The perspectives of industry stakeholders.' While it is difficult to envisage a single fate for the industry as a whole, change is most certainly on the horizon – with the crisis likely to alter production patterns and accelerate existing and new industry trends. Impact on production systems and practices While there remains little doubt that Asia will remain the pre-eminent global garment production hub post-Covid-19, they say shifts could occur between countries as buyers adjust their sourcing strategies, with risk becoming an increasingly important factor. While nearshoring and onshoring have grown in importance for some buyers in recent years to accommodate the needs of fast fashion or smaller volumes, study participants largely agree these trends are unlikely to be affected by the pandemic.
However, production shifts may occur within the region. "Asia is still a strategic production location due to its scale of operations, proximity to raw materials, developed infrastructure and supply chain linkages, and productive skills and know-how. These are all factors that are difficult to immediately replicate in other sourcing destinations such as Africa or Latin America while remaining cost-competitive," report authors state. "In a crisis we all tend to retreat to the known. But we are a lot more globalised and a lot more interdependent than we think we are. So the reality is that the quality of life that we enjoy is only possible with globalised supply chains" – Edwin Keh, HKRITA
Edwin Keh, CEO of the Hong Kong Research Institute of Textiles and Apparel (HKRITA), adds: "In a crisis we all tend to retreat to the known. If you retreat back to your own home country you don't have to deal with foreign currency fluctuations, political uncertainties or the complexities of travel in the age of the pandemic. But the reality is that we are a lot more globalised and a lot more interdependent than we think we are. So the reality is that the quality of life that we enjoy is only possible with globalised supply chains." The pandemic is also likely to accelerate the uptake and adoption of technology in the sector, especially of digital and analytical tools, enabling faster and more efficient production. Investments in data, in particular, will likely increase, as Covid-19 highlights the need for more control and precise information about the production process. Meanwhile, after an initial deterioration in social and environmental standards due to enterprise-level financial constraints, some of the experts predict a new and more forceful phase of industry collaboration to improve longer-term industry sustainability.
Impact on factories Experts also foresee a consolidation of manufacturers, as those with less financial capital and liquidity will shut down or be bought out, amid a deepening divide in the sector. While some are likely to become increasingly professional and offer more technologically advanced production, others may be incentivised toward a renewed 'race to the bottom' to attract buyers looking to reduce costs to offset pandemic-incurred losses. In these factories, there are likely to be increased decent work deficits. Buyer-supplier relationships are also expected to deepen, with manufacturers with advanced capabilities more likely to consider buyers' reputation, such as payment histories and financial health, before agreeing to work with them. This may potentially shift some of the power dynamics within the industry, driving more equal partnerships. "The way to get things faster and cheaper is to work together...[You] have got to really have a strong partnership with suppliers to be able to deliver and to do so quickly," says Marsha Dickson, president and co-founder of Better Buying.
Impact on workers Workers will be placed in a more precarious position, with increased competition for jobs in the shorter term and a possible deterioration in working conditions where social compliance investments are downgraded. Currently accounting for about 80% of the sector's workforce, women may be crowded out in the longer term due to technological upgrading. As such, upskilling will be necessary to ensure some workers can access better jobs. "As jobs in garments and other sectors become more scarce, the remaining jobs may become more attractive. We might see women start to get more and more crowded out of regaining access to jobs because once those jobs become more attractive, men tend to go for them and generally they have a better chance of getting employed," explains Joe Sutcliffe, senior dignified work advisor at non-profit CARE, which works to fight poverty and help women fulfil their potential. However, the pandemic may result in an expansion of social protection measures in the future as governments invest in new social contracts to boost economic resilience and protect workers from future shocks. If combined with a renewed focus on social and environmental sustainability in the sector, this could have a transformative impact on the future of work in garment manufacturing, leading to greater resilience both for businesses and workers across the region.