‘Made in Cambodia’ may become new fashion label with tariffs hitting China 20 August
The next designer handbag you buy is less likely to bear a “made in China” label.
Fashion companies, eager to diversify their supply chains, were already expanding into production sites in Southeast Asia as alternatives to China. Then the trade war happened.
Now, with tariffs on products such as Chinese handbags set to rise, nations like Cambodia and Vietnam are looking more attractive than ever for consumer-goods makers such as Steven Madden and Tapestry Inc’s Coach. And while the Trump administration has slapped duties on goods from many of its largest trading partners this year, it’s allowed some Cambodian products to continue duty-free access to the US market.
“The shift has been under way,” said Steve Lamar, executive vice-president of American Apparel & Footwear Association. The talk of tariffs has created “a lot of anxiety” and companies are gauging how fast they can make more changes to their sourcing, he said.
A study released in July by the US Fashion Industry Association showed that, while all of the companies participating in the survey sourced goods from China, 67 per cent expected to decrease the value or volume of production in the country over the next two years. US trade protectionism was listed as the number one challenge for the industry.
Steven Madden Chief Executive Officer Edward Rosenfeld said on the company’s most recent earnings call that it has been shifting production of its handbags to Cambodia from China. The maker of shoes and accessories sees 15 per cent of its handbags coming from Cambodia this year, with this percentage doubling in 2019.
“That gives us frankly about a three-year head start on most of our peers, because many folks are just now trying to make that move,” Rosenfeld said on the July 31 conference call.
“Our head of handbag sourcing is actually over there right now, working on a plan to ramp that up.”