The world keeps getting smaller, and that means more opportunities for ecommerce entrepreneurs. While China remains a bedrock for U.S. manufacturing needs, it’s not a static sector and there are other places to outsource.
This is particularly true when it comes to apparel, which has long been a foundational element of China’s exports. But times are changing, and the open-door policy that’s been encouraged for the last few decades in the United States is already veering towards the isolationism of the early 20th century.
This trend has engulfed China in particular, with the United States’ ongoing trade war causing some market prognosticators to grimace. While there doesn’t appear to be any end in sight to the escalating obstacles thrown up between the two largest economies in the world, that doesn’t mean businesses can’t find other places to efficiently produce garments.
In an effort for big-time clothing retailers, boutique brands and everything in between to broaden their manufacturing horizons, it’s important to have some backups in the event China no longer rules the outsourcing roost. Not all manufacturing needs can be filled in China, and that’s true of apparel as well.
Here are five countries where you can outsource apparel outside the People’s Republic:
1) India
Unlike China, or some of the other countries on this list, India is an infant compared to other manufacturing countries. But they’ve already evolved into a competitive market to outsource.
They’re like a sexy startup that’s already got a robust cash flow, while remaining invisible to the most powerful and cutthroat venture capital investors.
From 2010-2016, India’s garment manufacturing growth doubled that of China (4 percent vs. 8). Not only that, but China experienced negative growth in the last two years that data was compiled.
India’s geography has helped its manufacturing development the most.
It’s proximity to China reduces the cost of the imported raw materials that make up the finished garment products. And textiles are already a huge percentage of India’s manufacturing, where they rank second in the world in leather garments and footwear exports.
Not only that, but the cost of factory labor is lower in India than any other country on this list.
Finding the right manufacturer starts here
2) Bangladesh
It’s been over half a decade since more than 1100 workers were killed in Rana Plaza, effectively ending the garment industry in the country because of the draconian working conditions. But by 2016, Bangladesh has already become one of the top five garment and textile importers to the United States in the world.
They’re the world’s second-largest exporter of “fast” fashion brands to the United States, trailing only China. Suffice to say, they’ve rebounded in record time from that manufacturing low-point.
Not only that, but worker safety has improved in a country marked by such a horrific disaster. That might not matter to your bottom line, until you have to forecast your supply-chain costs beyond a year.
While factory manufacturing isn’t nearly as safe in Bangladesh as it is in more developed countries, it’s improved dramatically after the Rana Plaza incident increased awareness of the issue. The emphasis on worker safety might raise costs in the short term, but it’s a boon for the long-term consistency of production costs.
3) Vietnam
America’s come a long way since the days of LBJ and a war that catalyzed the nation.
These days Vietnam is the fastest-growing clothing manufacturer in the world. Similar to India’s strategic closeness to China, which allows cheaper imported raw materials, Vietnam is benefiting from the overcrowded manufacturing space in China. They’re getting the run-off, so factories normally built in China are moving to their less-saturated neighbor in the south.
Vietnam employs around 2 million in the garment industry with more than 6,000 garment and apparel firms spread throughout the country.
Because it’s still growing, manufacturers are willing to offer smaller order quantities—factories will produce a minimum order quantity around 250-300 pieces compared to 1000-plus in China—which is ideal for a small ecommerce startups with production run that can fluctuate wildly.
Like India, it’s a haven for manufacturing that hasn’t been overrun by the big businesses still in the process of pivoting away from China.
Finding the right manufacturer starts here
4) Indonesia
While not as geographically close to China as the first three on this list, Indonesia nonetheless has become a hub for brand-name clothing manufacturing. H&M, Uniqlo, Calvin Klein, Tommy Hilfiger and others have transformed the exotic isles of Java, Bali and Sumatra from honeymoon locales to the heart of garment production.
In fact, PricewaterhouseCoopers used Indonesia’s growing manufacturing sector as a key ingredient for why it predicted the country would become the fifth-biggest economy in the world in a little over a decade, surpassing behemoths like Brazil, Russia and Germany.
Indonesia, like every country on this list, has benefited greatly from the “China Plus 1” strategy more and more companies are employing to meet the rising production costs in China.
And they’ve diversified their offerings, with more vertical logistics in place—in weaving, spinning garment and printing—that don’t force companies to unnecessarily stratify their means of production.
5) Mexico
This is where shipping costs come into play. Mexico’s adjacency to the U.S. cuts down on overhead so severely, it comes close to eliminating the uptick from more expensive factory labor. And with China’s increasing labor costs, companies save even more when they outsource to Mexico.
A fear for any small business looking to outsource close to home, was NAFTA’s future under the current American administration. But, the recently signed USMCA is basically the same agreement, and it protects the textile supply chain Mexico’s garment industry relies upon.
In the summary of the deal, it reads that USMCA “eliminates the possibility of imposing restrictions (upon the garment-textile chain) that create obstacles for regional value chains to function.”
It’s a bit of a coup for garment production in North America.
Where to Go From Here
Not all ecommerce companies are going to expand their means of production outside the United States. But while the idea of international production might seem complex if you’re going somewhere other than China, consistency has improved, with safer factories, easier communication, and higher product standards around the world.
As you can see from the five countries listed, location matters, but China’s ubiquity in the garment manufacturing space has ebbed, and for small- to mid-sized businesses looking to expand, these five countries save you from constantly worrying about what new tariff could sabotage your carefully-laid plans.
