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EFF SOURCE Fashion business success without compromise

21 June 2012

Future of UK production: A global socio-economic outlook

Contributor Christian Smith

Sawangboran


Christian Smith, CSR Manager at leading fashion retailer ASOS.com, shares his expert view on the crucial socio-economic factors shifting global production, including the rising cost of resources and labour costs in China.


Christian Smith is the CSR Manager for leading fashion retailer, ASOS.com. His work includes measurement of greenhouse gas emissions, helping the company to understand where its impacts are and where there is room for improvement.
Christian has also just completed his MSc in Environment and Sustainable Development at University College London, where he wrote a dissertation titled “The End of Fast Fashion”. His interest in sustainability began at an early age, through his Sierra Leonean parents’ belief in quality not quantity.
Image: Fellowship 500 member, Sawang Boran

It’s very easy to take our globalised world for granted. Each day millions of products miraculously appear on the shelves of supermarkets and clothing stores. As customers, we rarely question the provenance of the goods we buy or how they got there, we are just happy these goods are readily available at the time we need them. Yet the system that has helped us achieve this great global supply chain is under stress.

Every day, we are delivered news about currency crises, slowing growth across the globe and deepening environmental problems that we are already failing to address. We don’t ever really think about how these changes are going to affect the way that business is done but it will and one could say that it already has.

This new paradigm shift is occurring in a world facing newer, longer-lasting problems. Issues that have taken around a century to come to light cannot be dealt with by raising/lowering interest rates, holding back fuel duties and cutting back on benefits and cannot be solved by quick fixes. These are polemics that need to be solved on a systemic level.

Emmanuel Kant once described enlightenment as “man’s emergence from a self-imposed immaturity.” In other words, “enlightened” people were finally able to understand the world in a different way and behave accordingly. It is now that this notion becomes of utmost importance. In the midst of global economic, social and political uncertainty on a systemic scale, most continue business in the same way as we did before the financial crisis, propping up a system that is broken.

From my conversations with people working in the sustainability arena– from academics to bankers – there is a sense that things are changing. Technology breaking down borders, social progress in developing countries and the increasing realisation of the fragility of our eco-systems are all playing a role in changing our relationship with the world. When you have large banks and investment firms talking about the benefits of sustainability and urging investors to wake up to a new era of diminishing natural resources and rising commodity prices, you know you are on the right track.

The future of global production

So, what’s actually happening? In terms of production, the landscape is changing rapidly. Much of recent economic development was down to cheap and abundant labour in the Far East supported by cheap raw materials, moved around the world by cheap oil.

China, the world’s factory, has developed at an incredible place and in its new 5 year plan, the government highlighted a desire to develop into a service-based economy in the Southern areas of China, while moving the manufacturing base to the northern areas. However, as the cost of living rises in China, so will the cost of labour and China’s ability to produce cheaply will slowly disappear.

That is not to say that cheap production will disappear forever, there are still other locations where it might occur but not everyone will have access to it. In some cases, such as Bangladesh, climate change will have long lasting impacts that could hamper the conditions for manufacturing.

As Chinese wealth grows, demand for both local and global products will increase. China’s manufacturing capability may well start to look more seriously at the domestic market. But this could also raise the possibility for British manufacturing, both in terms of coping with the short-fall in exports from abroad but also in terms of providing wealthier Chinese customers with quality goods associated with British heritage. However, the focus on service sector roles in the UK over the last couple of decades means that UK manufacturing may not be able to react quickly enough to fill this gap.

Not everyone can be or wants to be a banker, lawyer or sell mobile phones for a living. The UK’s focus on banking and its supporting industries has distorted UK industry, creating gaps in the workforce that have also contributed to Britain’s slide down the manufacturing sector. Bright technical graduates were often seduced into the banking sector, drawn by the lure of pound signs and the lack of potential when it comes to using their skills. Nevertheless, as banking salaries continue to fall (and yes they are despite continuing ridiculous bonus culture), and as banks continue to reduce costs, these same graduates will find it more and more difficult to find jobs in the banking sector. And a return to manufacturing is not yet an option. The UK still will very rarely be able to compete with the Far East on price (not yet) – but it can compete on craftsmanship and heritage.

Striving for a more diverse yet inclusive society means accepting new ways of working and embracing new opportunities that socio-economic development and a better understanding of our eco-systems gives us. Within the fashion industry this means taking into consideration the effects that these changes have on raw material availability. It means understanding how the quest for a lower global carbon footprint affects the way the industry operates – increasing carbon taxes will lead to increase in costs of production.

But this also presents fashion with opportunities to be part of the solution, whether that means using localised raw materials such as flax or nettles for clothing or finding commercial pathways for the incredible research that some of the UK based fashion colleges have been carrying out.

A more sustainable fashion industry is not just about working within the limits of our ecosystems and helping those who produce our clothing work in better conditions, it’s also about developing localised systems, using local skills, which now have access to global markets thanks to the Internet.


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