CHINA IS THE world’s largest exporter of garments, worth some $170 billion a year. So far, the industry has escaped the retaliatory tariffs Washington is to impose on more than 1,300 Chinese exports, no doubt much to the relief of members of US President Donald Trump’s family with clothing brands whose merchandise is made in China.
If any industry is emblematic of China’s rise as an economic power on the back of low-cost export manufacturing, it is probably textiles and apparel.
Low-cost labour has underpinned an army of seamstresses and tailors churning out garments by the million for retailers from the world’s leading brands to cheapest stores. It has also enabled the growth of an extensive ecosystem of spinners, weavers, knitters, dyers, processors and finishers, not to mention makers of fasteners, zippers and trimmings, all backed by cheap and efficient trade logistics.
As happened in Japan and South Korea before it, this has lifted millions of people out of poverty. But rising wages and a greying workforce are putting an end to that model.
Like the car and electronics industries before it, textile and apparel manufacturers in search of lower costs first offshored production, particularly in cheaper labour nations like Bangladesh and Myanmar. The industry’s outbound foreign direct investment hit a record $2.7 billion in 2016.
Now it is turning to automation not so much there but in its developed markets.
One striking example of this that caught this Bystander’s eye. Suzhou-based Tianyuan Garments Co., one of the biggest apparel makers in the country and which numbers Adidas, Armani and Reebok among its customers, is opening a $20 million factory of 300 sewing robots (‘sewbots’) in the United States.
It will make T-shirts for Adidas; 23 million a year once it is running at full pelt by the end of this year, a volume of relentless production that means its economies of scale will make it impossible for cheap labour anywhere to compete with it. Robots can sow faster, indefatigably and more consistently than humans: sweatshops without the human sweat.
The 400 human jobs that will be created at the new factory will support and maintain the robots and in logistics. The twist to the tale is that the sewbots are developed by a US company, SoftWear Automation, whose initial R&D was funded by the US Department of Defence. The US military needs domestic manufacturers of uniforms, clothing and basics such as towels and mats as it has a mandate from the US Congress to buy ‘Made in America’ yet three decades of offshoring has decimated the US textile and apparel industry and thus its potential suppliers.
SoftWear’s sowbots use computer vision to steer the fabric first through cutting and then along the production line through series of sewing needles. This is an automated step beyond the sort of manufacturing companies like Adidas are doing in their robot-aided production lines in Germany.
Tianyaun’s new factory is located in Little Rock, Arkansas, with the state providing $3.2 million in incentives and a 65% break on property taxes to attract it. Another Chinese company, Shandong Ruyi Technology Group Co., is investing $410 million in an automated yarn spinning factory in Forrest City less than 100 miles from Tianyaun’s T-shirt operation.
Shandong Ruyi has a growing portfolio of some 40 global fashion brands, including Bally, Gieves & Hawkes, Aquascutum, the Paris-based fashion group SMCP (Sandro, Maje and Claudie Pierlot) and Italy’s Cerruti 1881. It is moving into an old Sanyo plant that closed in 2007, an unintended symbol of how the industrial world is turning — and one that raises some questions about what ‘America First’ really means in such circumstances.
Once tariffs, duties and shipping costs are factored in, the case for shortening supply chains by shifting production closer to consumers in developed markets becomes compelling. It makes the turnaround of new lines quicker, essential in the fickle and fast-moving world of fashion.
For Tianyuan (and Adidas) there is the additional benefit of its robots being able to sew “Made in the USA” labels into the T-shirts it will be making for its German client. Xu Yingxin, vice-president of the China National Textile and Apparel Council, says Arkansas is becoming another centre for China’s textile industry.
So far, sewbots are limited in their ability to replicate the dexterity of the human hand. They can manage something simple like a T-shirt, but even hemming is challenging, and it will be several years before they can produce more complex garments like a dress shirt.
The industry’s vision of on-demand custom-made clothing that can be delivered to a customer overnight is still far off, but no longer unimaginable. E-commerce retail giant Amazon recently received a patent for a manufacturing system that produces “on-demand” apparel.
For low-wage countries like Cambodia or Vietnam, hoping to follow China’s development path the prospect should be terrifying. The International Labor Organization estimates that more than 43 million people are employed in the textile industry in Asian developing countries. Those jobs will not just go elsewhere; they will just go. The ones that will replace them will require different skills.
With hefty government support, China’s textile and garment makers may be moving out of the labour intensive end of the industry and into higher value-added specialty textiles for medical, engineering, filtration and automotive applications and into highly automated mass production overseas at just the right time.