The great divide between Made in China & Made in Australia

By Phoebes Garland, Garland & Garland Fashion

Writing on a chalkboardA couple of years ago we decided to look into a bit of local manufacturing. It was an interesting little exercise. For the most part finding a maker was really difficult. Simply they just aren’t here, or if they are here, they are making for the likes of big chain stores, and the minimums are as prohibitive as making in China. And the rest, well they were just not competitive in terms of price points we needed for our customer base.

The other factor, which was a big hindrance of going down the manufacturing path in Australia, was the new uncompromising homeworker’s code, which had just been implemented at the time. (Anyone manufacturing garments in Australia had to guarantee a minimum of 20 hours work a week for an ‘outworker’.)

All the romantic notions of doing a bit of local manufacturing and supporting the local industry quickly faded away with a very harsh reality. If we did go down this line it would be highly financially uncompetitive and not to mention filled with unnecessary bureaucracy. Isn’t our industry hard enough without these woes?

The whole exercise really got me to think about this. Why did the Australian government let the Australian fashion industry become so uncompetitive?  And not just the entire fashion industry, but the car industry as well, courtesy of The Button Plan under the 1980’s Hawke government.

ada-01Ironically, government grants are still handed out to people manufacturing fashion in Australia, which seems strange.  On one hand the government and the unions make it extremely difficult to manufacture in Australia by creating fears of hefty fines for non-compliance, but then on the other hand the government gives handouts to operators trying to manufacture in a demising non-competitive manufacturing industry in Australia. Talk about a fruitless exercise.

While the mining industry has done well exporting to China, let us not forget this essentially created a two-speed economy.  Try telling that to the overseas chain stores hitting our shores and not to mention the overseas wholesale import labels, which have highly unrealistic sales figures in their head of Australian market, and are consequently faced with the disappointing reality every season when they receive their ‘actual’ sales figures.

‘Made In Australia’ has and is gone. Echoing my thoughts on the tariffs, the astute business-minded Richard Evans, CEO of the TFIA has been recently addressing the tariffs issue with the government and is calling for an overhaul, stating it is outdated and is calling for it to be revised. But is it too late?

australianmade‘Made in Australia’ is now really only a financially viable option to some of the smaller vertical operators. Even the larger ones abandoned it years ago when they had to chase price to achieve and sustain margin, resulting in the bulk of the manufacturing sent offshore. Along with the demise of local manufacturing, there is the further problem of the fabric offering being extremely limited here. On too many occasions I have seen ranges with the same fabrics in it, obviously at vastly different prices. That is, providing you can still find a fabric house with so many closed or closing.

Ultimately the next question to ask is, where does the industry lie for the next generation of graduates?  Being taught pattern making in Australia is almost a redundant exercise due to the majority of pattern making now done in China. However, I do maintain that this is an area which China could improve on and fit problems are always the bane of the industry, so perhaps the death of the pattern maker is not over yet.

But is there really enough work to make a living out of from a freelance perspective?  Again the poor pattern maker falls into the ‘outworker’ category, which is still subject to a set number of hours per week instructed by the TCFUA. After speaking to one pattern maker, she confirmed my belief; this would be essentially driving the business ‘underground’. Then there is the issue of lamenting the death of the skill set of the tailor and pattern maker being lost, as result of ‘Made in China’.

Could the combination of price consciousness of the consumer and our Australian casual lifestyle have also killed off a skill set?  We also have a problem with the smaller emerging operators who struggle to meet the minimums in China, and yet are unable to be financially competitive making here. Essentially, this is where the area of the great divide lies between making in China and Australia. Most smaller Australian manufacturers have become, well, almost relegated to a position of an ‘artisan maker’, as opposed to a fully-fledged business. In other words, sadly, the garments may be beautiful but on a commercial scale, they do not generate enough sales for me to put a range in my showroom. Talk to any major fashion operator and they will say the death of ‘Made in Australia’ occurred over 10 years ago, and it sure did on the mass scale.

r1131195_13940055And it’s too late to go back, as simply the facilities and technologies in garment making overseas are way ahead of us, as well as being far more competitive. The larger manufacturers will not go back to making in Australia and there is not enough business of the smaller player to sustain it properly here. However, there is a huge opportunity for factories overseas to offer smaller runs or to bank together on production in Australia with several smaller operators. Even some of the larger players still struggle with numbers in production and it is still a huge issue and continues to be a cause of frustration with fashion labels, fashion buyers and agents.

I have always found the minimums in China completely shortsighted. While in my last article, we spoke about some factories offering smaller minimums about the ‘Do’s and Don’ts of manufacturing in Asia’, there needs to be more.  There is still an opportunity for more factories to offer smaller minimum runs. Most of the companies we represent are still finding it difficult to adhere to minimums in China.

And at the end of the day, most of us all want the same thing. Who doesn’t want the big numbers in terms of sales? So why is this industry faced with such battles regarding manufacturing.  I maintain that enough little units start to add up.  In a tough industry and with even the chain stores suffering set back on sales, I wonder at which point are the current factories in China going to loosen up on their minimums?

Interested in your thoughts.

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phoebe_solo_7913_2About the author:

Phoebes Garland is a Features Writer for EXPOSED Online and co-owns Garland & Garland Fashion with Robert Garland, a leading fashion agency based in Sydney. Phoebe also owns Fashion Initiative an online fashion destination covering business of fashion, fashion, luxury and events. Described as a” Power Agent” by Ragtrader magazine. Between the two of them, Phoebes & Robert Garland have over 50 years sales experience in fashion, publishing and advertising. Garland & Garland Fashion is a respected leading boutique fashion agency based in Sydney, and they are regularly sought for comment from various media and the fashion industry on business fashion topics, fashion and issues.

8 thoughts on “The great divide between Made in China & Made in Australia

  1. Just a note to say how much i have enjoyed the publication during the year. Not being directly in fashion retail more gifts and homewares I have found the articles to be well written timely and of great use. Thanks and heres to a improved year in 2014

    • Thank you so much for your kind words Andrea, it is such a lovely surprise to receive positive feedback especially at a time when we are all busy. It’s greatly appreciated. Hope you too have a wonderful holiday season.

  2. This opinion misses the point entirely. Any manufacturing (including textiles) in Australia cannot compete on a cost basis with low cost developing economies, but there are other ways to sell product other than on price. Australian business seems to have lost this skill. I am an Australian manufacturer of a niche product that is completely different in design and properties and I target a market that suits my product and not try to be all things to all consumers. I stay away from mass retailers because they only sell on price.
    We have survived for 25 years and are likely to be here in another 25years if we continue to innovate and experiment. We aim to lead the market not follow and this is the key.
    Sure we have been copied and sure we have dropped some designs because they have become generic but there is still plenty of innovation in garment design and particularly textile technology to have a future.
    I can’t manufacture for others because I can’t keep up with my current demand! My biggest problem is complexity of doing business and cost of training staff because governments won’t assist in this regard any more through local TAFE’s.

  3. The way i believe to fix the problems to focus on solutions.
    The government is the only one that can facilitate renewal of an industry that has been killed off by Chinese imports.
    We are dictated to by the seller in China and Asia as to what quantity we should by as re sellers, when the reality is we have a small market place.
    The solution is as follows:1] The reintroduction of tariffs for garments made overseas.
    2] The introduction of GST on all items purchased from oversea websites which have invaded the Australian market place, which has resulted in demised retail shop sales.
    Retailers with ever increasing rents and overheads plus paying GST. find it hard to compete in a small population. China does not need our sales they have their own huge market, their own population. We are to them an add on to what they already do for other countries.
    These items we purchase from overseas support other countries and no GST is paid to our Government.
    3] It is in the Governments interest to assist in providing a future for the extremely talented design and pattern making students that come out of our tafes and colleges.

    China does not need our sales they have their own huge market, their own population. In most cases for our importers to buy at a reasonable price out of China, we are to them an add on to what they already do for other countries.They try to offer what they are making for other countries so their numbers are up and to accommodate our small purchases.

    The industry needs to come together to lobby the government to save our industry.
    May be it should start with the Tafes and colleges.
    Kind regards
    Vera Nadile

  4. Phoebes, once again a great article well thought out and timely. I do however subscribe to Robert Lord’s view that the price focus is what has killed the trade here, and lets face it historically the “fashion industry” has been called ragtrade/schmutta etc, only recently has been tagged an industry. Even with our “big manufacturers” we never really had an industry here.

    Now, in my opinion, we face an even bigger issue than minimums which encompasses all the problems faced in the trade. Australian manufacture has been and always will be uncompetitive until we address the following issues;
    – High cost and low flexibility of labour
    – A lack of sizing/fit standards for all garments
    – No minimum health and safety standards around materials used in manufacture – think carcinogenic phthalates used in footwear for children, formaldehyde as a softening agent in blankets etc

    To solve these issues is simple:
    – Reintroduce flexibility in labour markets by embracing contractors and outworkers helping them build their businesses as they want. Don’t allow exploitation though
    – Remove the TCFUA’s ability to enter and interrogate businesses, that is an enforcement function that should be carried out by the relevant government authorities
    – Create and mandate a set of standards around size and fit. As soon as that is done it makes it even harder for minimums to be met in overseas manufacturing thereby promoting the resurgence of local makers
    – Carbon price imported product. Charge, at the point of entry to the country, a tax paid to the federal government to offset the emissions created in manufacture and shipping the product to our borders.
    – Whole of life disposal costs. Establish a pool of funds, from imports, that enables a disposal process of any TCF product/waste in an environmentally sound manner.

    These few steps will ensure that a level playing field exists for our local makers and the cost driven overseas entities, and just think what it will do to the cost structures of high street brands entering the Australian market now.

    Part of this will require a major mindset change amongst designers and manufacturers in this country. Collaboration will have to become the key word. Competition will exist obviously but our businesses working together is a much stronger result for everyone. A rethink around what is a large number for manufacture would also help. Recognise that, as GM eloquently put, we have a small market a long way from anywhere with a strong currency and high cost structures – the perfect storm.

    As an “industry” TCF businesses have been sitting on their arses wringing their hands saying poor me. It is time to stand up and be counted. Work, don’t focus on the bloody social side of things and create garments that the market wants. Learn the trade, develop skills and, listen up you kids at school now, achieve your goals through HARD WORK. Every overnight success I have seen, in my 30 years in the trade, came after years of slogging away and working like a dog.

    PR, social media and other peripheral puff pieces of the trade are not what makes our industry strong. Focus, dedication, learning and developing skills are. They make us stronger and better. We won’t need to worry about minimums when we work hard with focus and drive because we will be achieving them, regardless of the volume requirements of Chinese/Bangladeshi/African factories. Retailers will beat a path to our doors clamouring for our safe, quality products thereby ensuring international factories want to work with our talented and qualified design leaders.

  5. I have to say that as a Chinese manufacturer who also manufactured for 10 years in Australia, this article ignores the realities of Chinese manufacturing costs. There are MOQs for a reason. We’re not just being greedy. If numbers are too low, we can’t meet minimums on fabric, trims or embellishments. We can’t make any money in production, because as you are aware manufacturers make money from efficiency, and that is gained through our employees having a good crack at a style over a material amount of time.

    Don’t forget that making clothing is NOT EASY, and that everybody is human, so to get efficient at sewing a style, we have to do it over and over for a decent amount of time.

    Even if we charged sample pricing, we would still break even or lose money on 50 or 100 units. We can’t charge higher prices because many brands have an unrealistic expectation of margin. Go to America – I don’t think you’ll find too many retailers who still expect a 200% margin.

    We produce small quantities for brands we believe in, and brands who understand there are costs to manufacturing, and are in it for the long term with us. But we are a business, just like our clients, and if we don’t think there is growth potential or that we are simply being used, then we’ll definitely think twice before offering small minimums.

  6. Pingback: The great divide between Made in China & Made in Australia - QVM Trader Hub

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