When it Comes to Footwear Sourcing, China May be the New China

Market share loss or not, China’s dominance in the footwear space can’t yet be shaken much at all—no matter which markets are emerging and snagging some of that share.

“China is the new China,” Tony Pelli, supply chain risk advisor for BSI, said speaking at the Footwear Distributors and Retailers of America Footwear Sourcing Intelligence Summit in New York this week. “China’s going to continue to be a big deal, it’s just a question of what the labor force will look like.”

As China moves away from being the world’s manufacturer, so too are Chinese citizens moving away from an interest in factory work. Younger Chinese are increasingly moving toward more “comfortable” industries, according to Desmond Wong, EVP of operations for Steve Madden and Topline, a producer of private label and branded footwear that Steve Madden acquired in 2011.

With the knowledge of its present labor shortage, aging factory supervisors, disinterested youth and the concern for those trends spiraling into a problem it can’t keep up with, factory supervisors are making extra efforts to train and interest young people in the business, Wong explained, but it may be a tough road ahead, with one solution pointing to an increase in foreign labor—which introduces its own set of risks.

“There are different sourcing risks on the horizon for China,” Pelli said. “Now you may be dealing with different issues in terms of the workforce and how that workforce is brought into the factories.” This, Pelli said, is where concerns for forced labor could come into bigger play.

Either way, whether it means training more workers from the innermost parts of China or takes greater due diligence in bringing more foreign work into the country, China will likely find the labor to foot the supply.

“The way we see it right now, China is a huge market to source from,” said Paul Frowijn, a sales and production consultant for Impactiva. The alternatives for new countries to source from, like Turkey and Ethiopia, tend to have small factories that can’t handle the volumes to meet most American brands’ demands. “What we see as kind of a solution for the future is to have those factories mature, make them more efficient so you can keep costs under control.”

But for now, it’s still China.

“China has grown so big, if it’s footwear or if it’s apparel, it’s very, very difficult to replace that,” Frowijn said.

The thing to navigate now will be how to get China to be the China that modern footwear sourcing needs.

For one, there’s the constant need for greater speed to market, which, for the U.S. market, isn’t really something China can accommodate at this stage.

“When you talk about frequency of fashion, it has to come from nearby market,” Frowijn said. “But the bulk will come from China.”

Companies will have to start spending a little more time focused on their internal organizations and process rather than desperately trying to fix what they feel are external issues to make speed to market work, too.

“We cannot put all the pressure with the factories,” Frowijn said. “It’s design and development. We just have to go back to the basics. Where does it start?”

“Are we competing in the stores or in the factories?”

For speed to market to work, it will take partnership, which most companies understand on a superficial level but have not really worked to achieve.

“If you want speed to market, you need to align with what these guys can do for you, how they can do it and how they can do it in the most efficient way,” Frowijn said.

For Steve Madden, alignment with suppliers is exactly what’s going to keep the bulk of the brand’s sourcing in China.
“From the product mix that we have currently I think China will remain a big player for us just because we have a long-term partnership with these factories,” Wong said.

When it comes to solving the workforce conundrum, automation could help if brands and the factories they buy from can rethink the kind of workforce they’ll need in the future.

“If you go into automation—and it will eventually happen—what type of workforce do you need for that?” Frowijn posed. “In the future factory…maybe there’s no people in there anymore.”

The other thing companies will need to consider—and perhaps even entirely rethink, according to Frowijn, is where they’re trying to compete, and the answer could serve to set the winners apart from those less likely to succeed.

“Are we competing in the stores or in the factories?” he asked. “We have to think about that.”

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