New article on shifting firm strategies and changing geographies of global production networks
The global apparel industry is widely recognized as one of the most globalized supply chains, with large fashion brands and retailers coordinating extensive networks of suppliers across apparel assembly, fabric production, and fiber manufacturing across the globe.
Over the past 25 years, Western fashion brands and retailers have generated substantial profits through a fast fashion model built on low-cost, China-centered manufacturing and input supply chains - particularly for cheap polyester - as well as an ever-expanding network of physical retail stores globally, and especially in China.
In a recent study, published in Journal of Economic Geography, REMASS researchers Felix Maile and Cornelia Staritz argue that this accumulation strategy, based on ‘unlimited sourcing’ across long and fragmented global supply chains, is now being challenged by three key disruptions:
geopolitical tensions, most notably the US–China trade war, are complicating China-centered sourcing strategies.
decarbonization imperatives in major consumer markets are creating pressure to shift away from fossil fuel–based material supply chains.
the rise of online fast fashion retailers, particularly Shein, is forcing traditional brands such as H&M and Inditex to rethink their growth models, moving away from reliance on physical retail expansion toward increased online sales, which in turn require shorter and more responsive supply chains.
As a result, this period of disruption is pushing major fashion brands and retailers to recalibrate their sourcing and business strategies. Are the geographies of global fashion supply chains therefore fundamentally changing?
Drawing on extensive fieldwork as well as trade and investment data analysis, the article shows that supply chains in capital-light garment assembly have indeed begun to shift away from China, primarily toward Bangladesh, Cambodia, Vietnam, and, more recently, Central America.
However, the geography of production remains far more stable in capital-intensive input segments. Supply chains for fabric, yarn, fiber, and accessories continue to be strongly concentrated in China.
The article explains this persistence through several factors: limited incentives for suppliers to relocate in a low-margin environment, strong agglomeration economies that are difficult to replicate outside China, and the relative absence of state-led industrial policies aimed at ‘re-engineering’ textile supply chains, unlike in ‘strategic’ sectors such as batteries or microelectronics.
Read the full paper here