Fashion brands leave Asia; production expands to Serbia and Croatia

International fashion brands are planning to change the way they do business during the pandemic, abandoning global supply chains and low-cost production centres in Asia, perhaps for a long time. Their new production location is expected to be the Mediterranean.

The Italian company Benetton is already expanding production in Croatia, Serbia, Turkey, Tunisia and Egypt and plans to halve its capacity in Asia by the end of next year, said the executive director of the company, Massimo Renon.

This decision is said to be dictated by the fact that overloaded supply chains have increased costs and lengthened delivery times, undermining the business model of the previous 30 years.

The cost of shipping has increased tenfold as a result of the lack of available ships, which were largely idle during the pandemic, and increasing demand, Renon said. Although production costs in Vietnam and Bangladesh are still 20% lower than in Mediterranean countries, this advantage is disappearing due to longer delivery times and supply interruptions.

“Due to the lack of ships, the average delivery time from Asia has extended from the previous four to five months to today’s seven to eight,” he added, and in comparison, when producing clothes in Egypt, the delivery time to warehouses and shops in Europe can be reduced to two to two and a half months.

In the case of woolen clothes, which Benetton produces in Croatia and Serbia, it might only take four to five weeks. That’s why the company plans to increase production in Croatia, Serbia and Tunisia, he explains, working with suppliers in Egypt and Turkey.

(B92, 03.10.2021)


This post is also available in: Italiano

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