Why do large brands produce in far off countries? Well, aside from the fact we as consumers allow it, it started as a way for brands to offer product at cheaper prices to consumers. Now, bigger brands have gotten used to their profit margins and don’t want to relinquish them. They also don’t want to shell out on creating new factories, machinery and everything that comes with creating factories locally.
Let me also say, producing in countries like China for example, aren’t always bad places to produce shoes like the general media would have the public believe. The factories and craftsmanship can be absolutely top-notch. The issue here is the conditions can at times be extremely suspect. There’s also zero accountability for the larger brands if something goes wrong at one of these factories.
Understandably, newer, less liquid brands will have to look to far off manufacturing in order to compete in the market place. The machinery is already in place, the work force, etc. If a new brand wants to compete, they really don’t have much of an option (more particularly, sportswear brands).
However, do larger brands still have an excuse for outsourcing their development? These are some of the top reasons why I believe large brands need to start producing locally.
There’s a massive reason why bigger brands don’t own the factories they produce in. It’s called accountability. Could they afford to make their own factories? Well, consider some of these brands earn more then certain countries do in a year, I’ll let you decide. The reason they don’t want their name associated with a factory, especially ones in far off countries, is because then they can be held accountable for anything that may happen in them.
They’re scared of creating their own factories. They don’t want the responsibility.
When producing in far off countries, there is no way in hell you can fully stay on-top of every single aspect of shoe production. Shoe factories are one small part in a huge maze of sole factories, last manufacturers, tanneries & material suppliers. It’s hard to stay on top of it locally, so you can forget it if you’re operating in a country with a completely different culture.
Brands need to be held accountable wherever possible. With great power comes responsibility. And when you’re moving as many units as some of these brands, you’re having a massive impact on our planet. Creating local factories would hold them accountable for working conditions and quality of product. You can’t have the power and dismiss responsibility for profit.
Local shoe production has experienced a massive lull since larger brands started to outsource production to the far east (though it’s starting to pick-up). It goes without saying that creating local factories would create more jobs, which would be brilliant for the local economy.
Ok, so the set up costs will be huge…comparatively. But when you’re earning billions a year, that cost is comparative to bustin’ a grape in a fruit fight.
Buying a suitable space, buying (or renting) machinery, hiring and training a work force, etc… the costs will mount up, for sure. With all these added costs and higher wages, will these costs effect the final price of the shoes? Probably. But not as much as they’d have us believe.
Generally the mark-up for selling footwear to stores is 2.4/2.5 x the wholesale price (if the wholesale price of what you sell the shoe to a store is say $30, the store will then sell them to consumers for around $75). This is just a standard mark-up for brands, no matter the size. However, when you’re a big, powerful brand, you can pretty much name whatever mark-up you want. It depends on how badly these stores want your product. And they want it bad. They need to look cool, and your product is the coolest. They’re willing to take a hit on their profit margin just to have them, which translates to more dollar bills for that already large brand.
Not to mention, when you sell online, you have to sell at that same mark-up price (or you’ll be screwing those vendors you just wholesaled your shoes too). What that means is, you’re making a very, very healthy margin on your products.
With controlled mark-up costs and large amounts of online sales, larger brands could easily eat some of their mark-up cost and produce locally without having to increase the price for their product too dramatically. But of-course, thanks to balding white men wearing suits, driving their shiny BMW’s, that most likely won’t happen any time soon. Heaven forbid that brands would lose any profit, no matter how small, for the assurance of good working conditions and the betterment of our environment.
No one brand should have all that power.
ConceptKicks © 2013-20