Sportswear retailers line up on Central American shores
24 Dec '11
2 min read
Global sportswear retailers are moving back manufacturing to countries in Central America and Caribbean countries.
This has been prompted by the proximity of the region to the US, which also means quick turnaround times, benefit from duty-free access to the US markets and rising wages in China.
Nike the world's largest sporting-goods producer is exploring possibility of sourcing from Nicaragua. Adidas too plans to increase production five-fold from the region by 2015.
Since the last two years, Chinese wages have been increasing steadily, which has made the country loose its cost competitiveness in production of clothing.
Secondly, the countries of the region have signed agreements like DR-CAFTA with the US, which entails duty-free access to the US markets.
Thirdly, in the event of surge in consumer demand and likelihood of stock out occurring at US stores, it would take just three days to ship goods from these regions against 2-3 weeks from China.
The last but not the least, quicker turnaround times, mean the sportswear retailers will be able to sustain on lower inventory levels in their US warehouses.
In October, the US signed free-trade agreement with two more countries; Colombia and Panama, which could also provide a kick start to the apparel industry in these countries.
Currently, the US is dependent on China for around 41 percent of its annual clothing imports.
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