Spiral shipping costs and disruptions in the Covid-19 supply chain are accelerating a shift by South American retailers to end their heavy reliance on Asia and source products locally.
More than 50% of apparel textiles in South Africa , Shoes and leather products are mainly imported from China, leaving Africa’s leading economy and its retailers at the mercy of forces beyond their control, including China’s electricity shortages.
During 2019, the government embarked on a tax incentive program In order to source goods locally, recent problems emerging from Asia have made a slow shift even more urgent, four top retailers in SA told Reuters.
“Most of the furniture in SA is imported . We’re looking for ways to produce more here, especially at the moment shipping costs are up 400%. It’s an even more important reason when you need one, “said TFG CEO Anthony Thunström.
TFG, which sources 72% of its clothing locally, said earlier this month that it plans to produce 30 million items locally a year within four years, from 11.5 million now, adding furniture and jewelry to its growing local list.
Thunström said much of TFG’s jewelry is already made in SA, but he is wants to keep increasing local sourcing.
The owner of UK womenswear brands Hobbs and Whistles and SA’s @Home homeware brand wants these products to be made in the shortest possible time to improve turnaround times and across global chains like . Zara, which is owned by Inditex and Swedish rival H&M.
TFG said on Nov. 11 that it will spend an additional 575 million rand over the next three to five years Build local manufacturing capabilities.
Retailers in SA aren’t the only ones looking locally as constraints expose the vulnerability of global supply chains and low-cost manufacturing, leading to an over-reliance on imports, especially from Asia.
Italy’s Benetton and Hugo Boss have stated that they source clothing from the local area.
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Woolworths told Reuters the blackouts will affect its orders for March next year. The retailer, which sources about 30% of its fashion, beauty and household products from China, said it is making arrangements to shop more locally.
Retailers who spoke to Reuters did not share any potentially competitive information about who would produce goods for them in South Africa or wherever in the country.
Budget clothing and electronics retailer Pepkor said they would like to work with existing and strategic suppliers to create easy-to-make clothing such as T -Shirts and shorts and provide financial capital to purchase machines.
“We have identified a few vendors that we would like to work with. Next, we need to develop more capacity for them, ”Leon Lourens, CEO of Pepkor, told Reuters.
However, SA will not provide all the answers.
The industry has in one country suffered from power shortages and prone to labor disputes in some sectors, while raw materials such as fabrics are sourced from South African suppliers in Asia.
said Drieselmann, while Retailability is trying to expand its local supplier base by placing more orders with local manufacturers abroad, it is also shifting sourcing from China to other existing offshore suppliers.
The company has “started to look more actively at India as an alternative, particularly from a fabric sourcing perspective”. he said.