Fashion Giants Moving Out of Asia – Benetton Expanding Production in Serbia and Croatia

Fashion brands have changed the way they operate during the pandemic, abandoning global supply chains and cheap production centers in Asia, perhaps for a longer time period.

Their new production location is the Mediterranean.

The Italian Benetton is already expanding its production in Croatia, Serbia, Turkey, Tunisia and Egypt, and, by the end of the year, it plans to halve its capacities in Asia, said the company’s CEO, Massimo Renon.

His plans provide an insight into the calculation that is behind the trend in a large part of the industry after the overloaded supply chains raised the costs and extended the delivery deadlines, undermining the business model from the past 30 years.

– It is a strategic decision to have greater control over the production process, but also the transport costs – says the head of the Italian fashion company, adding that the group has already moved more than 10% of its production out of countries like Bangladesh, Vietnam, China and India this year.

– Today, a shipment container that used to cost USD 1,200-1,500 can cost between 10 and 15 thousand dollars, and the delivery date is not certain – explains the head of Benetton.

The tenfold increase in the costs of maritime transport is the consequence of the lack of available boats, which were largely dormant during the pandemic, and the increasing demand, he said. Although the production costs in Vietnam and Bangladesh are still 20% lower than in the countries of the Mediterranean, this advantage is neutralized by longer delivery deadlines, due to supply halts.

– Due to the lack of ships, average delivery deadlines from Asia have gone from four to five months to the current seven to eight – he added.

The new CEO of Hugo Boss, Daniel Grieder, said in September that he expected more goods to be produced closer to the sales locations in the future.

The company has a production facility in Turkey, it produces footwear components in Italy, and it produces custom-made suits at its seat in the German city of Metzingen.

Benetton

Hugo Boss

Daniel Grieder

Massimo Renon

fashion brands

textile production