Emily Harrison & Jennie Engelhardt, Co-founders at Hare + Hart
Few weeks ago I emailed some of you lovely people who are on my email list, asking about the pain areas of your business, to which I got an email from Kristiana from Fierce Finds, which is a mobile boutique based in Florida. One of her questions was that whether I knew of a win-win strategy for fashion retailers who import their products from foreign countries.
To answer her question, I decided to interview Emily Harrison from HareandHart.com. Emily and Jennie (the other co-founder at Hare + Hart) were our first client when I started I Love Fashion Retail and one of the nicest people I have worked with.
One of the things that makes Hare + Hart a great case study for a product sourcing talk is that they consider manufacturing & product sourcing to be part of their brand. For example – when they decided to shift their manufacturing from Argentina to China, they actually announced it on their website and informed their customers about the shift. I know that many fashion brands, would have gone through a transition like this one silently, in isolation with their customers.
Hare + Hart has scaled-up from getting its products manufactured at a small scale in Argentina to a much larger scale in China.
Long story short, Tons of amazing information below for fashion retailers who want to learn about off shore manufacturing & product sourcing… Stream with the player below:
Music Credit: Stefan Kartenberg
Hello Ladies & Gentlemen. This is Pulkit Rastogi from I Love Fashion Retail and welcome to my first ever podcast.
For those of you who don’t have any context on me, I am the Founder & Blogger at Ilovefashionretail.com. This is my blog where I share my thoughts and learnings working in the Fashion E-commerce industry. I tell you about things that really matter to build a great online fashion business.
The topic of my first podcast is – “Getting your Fashion line Manufactured in China or anywhere else in the World”.
Few weeks ago, I emailed some of you guys who’re on my email list, asking you about the pain areas of your business. I received several emails and one the emails was from Kristiana from from Fierce Finds, which is a mobile boutique based in Florida. She asked me an interesting question. She asked me whether I knew of any win-win strategy for retailers who import their products from foreign countries, such as China, Vietnam, India etc.
While I didn’t have the answer to her question, I actually knew someone who had the answer. Her name is Emily Harrison and she is Co-founder at HareandHart.com. Hare + Hart is a Leather accessories brand based in New York City and they also happen to be our first client when I started I Love Fashion Retail.
Emily is hugely impressive to me. She knows way more than I do about product sourcing, which is about to become obvious to you when you listen to my initial ramblings. I was clearly nervous and stumbled over several words.
Actually, my original idea was to call Emily, ask her few questions about product sourcing and because I know that she is such a nice person, she won’t say no to me. So I thought I will record her voice, write it down in my editor and just publish it as as a blog post.
But when I called her, she just blew me away with so so much information about product sourcing, like – how to find a manufacturers, how to source raw material, how to ensure quality, how to handle communication related issues, and so many other things that any smaller fashion retailer should know if he or she is planning to import products from a foreign country.
Frankly I didn’t expect Emily to share so much information with me because I know that many retailers consider such information to be their trade secret.
Anyway, if you’re a start-up fashion retailer, I would strongly recommend you to listen to Emily carefully because her tips can lead your brand into the right direction and may even help you save thousands of dollars on product sourcing.
So, without any further ado, let me take you to our recorded conversation.
Hope you enjoy it and thank you for listening.
E: Hi Pulkit, How are you?
P: Hey Emily, I am good! Hi again!
E: Hi. how are you? What time is it where you’re?
P: It’s 10:40 PM for me right now.
E: Oh ok! It’s pretty late but not like super super late.
P: Yah, I normally sleep at 12 or 1. So, it’s still a functional time for me.
E: OK! Perfect! Well, thanks for chatting with me. I know we were missing sort of back and forth on your blog but ya, I will be happy to talk with you.
P: Ya, finally. So Emily, I have been getting a lot of emails, I mean lot of enquiries that I get from people, lot of them ask me about manufacturing stuff in in China, which I don’t have much experience with. I did remember, incidentally you got your manufacturing shifted from Argentina to China, right? To Hong Kong?
E: That’s right! Ya!
P: So I thought it’s a good time I should ask you, especially when I saw that on your website, you were trying to tell your customers about this recent shift, so I thought you would be open to talk about such stuff.
E: Ya, I am happy to talk about it! Of course!
P: So Emily, I think we will start from the start about the brand – HareandHart. Even though we have talked briefly about it when we started working with you. Let’s just start with Hare + Hart. And, while we’re talking, I am recording your voice.
E: OK! We started in 2010. We started this company inspired by Argentina and this tendency here in Argentina to make use of all parts of the cow. There is a huge beef industry in Argentina. Leather is a huge component of product because it’s the bi-product of the beef industry. We really liked that concept and it inspired us to use Vegetable tanned leather and we came up with this idea of having a company that understood the whole process of where the raw materials come from, sort of having our product not just be about nice handbag or jacket and also telling people the story behind it. Telling them that the material is equally as important as the design itself. So that was the philosophy we started with in 2010. And a year since we shifted our focus on handbags because of the problems in Argentina with the economy and sourcing issues. That was a huge problem. Argentina has a protectionist importation policy. They don’t let you import very much.
And this really affects a brand like ours, I mean to get high quality zippers, quality lining and to make sure that whole product, not just the leather is high quality. We had to deal with some really rampant inflation here, that is about 25% annualized inflation which is just insane. We obviously can’t increase the cost of our products at this rate.
So we were forced to move through New York, working in NY we looked for contacts with in our network for manufacturing and we got in touch with this vendor which is a big manufacturer, that has worked with many large brands like J Crew, Marc Jacobs and variety of retailers in the US and beyond.
The thing we liked about them is that they reflected what we like the best – which is commitment to sustainable production
They only do vegetable tanned leather, which we focus on as well, paying workers fair wages, sort of making sure what we like about, being open and transparent with our customers continues to be that way even though we had changed production location. And we get high quality material – Zippers, whatever lining we want, a lot more latitude in terms of what we can get and what we can use and of course at a more competitive price.
P: When you were getting the manufacturing done from Argentina, how were you typically sourcing the raw materials that would go into the assembly of your handbags?
E: Interesting that you asked. Well leather was sourced from here. We ended up using local cottons. It’s only what we could get. It wasn’t organic but it was just what was available. And then I brought in Zippers, and anyone who was coming to Argentina, Jennie, myself, friends, family, we would bribe them to make them bring bags of zippers in their suitcases. So it was very very haphazard way to bring in the raw material. Not a systematized way of doing it.
P: That’s the problem you faced when you were importing raw material to Argentina, it’s easy to import stuff in China, the raw material?
E: Well ya, the other thing about China is that they have really excelled the kind of like being vertically aligned. So my manufacturer, almost everything we need is almost made in China. Even the high quality zippers. Even we were going to use renewable bamboo for our lining. Everything that you’re sourcing essentially has an option to be sourced locally in China, which is very helpful of course when you need everything more or less in the same place.
P: Yes and it should make the manufacturing lot more simpler as a process. Did this have an impact on the cost of production, since you were able to get everything in China?
E: Certainly it does. I think. I mean I would say so. We were able to essentially everything have everything incorporated. You know we’re a small company and we don’t have huge background in sourcing and production which is an entire role, kind of specialized within lot of accessories and fashion brands. So one thing that was really helpful about the new partner that we have is that they do sourcing themselves. Like if I want let’s say bamboo lining, we would say, we want this, we want that, etc and they go ahead and do it. They also have their own internal suppliers for everything – from brass hardware to hang tags which are sort of the labels that you have hanging from your product. Anything that I can think of, they have already sourced it. That’s a huge just helpful leap and it does makes a difference because it helps consolidate everything – the people they are already working with, so they have already an established relationship with their vendors and it makes the prices a little more competitive, than me just going out there.
P: So, it must be saving a lot of time for them and you as well. Shipping time should be a lot more accurate working there?
E: Shipping time is accurate, very accurate and also very expensive. But that’s ok.
P: Emily, can you take us from the starting of the process, how you found this vendor. Did you find this manufacturer through someone in your network.
E: In our case, we were lucky enough to find our new manufacturer directly through our network. Basically there are trade shows on sourcing both in New York and Hong Kong as well, where you can go and see new suppliers, and things like that. It’s really the thing about finding vendor is that no brand would ever tell you who their manufacturer is because it’s there best kept secret. So you can’t call up a brand and ask them – ya hi! Can you tell me who makes your products so that I can take some of their time and dedicate it to me. Nobody ever is doing that. So, one of things we have to sort of start and think – alright I will go to the trade shows and the sourcing shows and I might go to the consulate and ask them do they have a list of known vendors and suppliers. The consulate will tell you if there any any trade shows for this particular area or sector. And apart of the country or one that happened and Google – Google searching them. You can find another way that I found sources. Not that I have used but I have seen is Linkedin. On Linkedin, you can find supplier group, you can find contacts, look-up for manufacturers. That’s one option. And then another option that is less reputable, but it definitely exists that I have seen is Alibaba. And I have no way of recommending that. To be honest. A lot of what people use and rely on is word of mouth.
P: I think Alibaba is one of the primary channels that people use to find vendors in China. In fact it’s the first place they go.
E: In New York, people are not familiar with Alibaba and it’s just sort of now started to infiltrate the US market but frankly and it does seem that it is a good resource but the only thing is that you don’t know anything about the vendor. There are just thousands and thousands. How do you know how one is different from the other.
P: So when you started, you must have signed-up some sort of contract with the vendor?
P: So before you did that, did you do any reference check of his work, previous work, did you do…
E: Their New York showroom includes hundreds of prototypes from many big name brands. We were able to review the quality up close. They also have catalogue after catalogue of leathers, materials, linings, hardware pieces, etc for you to see. It is immediately clear that they are a high quality manufacturer.
And there is also something that’s D & B, or Dun and Bradstreet. Put this as registering your company, so that people specializing in finance, sourcing, have a way of validating that you’re reputable essentially. It’s kind of like what you need to do to make sure others are taking you seriously coz it’s validating you as a company.
P: So D & B is something that these bigger vendors might ask you for?
E: Right, exactly. I mean it’s just to make sure that you’re a real company and you have the sort of financial capability to engage in business with other companies in your industry.
P: OK. And these vendors, are they always so open about the retailer they have worked with. Aren’t they bind by any NDAs with their clients – that they can’t disclose their name. So if you ask them which retailers they have worked with. Are they always so open to tell people that – these are the brands we manufacture for.
E: Hmm.. I am sure, well don’t know, per se. I am assuming that what we can’t do is that I can’t look at a product from some other line and say that I want to do this. Logically, they don’t like you to do that but they do have sample to give you an idea of style category. If there is an NDA for some brands for some brands, which I am sure there are but then of course we don’t hear about it. What they have in their showroom are simply samples from companies that they work with kind of openly.
P: Did you feel any difference in cost working with a bigger manufacturer and a smaller manufacturer, be perhaps in Argentina or in China?
E: Well, there is a difference in cost, an enormous one in fact. The challenge that any small brand faces is that you can go to a smaller manufacturer and the benefit to you working with these smaller manufacturers is that Minimum Order of Quantity is minimum. However, the cost per unit is much higher.
And also it’s often difficult to know how reliable this smaller manufacture is going to be with your time frame, you know a lot of things – with the sourcing, with the quality control, when you work with a larger and more reputable company, it’s implicit that it’s a part of their core business structure that they have already managed to oversee and have a good system in place for quality control. There aren’t sort of delays that come with working with smaller provider. If someone gets sick, a larger provider has lot of other people that fill it, etc. sort of more well oiled machine than when it’s a small family business.
The difficulty of course for any brand that isn’t a large company is that you have a cost per unit working with a larger manufacturer and it’s also vastly more higher units. You have to make sure that you’re selling and you project enough sales so that you’re sure that you can absorb that cost per unit, I am sorry – the amount the minimum order of quantity.
Being a smaller retailer, was it hard for you to convince a bigger manufacturer to manufacture for you. Being a smaller brand?
Well no, I think we have been speaking them for a while. We were able to place substantial order, so it’s wasn’t convincing them per se, it’s just that you have to take it on yourself and make sure that you can accommodate that. Otherwise, if it’s too big of a burden than it’s really in your best interest to stay with a small manufacturer until you have store units or online orders to justify a larger order.
P: Emily can you walk me through the entire process. Let’s talk this from standpoint of someone who has never imported anything from china. And if it’s a retailer in the US who wants to import from china. Once you know who is your vendor – you request for samples.. what’s the typical process?
E: First of all you have to be very aware of your own market schedules. So if you’re a United States brand, for example – you have to be very aware that you need samples by a certain date to have them ready for sale during your sale season. So I can give you an example – I need samples ready.. I will work it backwards. I need samples ready for the first and second week of January so that by beginning of February I have everything photoshopped, shot prepared, I have my look book, my line sheets, I have everything I need to go to the market. So with that information in mind, I go to the manufacturer. I say listen, I understand what your terms are, your minimum – because that is the information you have to accept and agree upon before you work. Making sure that if they say we won’t sell to you if you order this many units per style, you have to accept that or look else where of course. So you say listen, I need my samples ready for market by the first week of January so that I have them in hand – what do I need to do? Then he works backwards.
What that meant for us is that in July, the prior July we had to have our sketches, our material submitted, a bill of material, which means that you list everything from thread color to linings to composition tags, to everything you can think of and you submit it for first round samples. There is usually a back and forth. It usually takes about a month for leathers to be sourced, first rounds samples to be made and the whole process takes about 3 to 4 months before you really determine your color ways, you have really applied your sample work, you have accounted for delays, what have you. So you need to make sure you’re giving yourself, you’re working in a sort of six months cycle essentially. And then, once you have your samples – the way it traditionally happens is that you have a showroom, or sales person. You work during the market schedule which essentially means one – stores are buying and that means for us in February stores begin buying and you need to make sure that your are keeping our orders ready, you’re keeping track and then you’re adding units if you have your own shop.
P: And what about the payment terms?
E: Payment terms really vary, depending on who you are, you know what you account for with your retailer and with your manufacturer. So that’s hard to say, there is no standard kind of protocol for that. It depends on your individual agreement.
P: When you placed your first order, did you or Jennie fly to China to meet the supplier before placing the order?
E: Well in our case, there is a manufacturing office based in Manhattan. So we meet all the time with their US based representative. Jennie did go I believe in February, we’re going again in a week to see this manufacturing facility outside of Hong Kong. Mostly the day to day contact we have with them is via their US buying office.
P: Alright. That’s really interesting. For any retailer in the US that’s importing from China, it would help to find a supplier that has an office in US as well?
E: Well it does help. If they are large enough it’s very typical thing to see. You know I don’t know I am not very familiar enough with many other China based manufacturers but I do know in this particular case it’s absolutely helpful that they have a US office.
P: Emily, can we talk about the biggest challenge you faced while importing from China as against when you were importing from Argentina? Any specific challenges?
E: Ya, I think the biggest challenge really is the increase in minimums, you really have to think about your orders very strategically because when I was ordering in Argentina, I had very low minimums and can order across really broad number of styles. So, I think the challenge is being very aware ahead of your selling season that you have to focus on things that seem to have lot of interest generated and make sure that sales representative and yourself are aware kind of what is doing well and what isn’t. So that you’re creating styles, sort of style families that make sense together and that you’re also able to meet minimums.
You know the benefit of working with a smaller manufacturer is that there is a lot of flexibility on that front. That’s understandable because it’s a smaller operation. The difference is that with larger companies it works sort of more smoothly but of course there is a higher barrier to entry with the minimum.
P: Ok it must have been a big impact on your brand as Argentina from what I know was something you were promoting a lot in your brand communication. So, shifting to China from Argentina must be a big decision for you.
E: Ya, it was. I think we felt that we needed to make that decision so that we could keep a product that represented our value at a price point that we could maintain and also quality we could have the elements and the construction all there. We were able to maintain sort of the core elements of the brand philosophy about transparency, about focussing on material, and being open about what we use, why we use it and ya we had to shift away from Argentina and that is a transition but I think it’s just a continuation of the same and we take the same inspiration about focussing on the materials and having them be reflected in our product and shifting it else where.
P: Ya, I think it’s really great, how you have you have been so open about where and how your products have been manufactured. You actually announced it to your customers as in – why you shifted your manufacturing from Argentina to China. You called the page – ‘The new frontiers’. I know many brands would have done it silently, in isolation with its customers as they don’t really see manufacturing to be part of their brand, which now I think is not such a good branding strategy.
OK, I have one more question for you. Though you found this vendor from within your own network, what if you didn’t know anyone and had to go through the research process of finding a suitable vendor for your brand. How would you have done it?
E: Ya, it’s definately. I think it’s hard to find the initial contact because that sort of is a challenge right there – where do you start looking? And I think you can start looking – I did find people on Linkedin. There is even I think a group – handbag manufacturer. And they are within sort of social media spaces places to look. And you know sometime you have to dig around on Google, additionally Alibaba and also importantly to look up trade shows. There are always going to tradeshows for any given marketspace. And that is the really good way to sort of test the market. Go and see kind of what the offers are, I have never been but I have been to other trade shows and I know you can get a panorama of suppliers very quickly and start there. It’s sort of process of trying to feel out, kind of what you’re looking for and reaching out as many people you can and getting recommendations.
That’s the part and then I think I would just advise for any small company just be very aware that there are benefits and drawbacks to both. Of course, if you’re small then it’s really great to find a reliable and good manufacturer that accommodates smaller order and it allows you time to grow. And as you do so, you can start looking around for larger manufacturers, that will obviously have higher minimum as part of their requirement.
P: So, they should have a good capital in order to get bigger manufacturer at least as backup. So if their payment terms are so that.. so usually how much deposit do they as for? 50 % deposit or?
E: Yes, typically it’s a 50% deposit.
In the process of looking around, it’s very fundamental, the cast of very wide net. I didn’t reject any avenue of research – Linkedin. I talk to other people in my industry. What other people do is that they hire production and sourcing specialists. I have never done that but I know that there are offices that specialize in this and they have a wide variety of experience across sourcing spectrum. That’s another opportunity and I would Google search that if that’s a particular interest for them. Tradeshows, linkedin, Alibaba, Google, it’s out there, you just have to dig around.
P: How do you define, when it’s the right time for a retailer to go find a bigger manufacturer? What are those signs he/she should be looking for in terms – Ya, now I should look out for bigger manufacturer?
E: I would say that it’s a big step. It is definitely something to do, is to know that if their business is still in process of finding its market in your niche and you still have growing to do, it’s really good to get a sense of what style you’re doing that are doing well to get a sense of how much traction you’re having because the cost of course moving production to china and working for a bigger retailer does require up front capital. So, it’s only recommended to do that if you have orders to back it up because if you don’t it’s better to work with a smaller manufacturer on smaller orders.
Even in New York City, you can find manufacturers of handbags and I know – there are number of them. Of course, their price is high, but it gives you an opportunity for testing – testing the market, testing the space, your style and I think it’s really good to go to China with a very solid idea –
- what works for you?
- how much do you need?
- who you’re selling to?
- and an idea of cost?
That’s a real issue. There is a very big difference between required to buy 30 or 40 items of a style as opposed to 300 to 600, or a thousand. So that’s absolutely something to factor in or the economics of what works for you, where are you kind of on the spectrum, how developed or how far along are you as a company. And if you feel that’s it’s the right thing to do to move on then you’re really going to face some really positive changes because you have the quantities to justify, then you will be getting much lower prices across the unit of course but it’s just a matter of getting there that is often a challenge for a lot of smaller companies.
P: I think you’re right, one of the other readers I was talking to about this similar issue, the thing he did was that he flew directly to China. He went there and then figured out. He almost stayed there for a month and then figured everything – manufacturing, so he went through the longer route. So he did all the research after he landed in China.
E: Well you can do that too. The thing is that if you have the opportunity to do that, that’s something. The people who don’t do that because they hire product specialist that already know who all the good contacts are. And the information, that’s their speciality and they will charge you for it. You can go see yourself, you can go to trade shows, sometimes manufacturing offices just don’t have great websites or they are not experts in SEO, they are experts in making handbags or any kind of consumer products and don’t have the most sophisticated websites, not even in English, you just don’t know. You can go check it out, that’s always recommendable. But if you have to start somewhere, the places I mentioned before are where I would begin.
P: One of the other things I want to ask you about is communication. Did you face any issue while communicating with these vendors. But since you mentioned you’re working with a larger manufacturer which even has an office in US. So I am assuming there should be no communication barrier between you and the vendor, right?
E: That’s correct, yeah. Luckily I am working with a US office. So the people that I work with are Americans or may be it doesn’t really even matter, they speak english and in that sense we don’t have a lot of communicating issues because my first contact is going to be that office. They sort of communicate internally. If there are questions from the factory, I only hear about it from my New York representative.
P: OK. Because one of my friends who in India gets his iphone cases manufactured in China. So he always shares with me is experience of communicating with Chinese. The kind of problems he faces.
E: Yes, that’s an issue. Again. It’s hard. We’re lucky that we have a set-up very very specifically geared towards US brand or a foreign brands. So because of that you have a foreign market and you have this office in Manhattan. I can’t speak to the experience of working with a smaller manufacturer in China or factory in China.
I can imagine that’s a challenge absolutely. And if you find – I think a really really good way to determine if this is going to be a problem – if it comes right away. If in your initial email to people there is miscommunication and they are not quite understanding a technical question you’re asking, that’s a pretty good indicator to you that more issue and communication will come up when it matters most. So, if there is an issue with misunderstanding over very simple communication, like conversation about cost, conversation about if you want an item in such and such way, I think it’s a very good way to judge them if it would up come later.
P: From all things you have just shared, China looks like such an attractive destination for Fashion manufacturing. How does one get started and also get it right, especially if they are small and new to the market?
E: You know I think sometimes, people think about China as a good solution. It really is. And I think just a cautionary word is to make sure is that your business can sustain the change because it necessarily requires almost always higher units. I think it’s good for people to really understand that their own business before they do that if they are there – great! make the change. It’s perfect. And if they still need to figure out what works, what doesn’t work and kind of finding their footing as a company, I don’t know if I would recommend it because I think it’s very good to have that learning process with a local manufacturer or a small European firm or a small manufacturer within Manhattan, even the garment district in Manhattan I know 4-5 places that make handbags. So, that’s really a good way to start out.
P: So it’s not really just about the cost benefit. It’s more than the cost. You have to go through the entire process to streamline and have to go through the entire channel to get your processing shifted to a country like China. So, it’s not just about.
E: Ya. I think something to take into account is that you need to internally have your process really streamlined. You need to know your know schedule. You need to have everything from samples, sketches, mockups, indesigns or whatever it is or Autocad if you’re using, you need to make sure that you understand your market, whom you’re selling to and what things are responding back, you need to understand your own business.
China is not a default option for a brand unless you’re a company that’s coming in with lot funding, lot of people with a lot of experience already in production. My suggestion for smaller companies is test your marketspace and your own products in local market with manufacturers that are used to doing samples. And what I would say is Google New York City Garment District, leather handbag samples. Go meet those sample makers – yes those are expensive but they are still great way to start out. See who likes it, see who your market is because by the time you make that leap that Chinese manufacturer is presuming that you know what you are doing.
P: True, and before you even selected China as an option, did you also consider other Asian countries for production, like India or Bangladesh, Philippines I guess, Vietnam?
E: I certainly would have. It wasn’t so much that the search was country based, this search was more about having this contact we already knew of, really liking the kind of position they have in terms of materials, they were very sophisticated about giving their workers fair wages, medical facilities on site, and I am sure same sort of facility exist for manufacturers in Philippines, India or Bangladesh. It’s hard to know unless you have a good contact, you find it trustworthy, especially for us, that part of our business is so much about our brand is to be able to say, we feel confident in this manufacturer. They’re doing things in a way that we like. We are OK putting our name as an associate with them. It’s very hard to do that unless you know know first hand exactly what the conditions are, you have a good sense of that company, so we were put in touch with sort of our network.
I am sure you can go and you can do your research. I know of brands who are getting their manufacturing done in Philippines, we were looking into doing leather jacket line and we were talking to leather manufacturers in Pakistan. There are suppliers absolutely everywhere. It’s just more about finding them and making sure you can get recommendations that you have a sense of, you can get samples back and forth. You know a lot of it is about instinct as well. You just have to be able to say OK, I like what I am seeing, I like the communication, I get quick responses, they understand what my issues are. These kind of things are intuitive and are very helpful of course, but it’s very entirely possible that the same partner is available to you in India, Vietnam or Pakistan, elsewhere or China itself. China is not actually the least expensive option, as everyone knows it’s developing very quickly and countries that are not so developed like Vietnam and Bangladesh often offer much lower prices.
P: So it’s not just about China, a retailer should not limit himself, his vision that he only wants to go to China. Should always be open to find them elsewhere.
E: Ya absolutely not. And it depends on what they are looking for. If the person you’re counseling Pulkit is for example is a US manufacturer, leather goods – whether it be footwear or handbags, another thing to say to them is that – Do you know Mexico has a huge leather industry and there is NAFTA – North American Free Trade Agreement. NAFTA gives you beneficial tax breaks, so that you’re not paying high custom tariffs between Mexico and United States. There are whole towns dedicated to manufacturing there.
It should not just simply be – default China. You have to also look at the tariffs leather goods from China to the United States is 9%. So that’s not insignificant, you have to deal with high volume and shipping costs are expensive, they are very expensive. If you’re submitting your production within a timeframe, often you don’t have the luxury of shipping it by boat, sometimes you do but if you’re air shipping, it’s about 20-30% of your total cost. When you factor in things like customs, air freight, and all those things. So I don’t think it’s not a good idea for any brand to just single mindedly focus on China, just because the cost is low.
P: It would also help to know the shipping cost of each of these countries?
E: Very much so. Also you know you have industries in Peru. Peru is huge manufacturer or thing such a pima cotton and also leather goods. A good thing for someone to do is what am I looking for and have that very clear. How much can I buy? What are my minimums? What is that I really need from my manufacturer that I am not getting or that I need to change. It’s a really good thing to say is Mexico is a manufacturing hub, Philippines is, India is and there is huge difference in cost from Shipping & tariffs that is really worth looking into to be mindful of your cost. I know that shipping from Pakistan is very expensive but manufacturing in Pakistan is very inexpensive. I am sure the same applies to Vietnam.
P: Emily we see this a lot. I think it’s very common to see lot of retailers saying that we have a fair wage policy, there is no child labor, I am asking you off the record as well. I want to know your standpoint on this. Do these retailers actually go and check if there is actually a fair wage policy and especially Eco Fashion brands?
E: Yeah, absolutely, we do and checked it out. We make sure and this is a very, the manufacturer we’re working with is really really open about that. They are very much pushing the issue – that we pay fair wages, we give on site medical, we do pay time off. Jennie, went to the factory and saw for herself, we always go to the factory and make sure. There is nothing to say that every single factory that you work with. May be they know, you’re coming and the people under 15 or whatever are not working that day because they know that you will be there. The manufacturing facility that we work with, they have been awarded prizes for things like their efforts in sustainability and they are a pretty reputable company. This is a huge thing, that makes people hesitant to look in places like Bangladesh, for example. People are really wary about factories there and the conditions there, and I think a lot of US companies, foreign companies say – I wanna pay more, just to know people are making a fair wage. I don’t want my brand to be associated with slave labor.
That’s hard to know from just from an Internet contact, from talking to somebody. That’s something depends to your commitment to it. But you kind of have to show up. Check it out. I know that the other brands in the facility where we work, send their quality control crew to make sure that everything is being done according to how it is marketed, they go check the product, they and check the space out. There is actually a whole industry, companies that do this, like I forgot what the term is but this is essential for large corporations to make sure all these things. There is a whole industry of people who go around and do quality control checks and that includes labor condition and what have you. If you don’t want to go yourself. I know that H&M has a division that has quality control divisions that go around the world to check their factories. This we’re talking about much larger scale. And it’s not inexpensive. But people go there are specialists who would go and check it out for you.
P: This of course applies to people who can afford to send people there. For start-up retailer, it must be something that they can take care of at a later stage?
E: Ya, I think. For me, it isn’t important if you’re a small brand. Your manufacturing partnership is very fundamental to you. Not that it is at any stage. It’s very important that you’re in touch and know what’s going on in your factory. You meet the people you work with face to face, I think this is true for almost any industry but it’s always helpful to get to really know who you’re working with and since you rely so heavily on them to begin, it’s always a good idea to find a way to at least meet them or just check it out. It’s much more expensive in the long run to have to make an abrupt change or have a serious error in the production and be unsatisfied than to buy a plane ticket and check it out yourself.
P: OK, Emily, I am done with my questions. Anything else, you wanna share.
E: Ya, I think that’s it. I can’t think of anything else. That’s just our experience and I don’t know if it’s helpful for other people but those are the things that you got to be aware of. I was happy to help Pulkit and thank you so much.
P: Thanks to you too for your time and your valuable responses. Thanks Emily. Bbye!