Sub-Saharan Africa’s potential to become a global low-end manufacturing destination has come under discussion lately, especially with rising cost pressures in traditional markets such as China.
Swedish-based fashion retailer H&M is one of the latest global companies to experiment with sourcing its products from sub-Saharan African countries. It has placed test orders for garments from Ethiopian and Kenyan suppliers. Retailers such as Tesco and Walmart reportedly already source some products from Ethiopia.
“We are a growing global company and we need to constantly look at how we can ensure that we have the capacity to supply products to all our stores where we have expanded rapidly. We do that as we increase production on existing production markets but also by looking at new ones. This does not mean we will stop buying from existing production markets. We see great potential in Ethiopia, it is a country with a huge development and growth and we see that we can contribute to jobs and reduce the unemployment in the country,” Elin Hallerby, a spokesperson for H&M, told How we made it in Africa via email.
However, she emphasised that the company is still in the early stages of sourcing from Ethiopia.
H&M doesn’t own any factories, but instead works with hundreds of independent suppliers, mainly from European and Asian countries such as Italy, Turkey, Bangladesh and China.
So what does H&M look for in a new supplier?
“We place orders at suppliers that can live up to our high requirements when it comes to quality, prices and lead times, but another crucial aspect is our high sustainability requirements,” says Hallerby.
“We always do a risk assessment before we enter into a new purchasing market. In Ethiopia we made extensive such analysis where we looked at human rights and environmental conditions in the country. Dialogue with the International Labour Organisation, the Swedish International Development Cooperation Agency and local organisations were part of the analysis. We lean against authorities such as the UN and follow EU trade directives.”
Hallerby also confirmed to How we made it in Africa that H&M’s plans to open its first outlet in South Africa in 2015 are still on track. A number of European fashion brands, including Topshop, Zara and Mango, have expanded to countries such as South Africa and Nigeria in recent years.