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The Group has used third party manufacturing facilities around the world for over thirty years but has specifically avoided suppliers or regions where the employment or environmental practices are known to be below acceptable standards. The Group requires all of its product suppliers to abide by its guidelines contained in the Supplier Guide. Our staff visit the factories we use for garment production on a regular basis and consider the environment and work practices during those visits, however currently our ability to formally audit the facilities is limited. Our Supplier Guide and the employment standards required of our suppliers accord with industry standards including inter alia that employees should: be given a safe and healthy environment to work in; be given the right to free association; be paid a fair wage; not be forced or bonded labour; be of an appropriate age; and work only reasonable hours.

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Operations
China,India,Turkey
https://www.frenchconnection.com/content/investor-relations/fashion-our-business.htm

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The Board recognises that the long term profitability of the business depends, amongst other things, on appropriate protection of the Group's assets, reputation and brand names and is subject to the long-term sustainability of the supply chain.

Impact on the environment

The use of resources to manufacture and supply our products utilise finite global resources. The source of the raw materials and the manufacture of the finished products is spread globally and provides employment, income and personal security at many different points in the process. We recognise, however, that our products utilise global resources some of which are limited in their nature.

Some of the initiatives we have implemented include:

In the UK, the business meets its responsibilities under the packaging waste regulations through membership of Valpak;

Wooden hangers are sourced from sustainable sources and we do not give them away with the products;

Reduction in packaging materials for finished goods i.e. no plastic banding, no inner cartons;

Plastic returnable tote bins for shipping to our own UK stores to reduce cardboard;

Plastic and cardboard waste is collected from our UK stores for recycling;

In our US operations, corrugated cartons are re-used whenever possible and ultimately recycled using a band machine so they are crushed into bails for collection;

In Canada we are participants in 'Stewardship Ontario', paying a fee for all point of sale materials to be recycled. All lighting has been replaced with LEDs; and

Donation of end of life stock to local and national charitable organisations.

The greenhouse gas (GHG) emissions report is in line with UK mandatory reporting requirements, set out by the Department for Environment, Food and Rural Affairs (DEFRA).

The mandatory requirement is for the disclosure of scope 1 and 2 emissions only. We have captured all material qualifying emissions from around the Group. Some extrapolation and estimation techniques have been used to calculate the Group CO ₂ e in respect of less than 5% of our stores and the final month of our data.

The reported sources fall within our consolidated financial statements. We do not have responsibility for any emission sources that are not included in our consolidated financial statements. We have computed our emissions using the DEFRA Environmental Reporting Guidelines: Including mandatory greenhouse

Our total GHG footprint in line with these guidelines is 1,939 tonnes CO ₂ e (2019: 3,043 tonnes). The decrease in our footprint has been supported by our targeted reduction in our retail portfolio during the year including the closure of our flagship store in Oxford Street.

Supply chain

The Group has used third party manufacturing facilities around the world for over thirty years but has specifically avoided suppliers or regions where the employment or environmental practices are known to be below acceptable standards. The Group requires all of its product suppliers to abide by its guidelines contained in the Supplier Guide. Our staff visit the factories we use for garment production on a regular basis and consider the environment and work practices during those visits, however currently our ability to formally audit the facilities is limited. Our Supplier Guide and the employment standards required of our suppliers accord with industry standards including inter alia that employees should: be given a safe and healthy environment to work in; be given the right to free association; be paid a fair wage; not be forced or bonded labour; be of an appropriate age; and work only reasonable hours.

The Board recognises that it is not possible to provide absolute assurance that standards expected of our suppliers are adhered to. Where transgressions are identified we would work with the supplier to develop an appropriate remediation programme. However we will not hesitate to stop using any supplier who we identify is persistently operating in contravention of our standards or failing to implement agreed remediation programmes.

The Group supports the non-use of animals in testing and challenge our suppliers on this matter - our glycerine soaps as an example, do not contain any animal derived ingredients and are suitable for use by vegetarian and vegans.

In 2018, the Group published its supplier payment practices in line with UK government 'Duty to Report on Payment Practices and Performances' legislation.

Modern Slavery

The Board has considered the Modern Slavery Act 2015 and has accordingly published a 'Modern Slavery Statement' on its website. The statement sets out the actions taken by the Group and the steps going forward to aim to prevent modern slavery from its business and supply chains. French Connection is committed to ensuring it maintains high ethical standards and due diligence processes in place which aim to prevent modern slavery and human trafficking in its supply chain.

Tax

The Board is committed to ensuring full compliance with the law and making all tax payments on a timely basis.

The Board is committed to ensuring that openness, honesty and transparency will be paramount in all dealings with the tax authorities and other relevant bodies.

We run cycle to work and childcare voucher schemes in the UK for our employees.

People

We are committed to providing equal opportunities for all of our employees.

We ensure that every employee, without exception, is treated equally and fairly and that all employees are aware of their responsibilities. The Group published its UK 'Gender Pay Gap' reporting on its website in 2018 in line with UK government requirements.

The breakdown of the gender of Directors and employees at the end of the financial year is as follows:

Notes

Company Directors consist of the Company's Board.

Other senior managers is as defined in The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013, and includes: i) persons responsible for planning, directing or controlling the activities of the Company, or a strategically significant part of the Company, other than Company Directors; and ii) any other Directors of undertakings included in the consolidated accounts.

The business complies with locally applicable health and safety regulations in the countries in which it operates. This includes the provision and maintenance of safe environments for our employees, appropriate design of our stores, health and safety training for appropriate personnel, electrical installation reviews, risk assessments and risk monitoring in our offices, stores and warehouses.

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The Board recognises that the long term profitability of the business depends, amongst other things, on appropriate protection of the Group's assets, reputation and brand names and is subject to the long-term sustainability of the supply chain. The use of resources to manufacture and supply our products utilise finite global resources.

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When picking a clothing manufacturer to work with, one of the most important factors to evaluate is the country in which the manufacturer resides. Here at Sewport, we know firsthand the logistical challenges that come with partnering with clothing manufacturers in countries across the globe.

We decided to do some research on the differences among clothing manufacturers in different countries so you'd have more information when deciding which manufacturer and country to work with.

We assimilated data from a variety of sources to analyze the different attributes of apparel manufacturers in different countries. The data came from studies done by professors, various nonprofits, and journalists covering this area.

These are some of our key findings:

Though China is still the leading exporter of textiles and clothes, its market share is decreasing. Other countries are worth exploring.

The US pays garment workers more than Asian countries, but Mexico pays garment workers even less than the Asian countries.

Garment worker wages are increasing dramatically in third-world countries but is relatively stable in the US and Mexico.

There are tradeoffs to be made between speed, cost, and ease of complying with regulations.

Trade barriers are an increasing worry for fashion executives.

Developing countries have more labor violations than developed ones.

European countries do the best job at protecting the environment.

Textile and Clothing Exports by Country

When choosing a clothing manufacturer, you may want to pick one that's in a country that already exports a significant amount of apparel. That way you know that there's a developed infrastructure around the factory to solve deliveries and other issues.

Using the World Integrated Trade Solution calculator from World Bank, we found out how much textiles and clothing every country exported. We then put that data onto a global map so you can take a better look:

Here's the same data presented in a chart. We also added the total amount of 2015 textile and clothing exports so you can see how the industry is changing:

One clear trend here is that China, even though it is the largest exporter of clothes and textiles, is losing market share to the rest of the world. We guess that political uncertainty and concerns about the trade war with America have a lot to do with that decline. As we'll talk about later, fashion executives are making it a priority to diversify away from China.

Bangladesh and Vietnam both seem to be gaining from China's loss. Even though they're the second and third biggest exporters respectively, both increased their market share by over three percent. Despite those gains, keep in mind how much more China exports than the rest of the world, as it exports more than the rest of the top five combined.

If you want to work with a manufacturer in Europe, you have several options. Italy, Turkey, and Germany are in the top ten, but they have all lost market share. We imagine that higher labor costs are a major reason for Europe's decline, but there are still significant reasons to choose Europe which we will talk about later.

U.S.A. is by far the biggest exporter in North America. Keep in mind that this is a measure of exports, not total production. There is certainly a significant amount of clothing manufacturing in America that never leaves the country and goes straight to American consumers. Mexico, as the second-biggest exporter in North America, is also worth considering.

Very little clothing is imported from Africa or South America. Even though the labor might be cheaper, our guess is that the business industry has decided that ,for now, these continents are too geo-politically unstable. If you do want to manufacture clothing in these continents, Brazil and Egypt are the biggest exporters in South America and Africa respectively.

Monthly Minimum Wage in the Garment Industry

One thing to keep in mind is that low minimum wages in a country isn't directly responsible for low wages in the garment industry. For various political reasons, workers in the garment industry can get paid more or less than the minimum wage.

For example, the nonprofit Micro Opportunities found that Bangladesh women garment workers earn less than minimum wage over 60 percent of the time . On the other hand, garment workers in America earn more than the federal minimum wage because certain states have a higher minimum wage and guaranteed benefits vary from state to state.

All of that shows how determining what garment workers get paid by country requires detailed analysis. The best source we found for actual garment worker minimum wages came from Public Radio International:

As you would expect, developed countries like Turkey and America pay garment workers the most. What is interesting is that, despite its reputation, China is no longer the cheapest source of labor. Garment worker wages in Mexico are over 25% lower than garment worker wages in China.

If you do want to get clothing manufactured in Asia, know that there is a significant variation from country to country. Thailand and Malaysia both pay its garment workers more than twice as much as China pays its garment workers.

Keep in mind that labor cost is only a small portion of the total cost of a piece of clothing. A study from Oxfam found that of a garment's cost goes to workers. That doesn't mean that there aren't significant variations between countries. Cheaper countries not only have cheaper labor but also cheaper overall operating costs.

Garment Industry Wage Growth

If you're picking a country to work with for the long-term, it's important to know how much labor costs are increasing. The country that is cheap today may not be so cheap a few years from now.

To that end, we decided to investigate how much wages have grown in the garment industry for different countries. Here's how much wages have grown in the garment industry according to the 2014 Werner International Labor Cost Comparison Report :

As we saw earlier, apparel imports from China and Indonesia have been declining. The rising cost of labor is a likely reason for that. At this rate, China's labor will soon become much more expensive than other developing countries.

You would expect that in developed countries, wages wouldn't grow too much. In fact, garment workers' wages in America actually dropped when adjusting for inflation ! On the other hand, Turkey, another developed country, experienced significant wage growth.

There are significant local factors in play that affect garment worker wages over time. In some cases, the garment workers in developed countries can have higher wages that are also growing faster than those in developing countries. This is clearly the case when you compare Turkey with Malaysia and Thailand.

Mexico is unique in that it has low garment worker wages that aren't growing quickly. We imagine that if the USA continues to move away from China (due to rising costs and political tension), there will be a big shift to Mexico (especially since it's so close) and wages will at some point start to rise quicker.

United States Fashion Industry Association 2018 Benchmarking Study

The United States Fashion Industry Association does a benchmarking study every year where they survey the top executives at major fashion brands to analyze their thoughts on the state of the industry.

As part of the 2018 benchmarking study , they rated certain countries on a scale of 1-5 on various characteristics. Here are some highlights of their responses:

Keep in mind that these responses come from American fashion executives, that's partially why they say that sourcing clothes from America is quicker.

Since the manufacturer is close by and is from the same country and culture, it makes sense that it's easier to optimize delivery times and make sure that all relevant laws and regulations are being followed. The tradeoff is that it costs more to produce in America.

We imagine that European fashion brands would feel the same way about sourcing from other European countries. You can get a finished product faster and it's easier to make sure that you're complying with the law. Unfortunately, you'll have to pay a bit more.

Fashion executives feel mostly the same about all of the Asian countries. It takes longer to get a finished product and it's harder to comply with local laws, but it's cheaper to produce there.

Mexico again shows that it's unique. Clothes can get delivered quickly, but the overall cost is low and complying with regulations isn't too hard.

Biggest Challenges in the Fashion Industry

Also as a part of the benchmarking study, fashion executives were asked what they thought their biggest challenges were:

Their biggest concern was the rising protectionism in the United States. Growing trade tensions have resulted in the US putting tariffs on goods from various countries. While it looks like most of the trade tensions are temporary, it's uncertain whether the tariffs and disagreements with China will stop anytime soon.

That explains why the seventh biggest challenge according to fashion executives is to find a new sourcing base outside of China. The rising labor costs and growing political tension means that it's no longer as attractive as it once was.

The third biggest challenge is rising production cost, which means that there will probably be an increase in sourcing from the other Asian countries. We imagine that Mexico will become more and more attractive for reasons we've mentioned earlier in this piece.

Cost is far from the only concern. Besides worrying about complying with trade regulations, executives are worried about dealing with political and trade tensions among countries.

This shows that executives have to make tough tradeoffs. They want to keep their sourcing costs low, but they also feel that there are significant political challenges that come from dealing with developing countries.

Workers' Rights by Country

It's no secret that there have been significant human rights issues in the garment industry. Several brands, like Nike, have suffered a hit to their reputation when consumers found out that they employed in workers in questionable conditions (often referring to these factories as "sweatshops" colloquially).

As a result, many companies now make sure that they screen their manufacturers thoroughly. The last thing they want is a picture of their clothing being made by workers in substandard conditions.

We didn't find a study that just displayed the country-by-country breakdown of workers' rights in apparel manufacturing specifically. Instead, we found a country-by-country breakdown of workers' rights in all industries.

The International Trade Union Confederation (ITUC) releases an annual study on workers' rights across the globe, the ITUC Global Rights Index.

In this study, they rank countries on a scale of 1-5 as to how much they violate workers rights. Countries with a rank of 1 rarely violate workers' rights. Countries with a rank of 5 have no protections for workers' rights. Countries with a 5+ ranking have no workers' rights due to a breakdown of the rule of law.

Here's a map of countries of the world with their ranking:

Here's the same data in chart form:

In general, the developing countries have fewer protections for their workers than developed countries. A significant portion of Europe scores a 1 or 2. Almost all the Asian countries that export significant amounts of clothing score a 4 or 5.

Notably, America scored a 4 and Greece scored a 5. This shows that there are significant workers' rights violations even in developed countries.

Obviously, this report is a generalization and you have to check a manufacturer specifically to know how it treats its workers.

What this can tell you is the general trend of a country and how closely you need to monitor your manufacturer. You shouldn't completely ignore the conditions of your manufacturer's workers, but you can probably do a little less monitoring if your manufacturer is in Sweden as opposed to a country like China.

Environmental Friendliness by Country

Another concern for many brands is whether their clothes are made in an environmentally friendly way. You probably don't want your brand connected to a factory that significantly pollutes the environment.

Famous clothing brands like H&M and Zara have received significant backlash for working with polluting factories in Asia. In order to prevent this type of incident from happening again, many brands have emphasized the importance of sustainability.

We didn't find any research specifically on environmental friendliness by country for the garment industry. We did find that Yale University created an Environmental Performance Index , which rates each country on a scale of 1-100 as to how it treats the environment.

Here's a map created by Yale to show how environmentally friendly each country is:

Here's the same data in a chart, also created by Yale:

We see a similar dynamic to that when we looked at labor rights. The developed countries are much more environmentally friendly than developing countries.

What is different is that America is one of the most environmentally friendly countries even though it ranks among the worst countries in treating workers.

Again, we have to emphasize that you still need to analyze each individual manufacturer. These rankings are simply a good rule-of-thumb to know how environmentally friendly a country is overall.

In Concluding...

Here are our biggest takeaways:

Even though China is the biggest exporter of clothes, its attractiveness has been decreasing because of rising labor costs and increasing political tension.

Garment worker wages vary significantly even in developing countries.

The wages for garment workers in Asia is growing rapidly.

Mexico is unique in that it has low garment worker wages that aren't rising too fast. It also has a low overall cost while still allowing for quick delivery to the USA.

Like many fashion executives, you should take political and trade tensions among countries into account when deciding which country to source from.

Be extra careful when choosing a clothing manufacturer from a developing country. They may not be treating their workers well and may not be environmentally friendly.

There are always tradeoffs to be made. If you want to be known as a sustainable brand or want to deliver your clothes as quickly as possible, then working with a manufacturer in a developed country can be right for you.

Finding a clothing supplier and manufacturer is a complex task (trust us, we know about it firsthand). There are many factors to consider and you can run into trouble if you pick the wrong partner.

Part of our research was meant to show how simply looking for the cheapest option is not always the best choice. There can be significant issues when sourcing from a developing country like China.

Your brand could receive big backlash for working with substandard manufacturers. If you're not careful, you could partner with a factory that abuses its workers or is not environmentally friendly.

Now that you know the manufacturing conditions of different countries across the globe, we hope you can now make a better, more informed decision when picking a clothing manufacturer. The best clothing manufacturer for you depends on several factors and tradeoffs that you want to make as a business.

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Which Countries Have the Best Clothing Manufacturers (Industry Research)

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When picking a clothing manufacturer to work with, one of the most important factors to evaluate is the country in which the manufacturer resides. Here at Sewport, we know firsthand the logistical challenges that come with partnering with clothing manufacturers in countries across the globe.

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Gone are the days when finding a new sourcing region was the simple answer to getting ahead of the competition. For one thing, there is no one country poised to be the 'new China' and it is no longer about delivering bulk orders but aiming to provide a customised item to a single individual, anywhere in the world.

Sue Butler, director at consultancy Kurt Salmon, says that success in a multichannel world relies on having production flexibility within an integrated supply chain, with the merchandising, design and logistics functions and fabric and accessory suppliers more involved in the process than ever before. "There also needs to be a greater use of analytics and investment in technology that will assist in the planning, production and speed of delivery," she says.

According to one department store boss, investment in the right systems is vital. "International ambitions are changing our supply chain strategy significantly, and this is where the investment in systems comes in because quite often you can't do things in the supply chain that you want to do without a clever system," he explains. "The way the supply chain is changing is that we want to be able to send products directly from our manufacturers to international markets as opposed to products being sent to the UK and then shipped back out again to an international market."

The choice of where to source production is in itself complex, with 66 countries all able to serve the fashion sector, according to Kurt Salmon. And with production costs in classic sourcing regions in southern China having increased by more than 160% since 2005, bringing them level with those in some Eastern European markets, everyone is looking at other options.

China's significance as a main sourcing country will persist due to its integration into the textile value chain, but a shift to other countries will continue with Cambodia, Bangladesh, Poland and Vietnam the main beneficiaries. However, most countries with low labour costs still lack the infrastructure and production competencies required to deliver similar volumes as China.

Cambodia is showing strong double-digit growth in six out of 10 product categories including shirts, blouses, skirts and dresses, according to research conducted by Kurt Salmon for its latest Global Sourcing Reference (which analyses production costs in key regions globally), but its market share remains relatively low. Within China, the movement from the coastal regions into the inland areas where labour is cheaper continues for various product groups, from denim to pullovers to shirts and blouses.

Turkey, which remains the third biggest apparel exporter to the EU behind China and Bangladesh, is also shifting production to cheaper regions to try and keep costs low. The country's core strengths remain its vertically integrated production facilities and high productivity levels, and buyers will continue to pay the price of having these options.

India's importance as the fourth biggest exporter to the EU is slightly diminishing. To hold its ground in the medium term, Kurt Salmon says it has to master the challenges of infrastructure, productivity and business environment if it is to regain its importance as an alternative to Bangladesh.

With brands such as H&M, Primark, Tesco and Walmart involved in pilots in Ethiopia, there is growing interest in sub-Saharan Africa.

Chinese and Turkish producers are building vertically integrated production facilities there to take advantage of the local cotton availability and low labour cost. The parallel infrastructural investments such as the new railway from Addis Ababa to the port of Djibouti, due to open in 2016, can provide a basis for future growth. However, production there is still in its infancy.

"Just as fashion goes in cycles, so too does the way in which retailers and brands manage their sourcing. Spurred on by the need to feed online sales and to deliver in super-quick time, retailers and brands are once again looking at the balance of own sourcing offices versus using a buying house or agent and some are even rethinking the advantages of owning their own factories," explains Butler.

"There can be significant cost advantages if the business has sufficient scale of volume going through its own sourcing office, but once volumes drop below a critical mass then the cost of running the office starts to erode any margin advantage. If an organisation has product produced across many different geographies that would need to be managed by more than one sourcing office, or if it is working in new geographies where there is risk and the market is unknown, then the preferred option might be to use agents."

According to the boss of one high street chain, his company is taking a similar approach. "As international [sales] grow, we are putting more focus into the international supply chain and looking for cheaper and more efficient routes to get products to market quicker."

Alek Adamski, head of Kurt Salmon's supply chain practice, says retailers and brands need to better aggregate their production.

"We have numerous examples of companies putting their production in the incorrect location - they need to make sure they have the right geographical balance to achieve an overall better margin. This is based upon a basket of costs such as volume discounts, logistics savings, smarter routing and storage options and better flow planning and markdown processes."

The majority of companies interviewed for Kurt Salmon's Global Sourcing Reference, including fashion brands, retailers and suppliers, are planning investment in technology that will better integrate suppliers. While only 31% of the interviewees were already using product lifestyle management (PLM) systems - which manage the lifecycle of a product from inception to the finished article - 54% plan on utilising them in the future.

"To operate a successful multichannel business, there is a need for common master data across channels with product information management (PIM) systems that can add ecommerce-specific data (such as pictures or Google search keywords). There is also a need for solutions that use inventory availability to route orders based on business goals and customer preference," explains Adamski.

Another trend is that as online retailers push their offline competitors into same day or next day delivery, this is impacting heavily on the location of distribution centres [DC]. In this anytime, anywhere environment, physical retailers need to use their biggest asset - their stores - to help reduce costs.

"While using a store to fulfil the DC function is probably only a temporary measure as it adds complexity and cost, it can delay the need to open a new DC to relieve lack of capacity at already stressed facilities, which at around £60m each is no insignificant expense," says Adamski. "If retailers can encourage customers to 'click-and-collect' this can also help save on transportation costs, which is especially important as fuel costs remain high and show no sign of coming down."

He adds that retailers and brands need to ensure that each product is being fulfilled from the smartest location as it relates to both customer experience and profitability. "Electronic tags will be instrumental in enabling this which is why retailers from Macy's to C&A are using RFID [radio-frequency identification] tags," says Adamski.

Not surprisingly, as a reaction to Bangladesh factory disasters, sourcing experts interviewed for the Global Sourcing Reference also reported an increase in importance in attention to corporate social responsibility (CSR), along with greater control of sub-suppliers.

However, only 35% of retailers and brands questioned had standards established for tier two suppliers, although 50% planned on introducing them.

Despite the increased focus on CSR, the boss of one fashion chain cast doubt on the real impact of incidents like Bangladesh on people's shopping habits: "What I have noticed is that in any scandal involving what you put in your mouth, customers will vote with their feet. But not necessarily if the scandal involves something you wear."

However, as the chief executive of one department store sums up: "Supply chain transparency is higher on the agenda than ever."

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Gone are the days when finding a new sourcing region was the simple answer to getting ahead of the competition. For one thing, there is no one country poised to be the 'new China' and it is no longer about delivering bulk orders but aiming to provide a customised item to a single individual, anywhere in the world.

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Published:

Disclaimer: This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.

Introduction

The report will consist of different aspect of factors to consider for moving the plant into Turkey. The area which will be covered will be the PESTLE analysis along side with the Porter's Diamond and also an analysis on the cultural factors.

PESTLE Analysis for Turkey

Political

One of the current political strengths in Turkey is that their government have policies on liberalisation. Turkey is supporters of liberal trade and investment policies which allow open trade between different countries in the EU. Turkey forged a custom union agreement in 1996 to allow many Turkish firms to get bigger and more successful in the global economy. Exports have been rising on average at a rate of 10% every year and this will allow the fashion industry to flourish with the exports produced in the Turkish plant.

One of the current political challenges in Turkey is the series of violent terrorist attacks that have happened in the country due to Islamic extremist, Kurdish radicals, Turkish militants that may have link with Al-Qaeda. This is a disadvantage for bringing the plant to Turkey as it may be targeted by these terrorist.

Economy

One of the current economic strengths in Turkey is that there is a high flow of foreign investment coming from abroad. The investment plays apart in Turkey's speedy expansion and this has been driving the country's economic growth. In Turkey there is a privatisation program planned to start from 2008 that will allow the sale of major bridges, highways, electricity grids and a share in the partly commercial bank. The money generated from foreign investment will be used for expanding the infrastructure of the country; this will be an advantage for bringing the plant into Turkey as the Turkish economy will be in growth and to bring the plant here will only benefit the company and the fashion industry.

One of the current economic challenges in Turkey is the current account deficit for Turkey. The declining current account has been was delayed the economic stability. The import market has seen a quick rise as an outcome of increased global commodity prices and a sturdy Turkish lira. Turkey is even more vulnerable during times of global financial doubt. This will be a disadvantage for bringing in the plant into Turkey as it the company may need to relocate if there is a financial crisis which may happen with Turkey.

Social System

One of the social system strengths in Turkey is that they have growing proportion of young population as they have more than half the population being aged below 30. This will allow Turkey to increase their employment rate by getting the most out of the young labour force. This is an advantage for the plant being brought into Turkey as shows there is a healthy supply of young population willing to work so the company could create jobs for these people.

One of the social system challenges in Turkey is that they have a high level of unemployment. Turkey unemployment level rose by 38,000 in that year to 2.3 million in 2007 but then in 2008 it rose again by 737,000 from the previous year so this shows that there was a substantial increase from the previous year. This is a disadvantage to bring in plant into Turkey due to the high level of unemployment as they may not be skilled workers in the pool of unemployed people. There is another side to this where it can become an advantage by hiring these unemployed and training them to work sufficiently for the company.

Technological

One of the technological strength's in Turkey is the significant development in the ICT sector. During 2001-2007, Turkey's ICT sector expanded so rapidly it expanded by double-digits so that shows that it was a very successful growth. In 2007, Turkey's ICT market reached $24 billion and in the previous year it reached $21 billion so this shows that in a space of one year the market grew by $3 billion which is a very substantial amount of money. The reason for this sharp increase is due to the Turkish telecommunications sector as they have been privatised by the government. This is an advantage for the plant being brought into Turkey as this will attract more foreign investment project as well as creating more jobs for the people of Turkey.

One of the current technological challenges in Turkey is the low expenditure cost on the research and development. Turkey's research and development cost in 2006 was around 0.6% which is below the average of the European countries which are at an average of 2.3%.This is an disadvantage for bringing in the plant into Turkey as there is not that much investment being put into the Turkish research and development, they will need investment from both the private and public sector because the country will need to have a healthily amount of investment in order to grow into a country which is in the EU. In the future is the research and development cost are still low then this will erode and stop the competitiveness of different industries in Turkey which will be bad for the long run.

Legal

One of the legal strength's in Turkeys is the comprehensive legal structure they have. The judicial system is made up of general courts which deal with domestic cases, heavy penal courts which deal with more serious case, military courts which will deal with the military cases and the Constitutional Court which is the highest level of courts that will deal with many different cases which is essential in the Turkish government such as war crimes. This is an advantage for the plant being brought into Turkey as this shows that the Turkish government are strict on the law and will enforce the law if need be, it will allow the company to have a fair trial if any form of disruption were to come up such as trade union issues that would cause the company any serious problems.

Another legal advantage in Turkey would be the robust framework for the business entities, as the company who are looking to invest into Turkey will not need to go through a very long and lengthy business registration process as there is a freedom to start, operate and close a business by the Turkish regulatory environment. so for example in Turkey, it will take on average 6 day to starting up a business compared to 43 days in the other world countries which is a much longer time and could be beneficial for the type of market the company is involved with. As the fashion industry clothe range change very often and will need to be able to adapt quickly if the plant is being brought over to Turkey.

One of the current legal challenges in Turkey is the judicial inefficiencies as there are some delays in the Turkish judicial system which can cause some serious issues. There are also judges who are politically biased and this has affected legal outcome. This is a disadvantage for bringing in the plant into Turkey as there may be a decision made against the company if ever in a legal battle as the judges may not have an unbiased view of the case but in fact have a biased view according to the political situation at the time.

Environmental

One of the environmental strength's in Turkeys is the prosperous biodiversity they have. Turkey has a very affluent natural resource base and has ranked ninth on biodiversity in the European countries. Examples of the type of biodiversity they have are not only a range of wild species but important domestic species such as wheat, lentils, chickpeas, pears, apple, chestnut and pistachios. The biodiversity has a very great potential for the development for Turkey and this is an advantage for the plant being brought into Turkey as this will materials such as cotton to be grown in Turkey and used in the plant so the material will be home grown and will have a cheaper price and there will be more jobs created for the company involved in cotton picking.

One of the current environmental challenges in Turkey is the high pollution levels and the global warming being caused from the pollution levels. The water treatment facilities, wastewater treatment equipment and solid waste management in Turkey needs urgent attention as there is high level of environmental pollution as the is an increase in chemical and detergent overflow and this rises in the air and can cause severe illness to people who inhale especially in urban areas. The air pollution has increased over the past since 1990s and is the air pollution is quite severe in the capital of Turkey, Ankara and other city such as Istanbul. Smog in these cities is due to the increasing number use of cars. Also there is a lot of industrial air pollution from power plants and facilities used by the fertilizer, cement and sugar industries which don't have the flirtation equipment needed to filter out the pollution. Turkey loses out on approximately one billion tons of topsoil annually and this has an increasingly level of environmental pollution and that could harm the people and economy of Turkey.

The air pollution is a disadvantage for bringing in the plant into Turkey as there many form of pollution in Turkey which are harmful and could affect the environmental value our company holds and the &lsquo;green' credential which many of our customers may consider before doing business with our company. Also the disadvantage is that the contribution to global warming where there are so many efforts to reduce the green house gas but Turkish government should invest into becoming green so that it could become a cleaner environment also it may need to cut down on the pollution level as they are in the EU and will have to meet the pollution level they have planned to cut to.

PESTLE linked to Porter's Diamond

Turkey's political strength that links to the Porter's diamond would be how the Turkish government are creating new legislation to help the industry and different companies to grow and foreign investment to improve and make it better for Turkey as a national advantage.

Turkey's economical strength that links to the Porter's diamond would be how they are making the market more demanding by stimulating foreign investment to make them more competitive for different industries and companies so it will benefit Turkey as a national advantage.

Turkey's social strength that links to the Porter's diamond would be how the Turkish have a growing proportion of young population which the Turkish government can use to create new job by encouraging and training them up to have new skills and qualified to work in different sectors and this will be a national advantage for having a very skilful workforce.

Turkey's technological strength that links to the Porter's diamond would be how the Turkish government are improving the ICT sector so not only is it modern but its structure would benefit Turkey and support different industries to enable them to achieve their optimum so that will be a national advantage that benefit Turkey.

Turkey's legal strength that links to the Porter's diamond would be how they have created a strict system for the courts which is there to keep companies and people within the law that Turkey have set out to help them grow so that would be a national advantage.

Turkey's environmental strength that links to the Porter's diamond would be how they have a good biodiversity and have a rich resource to different material used for various industries and the Turkish government are trying to maintain this biodiversity and creating job in the process so that it can supply to different countries and for Turkey this will be a national advantage.

Cultural issues to be considered

There are cultural issues that need to be considered before bringing the plant over to Turkey. There three main issues in Turkey would be religion, location and gender equality.

Turkey's main religion is Islam and it is heavily influenced in the many aspect of Turkish life and it plays a major part of the Turkish people lives. The faith has many restriction and many special occasions where to celebrate the faith. Where the company will need to consider if they clothing being manufactured will be able to look good for most of the Turkish population taste and the dress sense as the faith has many restriction on the type of clothing worn and will not support inappropriate clothing for the people Turkey. Especially in the female section there are many restrictions what to cover up and where, but in recent year the restriction have been very flexible as the country is becoming more modern and more western.

The location where the plant will be positioned will need to be thought over as there may have repercussion as there may be houses, schools and mosque nearby so this will create a bad environment because if the plant was to be made near houses then the community may be very unhappy with the disruption of they everyday live with a plant being made near them. Also the location will need to be considered in terms of pollution so if there was any pollution then it needs to be well away from people.

Gender equality will need to be considered as the males tend to get paid more than the female as they feel that they do more. It is serious issue within the Turkish government but it relate to the Turkish culture on how the males are the dominate species so the company may need to consider this could be a chance to break the gender barrier and provide same wages for the female as the males.

Conclusion

In conclusion, the company should seriously consider moving the plant into Turkey as it is still an emerging country that has flaws but has many advantages and over time the flaws will be sorted out and benefit the company in the long run.

References

Books

International Business, Environments and Operations, Pearson International Edition, Daniels, Radebaugh, Sullivan

Online PDF

Datamonitor Turkey PESTLE Analysis

Websites

https://www.cia.gov/library/publications/the-world-factbook/geos/tu.html

http://www.datamonitor.com/store/Product/turkey?productid=074DD3A8-BC2C-40A9-9672-3793A75DEBA0

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The Benefits and Challenges of Manufacturing in India

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As India aims to become a top manufacturing hub, India is on the threshold of major reform. India is poised to rank among the top three manufacturing locations by 2020. If you are considering locating or moving your manufacturing operations to India, there are many good reasons to do so.

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If we talk about textile and apparel industry in India, it needs to be mentioned here that this sector alone is the second highest employment generator for the country, employing 51 million people directly and 68 million indirectly, in 2015-16. Textile and apparel industry is a major contributor to India's GDP and a key investment destination under India's "Make in India" program.

(Image Source: www.ibef.org)

This sector accounts for 10% of the country's manufacturing production, 5% of GDP, and 13% of its export earnings. No wonder the current government's strong focus on pushing this sector to further growth through their policy initiatives can be evidently seen. Policies like minimum support price to the cotton farmers, technology up gradation efforts in the handloom sector, Merchandise Exports from India Scheme (MEIS), centers of trade facilitation, Interest Equalization Scheme, financial assistance (up to 50%) for technology up gradation, 100% FDI under the automatic route, etc. are some of the steps government has taken to make India's apparel sector more dominant globally.

The apparel and textile sector of India has attracted an FDI inflow of USD 428 million in 2104-16, with a 41% growth from 2012-14.

(Image Source: www.ibef.org)

Apparel alone has contributed the highest, i.e. 48% to the textile and apparel export basket of the country during 2016-17.

(Image Source: www.ibef.org)

But, are these figures enough to summarize the current scenario of the sector? There is a second face to the coin.

Now, let's take a look at some of the issues that are holding the Indian apparel industry back:
1. Export Growth Performance
The nature of the global production system shapes the participation of the third world countries like India into the international economy. Textile and apparel sector has a declining status in developed economies. This poses a huge opportunity for India's apparel industry to grow, but the slowdown in the import growth of the country's major apparel markets like the US and the EU is slowing down India's export growth.

The picture above shows India's declining apparel export from the year 2015 to 2017.
Image Source: UN Comtrade 2. The Multi-Fibre Arrangement (MFA)
The MFA has long governed the global textile and apparel industry from 1974 to 2004. Under MFA, quotas were imposed on the developing countries, to limit their exports to developed countries, to protect the local farmers and suppliers of the developed countries from market shifts. To prevent this agreement from negatively affecting developing countries, some players got undue advantage. For instance, the EU imposed no restrictions on emerging economies like Bangladesh, which not only led to massive expansion of apparel industry in these countries but also made them much stronger competitors for Indian apparel industry. Elimination of quotas also posed the risk of protectionist measures by industrialized countries, like antidumping laws, countervailing duties, environmental and labor issues, etc. for the protection of the domestic industry.
3. Buyer-Driven Commodity Chains
Industries with large retailers, big brand marketers, and trading companies develop decentralized production networks, mostly located in third world countries like India. So the main leverage here lies with the retailers and brand merchandisers at the marketing or retail end of the supply chain. Indian apparel industry is dominated by manufacturers who act as package suppliers for the foreign buyers. This lowers the bargaining power that Indian apparel sector has on global cues in the industry, thus preventing its unrestricted growth.
4. Infrastructure
Apparel Industry has been hugely affected by both industrialization (economic activity beyond borders) and globalization (integration of supply chain activities). This calls for an urgent need for investments in infrastructure development and process standardization. An OECD study has actually concluded that a 10% growth in logistics performance, results in 70% increase in bilateral imports. With globalization at play, logistical performance and the simplification and standardization of processes like customs is required to further strengthen India on the global apparel trade map.
5. High Costs of Capital
Compared to its competitors, India has one of the highest costs of capital, which directly affects India's cost of production, and hence the country's competitiveness in the global market. The current lending rate in India is between 11 to 12.5%, while China, Vietnam, and Turkey, offer capital at a rate of 5 to 7% only. To add to this equation, the high-power costs in the country further push India back.
6. Lack of Fiber neutrality
Manmade textiles in apparel industry have a substantially big demand, worldwide. Despite being the second largest textile exporter in the world, India lags far behind in this category, due to limited availability of manmade fibers at competitive prices. The textile value chain in the country also bears a differential tax treatment. Hence, India's competitors like Pakistan, Sri Lanka, China, Thailand and Indonesia who follow fiber neutral policy are much more aligned to the global apparel consumption patterns.
7. Limited FTAs
Bangladesh, Cambodia, Pakistan, Turkey, etc. enjoy duty-free access to all the major textile markets of the US and the EU. India still lacks FTA advantages to major markets making Indian produce much more expensive compared to that of its competitors. Indian government's current foreign policy is expected to bring in more trade agreements and trading partners for the country, but its direct impact on apparel trade will be seen only after the test of time.
8. Factor Costs
the labor cost in India is higher than that of Bangladesh and marginally lower that China and Vietnam. China however compensated for this disadvantage through its training infrastructure. Although the Integrated Skill Development Scheme (ISDS) of the government is focused on growing the pool of skilled labor in the country, the growing labor costs are stealing away India's competitive advantage in the apparel industry.

9. Goods & Services Tax (GST)

GST is a multi-stage tax levied on every value addition. By design, it was meant to transform the previous indirect tax system of the country from the origin-based model to a consumption-based model. But, GST has created distortions in the Textile and Apparel sector in India, impeding its competitiveness. The man-made fiber yarn is now taxed at 18%, while the fabric is taxed at 5%. The small businesses which buy yarn and produce fabric are directly impacted by this imbalance, affecting their sustainability. Apart from the policy limitations, system errors, delay in reimbursement of input credit, untimely implementation (while the industry was still feeling demonetization blues) and limited knowledge of GST has hugely impacted the sector in the country. Although in the long-term GST is set to affect the apparel and textile sector of India positively, the short-term impact has brought many small-scale businesses to a complete halt.
10. Duty Drawback Rates
The Govt. reduced the duty drawback rates on garment exports, effective from October 1, 2017. Duty drawback is the duty refund that a business gets against what it paid for importing the raw material. The sudden fall in the duty drawback rates impacted the Indian textile and apparel exports' price competitiveness. It caused a setback to garment exports as the exporters factor-in the drawback in their pricing. The biggest challenge that the sector faced was the lack of transition period, leading to cost elevation of Indian products, job losses, working capital crunch, and uncertainty to deal with standing commitments, followed by the GSTuncertainties.
11. Lower Efficiency
With the increasing global competition, one of the main factors affecting the growth of garment industry in India is the lower productivity level. India's apparel factory productivity levels are relatively low compared to countries like Turkey, China and Bangladesh. The picture below shows the comparison of the above-mentioned countries in terms of efficiency.

Source: Confederation of Indian Industry

To improve this condition, the garment sector needs to be supported with latest technologies and processes that are more efficient as compared to the traditional ones.

As we saw, there are evidently many policy initiatives that the government of India is taking along with its foreign policy and focus on "Make in India" campaign that is going to boost the Indian apparel industry's competitiveness in the global apparel market. But we are still faced with a multitude of factors that not only hinder the sector's growth but also affect the strategic sustainability of small players in the apparel business in the country. The need of the hour to take one challenge at a time, and work towards minimizing it to bring the glory Indian apparel sector deserves.

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11 Key Issues That Are Holding Back Apparel Manufacturing In India

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If we talk about textile and apparel industry in India, it needs to be mentioned here that this sector alone is the second highest employment generator for the country, employing 51 million people directly and 68 million indirectly, in 2015-16.