Fashion globalizes relentlessly

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For some time now, we have been observing an increasingly nationalist dialectic in public opinion. This leads irremediably to a protectionist position that has been adopted by several countries with projects such as “Made in China 2025” and “Made in America”. The practical result of this new situation is a profound change in world trade strategies and collaborations, which alter the dynamics of global trade.

But if we look in detail and go through the numbers, even despite the reemergence of isolationist trends, the return to nationalism and the supposed return of fashion production to traditional origins in the USA and the EC, fashion continues to globalize relentlessly. In the face of exponential growth in connectivity, cross-border bandwidth and the flow of digital data, we are witnessing a new expansive phase of globalization. This new process alters the global situation, changes certain rules of the game and generates new competitive advantages for certain actors in the fashion sector.

Continuing with the report The State Of Fashion 2018 | BOF & McKinsey (before analyzing it further, I recommend that you read this previous article: Resilient Fashion) in this new “world order”, the word globalization has taken on a clear negative connotation.

Relocation vs. OffshoringLa moda globaliza sin pausa-gabrielfariasiribarren.com

The result of these nationalist and protectionist measures, combined with the higher labor costs faced by Asian manufacturing countries and disruptive technologies – more specifically robotization and automation – could make relocation more commercially viable for retail and fashion brands in the US and in the EC.

According to McKinsey’s Apparel CPO Survey, more than 33% of purchasing managers surveyed responded that they expect their organizations to relocate their productions. At the same time, consumption has shifted to the Asian origins of production. Local brands and retailers in India and China are growing and so local production has shifted to the domestic market and regional trade.

Globalization, yes or no?

The report by the international consulting firm clearly states that most of the reports on the reduction of globalization, even those that mention its stop, are exaggerated. Even with the seeming rise of protectionism in several countries, globalization has not stagnated. On the contrary, we are immersed in a new phase of the globalization process, driven by data flow and digital connectivity. This will lead to much greater global connectivity.

Since 2005, cross-border bandwidth has increased approximately 80 times and forecasts indicate a growth of another five times over the next four years. And we must bear in mind that new forms of connectivity will emerge. For example, 40% of global devic

Big Data AnalysisLa moda globaliza sin pausa-gabrielfariasiribarren.com

A very important part of this global data flow is the one generated by each of the fashion brands with its internal traffic of business transactions, internal information, with its suppliers and with other service providers. For a long time, large established companies achieved considerable cost savings by building their own systems to manage cross-border interactions. For small businesses, however, this was very costly. Now, with the incredible and exponential increase in connectivity, a number of new ways of interacting across borders can be created that are affordable and open to all types of organizations, from operating platforms, to markets, to social networks.

Individuals also play a leading role in this new digital globalization. More than 900 million people have international connections on social networks and it is estimated that consumers will spend $1 billion on cross-border e-commerce by 2020. Major online ecosystems, such as YouTube, WeChat, Facebook, and WhatsApp, have formed user bases the size of large populations. Between 2013 and 2015, the number of SMEs on Facebook reached approximately 60 million.

The emergence of these ecosystems has not only improved the efficiency, transparency, and traceability of global markets, but has also democratized global connectivity by reducing the costs of international communication and transactions.

Fashion industry further globalized.

This greater global connection across the world is driving greater competitiveness in the textile and fashion industry.

We believe it is likely that the advantage that established firms enjoyed as a result of their assets, from physical distribution infrastructure to patented systems for cross-border communication, will dwindle. During 2018, more fashion companies will take advantage of the possibilities to enter new markets, as connectivity allows consumers access around the world through their own or third party platforms. Fashion companies enter new markets without establishing a significant physical presence. The ramifications of global connectivity are essential for new fashion players, who now have the potential to reach global scale and become “micromultinationals”.

Fashion brands created by Asian manufactures.La moda globaliza sin pausa-gabrielfariasiribarren.com

Asian manufacturing companies have been creating, developing brands and directly contacting global consumers. Originally established fashion brands are no longer protected by traditional advantages. Now, on the contrary, they feel somewhat more vulnerable and expect more and more voracious competition from all corners of the globe and from a very wide range of companies.

However, long-established brands will benefit from increased connectivity. They work by simplifying their global operations and internal communications through virtual connectivity and enhanced systems to access information in real time. New businesses can leverage digital ecosystems in the same way as smaller organizations; they gain access to customers around the world, especially those in new segments or ultra-fast growth markets.

Digital collaboration and blockchain.

New strategies and models of digital collaboration between fashion brands, their suppliers and service providers abroad can improve traceability, transparency and efficiency. Blockchain technology will generate more confidence across the entire value chain based on the three qualities mentioned above. Companies will be able to leverage global ideas, trends and talent pools faster and more efficiently, from collective online innovation ideas to virtual connections with creative or other talent on the other side of the world.

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