Gabriel F. Iribarren (Ripley): “Latin America needs political stability to compete in sourcing”.
Gabriel Farias Iribarren is a specialist in textile sourcing. With over twenty years’ experience in the fashion industry, he has been a Director for China and South East Asia for the Spanish company Blanco since 2006. He is currently leading the Chilean company Ripley’s provisioning in Hong Kong.
Question: Beyond costs, what are the advantages of sourcing in Asia for Latin American operators?
Answer: Production costs continue to be the biggest advantage of manufacturing in Asia, even when we add the cost of transport and logistics. These figures can’t be found in Latin America or in the Mediterranean Basin.
Q: Will Latin America be able to find an opportunity in the process of offshoring?
A: I think the aim of Latin American textile industry is to offer more value in the supply chain. We have excellent raw materials; there are brands with a lot of international potential (such as the Argentinian brand La Martina or the Brazilian footwear brands). However, the instability of Latin American governments doesn’t allow for the development the textile industry needs. Rather than trying to compete internationally with other manufacturing poles, Latin America must gain traction locally.
Q: When did the Latin American retail begin to take an interest in purchasing in Asia?
A: We cannot pin point a moment. For example, in the seventies, many Latin American retailers started to buy from China; then they moved to other Asian markets. In any case, Latin America is looking for solutions that Europe has found years ago.
Q: Which international retailers do you take as models?
A: There is trend that is followed on a global level. I think we all follow the same path because there is only one trend. What European and Latin American companies do is quite similar. It is volumes that influence the choices of sourcing destinations.
Q: What countries do you currently source from?
A: As production costs are rising in China, new markets appear that offer new services, such as India, Bangladesh or Myanmar. However, no other country can on its own match or compete with China.
Q: Are you planning to change them within the next five years?
A: The percentage of Chinese manufacturing will drop, as it has been happening in the past few years. I think –and hope—that retailers will be able to source from markets such as Peru, Colombia or the Mediterranean Basin.
Q: What do you think is the perfect balance between nearshoring and off shoring in sourcing?
A: A: After the 2008 crisis, retailers had to adjust their production chain and minimize risks. That is when nearshoring gained ground. I don’t think there is a perfect formula; it is not advisable to put all your eggs in one basket. Latin American retail is still looking at Asia, but it is necessary to have a wide sourcing portfolio so as not to depend on one or two countries. Ideally, we must replicate the model of the Mediterranean Basin in Latin America.
Q: Will Latin America be able to create local fast fashion chains? And on an international level?
A: To achieve that, we should have an industrial structure like Europe’s. Again, Latin American governments do not encourage the necessary development. In Latin America, it is unthinkable to get a garment from the design department to the stores in a matter of weeks. Europe, however, can do that. The need is there, but it is necessary to get a response from the industry, supported by governments and local policies.
Q: Are you investing in a more sustainable supply chain?
A: Investing in sustainable development is not only an obligation, it is the best business for the future. Sustainable manufacturing is a global trend; the consumer shift demands it.
Q: What steps are being taken to develop it?
A: 100 per cent product traceability; total control over the process and the production chain. Developing a sustainable supply chain no longer demands a large investment. Technology helps to have better control over the supply chain.
This interview was originally published at www.modaes.es