H&M is looking to “expand its sourcing footprint” by turning to Ethiopia as a new, low-cost country to produce its clothing. The Swedish retailer, which has relied heavily on its Bangladesh for its garments in the past, isn’t pulling out of Asia, however. To keep pace with its growing number of stores worldwide, H&M has had to increase sourcing across all its active markets, according to a spokeswoman. “As a growing global company we have to look at how we guarantee that we have the capacity to deliver products to all our stores where we have a rapid pace of expansion,” Camilla Emilsson-Falk, H&M’s head of media relations, told the Wall Street Journal on Thursday. “We are doing that by increasing production in our existing production areas and also by looking at new ones.”
H&M joins fellow apparel firms, including Tesco and Chinese shoemaker Huajian, which supplies footwear to Guess and Tommy Hilfiger, in taking advantage of the East African country’s competitive wages, productivity, and natural resources.
Ethiopia has a rich history of textile, leather, and shoe production, but local manufacturers have struggled against cheap imports from China.
Ethiopia has a rich history of textile, leather, and shoe production—the first garment factories were built during Italy’s brief occupation between 1936 and 1941—but local manufacturers have struggled against a wave of cheap imports from China. The Ethiopian government has said it wants to revive its flagging industries, setting a target of $1 billion in textile exports by 2016.
Meanwhile, H&M, which established an office in the country’s capital of Addis Ababa in 2012, has been placing test orders with Ethiopian suppliers. New factories for large-scale production could begin building as early as this fall. One supplier says H&M is planning to source one million garments a month from the sub-Saharan nation, which despite consistent economic growth remains among the world’s poorest.