In today's market place, it has become the norm to source clothing from countries with low costs. Furthermore, buyers are being forced to look for ever cheaper sources in order to satisfy consumers who are increasingly demanding while competition at the retail level continues to get tougher. However, there is still a gap in the market for manufacturers based in Western Europe and the USA who produce goods in their own countries for sale in their domestic markets and for export.

Of course, production costs are usually much higher in developed countries. Indeed, labour costs alone in Western Europe can be over 100 times as high as those in certain Asian countries. Nonetheless, manufacturing in developed countries brings with it a number of benefits. One benefit is flexibility in being able to offer smaller production runs and short delivery times. While distant suppliers may be cheaper, they often demand minimum quantities which can be too high for smaller companies.

Furthermore, buyers are looking increasingly to source from factories which adhere to corporate social responsibility (CSR) programmes in general—and fair labour practices in particular. Factories based in Western Europe and the USA are usually easier to audit, and tend to be audited regularly—which provides them with a significant competitive edge. Also, it is generally easier for a buyer to verify the accuracy of claims by suppliers that their factories are in compliance when the factories are located in Western Europe and the USA. Importantly, sourcing closer to home enables a company to cut down on the distance which a product has to travel in order to reach the customer and therefore provides scope for the company to reduce its carbon footprint. Some German companies are capitalising on the fact that they are sourcing from domestic factories by publicising these benefits in their marketing and promotion, and adding "Made in Germany" labels to their products.

In "Talking strategy" this quarter, Christian Schwab, the chief executive officer (CEO) of Nautilus skin touch, provides insight into the strengths and weaknesses of clothing production in Germany. In doing so, he explains that the key to success is to stay close to your customers and to tell a story.

Table of Contents

Talking strategy: clothing production in high cost countries -- marketing the benefits

• Talking strategy: clothing production in high cost countries—marketing the benefits
• Setting the scene
• Christian Schwab's view
• Appendix: company background