H&M to start production in Ethiopia

Test orders
placed

“We are an
expansive company and are constantly looking at new potential purchasing
markets to guarantee that we have capacity to deliver products to all stores in
our expansive markets”, Camilla Emilsson-Falk said to The Wall Street
Journal. “We do that by increasing the productivity on the existing
production markets as well as looking at new markets.”

That is why
the Swedish chain has started placing test orders at Ethiopian suppliers.
According to a supplier H&M is planning on having one million pieces of
clothing made in Ethiopia each month.

Half the
cost of China

The move to
Ethiopia obviously is for financial reasons: the cost per unit would be half as
high as in China, according to the latest available numbers of Sanford C.
Bernstein from 2011. The difference is shrinking fast though: in China prices are
going up by 7.7 % each year, while in Ethiopia this is 18%. – at this rate
Ethiopia will be more expensive than China by 2019 already.

The
Ethiopian government has said that the textile industry has to become one of
the growth pillars for the economy of the country. Ethiopia wants to export one billion
dollar in textile by 2016. Between July 2011 and June 2012 that number was as low as 84.6 million dollar, still 26% more than in the previous year.

British
chains Tesco, George and Irish Primark had already decided on moving a part of their
production to Ethiopia.