Fashion factory: Mango brings production closer to home in rethinking China

In 1970, a young Turkish immigrant named Isak Andic started importing blouses from his country of birth to Spain, bringing something different to people living under the dictatorship. Aged 17, he first traded them as a wholesaler in Barcelona, ​​​then opened a shop and also sold them from the back of the car he drove around the country. It was the start of a fashion business which 14 years later he named Mango.

Today, Andics’ status as Mango’s sole shareholder has made him one of the richest people in Spain and his empire has grown to around 2,600 stores worldwide. It continues to buy clothes from Turkey as well as 18 other countries. But the pandemic and war in Europe, along with friction between Beijing and the West, forced a rethinking its supply chain and China’s central role in its operations.

Toni Ruiz, who was appointed chief executive by Andic in 2020, said globalization had allowed companies to be very efficient at limiting production costs in quiet times. But in the end, what we realize is that things can change from one moment to the next.

He recalled Taiwan’s recent microchip shortage and European car factories stalling due to a shortage of Ukrainian-made wire harnesses. Whole [supply] a chain is only as strong as its weakest link, he says.

In the case of Mangos, the chain is very complicated. The retailer sourced 40 glitter ball gowns, 15 T-shirts and 100 winter coats from 408 suppliers who have about 1,000 factories, three-fifths of which are in Asia. Apple, which recently warned of disrupted supply due to a lockdown revolt at a Chinese factoryhas 180 direct suppliers.

What we’re seeing is the extent to which all these global sources, developed over years, can become more localized, said Ruiz. We are constantly thinking about alternatives.

Mango has done a lot of central control. No product reaches a buyer without first passing through its distribution center north of Barcelona, ​​where 75,000 items per hour pass through an overhead rail circuit to be sorted into a giant 170m long wardrobe.

But during the pandemic, the company has struggled steadily, increasing and decreasing production across Asia as the Covid-19 outbreak flared and subsided in China, Vietnam, Bangladesh and India. Last year, the shortage of container ships made its products stranded far from Europe. In September, October, November, we all pray that the weather won’t be bad because we don’t have warm clothes, said Ruiz.

There is a particular problem in China, where Mango is sourced from 262 factories, starting with the zero-Covid policy Beijing has this week. start to relax and strict visa and quarantine rules that deter business travellers. Then there’s Beijing’s fraught relationship with Washington and European powers, which Ruiz highlighted, and concerns about potential conflict between China and Taiwan, which he describes as part of it all.

In the debate about whether 30 years of globalization will continue or reverse, the most important thing for us to follow in detail is the China issue, he said. Asked whether Mango would reduce the proportion it buys from the country, Ruiz replied: I would say yes, but we will be very vigilant as things develop.

Mango gets some freedom from the fact that it only has six stores in mainland China and consumers there contribute little to total sales, which it predicts this year will surpass the 2019 record of 2.4 billion.

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Other brands have moved more decisively. US jeans maker Levis and British shoemaker Dr Martens have been reducing their sourcing from China since before the pandemic.

Another factor forcing companies to reassess their exposure is Xinjiang, says Brian Ehrig, a supply chain expert at Kearney, a consultancy. Alleged use of forced labor in factories in the region has led to laws in the US, UK, Germany and elsewhere pressuring companies to remove potential links to the abuse. What appears to be more is that the path of least resistance is moving production out of China as quickly as possible, Ehrig said. Mango said it has no suppliers in Xinjiang and does not work directly with other companies in the region.

Retailers have alternatives to China through a dual-channel supply chain. Asia is the long-distance track, producing basic goods like T-shirts that usually take six to eight weeks by ship to reach Spain. The affinity line mainly consists of Turkey and Morocco, where it manufactures the most fashionable clothes, all designed at its headquarters in Palau-solit i Plegamans in the Catalan countryside. The products reach their distribution centers within four to six days, giving Mango the ability to ramp up production quickly to replenish stocks when an item is popular.

Turkey and Morocco play a similar role for Zara owner Inditex and are the obvious places for Mango to expand production closer to home. It also shows the potential of Romania, which uses three factories. Ruiz said Mexico was an option in Central America as it plans to double the number of stores in the US to 40 by 2024.

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Luis Casacuberta, director of women’s, children’s and home business for Mangos, said the company was looking not only for flexibility but also robustness. Unlike automakers, he said, that doesn’t just mean having more suppliers. We already have a reasonable degree of diversification. What we are aiming for is just the opposite. How do we build a much sturdier base?

The key, he says, is finding suppliers who are already doing a good job making mango products and are willing to open factories in more than one country. So the flow of ships from Bangladesh ports is disrupted? Or is there a flood? That allows us to rotate with the same supplier.

Ruiz has been grappling with unwanted surprises from day one. He replaced Andiz, who is now chairman of Mangos, when the pandemic hit. The first document he signed put several thousand employees on leave. But if Mango gets too obsessed with what’s wrong, he says, we won’t do anything about it.

The things that are outside of our sphere of influence are huge, but it is about managing the things that are within our sphere of influence. So let’s attack, let’s conquer the market, then let’s have an alternative plan in case something happens.