Why manufacture garments overseas?
Garment manufacturing generally takes hold in areas where labor is cheap. Garments are a common item so the price is sensitive. Back in the old days, most people had just a few articles of clothing: a few shirts, a couple pairs of pants, 1 or 2 pairs of shoes. Not enough to fill a closet, that’s for sure! In the west, as industrial textile production became available, the price of the fabric dropped dramatically, but the price of labor continued to rise. Right now, the price of fabric is lower than ever, but the price of labor is high. A single shirt might cost $30+ just to produce in the U.S. nowadays, while the same shirt might be $3 in China. Most western companies manufacture in Indonesia, China, India, Bangladesh, Vietnam, Cambodia simply because it’s cheaper.
Why NOT manufacture overseas?
Manufacturing overseas is attractive from a price standpoint, but low prices sometimes come at a high cost. Many of these countries where labor is dirt-cheap, also experience rampant human rights abuses, corruption and poor conditions for workers. It’s easy to say that companies shouldn’t manufacture in these countries, but unfortunately the economics simply don’t it. Western consumers, drunk on low prices for so many years, simply will not pay the prices required to produce in their home countries. So, what’s the solution?
Manufacture in Indonesia
There are cases where outsourcing your manufacturing overseas actually HELPS and contributes to the health and vitality of a developing economy. Manufacturing contracts can bring jobs, better working conditions and prosperity. I present to you the case of Indonesia:
The Case for Indonesia
Betcha didn’t know that Indonesia is the 4th most populous nation on earth! And yet, most people I know can’t even locate it quickly on a map. Have you ever tried Indonesian food? Probably not. Can you name even one famous Indonesian? No? Do you know ANYTHING at all about Indonesia? Again no? Well, you’re not alone. Indonesia is arguably the most poorly understood country in the world, relative to its size and importance. If you’re American, one reason for this may be partly because it’s also the most populous Islamic majority population in the world. This fact makes many Americans nervous, but they shouldn’t be! Indonesia is a beautiful, peaceful country with some of the most warm & friendly people on earth.
Indonesia is a lot different than you might think. It’s a young democracy and it still has its struggles, but it IS a functioning democracy. It’s growing and learning and things are getting better every day for average Indonesians. The government supplies good services for its people and people of every class and income are able to take advantage of the many public services. The optimism is infectious, you can feel it everywhere you go. Indonesians are proud, they’re excited about the direction their country is going and they know that direction is upwards. That’s how it FEELS to live in Indonesia, but I understand that might not be enough to convince a company to manufacture in Indonesia. Fortunately, we have data that helps explain why the “vibe” in Indonesia is a lot different than in China, for example.
Indonesia is a Free Country
According to the Freedom House 2018 survey, Indonesia is by far the most free country in Southeast Asia with a score of 64%. Vietnam comes in at 20%, Thailand at 31%, Cambodia at 30%. Among other manufacturing powers in Asia, Bangladesh comes in at 45%, Pakistan at 43% and China brings us the rear at a staggeringly low 14%! Only India tops Indonesia with a score of 77%.
Why does this matter? Because when you’re exporting your hard earned cash to an overseas clothing manufacturer, you’ll want to know that your money is going toward improving the lives of real people and providing them with healthy economic opportunities, rather than having your money fall into the wrong hands. Manufacturing in Indonesia ensures that you’re spending your money wisely and that you’re part of the solution, rather than the problem.
Manufacturing in Indonesia is a Smart Choice
Choosing to manufacture in Indonesia is a choice you won’t regret. Not least of all because your factory visits will be amazing work trips into the heart of some of the most interesting culture on the planet. The people are warm and welcoming. When you visit the factories the people will be happy to see you. From their broad smiles you’ll know that you’re not looking a “sweatshop”, these are proud workers who take their jobs seriously. Their working conditions are generally good, the hours are reasonable and they go home to their families at night. If you choose to manufacture in Indonesia you can be proud of the fact that you are contributing to the development of job opportunities in a free market economy.