Editor's note: In what we plan to make an annual end-of-year tradition, RetailWire has compiled a list of the most significant retail industry "Turning Points" of 2008. (See our news release...) What follows is the fifth in a series of 12 discussions based on the list.
For a while it looked as if global sourcing, especially from Asia, was going to be the ultimate win-win opportunity. Products were cheap, even with shipping costs. Consumers were happy with low prices, shareholders with profits. Manufacturers were happy with reduced costs, workers in developing countries with increased job opportunities, wages and, for some, living standards. Exporters and retailers from developed countries were happy finding new markets.
But, to coin a cliché, if something looks too good to be true, it probably is. And while protectionism cannot be seen as the way forward, the urge to withdraw inward is natural in times of economic strife. Both the cost and security of products transported from some distance have caused increasing concerns. Excitement and anticipation are tempered with fear and distrust, especially when serious flaws are discovered, as with melamine in baby and pet food or toxic residues on children's toys. Other products may just be shoddy and badly made. Oversight, or the lack thereof, are problematic when dealing with globalization; in particular, monitoring living and working conditions as well as adhering to principles of social responsibility.
Outsourced customer care, as we discussed recently, has antagonized customers although RetailWire contributors have frequently highlighted the ways in which manufacturers and retailers are (and are not) addressing consumer concerns. Low prices are often seen as priority but job losses represent an increasingly unacceptable trade-off.
Mutual dependence is spreading the global downturn just as it spread global affluence. With fewer customers for their products, Asian manufacturers are disappearing. In Guangdong, China, manufacturers of toys, handbags, tee-shirts and shoes are closing down, abandoning workers whose "unscrupulous bosses take advantage of China's lax labor laws by disappearing without paying their workers," according to The Daily Telegraph.
"Sharply lower consumer spending in the United States and other high-income countries is stalling global trade, causing a surprise downturn in exports from China that is dramatically slowing its economy and rippling through other countries that rely on international commerce," according to The Washington Post.
The New York Times adds, "The economic downturn has decimated the market for recycled materials like cardboard, plastic, newspaper and metals."
As there is little likelihood of retreating from globalization, opportunities must be found to make it work for the maximum number of people - primarily by making sure people have work and can support themselves while creating profit and good quality products for sale at low prices.
Discussion Questions: What will sourcing, particularly from Asian nations, look like in the year ahead? What factors do you expect to particularly guide sourcing strategies in 2009?
- Downturn Choking Global Commerce - The Washington Post
- The Bangalore Backlash: Call Centers Return to U.S. - The Washington Post
- China's toy makers face bleak Christmas as factories shut down - The Daily Telegraph
- Asda wants ethical code for UK suppliers only - The Guardian
- Primark drops three Indian suppliers for using child workers - The Independent
- Back at Junk Value, Recyclables Are Piling Up - The New York Times