MILAN — Italian innerwear manufacturers and designers are banking that quality will win out over cost when global textile and apparel quotas are phased out for the 147 members of the World Trade Organization come Jan. 1.
Relying on a tradition of luxury and creativity — as well as a defense of the exclusivity of the Made in Italy label — the industry is looking at expanding its exports to China, while not rushing in to take advantage of the country’s low-cost production.
While aware that low-cost competition from China will become more intense, the Italians are confident their customer won’t trade for a more mass-oriented product.
“For a high-end product, the quality is not comparable,” said Alberto Masotti, owner of Bologna-based Gruppo La Perla. “Our customer wants creativity, uniqueness and new proposals.”
Stefania Saviolo, co-director of an MBA fashion management program at Bocconi University in Milan, said in the high-end market, the construction of innerwear pieces and the special finishings are pivotal and part of Italy’s tradition.
“It’s fundamentally all about innovation and specialization,” said Saviolo. “This is a business that is typically under license, as its know-how is extremely specific and technologically advanced. It is capital intensive rather than labor intensive, and in this sense, China does not have more of an advantage.”
Saviolo listed seamless technology and bras made with materials that release beneficial elements, such as moisture management, as recent successful improvements in the sector.
“The know-how is in Italy,” said Cristiana Cavalli, brand manager in charge of licenses at Roberto Cavalli. “Just as with our apparel line, our innerwear collections heavily depend on the exclusive patterns and prints developed at our companies in Tuscany, in Florence and Prato. These cannot be reproduced outside [Italy] with the same quality.”
Gianni Busanna, sales manager at Le Bonitas, based in Prato, which produces and distributes innerwear and beachwear lines for Blumarine, Versace and Ungaro, said, “The complexity of the construction and fit, and the image of a Made in Italy product, necessarily limit the manufacturing of innerwear collections to this country.”
The Italian industry will mainly have to compete with China’s principal asset: its low-cost manufacturing power. An Italian worker costs a company an average of $15.80 an hour, while China’s average wage costs range from 40 cents for mainland labor to 70 cents on the coast. The salary scales are according to statistics supplied by Italy’s consortium of apparel and textile firms, Sistema Moda Italia, based on data from Werner International, a Virginia-based management consulting firm specializing in the fiber, clothing and textile industries.For this reason, “production in China is destined to increase and Western brands will rely more on the handicraft and the lower cost of labor there,” said Armando Branchini, vice president of InterCorporate, a luxury goods analyst based in Milan.
Masotti does not underestimate the threat China poses as far as production, but he is in a wait-and-see mode.
“China is definitely a big competitor, but the future depends on how businesses will be managed and on the agreements stipulated by the international community, the rebalancing of the cost of labor and so on,” he said.
Federico Dinelli, licensing manager at Versace for the designer’s innerwear and beachwear lines, said a fashion house requires constant meetings to develop a product, and a geographically distant licensee would hinder production.
“Yes, there are faxes and e-mails, but you can’t beat sitting at a table with your producers to discuss whether a pleat should go here or there,” said Dinelli. “Our licensee, Le Bonitas, has a tradition of working with designers, so it’s used to paying attention to their schedules and needs. An innerwear line is a satellite for a designer, but it is nevertheless important.”
Meantime, La Perla’s Masotti is banking on increasing retail revenues in China. Supported by the success of the brand’s Hong Kong store, which Masotti described as doing “amazingly well,” La Perla will open a store in Shanghai by the end of the year, followed by one in Beijing, probably next year. Production in China, on the other hand, is not an option for La Perla at the moment.
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