dialogues: RONNA CHAO.
group CEO at Novel Investment Partners. creator of The Billie Upcycling. chairperson at Novetex Textiles Limited. CEO at Bai Xian Asia Institute. HONG KONG.
you come from a family who have been running a textile business for generations. has the industry changed in that time? if so, how?
The industry has certainly changed in the last six to seven decades since my grandfather started his first spinning business. Major changes over the years have included moving factories offshore in order to meet quotas, gain better access to labor, reduce distance to markets, reduce taxation, and lower costs. In this period, demand grew consistently, so we continued to expand.
Fast forward to today and fast fashion is so prevalent. The appreciation of high quality and natural fibers has gone down, and many high-performance synthetic materials are available at lower costs.
This makes for a challenging situation. Our orders are in smaller quantities and multiple colors, the order placement lead time is shortened, delivery lead time is also shortened, production efficiency is often adversely affected because of small lots, and margins are squeezed. Added to this are external factors that make business even more challenging, such as the changing geopolitical situation, world events like COVID 19, and demand for compliance (which is sometimes not so reasonable).
Players who can invest in automation, can modernize, and steer away from difficult markets have a better chance of survival.
requirements have been changing as well. in a world that seems to have embraced the search for sustainability, fashion is a huge business that needs to change and become more sustainable.
what do people want from fashion? are they really looking for sustainable products? is the generation of your daughters sensitive to the issue?
in addition, data from McKinsey seems to suggest a diminishing interest in sustainable products, particularly among young consumers. this could be due to price constraints or simply a desire for convenience.
does this reveal a contradiction between what people say they are willing to buy and what they actually choose? does this make difficult for sustainability to reach critical mass?
Again this is based on my limited exposure and experience to our customers. There are a lot of additional requirements and standards that we have to adhere to as a manufacturer and a supplier. For example, the traceability of raw materials, the compliance of processing standards, even where the cotton is picked, by whom, and whether or not that picker is being well treated by his employer. While I understand the overarching purpose of subjecting manufacturers to such compliance demands, I often wonder if these measures serve more of a deterrent than an incentive. Manufacturers are subjected to these additional requirements, and they cost us. But the customer does not factor in these additional costs, and still demands the lowest price, highest quality, on time delivery, excellent after sales service, etc., etc.
That leads me to ask whether people are really willing to pay a premium for sustainable options.
In our experience working with different customers, there are a small number that truly embrace circularity and sustainability. They are very proud to tell their stories and are willing to pay a higher price for production. They do charge a premium for their products, but they have a loyal following who understand and support this whole process. But they aren’t many of this type of customer.
For most of the big brands that we have worked with, the focus still seems to be on price and quality. There is a lot more talk about embracing sustainability than action on a large scale that incorporates sustainability into the design, production, and sales processes.
What do people want from the fashion industry? I think the number one thing is still newness. People look to different brands, different designers, different retail outlets to provide newness in a very convenient way. Because one can purchase clothing, nowadays, very cheaply and conveniently, this desire for something new can be realized very easily, leaving many of us with garments in our closet that we hardly ever wear. That is probably because in the moments when we are looking for newness, perhaps to make ourselves feel good, we buy something that we don’t really need.
There ARE people looking for sustainable options in fashion, but I think they’re turning to vintage clothes more than buying clothes that are made with sustainable materials. Why? Because it is the more accessible, more available, and more reasonably priced option. Also, the consumer is not participating in the additional production of new garments, sustainable or not.
My youngest daughter is the most sustainable-minded person among my three children. She buys the most vintage and the least new stuff.
I believe young people in general are more aware of, more educated, and more concerned about how we have been destroying nature, using up resources, and not seeing a real solution on the near-term horizon. And yet, the number of people who are truly changing their lifestyle, their behavior, their consumption and disposal cycles are probably relatively small. We often don’t realize how bad the problems are until we literally have to stand in the middle of it. Go visit a landfill. Look at an aerial photo of one. The image will convey the shocking reality.
shein—a global fast fashion retailer—in 2022 surpassed zara to represent a fifth of the global fast fashion market and 50% of the us market.
It’s like a drug. Retail therapy. And it’s made so much easier and so much more accessible because the prices are low and the styles are cool—often copies of the current season’s high fashion. People like to look good, they like newness. When fast fashion makes it so easy for us to feel good, we tend to think less about how our “regular and frequent but unnecessary shopping” at fast fashion outlets is contributing to the problem.
many of the native ‘sustainable brands’ have closed. why do you think this is?
Not to play with words, but it seems like sustainable fashion is not a business that is easily sustainable. It mainly comes down to cost. People often have this misconception that recycled and upcycled materials must be cheaper because the “raw materials” are free. If I can easily collect large quantities of natural fiber excess inventory or dead stock in the same material and same or similar color, then my unit cost would of course go down. But in the years that I have operated The Billie System, I have only had this kind of “ideal situation” once or twice. So, until economies of scale can be reached, the cost will remain high. And expensive clothes simply don’t sell as easily, as quickly, and as much as fast fashion.
according to the 2024 edelman trust report, consumers trust in fashion business is growing, and people trust businesses more than governments. companies and industry stakeholders seem to have embraced a narrative of compliance and esg that intercepts the requirements made by some of the public.
how are these plans working? is everybody walking the walk? is business really improving its operations?
It’s probably not the most meaningful to compare trust in anything to trust in governments! (Haha!)
There are endless stories of how manufacturers are slapped with documents and contracts thicker than phone books, all stating often impractical and unreasonable compliance requirements. However, failure to agree and sign could mean the end of orders from the customer. And yet, for many vendors, in order to hold on to whatever narrow margins are left, sometimes perhaps not every single requirement is met… it’s a game of risk.
why is the situation like this? is it a result of product price? profit vs. costs? difficulties in the business? etc.
This is a multi-level question and it’s difficult to answer. I suppose the factor that touches every point on the supply-consumption chain is price.
For suppliers, even if one had unlimited resources to keep investing, and few do, at some point you’re going to ask yourself: is this worth it? Is this endless loss-making worth it? Why should I keep putting efforts into an initiative that doesn’t move the needle? When do I accept that this doesn’t make business sense, common sense?
For consumers, it may seem easier to just buy less. But not enough people are practicing that to make an impact. Society’s message to consumers is buy, spend, use, discard, buy more! On a recent trip to the US, I was shocked to see the amount of single use plastics everywhere.