When it comes to the global fashion supply chain, there’s no longer a status quo to buck.
Geopolitics, tariffs and environmental policy shifts have all played a part in pushing the industry’s accelerated metamorphosis.
That’s evidenced in recently released supplier data from international fast fashion behemoth H&M. Many similarly positioned brands have stepped back from public-facing annual reports in recent years, but according to Dr. Sheng Lu, professor of apparel and fashion studies at the University of Delaware, assessing sourcing patterns on a brand level can yield invaluable insights into the fashion supply chain as a whole.
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“I think the fast fashion business model itself has had a lot of changes. This is not a static business model. And I think with the emergence of AI, with the emergence of the new the tariff regime, and also the consumer’s growing interest in consuming sustainable products, this model will continue to evolve,” he told Sourcing Journal.
Brands and retailers across the globe are facing similar challenges.
“I encourage brands retailers to release more such data with the public. Because the more they can release it, the more insights we can gain about how they design their supply chain,” he added. “We can also match their data with the macro level trade data, which can give a more complete picture about the changing nature of sourcing, supply chain and trade patterns.”
That’s exactly what Lu did with his analysis of the data released this week. Like many leading labels, H&M utilizes a geographically diverse sourcing base, and it continues to grow its global footprint. As of February, when the data was made public, the company sourced apparel from nearly 800 factories spanning 23 countries, and about 550 factories across 15 countries for textile raw materials.
Despite its expansive sourcing reach, China remains at the top of the heap for H&M as far as suppliers go. The brand sources from more than 230 factories there, making up 29.5 percent of its overall sourcing base. It also sources the widest range of product categories from China-based factories, including woven apparel (85 factories), jersey (56 factories), knitwear (32 factories), and denim (11 factories).
“My interpretation of China‘s advantage in this H&M analysis is that they offer the most wide range of products no one else can really match,” Lu said. “China is the only country you literally can source any products from.”
By comparison, Lu found that H&M sourced more narrowly from its other top-supplying destinations, relying heavily on Turkey (115 factories) for jersey, denim and knitwear, for example. India (92 factories) represents an important denim supplier for the brand, while Indonesia (26 factories) crafts a portion of its underwear and swimwear, and Pakistan (18 factories) supplies denim and socks.
Something else Lu noted: most of the Chinese factories H&M sourced from were smaller than those found in other countries; 76 percent have fewer than 500 workers. On the other end of the spectrum, 40 percent of the 127 factories contracted in Bangladesh have more than 4,000 workers, and a little under 60 percent have between 1,000 and 4,000.
This point of difference shows that “companies use China versus the rest of Asia in a different way,” Lu believes. Specifically, “China can fulfill orders that really require flexibility; relatively small orders with greater variety,” for example. Low or no minimum order quantities and speedy fulfillment are the icing on the cake—and those are qualities found in small suppliers, not massive producers.
This is valuable to a company like H&M because, “in the current business environment, you have so much uncertainty and you don’t know when the supply chain could be disrupted,” he added. “And I think this is one very important reason that China still makes sense as a sourcing base for fashion brands of retailers.”
H&M’s supplier base data also provides a point of contrast to prevailing depictions of China’s shifting role in the global supply chain.
“If you’re looking at the latest U.S. import data, China’s market share fell significantly again so far this year, so the narrative is that brands and retailers continue to reduce their China exposure,” Lu said. “But maybe market share is no longer that meaningful of a measurement of China’s relevance.”
China’s manufacturing influence extends well beyond its borders. “When they lose market share in the U.S., they simply move their factories from China to nearby Asian countries,” he said. Chinese firms are opening factories everywhere, from the Middle East to Africa and the Americas, so, in Lu’s view, packing up and moving out of China as a sourcing destination isn’t a true decoupling.
That doesn’t mean that H&M isn’t diversifying in earnest, though. While Asian countries are the brand’s biggest suppliers, other countries in Europe and Africa are now playing a critical role in its supply chain. Turkey, Portugal and Morocco are among the Stockholm-based company’s top 10 sourcing destinations. That speaks to H&M’s globalism; by contrast, U.S. companies tend to rely more heavily on Asian sourcing.
According to Lu, sourcing from these areas can provide greater speed to the European market, aligning well with its fast fashion business model.
Another trend that Lu pinpointed was that the brand appears to maintain long-term relationships with suppliers; of the 800 apparel factories its uses, 314 (almost 40 percent) have worked with the company for over a decade, and 126 have produced garments for H&M for 6-10 yerars. Just 261 factories—about one-third of those assessed—have a relationship that goes back less than three years. The brand has said that it “onboard[s] new suppliers or factories and, occasionally, phase[s] them out according to our business needs.”
Lu said the longevity of H&M’s relationships suggests that it views suppliers as “strategic resources” worthy of investment. With the strengthening of environmental regulations and laws surrounding transparency, as well as extended producer responsibility legislation taking shape globally, “their expectation for the supplier is also shifting,” he believes.
As of February, nearly half of H&M’s suppliers were certified by the Recycled Claim Standard, followed by Global Recycled Standard (39 percent) and Organic Content Standard (38.5 percent). Those standards align with the brand’s stated goals of upping the usage of recycled or sustainably sourced materials in commercial products to 100 percent by 2030. Between 50 percent and 70 percent of factories in H&M’s top apparel sourcing countries have at least one material-related certification.
Suppliers are also increasingly investing—both due to brand appetite and government regulations—in better data collection and traceability. But according to Lu, “The most challenging part of complying with legislation is not simply the technology aspect; it’s trust,” he said. A supplier has to trust a brand as a steward of the data it provides, and a brand has to trust a supplier to comply with the laws and continue to invest in advancement.
Lu said he believes the industry as a whole would do well to look to the scions of fast fashion and the ways they’re evolving, because their business models now go far beyond “offering the market popular products at a low price.”
“Behind that,” he said, is a knowledge of “how to make it happen, especially when the business environment is fundamentally changing.”
“I see a lot of changes behind the scenes,” he added.
