Timing is Everything for Designers Looking to Produce Offshore
Desa Fasiska would produce her 3-year-old designer label Desanka in China—if she could.
“I see some beautiful handwork and I say, ’I want that!’ but I just can’t afford it,” said the Los Angeles–based designer. Fasiska’s line sells her flirty, flowing dresses and slouchy knits in upscale boutiques alongside more established designer lines such as Twelfth Street by Cynthia Vincent and Development. The young designer is feeling the pressure to look for new ways to compete.
“I’m pitting myself against more established lines that have more resources,” she said.
It seems like a Catch-22. Smaller lines that aim for a high-end customer by focusing on upscale treatments are feeling stifled by the high prices of producing such garments domestically. Traditionally, such smaller manufacturers would opt to produce locally in order to monitor production— and to take advantage of lower minimum order requirements.
“It’s hard for me to compete with [moreestablished designers] as a smaller, newer designer because they can have work done overseas,” she said. “I would love to do the same, but I don’t need a large quantity of pieces—so manufacturers won’t work with me.”
Being unable to lower her costs through manufacturing, she has had to look for other means of leveling the playing field but so far has had little success. “For Spring I raised my prices to try to make a bit more money,” Fasiska said. “But it affected my sales, and now I’m working to narrow my margins even further.”
As companies grow, some begin to look for new sourcing opportunities. Often, that means looking to produce at least part of the collection offshore. For many companies, the challenge is to know when to look offshore.
Frankie B., a Los Angeles–based contemporary line known for its daringly low low-rider jeans, is contemplating manufacturing some of its fashion pieces overseas. “All of our denim is manufactured in L.A., and that’s how it will stay, but we’re getting close to doing a test run on a blouse in China,” said Richard Freund, the company’s general manager. Other items that are in consideration for overseas manufacturing are jackets and shirts. But Freund cautions that a company has to reach a certain volume level before it can see a cost benefit to offshore production.
“Going to China for 300 pieces is not worth it—the difference can be insignificant,” he said.
But when the numbers add up, he said, overseas manufacturing can be hard to beat.
“Once you get past the initial process of finding an agent and negotiating pricing and closing the deal, it’s like working domestically,” he said.
Frankie B. does all of its pre-production work in Los Angeles, opting to send a finished pattern to overseas factories. Freund emphasizes that the key to successful overseas manufacturing is developing tight relationships with the factories and agents.
“We look for someone who’ll follow through, but we’ll visit as well and monitor the product closely,” he said. “You want them to respect you, and in some cases it can be a case of the squeaky wheel getting the grease. You want to be the one who gets your goods on time if the manufacturer is running behind.”
Keeping design local
Sue Wong took a different approach when she started her eveningwear collection.
The Los Angeles–based designer took her production overseas in 2000, just one year after launching her eponymous eveningwear line.
Wong previously produced a collection of contemporary apparel. These days, she is known for her intricately beaded and heavily embellished gowns. Josh Homann, her son and the company’s chief operating officer, credits the overseas move with helping the company to grow.
“Manufacturing overseas allows us to focus on the design and fit work, which we do here in L.A.,” he said. “It cuts out a lot of time and effort that come with manufacturing domestically.
We don’t worry about production details so we can focus entirely on design— and it allowed us to increase the number of styles we create.”
Since moving production overseas, Sue Wong has increased its number of styles from about 25 to 150 per season. In the beginning, Homann said, their production runs were smaller—about 100 pieces per style—but still well within the range required by manufacturers.
Now, he said, Sue Wong works with 12 overseas factories, mostly concentrated in China, with a sprinkling in India. “They all have a specialty: Some do beading, others do appliqueacute;s, hand painting, printing, hand crochet or embroidery.” This system is working well for the company, Homann said, but he noted that he’s always monitoring sourcing opportunities in other countries and keeping an eye on the increasing labor prices in China.
Bruce Berton, director of international business consulting with Stonefield Josephson, said manufacturers who take work overseas can expect to see a savings of 70 to 80 percent in labor costs compared to producing the same pieces domestically. This includes the type of work that young designers like Fasiska covet: hand-beading and intricate handwork. But although the labor savings may seem huge, Berton said the overall savings are curbed by the cost of freight, brokerage fees and materials: “Including [those costs], the overall savings is brought down to about 50 percent.”
The key to producing overseas is volume. “The volume is usually a minimum of 250 dozen pieces of a style,” Berton said, which puts the overseas option out of reach of many young lines.
“If a company is not doing $2 [million] to $3 million in wholesale volume,” Berton said, “they aren’t big enough to go overseas.”
Still, producing locally has its advantages for new and established companies alike.
“Producing locally provides the quickest turnaround possible,” said Joe Rodriguez, executive director of the Garment Contractors Association of Southern California. For that reason, “startups are much better off producing here,” he said.
Domestic production also benefits the local economy, Rodriguez said. “It keeps the manufacturers alive, factories working and garment workers employed. That benefits everyone.”