Why your clothes about to get a whole lot more expensive

Clothing has been made in china since the late 70's or so. However, until 10 years ago there was quota on all clothing being made and shipped to any country that was part of the WTO. Quota was set by each country that imported clothing from china. Each factory wanting to produce clothing for the 1st world would request quota and quota became a commodity. Manufacturers would sell their extra quota or buy leftover quota from their competitors. As a result quota was operated on the basic supply and demand system of economics. When I started in the garment business back in 1999, us quota for cotton woven pants (the most valued commodity) was priced in the neighborhood of us $3.00 per pant. If you consider that the total wholesale cost of an "average" pair of pants leaving the factory was in the $10 range, quota played a big part of the total garment cost.

Then, in 2001, the WTO deemed quota unfair and the floodgates opened. Clothing manufacturing in china took off. Like a bullet train. People couldn't build factories fast enough and retailers couldn't place orders fast enough. In the past 10 years china has become the world's closet.

But in the past 10 years, a funny thing happened. Factory owners were getting rich, workers, though paid little, were able to send money home to their families and give their children an education. In that time, workers started realizing that they could walk across the street and make iPods for more money. So to entice new workers, factories had to keep increasing wages. Then the cost of every day goods like food started to get more expensive and workers started striking to make more money and factories had to give in or lose their workforce and now after ten years of this and the cost of labour is going up. And up. In the past year alone, wages for the average Chinese clothing worker have gone up about 30%.

And now that we have all become reliant on cheap disposable clothing, these increases have become hard to swallow. They have been great for China and arguably for the Chinese worker (though they make what we consider a pittance, workers are still able to send home a third of their wages home to their family in often rural areas)

As the labour costs of China have gone up, retailers have begun looking elsewhere: Thailand, Indonesia and Vietnam. So in the past 5 years clothing manufacturing in these countries has also taken off. The wages in these countries are still lower than china's, but because growth has been faster in these countries, wages have had to rise faster. From Vietnam (where I'm travelling for work right now) they're experiencing double digit inflation and the government has had to raise the unemployment rate 3 months ahead of schedule.

Clothing, unlike most other things for the past 15 years has been coming down in price because of cheap labour, but now that the clothing industry is slowly running out of "cheap" labour our days of disposable clothing may not be far behind.

Some in the industry think that with all these price increases, it just may come full circle. Now that the manufacturing countries are gaining a middle class, they'll change into consumers and the consumer countries will turn back into the manufacturing companies. That may be a bit drastic (for now) considering the average textile worker in china makes just over $100 us/month, but food for thought....