The country’s dominance owes much to a centralized system of state capitalism. Beijing has ramped up production in the arid west of the country to feed the hungry garment factories on the east coast and, increasingly, Chinese-owned factories elsewhere.
It was the guiding hand of the state that sent Shi Yanli’s family to the cotton fields here.
Her family’s roots are in Henan province, 3,000 kilometres east. But like many others in this town of 300,000, founded in 1953 by a unit of the People’s Liberation Army, her parents came here for the opportunity to live in subsidized housing and rent farm land from the local bingtuan, or “army unit.”
Workers even have the right to sell some of the cotton they produce – once they meet quotas for fixed, below-market-rate hauls.
So on a hot June day, Ms. Shi painstakingly plucks weeds with 12 others in the blazing sun, her eyes barely visible between a protective pink scarf covering her head and a purple one over her mouth.
“It’s good in Shihezi,” she says. “We have plenty of karaoke places and 3-D movie theatres.”
The economic opening in China that has allowed for mega-movie houses in small towns in the Gobi Desert is also what sparked the revolution in fast fashion.
In the early 1990s, a pool of millions of workers was suddenly available to companies around the world, willing to put in long hours for a fraction of North American wages. Even with shipping and import costs factored in, clothes could suddenly be produced drastically more cheaply than in the West.
And if the quality wasn’t quite as good, that was part of the magic of fast fashion: It didn’t have to be durable. Soon enough, something else would be the “in” design or colour.
But the explosion of factory work also gave employees more leverage than ever before. Strikes became increasingly common and the Communist government – ever conscious of the need to ensure social stability in a country of 1.3 billion – obliged workers with across-the-board minimum wage increases.
China’s industrial belt also began to move up the global value chain. Even where wages were equal, young workers preferred assembling computer parts to toiling amid the heat and chemicals of garment factories.
In recent years, the garment industry has started moving on from China, to even cheaper countries such as Vietnam, Cambodia and Sri Lanka. Cheapest of all is Bangladesh, where a garment worker is guaranteed just $38 a month. And the cost of doing business there is further reduced by lax enforcement of safety standards.
That doesn’t mean China still doesn’t play a key role. That role has just expanded from straight manufacturing to matchmaking as well – connecting retailers in the West with factories all over Asia that can deliver clothes cheaply and on time. Indeed, as the fast fashion becomes increasingly complex, those at the centre of the industry’s web of supply and demand – the middle men – have taken on oversight of everything from negotiating with factories on price, setting the conditions under which work is done and even conducting building checks where necessary.
No one personifies the middle man more than Bruce Rockowitz.
The 53-year-old – originally from Vancouver – is the chief executive officer of Li & Fung, the industry’s largest middleman.
After moving to Hong Kong from Canada in 1979, Mr. Rockowitz co-founded his own trading house – and outbid established players to land major American clients. Soon, one of those established players, Li & Fung, founded in 1906, bought up his company and asked him to head up the firm. (The first non-Fung to do so.) Since then he’s expanded the company’s network to 15,000 factories across Asia.
Along the way, the gregarious Mr. Rockowitz has also become a billionaire, married a local pop star and, when he’s not working at the glass-clad LiFung Tower, is seen driving a blue Bentley with a “Rock 8” licence plate around the city.
But that flash shouldn’t deflect attention to his real power over the supply chain. He works with such industry giants as Wal-Mart and Tommy Hilfiger. Hudson’s Bay Co. has Li & Fung manage much of its apparel outsourcing. And Loblaw and Joe Fresh are another client.
Twice a year, designers from Joseph Mimran & Associates, the creators of the Joe Fresh line for Loblaw Cos. Ltd. (Mr. Mimran is the “Joe” in Joe Fresh”), travel to Asia clutching precious cargo – the next season’s designs – which are then passed on to factory bosses.
Those bosses say that when deals are consummated, middlemen generally take about 5 per cent of the contract’s value from each side.
To Mr. Rockowitz, the logic of outsourcing the outsourcing is inescapable.
“Retailers are very focused on opening stores, marketing, designing product,” he says. “We focus on the supply-chain aspect, the sourcing side, the logistics side, and then creating brands they don’t want to do in-house … basically, doing what our customers don’t want to do, so that they can focus on growing their business.”
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