August Political Intelligence
Fashion in Parliament: The Latest News
Parliament was in recess over August, and so whilst we would usually use this space in the despatch to discuss key talking points from this month in Parliament, we are instead highlighting 3 key debates we would like to see take place in the coming month once Parliament returns.
1) Protecting the UK High Street Supply Chain – we at Fashion Roundtable believe that the political debate about the high street needs to evolve from simply a question of protecting the stores and their consumers, to protecting the supply chain network that stocks them. Zara is a company that has made the decision to eradicate the risk of a complex supply chain and they are clearly benefitting. Because this is not a step all brands can take, we think the Government has a responsibility to provide supportive policies and to keep costs competitive.
2) Creative Industry Visas – we believe that it would be an important show of internationalism for the UK Government to look to create a Visa category that enables short term freedom of movement for all creative workers, into Britain. Giving Britain the opportunity to benefit from this labour would enrich our already strong domestic events and promotion market.
3) Sustainable Imports – Britain's departure from the EU could enable a dangerous dependency on cheap and unsustainable material imports in the fashion and textiles market. We think that there needs to be an effective rewards and regulatory environment protecting those producers making more expensive but sustainable production decisions, as is currently in place for organic goods.
China’s Belt and Road – Squeezing the Waist of UK Fashion?
Expansionary foreign policy has become the new normal for China, under their President, Xi Jinping. China’s Belt and Road policy is all about international access and dominance and with it, China hope to dominate the new world trade in cultural goods. Taking its model from the original silk road across Eurasia, should this vision be fully realised, it could present serious implications for UK and European fashion’s international dominance.
West Berlin and East Berlin could be differentiated by the colour, diversity and freedom of the clothes worn on either side of the wall. The US and Britain made the case for their side of the argument through the freedom of culture and voice and democracy as the natural bed-fellow of these things. Identity can prove challenging for autocracies, as leaders are recognised for the way they look and the trends they set, rather than because of any overt military of political authority. This new playing field is dangerous and is why culture is nearly always the first component of a controlled society.
The normalisation of international trade allowed China to begin to dominate manufacturing. Huge population plus loose workers’ rights equal mass production at the kinds of low costs Europe had not seen since slavery. Apple was able to produce its products for less than a third of the price they retailed at, a margin fashion designers could only have dreamed of.
However, whilst price is a powerful consumer driver, it is not the only driver and this is particularly true in fashion. Consumers buy brands and the most popular brands are nearly all European. China’s ability to drive domestic success in tech markets will be difficult to replicate because of these market forces. This year, Kering saw their operating income rise 50%, linked to the sales explosion of Gucci in China. There is a similarly success story for Louis Vitton and Chanel in the Asian superpower. Although the volume of cash is quite different, this level of proportional success is not enjoyed by the likes of Apple or Samsung.
For China, the Belt and Road policy offers the chance to change the brand demands of consumers, as they move their profile as an exporter. An unrivalled access to developing markets from Uzbekistan to Turkey will give China the chance to export its culture, as Britain and Europe did 200 years ago. As you build the value of this difference into market preferences, you can begin to undermine brand loyalty. People will also follow investment and the Chinese population is likely to disseminate across most of the landscape directly benefitting from the nearly $1 trillion investment Xi Jinping’s Government is pumping into the policy.
This change won’t be overnight, the strength of these brands should not be underestimated. However, China’s legacy of intertwining its foreign policy with its economic growth tells us that complacency could be fatal in an industry that does not enjoy strong cash reserves. Belt and Road will change the preferences and buying power of most of the developed world and British and European brands will need to look to diversification and improved marketing in these areas if they are to continue to thrive.