The World’s Largest Clothing Maker Isn’t Betting On Automation Replacing Cheap Human Labor
Hong Kong’s Crystal Group makes clothes for many of the world’s clothing giants, including H&M, Gap, Fast Retailing (owner of Uniqlo), and L Brands (owner of Victoria’s Secret). It’s the world’s largest apparel maker by production volume, according to research firm Euromonitor, and attracted attention in October for having the biggest IPO on the Hong Kong stock exchange since 2015. It’s the sort of company you might expect to be pouring R&D money into automation, as labor costs rise in China and the world prepares for a future of robots taking over more repetitive, manual tasks, such as stitching clothes. But that’s not the case, says Andrew Lo, CEO of the Crystal Group. In an interview with the Financial Times (paywall), Lo says high-tech sewing robots are “interesting” and could change how some companies make clothes, but in the near-term they still can’t beat cheap human labor on cost. Crystal Group plans to increase its human staff in Bangladesh and Vietnam—garment hubs with some of the lowest wages in Asia—by 10% annually in the years ahead. Currently about two-thirds of its sales are made from clothes produced in Bangladesh, Vietnam, Cambodia, and Sri Lanka, which have all become more attractive to garment manufacturers as producing in China, still the global leader in clothing production, gets more expensive. Read more at Quartz.