• M74 Editorial Team

The Globalization of Style: How Fashion Became an International Industry

By Linda Lawson

080 Barcelona Fashion Week
080 Barcelona's Fashion Week. Image by Linda Lawson.

The fashion industry is constantly changing, and has a presence all over the world. There are fashion weeks everywhere, from Milan to New York. Fabrics produced in one country are transformed into garments in another. What holds the entire industry together is globalization. This whole process includes extensive planning, strategizing, sourcing, and shipping—all of which occur against a backdrop of differing policies, currencies, infrastructures, and cultures.

When it comes to the international trade of textiles and clothing, the European Union (EU) is a leader. As stated by the European Commission, its exports represent more than 30% of the world fashion market. Another country with an important role in the fashion trade is the United States (US). For the US, this industry accounts for 6% of its imports. McKinsey notes that, lately, US fashion companies have been challenged by federal tariffs, whereby they are forced to pay duties of up to 51%, especially on goods manufactured in China. Consequently, US brands, like the GAP, which base their production in China, have communicated to its customers that these tariffs might affect their final retail prices.

Within the EU, all trade is regulated by the European Commission, which facilitates dialogues and agreements to ensure a level playing field for its member states. This body follows the standards already set by the World Trade Organization (WTO). The Commission also removes unnecessary technical barriers to trade with non-EU countries, in order to enhance commercial relations. Such actions, taken via a horizontal framework, open the EU’s door to new markets (such as Colombia, or other countries in Latin America), which represent big steps forward for all parties involved.

According to the Business of Fashion, Latin America possesses serious purchasing power. This is demonstrated by the many fashion shows that take place across the region (such as Colombiamoda in Medellin, or Intermoda in Guadalajara, Mexico) that consistently attract top brands and grow every year. During these events, one will find not only commonly-known labels, but also new designers that have been carefully curated and who are changing the way the system works.

Due to the expansion of online shopping throughout Latin America, delivery logistics have had to improve to satisfy new demands. Now, brands that are being manufactured in Asia, sold in Europe, and exported to the US, end up being delivered to many cities in Latin America, thanks to companies like Net-A-Porter and Farfetch. While fast fashion brands continue to expand to Latin America, multinational luxury labels are the ones really changing the game there with their increased physical and online presence. Accordingly, upgrades to the region’s trading rules and infrastructure are needed. The World Economic Forum found that, although Latin America remains the most unequal region in the world, its middle class accounts for nearly one-third of its population. This, combined with Latin America's increasingly visible affluent class, has caught the global fashion industry’s attention.

Textiles and clothing are the world’s second-most traded goods (after oil and gas). This sector has become a priority for the EU, as it has emerged as a key factor in the economic recoveries of its Mediterranean member states (such as Spain and Portugal). According to the European Commission, the value of the textile and clothing trade in the Euro-Mediterranean area reaches €35 billion per year. Of the fabrics produced in this area, around 35% gets distributed within the EU. Despite this, the fashion industry in Europe remains highly competitive. There is a need to develop the sector further by focusing on innovative and creative aspects in order to deliver meaningful results, such as deeper partnerships and better transatlantic trade deals.

Something that will affect the whole international trading system, especially fashion, will be Brexit. As McKinsey notes, due to the United Kingdom’s (UK) high level of exports, reliance on international talent, and dependence on raw materials from abroad, its fabric, apparel, and footwear markets will be among the hardest hit by its decision to leave the EU. Around 63% of UK clothing or textile makers are involved in exports. Also, numerous EU citizens are employed by the fashion industry in the UK.

To that end, McKinsey found that some fashion companies are reconsidering their presence in, and exposure to, countries where tariff barriers could unduly increase their costs of doing business. The UK may become one of those countries if it is unable to reach new free trade deals with the EU, US, and other major markets. Meanwhile, in China, Puma and Steve Madden are among the brands weighing whether to move their production elsewhere, not only due to China’s trade war with the US, but also given COVID-19 and the Hong Kong protests.

One can conclude that the fashion industry is highly dependent on international trade. Accordingly, the industry must think globally if it wants to reach every type of shopper, as we are living in an era where it is no longer necessary to travel abroad to find specific high-end items. In terms of fast fashion, where everything depends on short lead times, companies will need to find new strategies that guarantee both delivery speed and production quality: for example, through nearshoring. Thanks to advances in technology and multinational agreements, we are now seeing more fashion-related trade between the countries of the Global South, which will have significant impacts on their economies and societies.

Linda Lawson is an intern at M74 from Panama. She is based in Barcelona, Spain, where she studies Fashion Marketing and Communication at the Istituto Europeo di Design. Her plans for the future include working in public relations and consulting.

The views expressed above are those of the author and do not reflect the official position of the M74 Group, which remains neutral on all matters. Publishers assume no liability for content.