A wave of fashion startups are looking to Chinese factories that treat workers well and churn out top-notch products.
Les Lunes, a fashion label headquartered in Paris and San Francisco, makes its clothes in a factory in the Qingpu district, on the outskirts of Shanghai. If you happen to drop in on any given weekday, you might find the seamstresses’ children playing in a little nursery set up for them. At lunchtime, workers gather in a sunlit room to eat and chat. Many are close friends, having worked in this factory together for decades. They visit each others’ families during Chinese New Year. When someone is out sick, coworkers stop by that person’s home with hot food. It’s a world away from the typical image–and reality–of factory life in China.
“Unlike other parts in China, where workers migrate from other cities to work in factories, all 50 of our employees come from the village where our factory is located,” says Anna Lecat, Les Lunes’s founder and CEO. Lecat says she checked retention rates and spoke with employees before working with this particular facility. “I know the workers’ spouses and children. This is a community where people are looking out for one another,” she says.
Every few months, a new scandal about the bleak working conditions in the Chinese manufacturing industry makes headlines. Foxconn, the Taiwanese company with industrial parks across China, Asia, and Europe that manufactures products for companies like Apple, Hewlett-Packard, and Dell, has become shorthand for the long and grueling hours of modern Chinese factory work, in part because of a spate of suicides at its Shenzhen factories. Just last month, the Washington Post revealed that the factory making Ivanka Trump’s clothing line compels employees to work 57 hours weekly, for just $62 a week, near or below China’s minimum wage.
But Lecat is adamant about showing that this isn’t the only reality inside Chinese factories. After more than two decades inside manufacturing facilities all over the country, Lecat is keen to change the perception that “Made in China” inevitably translates to poorly treated workers and poor-quality products. And she’s not alone. A spate of Western fashion startups that focus on ethical manufacturing–including Grana, Ellie Kai, Everlane, and Caraa–are now shedding light on a new generation of Chinese factories that pay workers fairly, offer pleasant working conditions and reasonable hours, and produce beautifully crafted clothes, shoes, and accessories.
American consumers are increasingly conscious about where their clothing is made and how workers were treated in the process. According to Marshal Cohen, a retail analyst at the NPD Group, shoppers will pay a 10 to 15 percent premium for clothes that were made ethically. Over the last few years, a number of fashion startups have chosen to make their products in the U.S. to offer customers more transparency. It’s a move that dovetails with a larger effort to keep manufacturing back home, amid populist sentiment–exemplified in Brexit and the U.S. election–driven in part by a growing frustration over the loss of manufacturing jobs to overseas workers. Still, as market economics (think of the prices that consumers are willing to pay for their clothes) keep most manufacturing overseas, some companies are making the case that Chinese factories aren’t so bad, and that “made in China” shouldn’t imply “low-quality” or “sweatshop.”
It was also her ticket into the growing world of China’s smaller, more expert factories. In 2000, Lecat founded a company called Streamline Alliance that connects U.S. brands with artisanal factories in China. Five years ago, she launched a new venture: Les Lunes, a fashion brand that creates elegant outfits out of bamboo fabric, often embellished with lace. “Bamboo comes from China, so I didn’t see the point of moving production somewhere else if we have highly trained seamstresses making product there,” Lecat says.
Over the years, Lecat has always found it easy to locate factories that match her values in Shanghai. She explains that higher-quality manufacturing is sometimes–though not always–tied to better working conditions. In Shanghai, a thriving city, it is harder to find factory workers, so employers must compete for talent: this means offering better salaries and benefits. This leads to lower turnover and, by extension, workers tend to be more experienced at their task. In the case of Les Lunes, this means that the seamstresses are skilled at sewing delicate fabrics and handling complex lacework. “There is a stigma that Chinese manufacturing will inevitably lead to poor quality,” she says. “We battle stigma with beauty.”
Working conditions in Chinese factories have been on an upward trajectory, according to Keegan Elmer, a labor researcher at the Hong Kong-based China Labor Bulletin, an organization that supports workers’ movements in China. But that’s not to say they are universally ethical. “One of the problems with assessing the state of the Chinese factory is that things are very uneven,” Elmer says. “China has some of the biggest high-tech factories in the world that are the opposite of a sweatshop, but might be right next to factories that pay very low wages and give workers very poor food in the canteen.”
Workplace standards can vary by province and region, for instance. Take the Pearl River Delta–home to Shenzhen and Guangzhou, as well as Hong Kong and Macau–which is perhaps the country’s best known manufacturing hub. Back in 1980, Beijing designated the region a special economic zone, providing Chinese entrepreneurs tax incentives to set up factories and inviting foreign investment. Companies from around the world saw an opportunity to take advantage of an inexpensive labor force, and many American and European brands began outsourcing their manufacturing to China. These days, the area accounts for only 5% of the country’s population, but it produces a quarter of its exports and has attracted more than one trillion dollars in foreign investment over the last four decades.
To keep up with this volume of production, Shenzhen’s factory owners depend on the constant flow of workers from nearby regions who leave family farms in search of better opportunities. Most of them work for a short while, then move into the cities in search of higher-paying, less-menial jobs–or else they return to their families with slightly more money in the bank. This culture of short-term migrant workers means that factory owners tend to treat employees as replaceable, so they don’t bother investing in good salaries or pleasant workplaces. And without much training or experience, it’s no surprise that the products that they make tend to be of poor quality.
Lecat also makes the case that shoddy manufacturing is what some brands are looking for. “That’s what demanded by their buyers,” Lecat says. “Some companies demand planned obsolesce from a factory. They say, ‘Sell me something for one dollar that will break in one year, so my customers come back to replace that product.'” Fast-fashion conglomerates and large discount stores, which have strong buying power, are particularly guilty of this approach, and are able to dictate low prices for these low-quality goods.
But even in Shenzhen, the culture in apparel factories is beginning to change. Many workplaces have become cleaner, safer, and more professional. The work itself tends to be less strenuous and workers tend to work fewer hours. After years of strikes–and after three decades of the one-child policy have limited the size of the working-age population–migrant workers have seen their bargaining power grow slightly, as a better educated and more assertive generation has entered the labor force.
According to Benjamin Cavender, a principal at the China Market Research Group, which advises brands doing business in China, factories are also increasingly automating their production lines, which means fewer labor-intensive tasks for workers. “The market was fairly low-tech, run by small operators,” he explains. “There’s been a hell of a lot of consolidation over the last couple of years. Since most of the smaller factories did not have the margins or the cash to be able to update their operations, they’ve closed down.”
Big international brands are also increasingly applying pressure to factories they partner with to make their buildings more environmentally sound and to ensure workers are treated fairly. “There’s been a push by a lot of the international brands to force the Chinese [manufacturing] companies to clean up their act,” Cavender says. “If you’re Nike, for example, you don’t want to get attacked in the U.S. because consumers are unhappy that you’re being unethical about how you source product.”
The Chinese government has also taken pains to create stronger protections for workers, including written contracts and compensation upon firing. However, according to Elmer, many factories don’t pay workers all the benefits they are legally owed. “There are universal problems even in some of the best factories we see,” he says. “In reality, in many cases, these social insurance is underpaid or unpaid. This regularly leads to worker strikes and protests.”
Of course, fighting for benefits packages is, in some ways, a sign that things are improving. These days, most workers are fighting for a better quality of life and the right to move up the socio-economic ladder, rather than basic workplace safety. Elmer points out that Chinese workers still can’t use working at a factory as a stepping-stone into the middle class. “Wages have been on an upward climb but the cost of living has eaten up all those gains,” he says. “After 20 years of industrialization, the average factory worker can’t hope to buy their own house and settle down in the city.”
When it comes to actual workplace conditions, however, Aaron Luo, the founder of luxury bag brand Caraa, says he’s seen drastic improvement over the course of his own lifetime. Luo’s family has owned factories to the northeast of Shenzhen since the ’80s; 20 years ago, the factory dorms were packed to the gills with workers, but these days, factories generally abide by the rule of having four or fewer workers in each room–generally. “Is China ever going to get to Western standards?” Luo says. “I’ve already seen factories that are up to par with [U.S.] OSHA standards. Who knows how long it will take for all the other factories to get there, but it’s important to note that the government is trying to do something about it.”
This kind of progress is one reason why Liz Hostetter was able to find a charming sewing factory in Shenzhen when she launched her women’s clothing brand, Ellie Kai, five years ago. Hostetter had been living in Hong Kong since 2008–she’d relocated to accommodate her husband’s job–and noticed the thriving tailoring industry in the city. “I’m 5’11” and I couldn’t find anything that fit me,” she says. “I would actually walk into stores and I’m pretty sure [the salespeople] were giggling at the idea that this Amazon would find anything to wear. But then I discovered the city’s tailors.”
Hostetter would regularly take a dress silhouette that was in fashion, then ask her favorite tailor to make tweaks to it: add two inches to the hem, make it sleeveless, add a pink trim, and so on. Hostetter wanted to make a similar service available to American consumers. So she founded Ellie Kai, which allows women to pick from a selection of outfits and fabrics, then customize it to suit their tastes. Products arrive at the customer’s home three weeks after placing the order.
Since Hong Kong is right next to Shenzhen, Hostetter spent months driving across the border in search of the perfect factory partner. She located a workshop in Shenzhen that ordinarily helps brands create sample garments that will eventually be sent to other factories to be made in bulk. Hostetter carefully explained her business plan to the factory owner, enlisting her to create customized clothes for the American market.
She spent day after day at the factory, working closely with the manager and seamstresses, helping to make the production line as efficient as possible. For instance, if several orders come in for a dress in the same size, workers cut those dresses at the same time and fabric is purchased based on real-time demand to avoid waste. In the process, Hostetter got to see the inside of many local factories, and saw the conditions she wanted to avoid. At the facility she’s working with, seamstresses make 50 custom garments a day in a brightly lit, clean, and air-conditioned room and earn a good wage. They work from 9 a.m. to 5 p.m., with a two-hour lunch break in the middle.
A year after the business had launched, she and her husband packed up and moved back to their home in Cape Cod. “I would have never thought that one of the more emotional parts about leaving life as an expat was leaving my China team, because I realized we had worked together so closely every day,” she says.
BUCKING A GLOBAL TREND
Unfortunately, the movement toward more ethical factories in China does not signal a global trend. Increasingly, Chinese companies are themselves seeking out cheap labor in other parts of Asia and the rest of the world, perpetuating the standards that once ruled in Shenzhen. The collapse of the Rana factory in Bangladesh in 2013, which killed 1,129 people, was a brutal reminder of how low those standards can be.
“The major factory owners in China that have scale–the big guns–have moved all the low-value manufacturing offshore,” Cavender says. “They’ve started buying factories in Vietnam, India, Malaysia, or Sri Lanka. They’re having the cheaper production done there, then reimporting the product back to China to do the high-tech finishing.”
In 2010, China was making 42% of apparel exports and 51% of footwear exports around the world, but those figures have been steadily declining. Meanwhile, developing countries in Southeast Asia have seen an uptick in clothing and shoe manufacturing in that same time frame. While China doesn’t release data about factory relocations, one study showed that then number of factories owned by Hong Kong companies in the wider Shenzhen region fell by a third to 32,000 in 2013, from a 2006 peak. Many of those moved to lower-wage countries.
Hoping to stem the tide of factory relocations to other parts of Asia, the Chinese government has also started to offer subsidies for companies to move to other regions in China, where wages can be up to 30% cheaper. “Factories use the threat of brands moving overseas to do their manufacturing as a way to wave a flag in front of policy-makers to get more tax cuts or subsidies, or to keep workers’ wages lower,” says Elmer, the labor researcher. “This has been happening for a long time.”
Still, amid the offshoring, a subsection of Chinese factories are steadily establishing a culture of premium workmanship, says Luke Grana, the founder of Grana, a clothing company based in Hong Kong. As he set up his brand–basics made from premium fabrics, shipped around the world within two days–he sent samples off to be made in different factories around Asia. Chinese factories did the finest work. “The manufacturers are very skilled and they’ve been doing it for a long time,” he says.
This is important for Grana, because its entire business is based on offering consumers very high-quality clothing at reasonable prices, much like Everlane. (A silk shirt goes for $49, a cashmere sweater for $99.) Grana purchases linen from the century-old Baird McNutt mill in Ireland, merino wool from the Albini group in Biella, in the Piedmont region of Italy, and poplin from a family-run mill in Avignon, France. He ships these to a pair of factories in Huzhou and Guangdong, not far from Hong Kong, where garment makers know how to cut and sew these expensive materials properly. “They’re really experts and skilled technicians,” Grana says.
China’s expertise comes, of course, at a higher cost. “Our experience is the prices the China factories charge us are creeping up” in comparison to other Asian manufacturing zones, says Grana. “They’re getting quite high, especially compared to other nations like Vietnam, Bangladesh, or Cambodia.” But for him, the rising costs of manufacturing aren’t a deterrent at the moment because the only other places where the quality of garment-making is comparable–Europe and the United States–have significantly higher labor costs. Grana may be well positioned to afford the higher price in China: It just picked up $10 million in Series A funding, on top of a $6 seed round, and is growing at a rate of 15% every month.
Of course, for fast-growing brands like Grana–and its U.S. counterpart Everlane, which also manufactures in China–its calculus of ethics versus cost might change as it scales.
In some ways, the shift in Chinese textile manufacturing reflects a broader change in the market away from low-quality fast fashion. Brands like Zara and H&M, which churn out up-to-the-minute styles at rock-bottom prices, are now in decline. Meanwhile, entrepreneurs like Lecat and Hostetter are garnering attention for opting to create classic garments that are meant to be sustainable–to be both long-lasting and made under quality conditions–and customers are willing to pay a small premium for them. In the process, they’re riding a broader trend in Chinese manufacturing, and nudging it along too–one that will change the notion of “made in China.”
“I look at this as a global issue rather than one country versus another,” says Hostetter, about making clothing in China. “To me, a great job in a safe environment that pays well is just as important in Shenzhen as it is in Western Massachusetts.”