As the European Union strengthens its regulations around textile waste while doing little to address the sheer volume of clothing being produced and thrown away, the burden of handling those discarded garments is being steadily transferred to workers and communities far outside the bloc’s borders — and far outside its legal protections.

Inside the Factory: A Teenager’s Day

A sixteen-year-old girl — referred to here as Ayesha — spends her working days sorting mountains of discarded clothing inside a factory at the KEPZ. The garments she handles arrive in large bales from the port of Karachi and originate largely from Europe. Her team of thirty workers is expected to process approximately seventeen tonnes of clothing every single day. No one is permitted to leave until that daily quota is met.

Ayesha earns the equivalent of €70 to €75 per month, including overtime pay and attendance bonuses. This figure is roughly 35% below the legal minimum wage applicable in the industrial zone where she works. Payslip documentation confirms these figures.

Her working day runs from 7 am to 7 pm. Any moment spent not actively sorting is met with reprimands from supervisors. On one occasion, when Ayesha attempted to leave the factory in the evening because she was the only woman still inside — a situation that felt unsafe to her — her supervisor responded with a verbal outburst severe enough to reduce her to tears. When she reached the factory gate, the security guard demanded she return her company-issued shoes before leaving. Unwilling to go back inside, she walked home barefoot.

Her mother, also based in Karachi, explained that the family cannot afford for Ayesha to leave. Their household of twelve people depends on Ayesha’s income, alongside her younger brother’s earnings and her mother’s salary.

The Karachi Export Processing Zone: A Hub Built on Tax Breaks

The KEPZ was established in 1982 and was constructed around preferential tax conditions and limited regulatory oversight. It is notoriously difficult for journalists to access. Reporters who gained rare entry to the zone interviewed workers, factory owners, and KEPZ officials, obtained payslips, and documented conditions through on-site photography.

Once clothing arrives from the port, large bales of mixed garments are opened on the factory floor. Trained labourers sort garments by hand into large metal cages categorised by item type — T-shirts, long-sleeve shirts, trousers, jeans, and similar categories.

According to United Nations data, the EU exported 216,649 tonnes of used clothing to Pakistan in 2025 alone, making Pakistan one of the primary recipients of EU second-hand clothing. A tracking exercise, in which twenty-eight SmartTags were placed inside donated garments across seven European cities, confirmed this trade directly: four of the twelve trackers that ultimately left the EU ended up inside the KEPZ.

EU Policy Is Pushing More Clothing Outward

Since 19 July 2026, large companies across the EU have been prohibited from destroying unsold clothing, accessories, and footwear. Medium-sized companies will face the same restrictions from 2030. While the ban on destruction marks a regulatory step forward, it has not been accompanied by any meaningful restrictions on overproduction. This means an increasing volume of surplus clothing may be directed toward export markets.

This stands in tension with the EU Waste Framework Directive, which stipulates that discarded textiles should be processed within the bloc. In practice, however, those garments are flowing outward in growing quantities — and the processing is being carried out by workers like Ayesha in facilities with little to no regulatory accountability.

EU Sorting Sector Under Pressure

Why European Facilities Are Struggling

The infrastructure within the EU for handling donated and discarded clothing is under significant strain. Sorting facilities are receiving ever-larger volumes of predominantly low-quality polyester garments — a direct consequence of the rise of fast fashion — while being paid relatively small amounts per tonne of clothing processed.

Antonio Cannone, head of Cannone srl, a sorting company based in Andria in southern Italy, described the situation plainly: “We can’t handle this amount of clothes. We look for foreign solutions, because we are up against the wall.”

Philippe Doliger, a policy advisor at the think tank Recycling Europe, noted that while sorters in the EU are poorly compensated, their costs have nonetheless risen in recent years due to inflation and energy prices. Some companies have already been pushed into insolvency as a result. Doliger warned that if the sector continues to deteriorate, rebuilding it would take considerable time, and sorting would increasingly shift outside of Europe entirely.

This structural bottleneck is a key driver behind the outsourcing of textile processing to countries such as Pakistan, where labour costs are dramatically lower and regulatory oversight far weaker.

The Return Journey: Some Clothes Come Back

Not all of the clothing sorted in Karachi stays in Asia or Africa. Between 2015 and 2025, second-hand clothing imports from Pakistan to the EU increased by more than 300 per cent, reaching over 2,561 tonnes in 2025.

A factory owner in the KEPZ, who asked not to be named, explained that the highest-quality items are returned to Europe for resale or recycling. “These items are sold mainly to sustainable shops in Italy, where they are recycled, cut, and remade into new garments. This recycling process makes them among the most valuable items we handle,” he said.

Some of these returned garments are processed near Florence, where specialised machinery converts them into fine textiles used by major fashion brands. The Karachi Export Processing Zone therefore sits at both ends of a circular loop that begins and ends in Europe — with Pakistani workers absorbing the labour-intensive middle stage.

A Workforce Shaped by Climate Disaster

Climate Displacement Feeding the Textile Trade

Labour researchers based in Karachi describe it as a city of migrants, with many displaced workers arriving in the textile sector after losing their livelihoods to Pakistan’s devastating floods and droughts. Climate change, to which the EU has historically contributed at a disproportionate scale, is now a significant driver of the workforce processing EU textile exports.

Nineteen-year-old Madiha is one such worker. She and her family relocated to Karachi around four years ago from a village in Sindh after the 2022 floods destroyed their home. She now earns approximately €80 per month sorting clothes in a KEPZ factory — a figure that includes an attendance bonus subject to deduction if she misses more than two working days in a month, for any reason.

“The work is tiring. I am mostly working with my arms and neck in constant pain due to the repeated action required in sorting clothes,” Madiha said. Her income, combined with her father’s earnings as a day labourer, supports a family of seven. “I don’t have an option. I have to earn so my family can survive in this big city.”

Eighteen-year-old Zameer comes from a farming family in Sindh whose agricultural income was wiped out by recurring droughts. He now earns around €100 per month packing sorted clothing into bales for export inside a KEPZ factory, sending half of that home each month. “Life isn’t easy here as it was back in the village, but the money I earn here means survival for my family back home,” he said. He shares a single room with eight other men in the so-called labour colony — a government-designated residential area for factory workers that dates to the 1970s. Walls are thin, lanes are too narrow for two people to walk side by side, and sewage runs openly through the settlement. Frequent electricity and gas cuts mean residents often cannot cool themselves in Karachi’s intense heat or cook a proper meal. Meanwhile, the factories a short distance away are fully powered around the clock, and the roads leading to them are well maintained.

Labour Laws in Name Only

When the KEPZ was first established, it was exempted from all Pakistani labour laws. Those exemptions were partially lifted in 2021, making statutory leave, social security contributions, retirement benefits, and overtime pay legally mandatory within the zone. Yet five years later, many employers continue to operate as though those obligations do not apply.

Workers are reluctant to raise concerns. “If we make the slightest complaint about safety issues or extra hours, companies fire us and replace us with other people in a matter of hours,” Zameer said.

A representative of a national trade union federation, who requested anonymity due to safety concerns, attributed the ongoing non-compliance directly to the absence of effective worker representation. “One of the main reasons factory owners can blatantly defy the law is the absence of a labour union,” he said. Workers are too afraid of losing their income to organise or complain.

The EPR Policy Gap

Since 2025, EU member states have been rolling out Extended Producer Responsibility schemes for textiles, which require clothing brands and retailers to fund the collection, sorting, and recycling of the garments they bring to market. However, this financial obligation applies only within EU borders. Once a bale of clothing is exported, the associated responsibility disappears entirely.

Emily Macintosh, a senior policy officer for textiles at the European Environmental Bureau, identified this as a fundamental gap. “The key thing missing from the EPR schemes is a mechanism to transfer fees,” she said. “How these funds could be transferred to countries receiving large volumes of EU textile exports is not addressed. This transfer would be a way to recognise that these countries are already doing the circularity that we are trying to promote in the EU.”

Progress on EPR implementation has been slow and inconsistent across member states. Industry voices have also cautioned that even full implementation of the EPR is unlikely to eliminate large-scale textile exports to countries like Pakistan, given the persistent lack of sorting capacity within the EU.

Natàlia Yesares, from the Spanish Association of Recovery Entities for Social and Supportive Economy, described the current moment as the most severe crisis the sector has faced: “For years, the networks we belong to have warned about the sector’s lack of circularity, its dependence on exports and the lack of public funding. But the crisis we are experiencing now is more severe than anything we have seen before.”

Invisible in the Supply Chain

Some of the garments sorted by workers in the KEPZ will eventually return to Europe. They may appear on resale platforms, in vintage shops, or within collections marketed as “sustainable fashion.” The labels attached to those garments rarely disclose where the item was sorted or who handled it along the way.

A European consumer purchasing second-hand clothing under the promise of circular fashion has no means of knowing whether that garment passed through a facility where workers earn below Pakistan’s own legal minimum wage and face penalties for missing daily production targets.

For Ayesha, Madiha, and Zameer, few paths forward exist. There is no accessible union, no labour inspector with effective authority to enforce wage law inside the KEPZ, and no binding EU mechanism that reaches into the zone’s supply chains. Pakistan’s labour rights framework may have been updated on paper, but enforcement inside the zone remains largely absent.

“I am trying to find a job outside the zone which would have better conditions and pay, but so far I have had no luck,” Zameer said. “I am stuck with this because I have to send money back home at any cost.”

Fast fashion waste and the EU textile exports driving it continue to grow. So too does the distance between European policy ambitions and the daily reality faced by workers like Ayesha in the Karachi Export Processing Zone — where second-hand clothing arrives in abundance and Pakistan labour rights remain, for most, out of reach.

Vietnam’s Value-Driven Approach Is Paying Off in Europe

Vietnam’s apparel exports to the EU have shown a notable upward trend, driven largely by the country’s increasing focus on value-added garments rather than sheer output. Industry data confirms that Vietnamese manufacturers are moving away from basic, low-margin items and investing in more technically demanding products such as outdoor wear, sportswear, and functional clothing — segments where buyers are willing to pay a premium.

This pivot has been supported in part by the EU-Vietnam Free Trade Agreement (EVFTA), which came into effect in August 2020. The EVFTA has progressively reduced tariffs on Vietnamese textile and garment exports to the EU, giving Vietnamese manufacturers a meaningful cost advantage over competitors from countries without similar trade arrangements. The deal has served as a key enabler in Vietnam’s broader effort to deepen its footprint in the EU apparel market.

EVFTA: The Trade Framework Fueling Vietnam Apparel Exports

Under the EVFTA framework, Vietnam apparel exports benefit from reduced or eliminated duties on a wide range of clothing categories, provided that goods meet the agreement’s rules of origin requirements. These requirements mandate that fabrics used in garment production must originate either from Vietnam or the EU — a condition that has prompted Vietnamese manufacturers to invest more heavily in upstream textile production capabilities domestically.

Meeting these origin rules has not been without challenge. Vietnam has historically relied on fabric imports, particularly from China, which can complicate compliance with EVFTA’s sourcing requirements. However, manufacturers who have successfully navigated these conditions are now benefiting from improved market access and stronger buyer relationships across key EU member states.

Quality and Compliance Are Central to Vietnam’s EU Strategy

European buyers have grown increasingly selective, placing greater emphasis on environmental standards, labour compliance, and supply chain transparency. Vietnamese manufacturers who have invested in meeting these expectations are finding themselves better positioned to secure and retain EU contracts. This alignment between what EU buyers demand and what a growing segment of Vietnam’s textile industry is now capable of delivering has been central to the country’s rising competitiveness.

Vietnam’s textile industry has also seen continued investment in sustainable production practices and certification, which resonates with European fashion brands and retailers who face mounting regulatory and consumer pressure to clean up their supply chains. This compliance-forward posture has given Vietnamese suppliers an edge that goes beyond pricing.

Competing in a Crowded Market

Vietnam is not alone in eyeing the EU apparel market. Bangladesh remains a dominant force, benefiting from its Everything But Arms (EBA) preferential access and a vast production base geared toward high-volume, cost-efficient output. Cambodia, Myanmar (where political factors have complicated trade access), and other regional producers also compete for EU buyer attention.

However, Vietnam apparel exports are increasingly differentiated by product complexity and reliability of delivery. European brands sourcing more technical or fashion-forward products have found Vietnamese suppliers to be capable partners, particularly in categories that require tighter quality control and more complex manufacturing processes.

This differentiation is critical. In a market where buyers are consolidating their supplier bases and seeking fewer but more dependable sourcing partners, Vietnam’s ability to deliver on both quality and compliance requirements gives it a distinct advantage over purely volume-driven competitors.

The Road Ahead for Vietnam’s Textile Industry

Vietnam’s textile industry remains focused on sustaining this upward trajectory in the EU apparel market. The continued implementation of EVFTA trade benefits, combined with ongoing investments in production quality and sustainability, is expected to keep Vietnam apparel exports on a competitive footing with other major sourcing destinations.

For European buyers, Vietnam represents a sourcing option that increasingly checks multiple boxes — competitive pricing relative to its product quality tier, improving sustainability credentials, and a track record of delivery reliability. These attributes together suggest that Vietnam EU apparel market growth is not a short-term phenomenon, but a trend grounded in structural improvements to the country’s manufacturing and trade capabilities.

As global fashion brands continue to reassess their supply chain strategies in response to geopolitical shifts, sustainability mandates, and changing consumer preferences, Vietnam’s value-not-volume approach in the EU apparel market positions it as a sourcing destination of growing strategic importance.

The University of Michigan’s preliminary September consumer sentiment index stood at 47.8, which would rank among its weakest readings. However, spending has remained relatively resilient, with US retail sales increasing 1.2% month on month in August, according to Reuters.

Against this backdrop, fashion companies are increasingly concentrating sourcing among larger suppliers capable of operating production facilities in several countries.

A survey conducted by the United States Fashion Industry Association and the University of Delaware found that 47.4% of 30 major US fashion companies surveyed between April and June planned to reduce their apparel supplier base over the following two years. The proportion was significantly higher than the 17.6% recorded in the previous year.

At the same time, the percentage planning to expand their supplier networks fell to 26.3% from 41.2%. Companies intending to increase the number of production countries also declined sharply, from 58.8% to 21.1%.

The change indicates a move towards more consolidated sourcing structures. Large vendors with manufacturing operations spread across Vietnam, Bangladesh and Central and South America can shift production between locations as tariff rates, labour expenses and logistics conditions change.

This model is supporting the performance of major Korean apparel suppliers. Youngone, Hansae and Shinwon all reported higher sales and operating profits during the second quarter.

Youngone posted second-quarter sales of KRW 1.23 trillion and operating profit of KRW 175.6 billion, representing increases of 19% and 20%, respectively. OEM revenue climbed 22% to KRW 850.1 billion, while OEM operating profit increased 18% to KRW 198.7 billion.

Youngone’s first-half OEM sales increased 12% in dollar terms, according to NH Investment & Securities. Sales to The North Face rose 12%, while Arc’teryx sales jumped 58%. Revenue from other customers outside its four largest accounts increased 19%.

OEM inventories reached a record KRW 820.6 billion at the end of the second quarter, up 21% year on year, as higher orders contributed to increased materials, supplies and work in progress.

Jeong Ji-yoon, an analyst at NH Investment & Securities, said, “Youngone’s growth drivers are the consolidation of global OEM vendors, strength in sports and outdoor brands, and diversification of production bases due to the deepening U.S.-China trade dispute,” adding, “Solid sales growth is expected to continue in the second half.”

Hansae, whose US market accounts for about 90% of revenue, reported an 18.2% increase in second-quarter sales to KRW 561.6 billion. Operating profit surged 193% to KRW 36.1 billion, supported by stronger order volumes and a greater contribution from premium brands.

With manufacturing facilities in eight countries, Hansae is also expanding vertical integration covering fabric production, dyeing, spinning and sewing.

Lee Jin-hyup, an analyst at Hanwha Investment & Securities, said, “Starting with last quarter’s results, volume-driven growth is emerging. We expect volume-driven growth to continue in the second half,” adding, “It is time to watch whether we have entered an inflection point for improvement in OEM industry conditions, such as easing tariff uncertainty, or whether this is a temporary recovery.”

Shinwon, which supplies around 20 buyers including Gap and Walmart from nine overseas production bases, recorded an 11% increase in export sales and a 217% rise in operating profit during the quarter.

The performance suggests that US apparel OEM demand is increasingly influenced by supply-chain resilience rather than consumer sentiment alone. For fashion companies, fewer but larger sourcing partners can provide greater flexibility when trade policies or production economics change.

An industry official said, “In the past, low labor costs were the key competitiveness of apparel vendors, but recently the ability to quickly switch production countries in response to tariff and supply-chain uncertainty, and production capabilities that can handle everything from materials and fabrics to finished goods, are determining order wins.”

The shift could continue to reshape sourcing strategies as brands place greater emphasis on multi-country manufacturing, integrated production capabilities and the ability to respond quickly to changing trade conditions. This is strengthening the role of large-scale US apparel OEM demand suppliers even without a broad-based recovery in US consumer sentiment.

Scalability challenges, labor costs, and a deeply fragmented domestic supply chain remain the defining obstacles. Yet the conversation also revealed a growing consensus: technology — from AI-driven design tools to advanced factory automation — may be the only realistic lever capable of making fashion onshoring work at any meaningful scale.

The Real Cost of Long Lead Times and Offshore Dependency

Ashley Stickler, Vice President of Marketing and Partnerships at CreateMe Technologies, Inc., framed the issue in terms of the fundamental economics of the current production model. With lead times stretching to 19 months and forecasting locked in well in advance, the pipeline brands rely on is slow, cumbersome, and deeply tied to inputs from overseas markets that take considerable time to produce and ship.

According to Stickler, the economic value of a garment produced offshore is already diminished by the time it arrives on U.S. soil, simply because of how much the market has shifted during that long journey from concept to shelf. “Trends have shifted. We’ve moved on,” she noted.

CreateMe Technologies directly addresses part of this problem. The company automates the manufacturing process for apparel and similar products, replacing traditional thread-based construction with digital adhesives to enable faster, more localized, on-demand production — a model better suited to the speed requirements of today’s fashion market.

Stickler was direct about why simply transplanting the Asian manufacturing model into the United States is not a viable solution. The labor cost structure that underpins large-scale garment production in countries like China simply does not translate to a market like California. In her words, the math only works if the entire system is redesigned from the ground up — a shift she sees factory automation making possible by removing labor as the primary cost variable.

AI’s Role in Smarter Production Decisions

Keith Hoover, President of Black Swan Textiles, a digital product development consultancy specializing in textiles, echoed the concern about the fashion industry’s traditional production calendar. The standard practice of forecasting consumer demand 18 months ahead consistently results in either overproduction leading to liquidation, or underproduction leading to lost revenue — both costly outcomes that have long plagued the industry.

Hoover sees artificial intelligence as integral to improving how brands decide what to make in the first place. By using AI agents to analyze readily available data, brands could identify near-term consumer demand more accurately, produce in smaller initial lots, and then scale up or pivot based on actual sales performance. This data-driven approach to production planning could reduce the chronic misalignment between what gets made and what consumers actually want — a core problem that the existing forecasting model has failed to solve.

On the design side, Hoover highlighted how tools like 3D design software are already helping creative teams work faster. Generative AI has added another layer of acceleration, allowing designers to move quickly from a preliminary sketch or even a verbal description to fully visualized concepts ready for merchant review. Hoover was careful to frame this not as AI supplanting the designer’s role but as a powerful tool in the designer’s hands — one that dramatically speeds up iteration and improves the likelihood that a concept will make it into a final line.

The Raw Materials Problem: A Gap Technology Cannot Close Alone

Where the conversation shifted was on the subject of raw materials — and here, the limitations of technology became clear. Hoover laid out the upstream supply chain reality plainly. While the United States is the third largest cotton producer globally, approximately 75 to 80 percent of that cotton is exported offshore. Polyester, the single most widely used fiber in apparel, is manufactured predominantly in Asia. Domestic knitting capacity is limited, woven mill infrastructure is sparse, and dye houses are similarly scarce.

The upstream components of a functional, end-to-end apparel supply chain are, in large part, absent from the U.S. domestic market. This is not a gap that AI or automation can fill on its own — it reflects decades of industrial offshoring that left the domestic manufacturing ecosystem incomplete.

Alexander Zar, CEO of Lalaland Production and Design — Downtown Los Angeles’s largest leather goods producer — reinforced this point from a manufacturer’s perspective. The limited availability of raw materials domestically is both a constraint on capacity and a significant cost burden for any producer serious about scaling within the United States. Lalaland manufactures luxury footwear and handbags for some of the world’s most recognized labels, operating in a segment where premium pricing can absorb the higher cost of U.S. labor and quality materials.

Luxury vs. Mass Market: A Fundamental Divide in the Onshoring Debate

Zar drew a sharp distinction between what fashion onshoring can realistically deliver for the luxury segment versus the mass market. For luxury brands, domestic production is achievable and even commercially viable. The premium price point accommodates the higher cost structure. However, any attempt to pursue domestic production at mass-market scale — particularly in categories like footwear — runs into a wall.

Many have already tried and failed by attempting to replicate the labor-intensive factory model common in Asia, hoping to approach similar margins or price points. Zar was unambiguous: that approach has not worked and will not work, primarily because labor costs in cities like Los Angeles make it economically unviable to compete on price with offshore producers.

His conclusion was that the industry must look beyond existing models. Rather than trying to adapt a system designed for low-cost, high-labor environments, U.S. manufacturers need to leapfrog to a fundamentally different production paradigm — one built around automation technologies like 3D knitting, 3D bonding, and 3D printing.

Rethinking Production Architecture for Domestic Scale

Zar offered a concrete illustration of how this rethinking might apply in practice. In footwear manufacturing, the upper is typically the most time-consuming component to produce. By incorporating automated solutions — such as a 3D knitted, technical-knit full-sock upper — manufacturers can eliminate what is often the biggest bottleneck in the production process, reducing both time and labor requirements.

The scale of the challenge, however, is not lost on him. The United States imports approximately 2.3 billion pairs of shoes annually. Building a domestic infrastructure capable of replacing that volume entirely is, by Zar’s own assessment, not realistic. But capturing even 10 to 20 percent of that market through domestic production could be achievable — provided manufacturers are willing to accept the capital-intensive nature of the investment, or embrace new technologies that remove the high-touch, labor-heavy aspects of production.

The goal Lalaland and others are working toward is a fully automated, continuously operating production environment — what Zar describes as a “dark factory” capable of running 24 hours a day without the dependency on large human labor pools. In his view, this is the only model through which scalable, domestically produced fashion becomes commercially possible.

The broader takeaway from the panel is that fashion onshoring, while not a near-term mass-market reality, is not an impossibility — provided the industry accepts that it cannot simply reproduce offshore systems on American soil. The path forward, if there is one, runs through a wholesale reimagining of how garments are designed, planned, and manufactured, with AI in fashion and advanced factory automation serving as the foundational building blocks of whatever comes next.

The Old Navy Sport collection features refreshed seasonal styles, updated colorways, and modern silhouettes spanning many of the brand’s most popular activewear franchises. Designed with comfort, versatility, and performance at its core, the line combines technical features with trend-right design — creating apparel that is meant to perform both in and out of the gym.

A Category Push with Greater Focus

Jessica Shynn, Vice President of Merchandising, Old Navy Sport, spoke to the intent behind the launch: “Old Navy Sport gives us an exciting opportunity to push the category forward with even more focus and innovation. We’re bringing together trend-forward design, performance-driven details, and the value our customers expect from Old Navy to create a destination that makes it easy to move with confidence, wherever life takes you.”

The new identity is designed to make it easier than ever for shoppers to discover the brand’s expanding performance apparel range, bringing the Old Navy Sport activewear experience into sharper focus across every touchpoint.

Where to Find Old Navy Sport

Customers will encounter the Old Navy Sport identity across the brand’s website, its mobile app, and stores nationwide. The brand has also launched a dedicated social presence under the handle @OldNavySport, further establishing it as a standalone destination within the Old Navy ecosystem.

Beyond digital, 42 select stores will feature immersive shop-in-shop environments dedicated to Old Navy Sport. These spaces are specifically designed to highlight the brand’s unique combination of style, performance, and value, offering customers a curated, in-store experience centered entirely around the activewear destination.

Elevated Activewear, Accessible Value

What sets Old Navy Sport apart is its commitment to delivering elevated activewear through a style-forward lens — without moving away from the accessible price point the brand is known for. The assortment is built around franchises that already resonate with Old Navy’s customer base, now refreshed with new seasonal updates and performance-driven details suited to active lifestyles.

For shoppers seeking performance apparel that transitions smoothly between fitness and everyday life, the Old Navy Sport launch represents a more streamlined, focused way to shop the category — whether online, on the app, or in-store at one of the new shop-in-shop locations.

Industry representatives have highlighted that the absence of a robust local or regional fabric supply chain remains one of the most critical vulnerabilities facing Sri Lanka’s garment manufacturers. The heavy reliance on imported fabric, particularly from countries such as China and India, continues to inflate production costs and extend lead times — two factors that undermine the country’s ability to compete effectively in international markets.

The Case for Fabric Investment

The call for fabric investment is not new, but it has gained renewed urgency given the shifting dynamics in global supply chains. Sri Lanka apparel exporters argue that building a strong upstream textile and fabric sector would not only reduce import dependency but also add greater value to the country’s overall export proposition.

Stakeholders in the industry have pointed out that buyers, especially those based in the United States and Europe, are increasingly favouring suppliers who can demonstrate end-to-end manufacturing capability — from yarn and fabric to the finished garment. Without this vertical integration, Sri Lanka apparel manufacturers risk losing orders to competitors in countries that have more developed textile ecosystems.

Preferential US Trade Access: A Key Demand

At the heart of the sector’s advocacy is the push for a preferential trade deal with the United States. Currently, Sri Lanka does not benefit from the kind of duty-free or reduced-tariff access to the US market that some of its regional competitors enjoy, placing its exporters at a structural disadvantage.

Industry voices have made clear that securing a preferential trade arrangement with Washington would be a game-changer for Sri Lanka apparel exports. The United States represents one of the largest and most lucrative apparel import markets in the world, and even a modest tariff reduction could significantly enhance the price competitiveness of Sri Lanka-made garments.

The apparel sector has urged the government to prioritise trade negotiations with the US and to engage proactively with American authorities to explore the possibility of a bilateral or preferential trade framework. Such an agreement, the industry contends, would open doors for higher-volume orders and attract foreign direct investment into the country’s manufacturing base.

Broader Implications for the Export Economy

Sri Lanka’s apparel and textile industry is one of the country’s largest foreign exchange earners, making it a cornerstone of the national economy. Any gains in market access or supply chain efficiency would therefore have wide-ranging benefits beyond the factory floor — supporting employment, boosting foreign exchange inflows, and contributing to macroeconomic stability.

The sector’s representatives have stressed that both the fabric investment agenda and the preferential trade deal push must be treated as complementary priorities rather than separate policy conversations. A stronger local fabric base would make Sri Lanka apparel exports more cost-effective and rules-of-origin compliant, while a US trade deal would provide the market access needed to make those investments worthwhile.

The industry has called on policymakers to take a coordinated approach — engaging with investors to build out the upstream supply chain while simultaneously advancing trade diplomacy with key export destinations, with the United States firmly at the top of that list.

The first phase of the implementation will be rolled out at the company’s manufacturing facility in Jining, China, before being extended to its Bangladesh operations. The solution will integrate with Orient Rongheng’s existing enterprise resource planning (ERP) and Manufacturing Execution System (MES), creating a more connected planning environment designed to improve visibility, planning accuracy, and operational agility across the business.

About Orient Rongheng

Orient Rongheng specialises in the research and production of women’s lingerie, swimwear, loungewear, and sports underwear. The company serves a number of internationally recognised brands and large retailers across Europe, North America, South America, the Middle East, and other global markets. With an annual production volume exceeding 20 million pieces, Orient Rongheng has passed rigorous factory compliance audits from multiple global brand partners and employs more than 3,000 staff across its China and Bangladesh operations.

In recent years, Orient Rongheng has focused on cross-border supply chain development and flexible manufacturing, deploying foundational information systems including ERP and MES, while continuously advancing digitalisation as a core business strategy.

The Business Challenge

As Orient Rongheng’s manufacturing footprint expanded across China and Bangladesh, the company identified the need to strengthen its planning capabilities to manage increasingly complex customer requirements. Handling high-mix, small-batch production with shorter lead times demanded a level of agility, coordination, and accuracy that traditional manual planning processes were no longer able to deliver.

Fendy Shen, General Manager of Orient Rongheng, explained the need for change: “As the complexity of orders increases and the demand for multi-factory collaboration grows, traditional systems have become unable to keep up with our pace towards digital manufacturing. Now, we are leveraging advanced planning platforms combined with artificial intelligence to build a real-time interconnected and globally viable scheduling system. This not only helps us achieve dynamic collaboration regarding production capacities across our factories, but also ensures that every decision is supported by data — significantly enhancing operational efficiencies and our response speeds. It is a crucial step for us to shift from experience-driven to data-driven processes, from local optimisation practices to global ones — and increased digitalization will provide the solid foundation we need for continuous growth and industry transformation.”

Why FastReactPlan Was Selected

Following a thorough evaluation of multiple domestic and international software suppliers, Orient Rongheng ultimately selected FastReactPlan for its advanced planning and scheduling capabilities built specifically for the apparel industry, its intuitive visual planning interface, and its ability to integrate material planning and capacity management to support multi-factory collaboration.

Fendy Shen further noted: “FastReactPlan’s stability, flexibility and Coats Digital’s understanding of garment manufacturing fit our operational requirements well. We sought a system that truly understands the garment-making industry, rather than a generic scheduling tool — and that was the key reason we ultimately chose FastReactPlan. Coats Digital’s proven experience in supporting leading fashion manufacturers globally, together with its industry expertise, ultimately gave us confidence that it was the right long-term partner to support our business objectives.”

Expected Outcomes from FastReactPlan

Orient Rongheng anticipates that the deployment of FastReactPlan will deliver measurable improvements across its planning and production processes. The company expects to reduce planning preparation time by 75 per cent, maintain on-time delivery performance (OTDP) above 99 per cent, increase line utilisation by 15 per cent, and reduce the time spent confirming order delivery dates with factories by 50 per cent.

The Role of Deep System Integration

Fendy Shen elaborated on the deeper significance of the integration: “FastReactPlan integrates deeply with most companies’ ERP, MES and PLM systems, building a full-chain digital closed loop from product development through to production execution. Once integrated, all planning, capacity, materials and order information is consolidated on a single unified platform so that teams collaborate on the same real-time data. This fundamentally eliminates decision errors and communication losses caused by data inconsistency and helps to fully connect the vertical data chain of the Design–Planning–Production process.”

He added: “Through this deep integration, companies can rapidly build an intelligent planning hub covering the entire value chain on top of their existing IT investments — without replacing them — truly achieving a single source of truth that powers precise decision-making. FastReactPlan is an important step in the digitalization of our manufacturing operations. With order planning, materials planning and production planning connected, our teams can now make faster decisions and deliver more accurately — a genuine capability upgrade in how we serve our international customers.”

Coats Digital’s Perspective

Aruna Telikepalli, Global Commercial Director at Coats Digital, commented on the partnership: “When I visited Rongheng at the outset of our engagement, I was very impressed with their Digital Transformation strategy. Orient Rongheng is an excellent example of a forward-thinking apparel manufacturer that recognises the need to evolve its operating model to meet the demands of today’s fast-moving global fashion industry. We are delighted to partner with Orient Rongheng as they strengthen their manufacturing operations and look forward to supporting their teams throughout this important next phase of their operational transformation.”

The partnership between Orient Rongheng and Coats Digital reflects a broader shift within the apparel planning landscape, where manufacturers are increasingly turning to purpose-built digital manufacturing tools to manage growing operational complexity and global customer demands. With FastReactPlan now forming the backbone of its planning infrastructure, Orient Rongheng is positioned to deliver greater accuracy, speed, and collaboration across its international manufacturing network.

Why Traditional Waterproof Jackets Fail the Recycling Test

BAM points out that conventional waterproof jackets are notoriously difficult to recycle. These garments typically combine multiple materials bonded together with chemical glues, making it nearly impossible to separate or process them at the end of their useful life. The result is that the vast majority of such jackets end up in landfill, contributing significantly to textile waste in the performance and technical clothing segment.

The Any Weather Mac was developed specifically to challenge this norm. All major components of the garment — the membrane, adhesives, fabric, and trims — are made from polyester derived from 95% recycled content, creating a unified material ecosystem that supports mechanical recycling without the need for disassembly. The only exception is the zip head, which is removable and sits outside the polyester system.

Engineering a Recyclable Waterproof Mac Without Compromise

Ultrasonic Heat Sealing Replaces Petrochemical Glues

One of the more technically demanding aspects of producing a recyclable waterproof jacket lies in the seam-sealing process. BAM’s manufacturing approach deliberately avoids petrochemical glues, which are a common barrier to recyclability in technical outerwear. Instead, the Any Weather Mac uses ultrasonic heat sealing along with a specialised polymer adhesive that is compatible with the garment’s polyester makeup. This ensures the coat can be mechanically recycled as a whole, rather than requiring component-by-component separation.

PFAS-Free, Plant-Based Waterproofing Treatment

The waterproofing treatment applied to the Any Weather Mac is described as plant-based and is entirely free from polyfluoroalkyl substances, commonly known as PFAS. Often referred to as “forever chemicals,” PFAS have attracted growing regulatory and environmental scrutiny due to their persistence in the environment and the human body. BAM’s decision to avoid these substances in its sustainable outdoor clothing reflects a broader industry shift away from fluorinated chemistries in performance apparel.

BAM’s marketing director Clare Coughlan commented on the development: “Our technical and design teams alike have gone above and beyond in taking on the challenge to make a waterproof mac that’s not only recyclable, but great looking and high performing, meaning our customers don’t have to compromise.”

A Take-Back Scheme to Close the Loop

Beyond the product’s design, BAM has established a take-back scheme that allows customers to return their Any Weather Mac once it reaches the end of its useful life. The company states that this programme guarantees the coat will be recycled rather than sent to landfill — directly addressing the gap that often exists between a product being technically recyclable and actually being recycled in practice.

This end-of-life return infrastructure is a critical component of the recyclable waterproof jacket’s full-circle proposition, ensuring that the Circular Textiles Foundation certification translates into real-world environmental benefit.

BAM’s Wider Sustainability Framework

The Any Weather Mac exists within a broader sustainability strategy at BAM. The brand reports that over 90% of its products are made using nature-based or recycled materials. It has also developed its 73 Zero range, which is described as fully circular, and introduced a “Product DNA” feature that enables customers to trace each garment’s production stages by scanning a QR code — a transparency tool aimed at informed consumer decision-making.

The launch of a certified recyclable waterproof mac reflects the increasing pressure on the apparel industry — particularly in technical and performance categories — to address how garments are treated at the end of their life. The Circular Textiles Foundation’s certification of the Any Weather Mac signals that meeting these standards, while maintaining product performance, is an achievable goal for PFAS-free waterproofing and circular fashion design.

The 737,000-square-foot facility is scheduled to begin operations in September and introduces automated fulfilment technology designed to improve warehouse productivity while reducing repetitive manual activity. The site uses a goods-to-person system that moves products directly to employee workstations, helping streamline order processing and improve workplace safety.

The investment reflects a broader shift in online fashion logistics. As e-commerce volumes increase, retailers are turning to regional warehouses, automation and technology-led fulfilment systems to shorten delivery times and manage increasingly complex order flows.

Indiana Becomes a Major Fulfilment Base

The new facility further expands SHEIN’s presence in Central Indiana, which has become an important part of its US distribution network.

The company established its Indiana operations in Whitestown in 2022. With the addition of the Lebanon facility, its operational footprint across the state now exceeds 2.5 million square feet. The new warehouse is located approximately 1.5 miles from its existing Indiana operations, creating a concentrated logistics cluster.

SHEIN also operates fulfilment facilities in California and works with third-party logistics providers as part of its wider US distribution network.

The expansion gives the retailer additional capacity to position merchandise closer to customers rather than relying solely on long-distance or cross-border fulfilment.

Automation Reshapes Fashion Warehousing

The SHEIN automated distribution center illustrates how automation is becoming increasingly important in fashion fulfilment.

Traditional warehouse operations can involve substantial manual movement of products between storage locations, picking areas and packing stations. A goods-to-person system changes that workflow by bringing inventory to workers, allowing employees to concentrate on picking and processing orders.

For an online fashion retailer handling large numbers of individual products and frequent order variations, such systems can support greater operational efficiency.

Automation can also become increasingly valuable as retailers manage larger product assortments and more geographically dispersed customer demand.

A Changing US Fulfilment Model

SHEIN’s investment comes as cross-border e-commerce companies reassess how they serve US consumers.

Changes to customs and import arrangements have increased the importance of domestic inventory and local fulfilment capacity for retailers that previously depended heavily on direct shipments to consumers. Building warehouse infrastructure inside the US can provide greater control over inventory positioning and order fulfilment.

The SHEIN automated distribution center therefore represents more than additional warehouse space. It forms part of a broader effort to establish a more locally positioned fulfilment network.

Competitors in the low-cost online retail segment are also developing local fulfilment strategies as the economics and regulatory environment surrounding cross-border e-commerce change.

Implications for Fashion Logistics

The development highlights the growing connection between fashion retail and advanced logistics technology.

For online-first fashion businesses, warehouse performance increasingly influences the customer experience. Inventory availability, picking speed, order accuracy and delivery times can all affect repeat purchases and customer retention.

Automated facilities can help retailers handle these requirements at greater scale, while strategically located warehouses can reduce the distance between inventory and end consumers.

SHEIN’s expanded Indiana footprint also creates a larger operational base from which the company can serve the US market. The facility is expected to create hundreds of jobs as operations are phased in, adding to the company’s existing Indiana workforce of more than 1,300 employees.

Fashion Retail Moves Further Into Automated Fulfilment

The Indiana investment signals how fashion companies are increasingly treating logistics infrastructure as a strategic part of their business model.

As online fashion continues to depend on speed, inventory flexibility and efficient order processing, automated warehouses are likely to play a larger role in supporting retail growth.

For SHEIN, the new Indiana facility adds significant capacity to an already expanding US network. It also demonstrates how the next stage of fashion e-commerce will depend not only on product selection and digital engagement, but increasingly on the technology and infrastructure that move products from warehouse shelves to customers.

The significance of AGOA for Kenya extends well beyond apparel shipments. Over the years, the programme has helped establish garments as an important source of export earnings while supporting substantial employment and encouraging the development of an export-focused manufacturing ecosystem.

Kenya’s apparel trade with the US has expanded considerably. Estimates indicate that exports under AGOA were worth approximately KSh60.6 billion ($466.6 million) in 2024, representing a 19.2 per cent increase over the previous year. Employment across AGOA-accredited companies also recorded strong growth, demonstrating how closely the sector’s industrial development is linked to access to the US market.

For manufacturers and investors, the extension therefore provides an opportunity to plan beyond short-term market cycles. Investment decisions involving factories, equipment, workforce development and supply-chain partnerships require a degree of predictability, making the additional AGOA period particularly important.

Investment, Trade and Industry Cabinet Secretary Lee Kinyanjui described the extension as providing “much-needed certainty” for exporters, manufacturers and investors.

Apparel remains a strength — but also a concentration risk

Kenya’s success in apparel demonstrates the potential of preferential trade arrangements to stimulate manufacturing and employment. At the same time, the sector’s dominance within AGOA-related exports exposes a structural weakness in the country’s export strategy.

A heavy reliance on garments means that changes in US consumer demand, international competition, production costs and pricing can have an outsized effect on Kenya’s export performance. Shifts in US trade policy could create another layer of uncertainty.

This makes export diversification an increasingly important part of Kenya AGOA export growth. Expanding into additional product categories could help reduce the impact of volatility in the apparel business while allowing Kenyan companies to access new opportunities in the US.

“Beyond apparel, Kenya must use this extended window to diversify its export basket and expand both the range and value of products entering the US market,” Kinyanjui reportedly said recently, even as he highlighted value-added agricultural products, leather and leather goods, pharmaceuticals, and manufactured products as key sectors with potential to drive increased Kenyan exports to the US.

The message is significant: diversification does not mean reducing the importance of garments. Instead, Kenya is looking to use the experience gained through apparel exports as a foundation for developing other internationally competitive industries.

Moving apparel up the value chain

The next phase for Kenya’s textile and apparel industry will require more than maintaining existing export volumes. Industry competitiveness will increasingly depend on productivity, product sophistication, supply-chain depth and the ability to retain a larger share of value within the country.

Moving towards higher-value garments and specialised textile products could provide one route. Improvements in manufacturing efficiency, technology adoption and workforce capabilities could further strengthen the sector’s position in the US market.

There is also an opportunity to develop stronger domestic supply networks. Greater availability of locally sourced inputs and supporting manufacturing services could reduce external dependencies while increasing the economic value generated within Kenya.

Such improvements would give the apparel sector greater resilience while supporting the broader industrialisation agenda.

Replicating the apparel model

The wider policy challenge is to translate Kenya’s apparel experience into growth across other manufacturing and export categories. Garments have demonstrated that Kenyan producers can build international customer relationships, establish production capacity and compete in a major consumer market when supported by favourable trade conditions.

The government now appears keen to apply those lessons elsewhere.

Agricultural products with greater levels of processing, leather and leather-based products, pharmaceuticals and other manufactured goods could offer avenues for expanding the country’s export base. Developing these areas would require investment in production capacity, quality standards, logistics, skills and market development.

The approach could also make Kenya’s manufacturing sector less dependent on a narrow group of export products. A broader industrial base would provide multiple sources of foreign exchange and employment while creating opportunities for domestic companies to participate in international value chains.

AGOA extension creates a strategic window

The extension of AGOA should therefore be viewed as more than a continuation of existing market access. For Kenya, the additional period can serve as a strategic window to strengthen what is already working while building new export capabilities.

The textile and apparel sector remains central to this effort. Protecting its competitiveness, encouraging higher-value production and strengthening supporting supply chains can help preserve the gains made under AGOA.

At the same time, investment and policy attention must extend beyond clothing. Kenya’s longer-term objective is to create a manufacturing ecosystem capable of competing across multiple product categories and international markets.

Kinyanjui’s description of AGOA as a ‘catalyst for Kenya’s industrialisation, value addition, investment and job creation’ points to the broader ambition behind the strategy. Apparel has shown that Kenya can compete in the US market and the government’s latest position signals a push to replicate that success across other sectors.

For the textile and apparel industry, the priority is therefore twofold: consolidate its position in the US market while helping create the capabilities needed for the next generation of Kenyan exports. That balance could prove critical to achieving sustainable Kenya AGOA export growth before the extended trade window closes in 2028.