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January 2009
Industry Highlights
China Manufacturing and Responsible
Sustainability: A Perspective from Fountain Set

Simon Jameson Weston
Simon Jameson Weston
Marketing Director,
Fountain Set,
Hong Kong

Simon Jameson Weston is marketing director for Fountain Set in Hong Kong with responsibilities in research and development as well as marketing. He is also involved in the business's sustainability initiatives. He has worked for Fountain Set for five years, with the first four based in Sri Lanka, where he made the company the first fair-trade cotton supplier in Asia.

Prior to that, Weston worked for Courtaulds Textiles, running that company's warp knit plant in the Philippines, working with their green field team to build a new business in Sri Lanka and also in their warp knit business in the United Kingdom. He is a graduate in mechanical engineering from Manchester University in the UK and is also a chartered naval architect — before he enterd the textile business he had a career in ship construction in the UK.


Before we look at what our businesses are doing in China at the moment to address the issues of corporate responsibility and ecological sustainability, it would be useful to look back at the rapid growth that the textiles sector has undergone in the last decade.

The last decade, until very recently, has been a period of phenomenal commercial growth for the West, with the demand for textile products increasing exponentially during this period. As retail within the West grew, so did competition and the drive to find a faster and cheaper supply base so that retailers could continue to attack their own markets and in many cases increase their share of the market. This growth led directly to an equivalent growth within the emerging markets that supply textile products and also to aggressive sourcing based on lowering prices of all products within the apparel sector.

China was not as aggressive in the first few years of growth as some areas of Asia, as they remained constrained by quotas on all products until 2001. In 2002, China joined the World Trade Organization (WTO), and due to this, some products had their quotas lifted. These categories saw the supply base grow immediately as China became the new low-cost source base for the West. China (including foreign manufacturers investing in China) also prepared for the future removal of all other quota areas by speculatively building capacity for future business, while also being mindful of the expectation from the West that the goods needed to be lower priced.

China’s entry into the WTO was not as simple as most countries' since they remained constrained by a host of transitional reviews. These were based around the concern that China had the capacity to dump massive volumes of apparel into the West and, in the process, destroy the remaining Western businesses that still make textile products. In fact, some categories had quotas reinstated in the middle of 2005 when the European Union and the United States expressed such concerns.

Because this action raised serious concerns within China about the amount of export business that would be available to them, and because they wished to become a friendly and responsible trading partner with the European Union and the United States, the Chinese government decided to take a few steps both to cool off exports and to develop the local market, including the following:

As a business with a number of textile mills in China, Fountain Set has witnessed the changes that the last decade has wrought on our industry and has changed its factory base in order to fit in with the changes in law and also to make our businesses more sustainable for the future.

Ten years ago we had two businesses in China — both in Dong Guan City, Guang Dong Province — one of which was already over 15 years old. We also had a mill in Sri Lanka that produced fabric for the local export market at a much smaller scale than the businesses in China. Prior to the WTO changes, we had already commenced building a new business in the Jiangsu Province that would update our production abilities and provide a more efficient factory for the future. Our idea was also to be prepared for the increased volume of orders that complete membership in the WTO would bring.

It was during this time of transition for Fountain Set, that the Chinese government looked more closely at the Pearl Delta region and decided to reduce the total amount of effluent generation and electricity consumption in the region. This caused faster-than-planned changes to our manufacturing strategy and a reduction in the amount of fabric from our two older businesses.

This also coincided with the government’s policy to not flood the West with Chinese textiles, and so we decided to reduce our total capacity by almost one-third, which allowed us to look more closely at the quality of our factories and processes with a mind toward the future and making our businesses less wasteful of nonsustainable resources.

The last year has seen our business bring to a close the final act of these changes in manufacturing. We have downsized and written off over US$30 million in assets in preparation for closing our oldest Chinese business in Dong Guan, moving key products to our remaining specialized business in the town of Sha Tin, Dong Guan, and supplementing our capacity with an investment in a new state-of-the-art business at Yan Chen City in northern Jiangsu Province.

This business employs a layout philosophy based on reducing all forms of waste and a "cleaner and greener" mentality focused on reducing the use of nonsustainable resources through more efficient machinery and processes, increasing the proportion of recycled water, and improving and centralizing effluent treatment methodologies.

Fountain Set’s founding membership in the Hong Kong-based Sustainable Fashion Business Consortium and involvement in the work stream from this group of industry leaders will continue to cause the staff of our businesses to question working methods at all levels, so that in a country where the cost base continues to increase, we are able to offer innovative products at the desired level of quality and service but at prices that match the desire of the market.