Ethiopia - next stop for textile industry?

Swedish clothing retailer H&M wants to set up shop in Ethiopia, since production costs there are cheaper than in the Far East. Other clothing manufacturers are hesitating. Could Ethiopia become the next Bangladesh?

Ethiopia's economy just keeps growing - since 2007 at times with double-digit leaps and bounds. "The Economist" projects that the country will experience annual growth of 7 to 8 percent through 2016.

Ethiopia's government is apparently placing special emphasis on the textile industry - by 2016, the country aims to export more than a billion dollars worth of apparel. Factories established by the likes of H&M are more than welcome.

According to a supplier, the Swedish chain wants to produce more than a million items of clothing per month in the East African nation. A company spokesperson confirmed that test runs have already been ordered from Ethiopian producers.

Cheaper than China

Many producers have in the past relocated production to countries that offered cheap labor, like Bangladesh or China. But in such countries, social standards have risen along with wages - while the world seems to be examining production conditions increasingly critically. So producers have started considering new options for cheap labor.

On the African continent, Morocco and Tunisia are known as clothing production countries, mostly for discount apparel. Other African countries, like Ghana or Kenya, don't play much of a role in the fashion industry, according to GermanFashion, a German industry association.

Ballweg says Ethiopian textile production is just a drop in the bucket

Ethiopia offers a number of advantages, said Thomas Ballweg, a procurement and technical consultant at GermanFashion. "On the one hand are the lower costs - much lower than in China - with 80 million people living there. And, it's near the sea - and quick to get to Europe via the Suez Canal," Ballweg said.

This could shorten delivery time by a third compared with coming from the Far East. In addition, Ethiopia's climate and that of neighboring countries is well-suited for the cultivation of cotton, Ballweg emphasized. As long as the cotton was of high enough quality, clothing producers could save on expensive import by using local materials.

No new Bangladesh

Apart from H&M, British supermarket chain Tesco and Ireland-based discount textile company Primark also produce in Ethiopia, according to GermanFashion. Observers warn that Ethiopia could become another Bangladesh, with textile factory workers laboring under scandalous conditions. Reports recur of Bengali factories burning down and causing numerous deaths. In April a textile factory collapsed, killing more than a thousand people.

Companies are concerned about their brands' reputation, Kannengiesser thinks

Christoph Kannengiesser of the German-African Business Association told DW he can't imagine such a fate for Ethiopia - even discount apparel companies like H&M or Primark are concerned about their reputation.

"For a company with a brand name that relies on its clientele's approval, it would be a disaster for it to become known that social or environmental standards are not being kept," Kannengiesser said.

He said standards set by the International Labor Organization and World Trade Organization are high enough, adding that that numerous non-governmental organizations and other independent groups monitor production conditions in countries with cheap labor.