Puma seeks to source goods closer to Western consumers
By Emma Thomasson
HERZOGENAURACH, Germany (Reuters) - German sportswear firm Puma SE (PUMG.DE: Quote) is looking to produce more goods closer to customers in Europe and the Americas, but will not abandon Asia in the next few years despite rising labor costs and political unrest, its chief executive said.
Puma, which has 178 suppliers in 32 countries, sources 79 percent of its goods from Asia, mostly from China, Vietnam, Indonesia and Cambodia - the latter where a violent crackdown on garment workers striking over pay has disrupted production at its suppliers.
CEO Bjoern Gulden expressed frustration that industry lead times are so long, with ranges being designed now only going on sale in autumn 2015.
Puma is looking into producing more goods closer to consumers to be more responsive to demand, including in Turkey and eastern Europe, and in Mexico to serve the Americas, he said, without giving further details. Over 70 percent of the firm's sales were in Europe and the Americas last year.
But the chief executive said his first priority was to revamp Puma's products before overhauling its supply chain.
"Everybody is looking at how to improve the speed and flexibility of sourcing but for the next three to four years the majority will come out of Asia because of the infrastructure," Gulden told Reuters on Thursday after Puma's annual news conference.
"Yes, there are issues in Cambodia and Bangladesh but to run away from it and pull out of the country cannot be the answer," he said. "You can't say this is a very poor country and so we shouldn't go there. It's the opposite."
Rising labor costs in China in recent years have prompted brand to seeks lower-cost markets in Asia such as Bangladesh, Vietnam, and Cambodia, countries where demands are now mounting for better pay. Continued...