(The original article in Japanese was posted on July 16, 2021)

 

On July 12, the Ministry of Economy, Trade and Industry (METI) released a report on the “Study Group on Sustainability of Textile Industry,” urging the textile industry to establish guidelines to eliminate risks related to human rights violations from its supply chain.

The apparel industry, which relies on global supply chains for its manufacturing processes, has long been questioned about its responsibility for human rights violations and environmental risks inherent in its supply chain, including health and safety, unfair wages, child labor, and hazardous chemicals. This report is also an extension of this context, and there is no doubt that the pressing issue of the forced labor in the Xinjiang Uygur Autonomous Region was strongly considered in creating the report.

On the other hand, the report also addresses the actual situations of unfair compensation and unequal treatment of foreign technical intern trainees and female workers in Japan. Referring to the report titled “Textile Industry” published by our company, Yano Research Institute, and other sources, etc., it is suggested that these problems have been caused by the facts that the apparel industry as a whole has become exhausted because the volume of supply has increased while the market size has shrunk, and overstocking and price discounts have become common. In other words, it can be said that the “unprofitable” structure of the textile industry is at the root of the risks regarding human rights and gender, and the apparel companies, who are supposed to manage the supply chain, do not have enough capacity to absorb the costs.

In short, the problems lie in the textile companies’ structural low profitability, which means that what is necessary is a growth strategy. The METI’s report states that “a shift from a linear economy based on mass production and mass consumption to a circular economy that maximizes the value of resources and minimizes the amount of waste is required” in order to achieve sustainable management. In addition, stressed is the need for structural reform of the industry by utilizing digital technologies.

I have no objection to the content of the report introduced above, and I can see that some efforts have been already underway on an individual company basis. However, a dramatic increase in the productivity of resources in the industry as a whole means a downsizing of the entire industry from production to sales. If this is realized, there will be an inevitable impact on domestic employment as well as on the economies of developing countries.

However, that does not mean that we can ignore the injustice happening right in front of our eyes. If what is essentially necessary to solve the problems is to build a new chain of value and achieve the healthy growth, then eliminating the unhealthiness of the supply chain is the very first step the industry has to take.

 

This Week’s Focus, July 16

Takashi Mizukoshi, the President