H&M Falls Into "Quality Gate": Investigating Out Of Control Supply Chain

On March, at the gate of the H&M flagship store in Nanjing West Road, Shanghai, twenty or thirty customers, either sitting on the railings or moving to a stool, lined up.

On the second day, we will sell the fashion designed by Italy brand MARNI and H&M, ranging from 199 yuan to 999 yuan.

A customer told reporters that he started queuing at 5 in the morning.

Almost all the clothes in this flagship store are new products. Only on the first floor of a corner, the off-season clothing is being reduced and discounted.

A salesperson introduced that if all clothes appeared quality problems, customers could come back in 30 days.

However, for many customers, the biggest attraction of H&M is not the return guarantee, but its low price.

In the bustling stores, customers may not mind. Not long ago, by the "quality gate" incident, H&M has a number of sweater products have been quietly off the shelf.

In January 19th, the Shanghai quality and Technology Supervision Bureau announced the results of a sampling survey of WOOLLEN KNITWEAR on the market. On the list of unqualified, H&M's sweater ranks among them, the problem is lack of fiber.

However, for H&M, who has entered China for 5 years, it will not be too uneasy, because the historical experience of two times on China's quality blacklist has told it that this kind of thing will not cause too much impact on it.

Big credit crisis

Since H&M opened its first store in China in 2007, H&M has been sampled at least 3 times by many local industry, commerce, industry and quality supervision departments as "unqualified".

In January 28, 2012, the report issued by the Shanghai quality supervision department showed that the item number was "605040/2011.6", and the measured results of the fiber content of the H&M knitted sweater with a size of 175/100M were not consistent with the product label.

The journalist called Marie Rosenlind, head of news at Stockholm H&M headquarters in Sweden. She said that the matter was based on the reply from China.

For this problem, Fu Xiarong, manager of H&M public relations in China, told reporters that H&M was selected for a man's sweater. The fiber content on the label was 38%, but the result was only 28%.

H&M has already taken off the product and accepted the return.

H&M has tried to remedy and apologize to consumers.

H&M these unqualified sweaters were produced in China, and the production date is June 2011.

H&M has already identified the sweater manufacturers and problems, and is communicating with manufacturers. However, it is not disclosed in this respect.

A staff member of Shanghai Quality Supervision Bureau told reporters that every year the quality supervision bureau should conduct sampling inspection on various commodities on the market, and increase the number of sampling inspection according to the market situation.

In clothing, winter sampling is usually the key.

In addition to the fact that the "knitted sweater fiber content test results are not consistent with product labels", in June 2010, the Shanghai quality supervision department also found that a H&M knitted leisure jacket pH value was not qualified in the sampling inspection. In 2008, H&M was detected "pH value, clothing composition and tag".

Procurement loopholes

H&M, like ZARA, is known for its fast response to fashion and strong supply chains all over the world.

The biggest difference between H&M and ZARA in production is that ZARA owns its own production plant, but H&M does not build factories on its own, but cooperates with OEM enterprises.

Compared with ZARA, H&M efficient supply chain strategy is to minimize the cost while satisfying product supply.

Rafael Moro, an analyst with London market research, said: "H&M does have more flexibility than other retailers in reducing costs without owning any own factories, but it is a question of whether the management of the foundries can be smooth and without bias."

A H&M factory worker told reporters that in China, H&M procurement methods are divided into two types: one is H&M personally purchasing raw materials, then the fabric is shipped to the factory production; the other is H&M designated a generation factory to purchase, from the factory to fabric manufacturers ordering purchase.

H&M produces regional production globally.

But according to the reporter, in China, in the actual operation process, H&M sometimes will directly purchase the fabric procurement links to the long OEM enterprises.

In fact, this way of fabric procurement can easily cause uncontrollable factors to increase.

The most famous raw material base in China.

According to the reporter, Shaoxing Keqiao has become a large number of people including H&M.

Chen Xin, deputy manager of Guotai dyeing and finishing Co., Ltd., Zhongshan, told the newspaper: "the profit of the entire OEM industry is very low, which is around 10%.

As long as there is no order, it will lose money. "

Because foundry enterprises are very dependent on many clothing brands, they have little bargaining power with the international brands.

With the increase of raw material costs and labor costs, the only control that these factories can take to amortize risks is product cost.

A person who specializes in clothing raw material purchasing told reporters: "in order to guarantee the price of the big brand, we can only solve it by looking for other fabrics, but because of the fabric changes, the effect of clothing is different."

Professor Zhang Xinke of The China Academy of Art has revealed that there are many problems in the quality of fabrics. For example, some products are actually flax, but after being copied, consumers are mistaken for wool.

The biggest problem is that some fabric manufacturers reduce the density of the fabric, "the same area, the warp line is few, and the weft is few, so the fabric becomes very thin."

Zhang Xin can say.

A number of H&M Chinese foundry employees told reporters that H&M was very low in price, but the amount was very large.

The order for H&M is very hard and difficult, the cycle is too short, and it is difficult to fully meet the requirements in quality control.

The public relations official of fast fashion brand H&M told reporters that when the enterprise was purchasing, the third party certification body entrusted by the company fully implemented the company's standards, and the company itself had strict control over it.

However, because of the cost control, the quality problems of raw materials factories at the upstream of the industrial chain are prohibited repeatedly.

The dilemma of "post reaction" mode

General clothing testing needs 3~5 days at a time. If clothes are not qualified, re inspection will take 7~10 days. For fast fashion enterprises, the delay of one day may lead to the failure of products to be put on shelves.

So it is very normal for the QC staff to "turn a blind eye".

H&M said that at present, H&M has cooperation with more than 700 generations of factories around the world. H&M has 150 quality inspectors worldwide, and has conducted more than 500 thousand quality tests every year.

For the 150 quality inspectors and 700 generations of the number of factories fall, Fu Xiarong said, believe that headquarters will make reasonable arrangements according to the factory situation.

H&M said that H&M is an international company. Its workflow and management are very systematic. "China and other OEM factories are strictly managed according to H&M unified standard".

However, "the factory strictly follows the H&M standard" can still be used as a question mark.

A senior executive of a local garment company in Shanghai told reporters that in production, some OEM factories will subcontract orders in layers, resulting in an order being completed by several factories.

After receiving orders from H&M, the first generation factories often subcontract small processes such as water washing, embroidery, packaging and dropping cards to downstream small foundry enterprises according to the situation.

The boss of a clothing enterprise in Xiaoshan, Hangzhou, told reporters that receiving orders and subcontracting to other factories is a common phenomenon in the industry.

"Many orders are subcontracted, and as long as delivery is on time, in general, many brands do not care about other issues."

On this issue, as of press release date, H&M did not reply.

Under normal circumstances, brand names are the first level contract manufacturers who have signed contracts with them.

For quality inspection, the brand side usually checks the product at a certain proportion at the delivery acceptance stage.

According to the data provided by H&M, the average quality inspector in the world needs to focus on 4 to 5 generations of factories, plus the other sub contracted factories. A quality inspector may be responsible for various production workshops in different regions throughout the year. The task pressure is very great.

In addition to quality control staff, there is another hidden rule in China that threatens the safety of the supply chain. Many manufacturers will try to "corrupt" the quality control staff from the enterprise, so that their products can pass the inspection of the QC and pass the customs smoothly.

A manager in Shanghai who provides factory inspection services for the H&M generation plant says that the scale of foundry plants in Jiangsu and Zhejiang is different in size. In some smaller foundries, there are problems such as inadequate equipment manpower and imperfect internal system, etc. in H&M.

For this, H&M did not declare.

"Quality problems, orders are rejected by the H&M is also there."

The factory manager said.

However, a professional engaged in textile testing revealed to reporters that in general, clothing testing takes 3~5 days at a time. If clothes are not qualified, re inspection will take 7~10 days, and for fast fashion companies, the delay of one day may lead to the failure of products to be put on shelves.

So it is very normal for the QC staff to "turn a blind eye".

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In many cases, the brand subcontracting enterprises adopt the "post process" mode instead of the "process control" mode, that is, to take measures to reduce the order or cancel cooperation after the problem occurs.

This makes the problem inevitable.

"Testing standards" at different stages

Will the raw material factory send the qualified cloth to the representative factory? Will it be inferior? The fabric manufacturer will directly pfer the "qualified" fabric to the representative factory to enter the production process. For this "incoming" link, H&M company has no control over it.

In fact, the crux of the H&M quality gate is that it fails to control the specific operation of quality inspection.

The national quality inspection and supervision center has the following requirements for the quality inspection of garments: decomposable aromatic amine dyes, fiber content, pH value, color fastness to water, color fastness to perspiration, color fastness to rubbing and product identification.

According to the reporter, for these indicators, H&M will conduct corresponding tests, but the order of detection is easy to cause quality door problems.

According to convention, inspection in garment manufacturing process should be divided into three stages: prenatal, middle and postnatal.

Generally speaking, in the prenatal testing stage, the quality inspector must ensure that the quality of the fabric and dyestuffs is all right.

However, reporters learned that the inspectors from the H&M company will check in the agent factory, but they usually appear in the middle and late stages of production.

The inspection of raw materials is part of prenatal work. When the finished garments are finished, the quality inspectors of H&M will only check the quality of the products.

It includes visual inspection of chromatic aberration, stain, size, sewing quality and label.

"The factory will never check the fabric of the finished garment again, and when the proofing is qualified, when it enters the mass production link, the fabric ingredient index will not be questioned again."

An industry insider who has been buying clothes for a long time said.

However, the problem lies in whether the raw material factory will pport the qualified cloth to the representative factory and whether it will be shoddy. The Zhejiang H&M generation factory staff told the reporter that the fabric manufacturer will directly pfer the "qualified" fabric to the factory to enter the production process.

But for this "incoming" link, H&M has no control over it.

In addition, the fabric testing does not seem so simple.

"In fabric testing, we should not only check the strength of the fabric, but also check the color fastness, and whether it is easy to cook and whether it is harmless to the human body. These aspects are not easy to detect," Zhang Xin told reporters. "Buttons, zippers, cloth and other testing methods are numerous. It is easy for insiders to see the difference between different qualities.

Some zippers will be stuck for ten times, or there will be off-line conditions.

When reporters asked H&M for specific quality inspection indicators and testing links, H&M thought it was a trade secret and did not give more explanation.

Speed pressure

At this stage, many commercial centers in the city want H&M to open shop. From the perspective of enterprises, if you don't rush to open a shop, the best store location may be robbed by competitors.

In many cases, fast fashion brands pursue "fast" and "fashion" blindly, ignoring the quality.

Unlike many old European luxury goods that only update their two quarter a year, H&M updates quickly, and shelves change every day.

H&M pursued a concept of being a follower of fashion rather than a creator.

This means that the lead time from design to sale is very short.

However, the short delivery date has brought great pressure to the factory. In order to complete the order within the specified time, the factory must work overtime.

For brands, opening more stores is conducive to the rapid digestion of product inventory, but the increasing number of orders and orders have produced great pressure on the production speed of OEM enterprises.

The delivery time is too short, so there is not enough time in quality control, so the cost of quality control is improved.

The above executives of local garment enterprises in China say that at the present stage, many commercial centers in the cities want H&M to open their stores. From the perspective of enterprises, if they do not rush to open stores, the best store locations may be robbed by competitors.

Many times, fast

Many Europeans are accustomed to wearing clothes out of season, but Chinese people do not consider hundreds of dollars of fast fashion clothes as fast food products. Their expectations for quality are higher than those of Europeans.

Under such circumstances, H&M's culture and ideas have fallen behind with the psychology of Chinese consumers.

Persson, who is now the founder of H&M, is the 36 year old Persson, who took office in 2009.

In June 2010, he disclosed that sales of stores that had opened for H&M for more than a year fell by 2%.

In the past few years, there has been a radical opening up speed. He admits that H&M stores even have some "cannibalism". If that is not the case, the sales of individual stores will be much better.

Many years ago, the second generation of Persson's family leaders, when interviewed by the business week reporter, said that his father, founder of H&M, had questioned whether the expansion policy of the company had gone too far, and sometimes asked, "Why are you in such a hurry?"

H&M was founded in 29 years (when H&M was founded in 1947), and only second foreign branches were opened in London. At that time, the son replied, "when you are hot, you can't stop to cool the heat."

H&M's latest annual report shows that in the past fiscal year, sales of H&M were close to SEK 110 billion and gross margin reached 60.1%.

According to the income calculation, H&M is the world's third largest fashion chain corporation, second only to the United States GAP and ZARA's parent company - Spain's Inditex.

H&M has made it clear that it will expand to China's two or three - line city.

In addition to competition from GAP, ZARA and UNIQLO rivals, they will also face Metersbonwe with 3000 stores.

Quality door does not seem to have a great impact on H&M. Beckham's endorsement and cross-border Marni are still a hot scene.

In January, sales of H&M continued to grow.

In China, there are many queues in Beijing, Shanghai and Guangzhou, as well as shops in Hangzhou and Chengdu.