1. West vs. EAST Sourcing Report Card Miami 2016 1

2. 14 AAPN Sourcing Executives Over 380 yrs. Of combined Apparel experience 2

3. Survey Results 2012 31 survey questions 10 of 31 favored the West 21 of 31 favored the East Total Score West @ 95.5, Avg. @ 3.1 East @ 107.3, Avg. @ 3.5 2016 30 survey questions 10 of 30 favored the West 18 of 30 favored the East 2 of 30 tied Total Score West @ 102.3, Avg. @ 3.4 East @ 107.7, Avg. @ 3.6 3

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5. The Western suppliers have caught on...seem to “get it” now. The Supply Chain (in general) has become more customer-driven. Trim, Fabric & Garment Suppliers in the East have learned the importance of customer service and being customer-centric. China has responded to the challenges facing their mfg. sector by continuously adapting and changing to the demands of the customer and markets. The Asian mindset of saving face and win at any cost has been put to the test with a nimble Supply Chain from the West. 5

6. WestEastMetrics 2012 2.44.3 Textiles 2.84.5 Full-Package 3.04.3 Trim & Packaging 8.213.1 Total 2.74.4 Avg. WestEastMetrics 2012201620122016 2.42.84.34.5 Textiles 2.83.34.54.4 Full-Package 3.0 4.3 Trim & Packaging 8.29.113.113.2 Total 2.73.04.4 Avg. 6

7. In denim... definite shortage of “stretch” fabrics in the West The West has gaps in print and yarn-dye fabrics, as well as heathers More options and investment in technology in Asia West is closing the gap but still lagging re. trims and packaging The West has more factories that rely on their customers to dictate and supply where their materials are coming from. Rarely do they offer a true full package. This is more common in the East. 7

8. WestEastMetrics 2012 2.73.8 Pre-Production 3.73.6 Production 3.73.6 Logistics/Transit 3.63.7 Predictability 13.714.7 Total 3.43.7 Avg. WestEastMetrics 2012201620122016 2.72.93.84.0 Pre-Production 3.73.6 3.9 Production 3.74.13.63.2 Logistics/Transit 3.63.93.74.0 Predictability 13.714.514.715.1 Total 3.43.63.73.8 Avg. 8

9. Sampling, In the West, takes way too long Once the product is approved for production and is buy-ready, the West is as good as the East in the Production stage. Logistics: West is closer and quicker... West has an edge Based on geography, you would think that the West would be rated even higher…however, there is still delays in getting through our supply chain process 9

10. You need to identify a specific factory that is able to deliver like this. It’s not a regional thing Tier I suppliers are predictable on both sides – seems to decline in the East with Tier II suppliers It strictly depends on the maker. If you partner with the right people, you typically are ok. 10

11. WestEastMetrics 2012201620122016 3.13.8 Labor 3.43.0 Power/Energy 3.44.0 Competitiveness 3.53.4 Ease & Speed of Costing 13.414.2 Total 3.43.6 Avg. WestEastMetrics 2012201620122016 3.13.63.83.7 Labor 3.43.93.0 Power/Energy 3.43.24.0 Competitiveness 3.5 3.43.5 Ease & Speed of Costing 13.414.2 Total 3.43.6 Avg. 11

12. For the most part, the East is still more cost competitive. We have utilized CAFTA more recently – but the math works out better for the kids garments vs. adult... based on the fabric consumption. Varies by HTS code, without regard to trade benefits, East is generally more competitive – Mexico has improved. East really can drop their pants when they want to 12

13. WestEastMetrics 2012201620122016 3.63.5 Rules 3.03.6 Minimums 3.23.7 Flexibility 3.23.7 Assist Rq'd 13.014.5 Total 3.33.6 Avg. WestEastMetrics 2012201620122016 3.63.73.53.6 Rules 3.03.43.63.4 Minimums 3.23.43.73.6 Flexibility 3.22.93.73.9 Assist Rq'd 13.013.414.5 Total 3.33.43.6 Avg. 13

14. The West generally requires more hand-holding; however, this also gives the buyers more control. The East tends to have more front-office structure than the West making interaction with product development easier. Re. Flexibility/responsiveness: The West has made huge gains here, due to the need for replenishment models and quick response programs. Asia has always been responsive, faster than the West, but now the edge is moving more and more toward the Americas Region. 14

15. WestEastMetrics 2012201620122016 2.93.43.63.8 Color 3.13.33.83.7 Pattern/Fit 2.93.43.83.7 Samples 2.53.03.63.4 Design 2.73.13.8 Development 2.93.13.83.6 Speed 17.019.322.422.0 Total 2.83.23.7 Avg. WestEastMetrics 2012 2.93.6 Color 3.13.8 Pattern/Fit 2.93.8 Samples 2.53.6 Design 2.73.8 Development 2.93.8 Speed 17.022.4 Total 2.83.7 Avg. 15

16. The entire development process is much cleaner, easier and adaptive to changes in Asia than in the West. The West is still cumbersome, but getting better. The only advantage the West has is with the less complicated / lower needle products being produced in the region. Number of East iterations leveled off, experiencing fewer iterations in West now – Alvanon technical forms have helped. Asia mills and factories have been on the leading edge of technology for the color development, approval & fabric matching; this is getting better in the West, but with only a handful of fabric mills. The implementation of digital printing has changed the industry and will continue to drive new developments, quick response and short lead times. East is much easier to work with to get initial pre-production samples. 16

17. WestEastMetrics 2012 3.72.8 H 2 O/Avail. & Quality 3.02.8 Green/Sustainability 3.33.5 Labor Supply & Education 3.83.0 Worker Rights 3.42.7 Workplace Stability 17.214.8 Total 3.43.0 Avg. WestEastMetrics 2012201620122016 3.73.62.83.0 H 2 O/Avail. & Quality 3.03.62.8 Green/Sustainability 3.33.13.53.4 Labor Supply & Education 3.8 3.03.1 Worker Rights 3.43.52.72.8 Workplace Stability 17.217.614.815.1 Total 3.43.53.0 Avg. 17

18. The fact is, if you do not take social compliance serious, you are putting your brand and company at risk. The West has much more NGO activity and thus the need to be more diligent; however, this is a bone of contention which needs to be addressed in our industry. The NGO can make claims, without any proof and due diligence against suppliers or corporations and thus the process of defense must be put in place and is quite time consuming. This does not happen as much in Asia, albeit Bangladesh being the exception (rightfully so). More labor, Worker’s Rights Protests in the East – especially countries like Bng., VN & Cambodia 18

19. WestEastMetrics 2012 3.43.5 Security 3.33.1 Economy/Political 3.23.3 Financial 9.9 Total 3.3 Avg. WestEastMetrics 2012201620122016 3.4 3.5 Security/Safety 3.33.53.13.0 Economy/Political 3.23.53.33.4 Financial/Credit 9.910.49.9 Total 3.33.53.3 Avg. 19

20. You have to be careful in each hemisphere; e.g., Honduras, Mexico & Pakistan In the countries we source in the East, political & economic stability, risk, is a constant concern. Each country has problems. Generally about equal. 20

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22. Who Is Better ? Flexibility re. P.O. Revisions & Cancellations WESTEASTSAME 33%42%25% 22

23. Who Is Better ? Willingness & Ability to pre-position fabric & trims WESTEASTSAME 23% 54% 23

24. Who Is Better ? Providing transparency re. Financial stability & Credit worthiness WESTEASTSAME 31%15%54% 24

25. Who Is Better ? Providing Newness, Innovation WESTEASTSAME 15%77%8% 25

26. Who Is Better ? QA Processes, Disciplines & Testing WESTEASTSAME 23%31%46% 26

27. Who Is Better ? Better Ethics; related to bribes, kick-backs and “commissions” (buyer/seller/QA relations). WESTEASTSAME 46%0%54% 27

28. Who Is Better ? At People (Talent) development WESTEASTSAME 23%31%46% 28

29. Who Is Better ? Scores higher on Sourcing (KPI) Score cards WESTEASTSAME 16%38%46% 29

30. Top 3 Western Countries... “Prefer” to source from MEXICO HONDURAS EL SALVADOR NICARAGUA COLOMBIA PERU GUATEMALA USA DR HAITI 30

31. Top 3 Eastern Countries... “Prefer” to source from VIET NAM CHINA INDONESIA BANGLADESH THAILAND PAKISTAN JORDAN EGYPT SRI LANKA PHILLIPINES 31

32. Final thought to Western Producers To Western factories... are you a “Maker” or a “Supplier”. John Strasburger, Dickies, USA 32

33. Final thoughts from Western Suppliers to Western Buyers/Sourcing Execs. "Successful brands/retailers will be those that deftly connect the end consumer with the factory/supply chain and vice versa. This connectivity serves up the tools to solve the challenges the new math presents at retail.” Juan Zighelboim, TexOps, El Salvador 33

34. Final thoughts from Western Suppliers to Western Buyers & /Sourcing Execs. The Apparel world and sourcing options are changing rapidly, especially driven by China’s demographic change (aging population) and the e-Commerce Era. The Western Hemisphere has an unprecedented opportunity to grow with great success thanks to these two factors. Today, the best bet to service the market is to expand in the Western Region partnering with the companies that are investing in capacity expansion and diversifying it’s product lines to meet customers’ demand and market trends. Jesus Canahuati – Elcatex, Hon duras 34

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