Monday, June 25, 2012

Victoria's Real Secret

This image recently appeared on the very popular, self-deprecating So Mexican page on Facebook. The post and most online comments reference the pulga -- flea-market -- as a bargain-hunter's dream that is widely appreciated in Mexican-American communities (among many others) in the United States.

My first thought, however, is that the photograph might just as easily have been taken in Nicaragua. Outside of Managua is a "zona franca" in which various incentives encourage investment in light manufacturing such as textiles or basic assembly operations. These facilities -- such as Las Mercedes and Las Palmeras provide business services and utilities that would be in short supply elsewhere in the country, so that the rent per square meter might actually be higher than comparable facilities in the United States.

What the zones offer really offer, of course, is very low-cost labor, adding a additional, very wide layers of profit between those who make clothes and those who purchase them. 

In the case of Managua, the facilities are accessible to ports, but for high-value, low-weight items for which tight timing is part of the business model, proximity to the airport is even more important. The current geography of lingerie is apparently such that the outskirts of Managua is a good location for a 200,000-square-foot Victoria's Secret shop. That is a lot of bras and panties! And the real secret is what portion of the price of a $50 bra is paid to the women who made it, and whether more than a few top managers benefit from the operation at all.

Back to the opening photo -- one of the few "benefits" of having such a facility in one's neighborhood is that flawed items go to real factory outlets (like we used to have in the United States), and from there to various local markets. In Central America -- as in textile-producing areas throughout the periphery of the world space-economy -- slightly imperfect designer fashions are easy to come by.

All of which raises the question: how much is this stuff really worth anyway?

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