Philippines

Many manufacturers began to move their operations out of the United States in the 1990s. The handbag industry shared many of the same problems experienced by the apparel and leather industries to which it is connected. The industry suffered from high production costs because of the labor-intensive nature of handbag manufacturing. Overseas markets offered a large pool of non-unionized workers and also offered access to more plentiful materials and at lower costs. Also, with the increasing globalization of the international community, it was advantageous for companies to expand into developing markets that were hungry for new products. This was particularly the case for fashion, where certain luxury names appeal to women of all cultures.

Leather production grew in China and the other countries to which U.S. manufacturers were shifting their operations. China produced an average of 4.8 million bovine hides and skins annually from 1984 to 1985, according to World Trade Organization statistics. Bovine hides and skins are processed into leather. By 1990 China produced 9.3 million hides. In 2000, the figure was up to 40.1 million. India's production increased, although not as dramatically as China's. The country manufactured 36.1 million pieces in 1990; a decade later, production was up to 40 million. In terms of the overall leather goods trade (including footwear) the Far East had 15.7 percent of the market from 1984 to 1986, according to World Trade Organization statistics. By the period 1999 to 2001, that figure had more than doubled and stood at 33.7 percent.

Overall costs may be lower for U.S. businesses in these countries, but there are still other considerations. The animal hides must be obtained and then processed into leather in tanneries. From there they must be manufactured into leather goods and shipped back to the United States. This supply process is affected by the quality of hides, the general infrastructure available in the country (from roads to ports and machinery), and potential environmental problems that might be created in the leather treating and manufacturing process. The discovery in the middle of 2007 of large numbers of toys imported from China by Mattel that had been painted with 

Companies generally manufacture handbags along with some other product: luggage, clothing, scarves, or watches, for example. Because of this, handbags benefit from the well-established distribution networks created by the large apparel and leather industries. They are available in nearly every retail channel.

Some specialty retailers went through tough times in the 1980s and early 1990s. By the middle of the decade the country was enjoying strong economic times and many people became affluent. This increased affluence—wealthy consumers willing to spend money—helped to spark change in the retail industry. Specialty retail blossomed and the discount store industry took shape.

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