BEIJING, China — In January, the first train from Yiwu — a city situated in eastern China — arrived in London after spending 18 long days on the rails, crossing Kazakhstan, Russia, Belarus, Poland, Germany and France, bringing containers filled with various goods including clothing.

Navigating a complex intercontinental network of rails across a grand total of 12,000 km, the ambitious route — less costly than air yet comparatively faster than sea — intends to usher in a new era of freight transportation from China to Europe. As the 15th European city added to China’s international rail network, the Yiwu-London route is just one of many legs of a global initiative that will have a momentous impact on the garment and textile industries.

Nearly 2,000 years since traders first brought silk out of China and over seven centuries since the arrival of Marco Polo, textile and apparel industry leaders across three continents are eager to reap the results of One Belt One Road [OBOR]. But what exactly is this enigmatic plan with the potential to reshape world trade as we know it?

OBOR is a colossal China-led project that aims to become an interconnected network of ports, roads, railways, air routes and even resource pipelines, ultimately connecting Asia with Europe and East Africa. Thanks to existing global supply chain networks, the knock-on effect has the potential to impact economic corridors worldwide.

While some describe OBOR as a Chinese master plan to rewrite the world order akin to the US-led Marshall Plan for Europe after the Second World War, the Chinese see OBOR as fitting neatly into President Xi Jinping’s role as the new protector of globalisation and free trade in the absence of American leadership. Speaking emphatically at the World Economic Forum earlier this year, Xi’s voice was in sharp contrast to President Trump’s protectionist stance.

The sheer scale of OBOR is staggering. According to the Carnegie Endowment for International Peace, the aggregate investments related to OBOR are estimated to be upwards of $1 trillion; meanwhile, a 2016 report by professional services firm PwC stated that as of February 2016, a value of $250 billion in projects had already been completed, commenced or signed into action.

Last month during the Belt and Road Forum for International Cooperation held in Beijing, China signed agreements with over 30 new countries – bringing the total to 68 – while Xi pledged to contribute an additional 100 billion yuan ($14.5 billion) to the Silk Road Fund. Yet four years after Xi’s initial announcement, the inner workings of the project remain shrouded in mystery. With a bar set so high, one can’t help but wonder if OBOR will deliver.

Sceptics in the West

In parts of the West, scepticism is running high. In the eyes of many analysts and investors, Xi’s extravagant rhetoric ostensibly diverges from the reality that is. “The impact of the Belt and Road project on the European economy is widely thought to be slight — positive if the initiative is focused on improving transportation infrastructure, modestly negative if trade integration with China reduces European exports to Central and South Asia,” writes Bruno Maçaes, a political scientist and business strategist, in a report for Carnegie Europe.

Some critics are calling into doubt both the viability and reciprocity of Xi's ambitions. According to a piece in the Financial Times by Jörg Wuttke, president of the EU Chamber of Commerce in China, five trains packed with cargo depart from the western Chinese city of Chongqing for Germany each week, yet only one full train returns with European goods. This inability to maximise the two-way flow of goods is one of the ultimate shortcomings of the project, particularly for fashion.

Today, despite mounting challenges from India — as well as increasing domestic wages — China remains the largest exporter of textiles and garments worldwide. At the bottom segments of the market, European demand for Chinese products far exceeds the reverse; meanwhile, in the premium and luxury segment, Chinese demand for Western goods may not be enough to render the railway economically viable, even if China remains the world’s largest luxury market, accounting for 50 percent of global purchases.

At the more affordable end of the fashion market, attention still seems to be focused on sea transport. According to Iñigo Sáenz Maestre, a spokesperson for H&M, the company “is focusing on efficient and simplified logistics — transport by sea and avoiding air and road transport — whenever possible.” As of 2017, approximately 90 percent of the fast fashion giant’s goods were transported by either sea or rail (the exact breakdown is unavailable), including those headed to China from the company’s European suppliers.

Rail transport to and from China only represents a minor part of overall freight volume, but the benefits are already significant.

Compared to equivalent sea routes, the Yiwu-London train ride takes half as much time; compared to air travel, railways offer greater volume per journey at a lower price. According to SeaIntel, a container shipping market intelligence consultancy based in Copenhagen, rail transport is expected to grow rapidly over the next decade, potentially taking market share from ocean transport in the process.

For brands like H&M, this could mean replacing some of its sea freight with rail transport in the future. And for luxury groups, which tend to dispatch a greater proportion of their goods via air, OBOR provides a direct opportunity to reduce coat and carbon footprint with freight train.

"Over the next one or two years, rail transport to and from China will only represent a minor part of the overall volume, but the benefits from being on board are already significant," predicts Ole Kehler, route development manager at DSV, a Danish transport and logistic company.

A modest view of OBOR "ignores both the ambition and the long-term impact of the project, once its purpose has been properly understood,” adds Maçaes. The China-Britain Business Council, for instance, expects that major opportunities will arise alongside OBOR, particularly in infrastructure and logistics, as well e-commerce — all of which are intimately connected to the project's railway initiatives.

To their point, at least one major player — the Chinese e-commerce titan Alibaba — is eager to tap the growing rail network. Earlier in January, when the train arrived in London, the Bulgarian government and Xinhua, China’s official press agency, jointly reported that Alibaba was scouting for locations and considering the construction of a European logistics centre in Bulgaria, with the primary intention of backing up their operations in Europe.

This past April, as the London-Yiwu train prepared to return to China, Alibaba began its search for warehouse locations adjacent to the rails of the new route, with hopes of optimising its reach throughout Europe with new hubs, expediting its deliveries. In a certain light of optimism, OBOR has the potential to become Alibaba’s long-sought launchpad into the European market to challenge Amazon.

As for the lack of demand for freight transport by rail from Europe to China, perhaps this too will change as an increasing number of upmarket European brands begin to sell through Chinese e-commerce giants like Alibaba and JD.com.

Transformation and Conflict in Asia

A little closer to home, China’s Asian neighbours are caught in a similar bind between hopeful optimism and intensifying scepticism, as OBOR-related projects such as the Jakarta-Bandung railway continue to be plagued by severe delays and swelling expenses in Indonesia.

Nevertheless, countries like Myanmar, for instance, which reopened its economy in 2012 following intense political reforms, have plenty to gain from OBOR. In particular, with the EU and US lifting sanctions in recent years, “Myanmar is now regarded as a newly emerging destination for businesses on account of its strategic geographical location,” writes Daw Chaw Chaw Sein, a member of the Myanmar Institute of Strategic and International Studies

In terms of the fashion industry, Myanmar's textile and garment manufacturing sector currently account for approximately 10 percent of the country's total exports — and the market continues to grow, with a total export revenue target of $12 billion by 2020. In terms of production, the country's minimum monthly wage in 2015 sat just shy of $70 — a significantly lower rate than neighbouring Vietnam and Cambodia — making the country an especially attractive location for high street retailers like the Gap, H&M and Primark, all of which manufacture in the South East Asian nation.

By opening up new trade corridors to link the southwestern Chinese province of Yunnan with South Asia through Myanmar, OBOR provides much-needed infrastructural upgrades for the formerly economically isolated country — all of which are essential for Myanmar to meet its 2020 goals. As part of the Bangladesh-China-India-Myanmar Economic Corridor, Myanmar’s garment industries can potentially increase productivity and efficiency in supply chains as well, while opening up trade with the rest of Asia, Europe and Africa through OBOR.

But while the plan looks good on paper, several obstacles remain. “Beyond the technical dimension, the problems faced [with regards to OBOR] are of a geo-economic, political and strategic nature,” says Dr Jean-Michel Valantin, lead senior analyst at think tank Red (Team) Analysis Society.

As Sein explains, “Myanmar is important for China’s landlocked southwestern provinces’ market access to Bangladesh and India through transit trade instead of China’s eastern coast.” But although Bangladesh is openly receptive to the initiative, India — notably absent from the Belt and Road Forum this past May — has objected to OBOR altogether on several grounds, citing geopolitical antagonism related to another leg of OBOR: the China-Pakistan Economic Corridor, highlighting yet another dimension of challenges for the ambitious project.

Potential Success in East Africa

Despite the mounting scepticism and rising obstacles, China’s ambitions have not been fruitless. Africa has been hailed the next frontier for both fashion retail and apparel sourcing with high street and budget labels like H&M and Primark already manufacturing in East Africa, China’s aspirations are already manifesting themselves throughout the continent by means of highways, airports and high-speed rails — many of which are constructed by Chinese companies and will bear significant consequences for the garment industry. Though officially outside the reach of OBOR, these projects are effectively laying the groundwork for its extension.

“China is a continental-sized economy facing tight resource constraints; home of the world’s largest and an ageing population, its slowing economy offers cheap capital and internationally competitive industrial — including infrastructure — capacity,” explains Dr Lauren Johnston, an academic specialising in China-Africa relations at the Melbourne Institute of Applied Economic and Social Research. “Africa, in contrast, offers a fast-growing and young population, and relatively high natural resource and arable land levels per capita; on the whole, it is in need of massive infrastructure investment, affordable financial capital and investors with an appetite for risk.”

As Dr Johnston highlights, while the 2016 minimum wage in China's manufacturing cluster in Guangdong province is approximately $300 per month, in Ethiopia's Hawassa Industrial Park — one of the country's premiere industrial areas centred on textile and garment products — workers' wages average merely $50 monthly, amongst the lowest in the world. Already, the budding manufacturing hub has attracted the attention of Western operators such as PVH and H&M, both of which intend to source from the park.

Chinese firms like Wuxi Jinmao, which produces garments mainly for export to the US — occasionally for brands under PVH's umbrella, as well as Huajian, a shoe manufacturer for brands like Clarks, Calvin Klein, and even Ivanka Trump — have already invested heavily in the area.

Major opportunities could arise alongside OBOR, particularly in infrastructure, logistics and e-commerce.

“In essence, countries like Ethiopia stand to benefit from China's fading demographic dividend and rising wages [and] level of development, and use related labour-intensive textile manufacturing and light industrial opportunities to ultimately realise a similar gradual industrial transformation [as China’s],” adds Dr Johnston.

Through an interconnected Africa via OBOR, presently nascent garment manufacturing hubs on the continent are breaking down some of the general barriers in place, expediting their evolution into international factories. Indeed, many local businesses have already begun to reap the rewards of OBOR as well.

“It’s important to note that China is not just investing in trains connecting Ethiopia to other African nations but has also built the rail link from Ethiopia to the port [in the neighbouring country of] Djibouti,” says Bethlehem Tilahun Alemu, founder and chief executive of the Ethiopian footwear brand SoleRebels, referring to the $3.4 billion China-built electric railway connecting Ethiopia — an otherwise landlocked country — to the ocean, which launched earlier this year.

A logistic upgrade of this magnitude, Alemu emphasises, will bear significant consequences for her budding business, which produces its own inputs locally through small-scale local facilities and exports worldwide. “This will have a major impact on transit time and transit flows reducing them from two to four days to just under ten hours to deliver goods from Addis Ababa [Ethiopia’s capital] to the port.”

“To give a very vivid example, one of the shoe factories in our ‘Made by Ethiopia’ programme [of which Alemu is the chief executive] is situated one kilometre from the start of the rail line. This means that they can have goods out the factory door and on the way to port within 25 to 45 minutes of being packed out at the factory. That’s a paradigm shift for delivery and one that is in line with how global consumers want and need products to flow.”

In nearby Kenya, China’s reach is continuing to expand, with locals hopeful that the economic initiative will yield similar upgrades, which are much desired in the region. Currently, infrastructure upgrades include the China-invested standard gauge railway in Kenya, scheduled for completion by the end of this year. The $3.8 billion and 609 km-long railway will connect Mombasa’s ports to the capital of Nairobi, bearing the potential to impact both textile imports and garment exports.

"Most of the manufacturing units for apparel are in Nairobi and its environs, and most fabric for those factories arrives by ship to Mombasa, so [this route] will be convenient," says Ann McCreath, the managing director of KikoRomeo Africa and founder and chairman of the Festival of African Fashion and Arts. "I assume the more standard items are also sent [out] by sea, so again the route to Mombasa is critical."

In spite of such infrastructure groundwork and China’s recent commitment of $60 billion in development aid to Africa during 2016-2018, most of which are in the form of patient capital, critics believe that China’s relationship with Africa is not as mutually beneficial as it should be.

What’s Next?

Despite early signs of OBOR’s success, as critics continue to lament, four years have passed since the global initiative was first cast under the spotlight. Today, the official plans remain still fragmented and murky at best. Admittedly, the pace of development of OBOR does seem slow, but perhaps that is the point. As some scholars of China are quick to point out, unbarred by the relatively short nature of Western political terms and regular elections, President Xi does not need to produce immediate effects in the same way that Western leaders do.

But regardless of whether Xi’s initiative is the manifestation of a geopolitical “will to power” or a genuine economic partnership in good faith (in reality, most experts believe it is a mix of both), no one can deny its potential to send shockwaves across sectors, directly influencing the future of the garment and textile industry on three different continents and act as a competitive advantage to trade with the other two continents — precisely the way Xi intended it to.

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