Background Globalization has forced textile firms to move their manufacturing to low-cost countries to reduce their prices. However, interest in local manufacturing has increased in recent years because of the trend in sustainability and changes in society’s ways of thinking, both of which can bring textile industry manufacturing back to high-cost countries.

Purpose The purpose of this study is to formulate concepts and theories that can differentiate local manufacturers in high-cost countries from their competitors and identify the key competitive advantages that can lead to successful local production in high-cost countries.

Methodology Two case studies were conducted of local textile manufacturers in Sweden in this study. Both companies’ value chain activities were examined to determine their competitive advantages. Empirical data were collected using semi-constructed interviews with key managers in both companies and were analysed using the thematic analysis method.

Findings The textile industry in high-cost countries can create difference by considering competitive advantages, which are flexible and agile operations, development and innovation, sustainability, combining products and services, and uniqueness and differentiation. However, the competitive disadvantages of textile manufacturing in high-cost countries, which include scarcity of employees and high costs, should be considered as well.