China’s apparel supply chain dominance will endure, says analyst

While the on-going US-China trade war has highlighted the need to diversify clothing and footwear sourcing, this is no easy task given China’s dominance of apparel supply chains, argues GlobalData.

The stakes were raised on September 1 when an additional 15-per-cent punitive tariff was imposed for the first time on US$31 billion in US imports of textile, apparel and home textile products from China. This is on top of the existing duty rate, and will be extended to almost all remaining Chinese imports on December 15.

Leonie Barrie, apparel analyst at GlobalData, says the move – which had been widely anticipated by the industry – is accelerating efforts by clothing and footwear brands and retailers to diversify their sourcing out of China.

“[But] it is not a simple shift,” she argues. “China is by far the largest clothing and footwear supplier, accounting for 42 per cent of all apparel and 69 per cent of all shoes imported into the US last year. All other countries combined are ill-equipped to handle the sheer volume of capacity that would be required to move production out of China.”

China had a 31.3-per-cent share of world apparel exports by value last year. No other country can match the size of its supply base, its range of skills, its quality levels, its product variety and the completeness of its supply chain from raw materials to final products – or has the capacity to absorb its business, Barrie says. China also continues to appeal to apparel buyers as rising wages are largely being offset by efficiency and productivity gains.

In addition, the country plays a key role as a textile supplier, as the world’s largest producer of fibre and fabric and the largest textile exporter, with the value of shipments last year reaching 37.6 per cent of the global total.

Its on-going investment in modern spinning, weaving and knitting machinery is also helping to drive better quality, lower production costs and more environmentally-friendly production – and shores up China’s future position as the key supplier of fabric and trims.

Barrie concludes: “Despite the risk of worldwide political instability and the need to diversify supply chains, China’s role as the leading player in apparel and textile sourcing is expected to continue for years to come.”

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