Are Textile and Apparel “Made in China” Losing Competitiveness in the U.S. Market?

The following analysis is from the latest Just-Style Op-ed Is China Losing Its Edge as a US Apparel Supplier.

A fact-checking review of trade statistics in 2016 of a total 167 categories of T&A products categorized by the Office of Textiles and Apparel (OTEXA) suggests that textile and apparel (T&A) “Made in China” have no near competitors in the U.S. import market. Specifically, in 2016:

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  • Of the total 11 categories of yarn, China was the top supplier for 2 categories (or 18%);
  • Of the total 34 categories of fabric, China was the top supplier for 25 categories (or 74%);
  • Of the total 106 categories of apparel, China was the top supplier for 88 categories (or 83%);
  • Of the total 16 categories of made-up textiles, China was the top supplier for 12 categories (or 68%);

In comparison, for those Asian T&A suppliers regarded as China’s top competitors:

  • Vietnam was the top supplier for only 5 categories of apparel (less than 5% of the total);
  • Bangladesh was the top supplier for only 2 categories of apparel (less than 2% of the total)
  • India was the top supplier for 2 categories of fabric (9% of the total), one category of apparel (1% of the total) and 5 categories of made-up textiles (41.7% of the total)

part II

Notably, China not only was the top supplier for many T&A products but also held a lion’s market shares. For example, in 2016:

  • For the 34 categories of fabric that China was the top supplier, China’s average market shares reached 41%, 23 percentage points higher than the 2nd top suppliers for these categories
  • For the 88 categories of apparel that China was the top supplier, China’s average market shares reached 53%, 38 percentage points higher than the 2nd top suppliers for these categories.
  • For the 16 categories of made-up textiles that China was the top supplier, China’s average market shares reached 57%, 40 percentage points higher than the 2nd top suppliers for these categories.

It is also interesting to see that despite the reported rising labor cost, T&A “Made in China” are NOT becoming more expensive. On the contrary, the unit price of U.S. T&A imports from China in 2016 was 6.8% lower than a year earlier, whereas over the same period the unit price for U.S. T&A imports from rest of the world only declined by 2.9%.

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Furthermore, T&A “Made in China” are demonstrating even bigger price competitiveness compared with other suppliers to the U.S. market. For example, in 2016, the unit price of “Made China” was only 78% of the price of “Made in Vietnam” (in 2012 was 89%), 88% of “Made in Bangladesh” (in 2012 was 100%), 86% of “Made in Mexico” (in 2012 was 103%) and 72% of “Made in India” (in 2012 was 81%).

Are the results surprising? How to explain China’s demonstrated price competitiveness despite its reported rising labor cost? What’s your outlook for the future of China as a sourcing destination for U.S. fashion brands and retailers? Please feel free to share your views.

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Author: Sheng Lu

Professor @ University of Delaware

11 thoughts on “Are Textile and Apparel “Made in China” Losing Competitiveness in the U.S. Market?”

  1. I think that the difference in the price drop is surprising, 6.8% compared to 2.9% is a lot! However, I do not think that it is surprising that it is China that has the more significant price drop, in that China is known for having cheap prices. Even despite China’s rising labor cost, it is still a strong price competitor. I think that because China has had such low labor costs in the past, it’s rising cost still isn’t up to the labor costs that are required in other countries, therefore enabling them to still be more price competitive. Also, because China has the capacity to have the full supply chain there or really close to there, it makes prices lower. I think that the future of China as a sourcing destination for U.S. fashion brands and retailers is something to beware of, especially since nowadays consumers are looking for even cheaper goods, something that China can provide. However, because consumers are also looking for goods to get to them quicker, that is something that China cannot ensure due its distance. It is evident that China’s economy has grown significantly, being a part of the BRIC countries, and while China’s economy recently has not had as strong as growth as it has seen in past years, it is still a country to look out for.

  2. It is clear from this article that China has exceeded all expectations in the textile and apparel industry. China is known for cheaper labor and sourcing, making them an important market for many retailers looking to find the best possible price range and adhere to a budget for the company. I think that although this is beneficial for other countries, it may not always be beneficial for China; cheaper labor costs can potential hurt their rising costs in the long run. They will continue to be the top contender of textile and apparel sourcing, however, many countries such as Bangladesh are starting to rise with success in the industry and market as well.

  3. From this article it is clear that China’s textile and Apparel power is not slowing down even with this rise in labor costs. Even though their labor wages are rising, they are still known for having cheap labor, fast production time, and better working conditions that other counties such as Bangladesh which gives China a competitive edge over other Asian countries. Furthermore they have all components of the supply chain allowing for them to increase their speed as well as eliminate transportation cost which all affects the end cost of the goods. China will always be relevant in the textile and apparel world, however with other Asian countries such as Vietnam and Bangladesh showing signs of great growth, China might move forward in the Flying Geese Model and focus more on textiles, shifting its apparel production to counties near by.

  4. After reading these results and looking at the statistics, it wasn’t too surprising to see that China is still dominating the T&A industry. Even with all of the competition they are facing today, China is still the top supplier (more than 50% of the market) for apparel and fabrics. It was shocking to hear that even with the rising labor costs in China, they still were able to have a larger price drop in their unit price, 6.8% lower than last year with the rest of the world only declining 2.9% from last year. I think that with the higher competition arising around the world in Bangladesh, India and Vietnam, China understands that this is not a time for slacking. They are and probably always will be the leaders in this industry and they will continue to grow without any mercy. Although other countries are coming into the picture with low labor costs and taking some of the business away from China, I do not think any of them with outrun China in the near future.

  5. It’s not surprising at all that China is still dominating the T&A industry. I think there has been more publicity on other countries such as Bangladesh, Vietnam and India so people are aware that there are other countries and opportunities for T&A creation. This week we talked about the Asia Pacific and how regionally they’re all working together to import and export with one another, leaving the US out. If the Asia Pacific keeps it up, I think the US and other places like the UK are going to have a tough time getting apparel and textiles to the consumers. I think if it looks like that’s where it’s heading, the US should really start thinking about other solutions that can benefit them or negotiate with the Asia Pacific region especially China.

  6. After reviewing the data, it is not a surprise that China is still dominating the T&A industry. Although China has rising labor costs, they were already offering very cheap prices, and the increasing labor costs have not effected the price of goods, which is what allows China to continue to be the top contender in these sectors, and stay competitive in today’s market. As the costs of manufacturing in China continue to rise in the future, Western Hemisphere countries such as the US will look to other places for cheap labor, such as Bangladesh, Vietnam, and South and Central American countries.

  7. It’s evident that China is a leader in the textile and apparel industry with it being the top supplier of yarn, fabric, apparel and made-up textiles. I was not surprised in reading this data. China most commonly has the cheapest labor, and many companies choose to outsource from China for this reason. I think China will continue to be the leader in textile and apparel sourcing, with Vietnam and Bangladesh not far behind. I wonder if one day however Vietnam or Bangladesh will catch up with China, and if so- when?

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