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

17 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?

  8. It is not surprising that China has become one of the leading suppliers and manufacturers in the textile and apparel industry. The statistics display that China was the top supplier for two categories of yarn, the top supplier for 25 categories of fabric, the top supplier for 88 categories of apparel, and the top supplier for 12 categories of made-up textiles. As we can see, China is going nowhere but up from here. We’re aware that China’s labor costs have increased, but they are still cheaper than the U.S., making China a strong price competitor. China is also able to do all of their production and manufacturing in one place, so their prices can be lower because their supply chain is in one area. I think that China has a very good chance of staying at the top as a sourcing destination for U.S. fashion brands and retailers. Although their labor costs are increasing, they are still significantly cheaper than America’s. China can provide cheap products, which is what the consumer is looking for. This makes it more attractive for retailers to source from China because they can price their products lower for consumers and make a better profit. China is definitely a country to be aware of in the fashion industry, for it is continuously becoming a stronger country to outsource from. However, I’m curious to see if other countries, such as Vietnam, Bangladesh, and India, catch up to China or surpass it. These countries are still top suppliers in some aspects and provide even cheaper labor than China, so I’m interested to see if these countries will be a threat to China.

  9. Being that China has become one of the leaders in the textile and apparel industry, they are going to be able to provide the cheaper products, which is exactly what consumers want. What many people do not see is the horrible working conditions, all they want is the cheap clothes. The unit price for things made in China is much cheaper than Bangladesh or Vietnam.

  10. I’m very surprised at these statistics, as I certainly thought that China was losing its competitive edge to places like Vietnam and Bangladesh. Perhaps the main reason China is still able to stay on top is because of the sheer size of its work force. In the beginning of the semester, we read an article about the production of Apple products. The article mentioned that in China, there are thousands of factory workers, most of which are willing to work long hours and live on factory grounds. Other places don’t have a workforce this large, this educated, or this motivated to work. Even though the United States is certainly developed enough to produce on a large scale like China, Americans are much less willing to take manufacturing jobs. Perhaps another reason the numbers aren’t budging is that the US has been too dependent on China for too many years. So many companies are too involved to simply abandon Chinese manufacturing. Additionally, while labor costs in China are rising, the amount is not significant enough to have a huge impact on the total cost of goods produced- certainly Chinese manufacturing is still significantly cheaper than US manufacturing will ever be. Because Chinese manufacturing is still cheap, quick, and reliable, I don’t foresee China ever becoming obsolete in the US market.

  11. It is not a surprise to me that China has become a top supplier of over 50% for 3 categories in the textile and apparel industry. Within the past 30 years China has transformed to become the 2nd largest economy in the world. With their industry improving in such short amount of time it proves to the rest of the world that they are a reliable supplier with cheap labor costs. Although China is a huge source of fast fashion products, they give the consumer what they are ultimately looking for which is cheaper prices. I think that in the future China could pose as a major threat to the U.S. because although they are not at the same level as us at the moment in the textile industry, they do have the skilled labor for the apparel industry, which is something that our country lacks at the moment.

  12. Right now, theres a huge trend in the US to create “made in the USA” products. I do not believe that this trade is really competitive to products that are made in China. Chain is a huge part of the US apparel and fashion industry and contribute over 40% of apparel imports. Even with “made in the US” becoming more popular, it cannot compare to the price and reach that China provides to US apparel consumers. I believe the US should expand on ‘made in the USA” product when we have the competitive advantage, for the products that we don’t we can leave them to China.

  13. I found the subject of this article to be very interesting because at first thought, hearing “Made in China” I almost connected it with a bad connotation. It is being more stressed to produce and purchase more “Made in America” products. Although, they want people to support more U.S made products, there is really not much comparison with products produced in China. China will always have an upper hand in T&A for various reasons as opposed to the small production of T&A in America.

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