China’s Changing Role in the World Textile and Apparel Supply Chain

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Following the steps of many countries in history, China is gradually shifting its role in the world textile and apparel supply chain. While China unshakably remains the world’s largest apparel exporter, its market shares measured by value fell from 38.6 percent in 2015 to 35.8 percent in 2016.  China’s market shares in the world’s top three largest apparel import markets, namely the United States, EU and Japan, also indicate a clear downward trend in the past five years. This result is consistent with several recent survey studies, which find that fashion brands and retailers are actively seeking alternative apparel sourcing bases to China. Indeed, no country, including China, can forever keep its comparative advantage in making labor-intensive garments when its economy becomes more industrialized and advanced.

However, it is also important to recognize that China is playing an increasingly important role as a textile supplier for apparel-exporting countries in Asia. For example, measured in value, 47 percent of Bangladesh’s textile imports came from China in 2015, up from only 39 percent in 2005. We can observe similar trends in Cambodia (up from 30 percent to 63 percent), Vietnam (up from 23 percent to 50 percent), Pakistan (up from 32 percent to 68 percent), Malaysia (up from 25 percent to 49 percent), Indonesia (up from 26 percent to 40 percent), Philippines (up from 19 percent to 40 percent) and Sri Lanka (up from 15 percent to 38 percent) over the same time frame. 

So maybe the right question to ask in the future is: how much value of “Made in China” actually contains in Asian countries’ apparel exports to the world?

China’s Textile and Apparel Factories Today

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Author: Sheng Lu

Professor @ University of Delaware

8 thoughts on “China’s Changing Role in the World Textile and Apparel Supply Chain”

  1. I think it is super interesting to look at China as a major player for exports for other Asian countries. China is known for being a huge exporter for Europe and the Americas, I have never thought that they would aid in sourcing for other countries. 47% of Bangladesh’s textile imports were from China. I am just surprised that this is the case. It is interesting to think about a large player in the export game, helping import for other smaller and developing countries.

    1. Good thoughts! But I don’t think the result is too surprising. First, like we mentioned in the class, while almost any countries in the world can make apparel, much fewer have the capacity of making textiles. Some leading apparel-exporting countries like Bangladesh and Vietnam still rely on imported yarns and fabrics heavily. Second, because of the flying-geese model and the regional free trade agreements in Asia, Asian countries mostly import textiles from within the region. Third, China is becoming a more capitalized and technologically-advanced economy. Like many other countries in the past, China’s textile and apparel industry is also moving from the golden age stage to the full maturity stage. I think in the future we should expect China to shift more production from apparel to textiles.

      1. I’m curious to see how this will effect the already high competitiveness in the retail industry. With China in high demand of exports from not only Europe and the Americas, but Asian countries as well, will retailers have a harder time finding a space to have their products manufactured within China. Now that china is advancing in technological innovations, will retailers have a more difficult time finding factories that can meet there high quantity and time efficiency demands due to the increase amount of retailers wanting to have manufacturing there?

  2. I think China’s expansion into textiles is an interesting and important case. First, China revolutionized the textile and apparel industry, when it became one of the leaders in apparel exports. Many companies across the world outsourced to China and relied on the country’s low wages to keep their own costs down. China’s race to the top improved the poverty and standard of living for its people. As a result, the country is looking to push toward a capital-working country like the U.S. Since China is increasing their textile exports, this is a sign of increasing technological and capital advancements. The people in China are growing with the country because they too are gaining higher-skilled jobs. This is important to the rest of the world because China’s growth into textiles will cause a shift in roles. Since China is advancing and moving toward textiles, someone else will have to take its place in apparel manufacturing. Other developing countries, like Bangladesh and Vietnam, have the opportunity to stimulate their exports by creating labor-intensive jobs in apparel. As stated, companies are already looking elsewhere besides China, so there is clearly an opportunity for other developing countries. It will be interesting how these countries will follow in the footsteps of China toward expanding their global presence.

    1. Great comments and agree totally!
      Related to your comment, here is a very interesting comment from an industry insider: “(Chinese factory owners)” see Vietnam as an opportunity to produce for their long-time buyers using the Vietnamese labour force. They have the Walmart orders of the world, they have the fabric, they just need cheaper skilled labour. http://www.vietnaminsider.net/vgi/blog_files/state-of-vietnam-garment-industry-2017.html
      I think it is very true!

    2. After reading this article and viewing the graphs, I think that it’s interesting to see that even China can’t maintain their competitive advantage in the global supply chain market. Although China is the leading apparel exporter, brands are still seeking alternative sources. China’s factories produce apparel faster and their employees have better skill-sets than those in America. So it’s interesting to think which country would be the next leading apparel exporter- especially when one of the main problems in the global supply chain is the speed in market. The U.S., EU, and Japan would have to find an exporter that could meet consumers’ demands to fast fashion in order to advance in the global supply chain. Despite of the graphs, it still seems like China is their best bet.

  3. China is a cheap labor country before so they focus on the apparel assembling industry. Recently, they start to produce the textiles which means they move the next stage of fashion industry. They start to develop their own textiles instead to import textiles from others and help to sewing or pack garments for developed countries. At the same time, they improve the textile production instead of offer cheap labor force to others as other developed countries do.
    LDCs will import the textiles from China and increase the economy of China as well.

  4. China relies on cheap labor and low cost, and efficiency has always been a big advantage in the world. However, with China’s development, China’s role in the global supply chain (or global value chain) has increased. China has leapfrogging the role of low-cost suppliers and has weakened its position as a cheap outsourcing company. Rising Labour costs have made China no longer a cheap Labour market and a destination for outsourcing, which is also part of a number of reports that have crossed the line of low-cost suppliers. In the next few years, let’s hope that Made in China will become Creation in China.

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