Trade War Looms over New York Fashion Week

Discussion questions:

  • Why does the U.S. textile industry call for additional tariffs on textile and apparel imports from China whereas U.S. fashion brands and apparel retailers oppose the tariffs?
  • Based on the trade theories we have learned so far, why or why not would you recommend President Trump to impose 25% punitive tariffs on imports from China?

Appendix: Comments on the Proposed Section 301 Tariffs on Imports from China (August 2018)

For the complete timeline of the U.S. Section 301 tariff action against China, please click HERE

How Might Brexit Affect the Global Fashion Apparel Industry: Discussion Questions from FASH455

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#1 Why should or should not globalization be responsible for Brexit? Does Brexit suggest that globalization is in retreat? What is your view?

#2 What could be the worst scenario of “Brexit”, particularly for the fashion apparel industry?

#3 Why should or should not UK maintain the trade preference programs established between EU and developing countries (such as GSP) after Brexit?

#4 How might Brexit affect the fashion apparel supply chain in EU and rest of the world? Who might be the winners and losers?

#5 What could garment factories in Romania do to mitigate the potential negative impacts of Brexit?

#6 Overall, from the case of Brexit, how do you understand that textile and apparel is a global sector?

[For FASH455: 1) Please mention the question number in your comments; 2) Please address at least two questions in your comments]

Fashion Education in China: An Exclusive Dialogue with Fashion Majors from the Donghua University (September 2018)

(Student fashion show–from College of Fashion and Design at DHU)

To enhance students’ global awareness and facilitate cross-cultural exchange, we are very pleased to have several special guests from the Donghua University (DHU) to answer questions proposed by FASH455 students regarding the fashion education in China. Donghua University (DHU), located in downtown Shanghai and formerly known as the China Textile University, has one of the oldest and most prestigious fashion programs in China.

  • Luo Wang: a Ph.D. student at the College of Fashion and Design at DHU. Luo received her B.S. in fashion design and engineering from DHU and was an exchange student at the North Carolina State University, College of Textiles.
  • Caixia Chen: a Ph.D. student at the College of Fashion and Design at DHU. Caixia received her B.S. in fashion design and engineering from DHU as well. Her research interests include fashion marketing and fashion supply chain management.
  • Zongyu Xiong: an M.S. student in the College of Fashion and Design at DHU. Her research interests include cost management in the fashion supply chain.
  • Jingjing Wang: a freshman majoring in Fashion Design and Engineering in the College of fashion and design at DHU.
  • Bai Li: Bai received her B.S. in fashion design and engineering from DHU and M.S. in Fashion and Apparel Studies from UD. Currently, Bai is a Ph.D. student at UD studying functional apparel design and physical therapy. 

Question from FASH455: Why do you choose to be a fashion major—personal interest or guaranteed job offer?

Luo Wang: For me, it is personal interest. Both my bachelor and master degrees were in fashion design. I was interested in the development of the luxury apparel market in China. As China’s economy continues to grow, I have been studying the purchasing behaviors of Chinese consumers for apparel as well.

Caixia: Personal interest.

Zongyu: Personal interest is the main reason above all. And I also hope that I can engage in fashion-related jobs in the future.

Jingjing: I choose to be a fashion major because of my personal interest. But my future work may not be in the fashion area.

Bai Li: Both–personal interest in fashion and a kind of guaranteed job offer because of the engineering component of the major.

Question from FASH455: What classes do you take as a fashion major in China?

Luo Wang: At the Donghua University, we have two departments in the College of Fashion and Design. One is fashion design, and the other is apparel engineering. I was a design major. For my undergraduate studies, I have taken Design Introduction, fashion design, pattern making, Apparel Production, and Marketing Management, Apparel Making Basic Techniques,Fashion Illustration,Computer-Aided Fashion Illustration,Apparel Making Techniques,Apparel Accessory Design,Clothing CAD,Apparel Accessory Design.

For my graduate studies, I have taken Branded Fashion Exertion, Fashion Accessories Art Design, Design management, History of Art Design, Branded Fashion Design, Fashion Brand Constitution, Fashion Comments, Western Modern Art, and Western Art Literary Theory.

Caixia: Fashion marketing, fashion manufacture management, fashion buyer, fashion English, Fashion trade, fashion forecasting, draping, and pattern-making.

Actually, the Donghua Universty offers two fashion majors. One is fashion design which focuses on design. The students majored in fashion design are good at drawing. Another one is fashion engineering, which focuses on draping, pattern-making, fashion trade, fashion marketing etc.

Zongyu: Global marketing of clothing, Market research and forecast, Consumer psychology, Clothing Materials, CAD, Fashion Illustration, Clothing craft, Draping, and some theoretical course.

Jingjing: So far I’ve taken clothing marketing and merchandising, garment production management, fashion retail management, etc..

Bai Li:  1) Engineering basic courses: chemistry, physics, electrical and electronic engineering, and C programming, etc. 2) Fashion design courses: pattern making, trend forecasting, draping, clothing materials, etc. 3) Senior thesis and senior collections for the fashion show

Question from FASH455: What is the percentage of fashion majors in your school that receive job offers immediately after finishing their studies?

Caixia: As I know,  around 100 fashion engineering majors graduate from the college of fashion and design at DHU every year. Among them, about 50% receive job offers immediately after finishing their studies, and about 20% will continue to pursue a master degree in China. Another 20% will choose to study abroad.

Zongyu: According to the official statistics released by DHU, the employment rate reached 92.18% for the total 729 class of 2015 graduated from the college of fashion and design.

Jingjing: About 90%.

Question from FASH455: How do your professors tell you about the fashion industry in the United States?

Luo Wang: We were told that a notable competitive advantage of the U.S. fashion industry is in marketing and business strategy. As we know, U.S. has the world’s top business schools and MBA programs; I think this is why our professors told us we need to learn more about the business strategy of U.S. fashion companies.

Caixia: U.S. is one of the largest textile and apparel importers in the world. China — by far is the largest supplier of textiles and apparel to the U.S..

Zongyu: I’m sorry for my limited knowledge. I just know a little about the recent trend of American textile industry moving back to the U.S..

Jingjing: The fashion industry in the United States is quite developed, and it has an important place in the world. However, it also meets bottlenecks at its present development stage. Some classic brands are managed less well than in previous years.

Bai Li: Not much…some professors had limited knowledge of the fashion industry in the States.

Question from FASH455: How do you think globalization has affected China, especially its textile and apparel industry?

Luo Wang: In my opinion, globalization is a double-edged sword that brings China both changes and opportunities. The low labor cost was a significant advantage of the apparel industry in China. With the deepening of globalization, however, China has been strengthening the enforcement of regulations in the social aspects, which focus on improving worker’s welfare and meeting the international labor standards. As a result, China is gradually losing the advantages in labor cost compared with many other developing countries. On the other hand, an opportunity for the apparel industry in China is that we begin to pay more attention to the building of our indigenous fashion brands rather than making knockoffs.

Caixia: It is of grave concerns to some Chinese manufacturers that more and more international buyers now switch to source from lower-cost countries such as Bangladesh and Vietnam. However, in my opinion, Chinese manufacturers still enjoy competitive advantages. For example, Chinese suppliers can provide better quality products and more value-added services. Furthermore, by adopting new technologies, Chinese factories are able to offset the impact of increased production cost through improved efficiency and product quality.

On the other hand, globalization has made it more difficult for Chinese fashion companies to develop its own brands. In particular, the local Chinese fashion brands are facing grant challenges with the flood of international brands into the Chinese market.

Zongyu: For Chinese companies,  globalization not only has resulted in more competitive pressures but also has created more opportunities to get access to the world marketplace.  Chinese companies realize that they have to embrace a global version and develop high quality and innovative products so as to stand out from the market competition.

In terms of the Chinese consumers, globalization has brought them with more choices of better quality and lower-priced products.

Jingjing: Globalization is a two-edged sword, creating both opportunities and challenges for China. In the past, low-cost labor is a major competitive advantage for China. But now China’s cost advantage is gradually diminishing compared with other less developed countries whereas China is still not “strong enough” to compete on technology with advanced economies.

Bai Li: Of course, globalization has created many new job opportunities in China but also has caused some labor and environmental issues.

Questions from FASH455: What are the working conditions of garment factories in China?

Caixia: The working condition in China’s garment factory has improved significantly as you can see from the pictures below. Automation and technology advancement also play an important role.

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Zongyu: Dragons and fishes jumbled together, meaning there are companies in either good or bad conditions. But compared with the past, working conditions in the Chinese garment factories overall have much improved. Most factories have met the 5S (5s is the name of a workplace organization method that uses a list of five words: sort, set in order, shine, standardize and sustain) or 6S(5s plus safety) requirements.

Jingjing: Following the principle of 5s management, Chinese garment factories overall are getting cleaner, more orderly and more modernized.

Question from FASH455: Does it bother the Chinese people that American companies send work to China to produce cheap labor?

Zongyu: It is just my personal view: exporting textile and apparel is necessary for China as a developing country to generate economic growth and create job opportunities. But China is also transforming and upgrading its economy.

Jingjing: I think it is a normal phenomenon in the developing world. Actually, Chinese companies have started to offshore production to less developed countries with cheaper labor.

Anything else you would like to share with our students? 

Luo Wang: As a pillar industry supporting China’s exports and foreign exchange earnings, the textile and apparel industry is a sector of strategic importance to China’s national economy. You can find the world’s most complete textile and apparel supply chain in China, from material planting to retailing. I would strongly recommend you to come and visit China, from its garment factories in Guangdong province (located in the South Part of China), online apparel retail businesses in Zhejiang Province (for example, Alibaba), to Shanghai where you can enjoy the most novel way of clothing shopping. Further, in today’s supply-chain based economy, China plays a critical role in linking the textile and apparel industry around the world. I am sure understanding China will help you shape a big picture of the global textile and apparel industry and beneficial for your future careers.

Questions from our DHU guests for FASH455 students:

  1. What do Americans think of “Made in China” today?
  2. Do the classes you take help with your career preparation?
  3. Have you taken any internship classes at UD? What did you do?

Textile and Apparel “Made in the World”

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While shopping in SoHo (NYC), Nicole Farese, a student from FASH455, found the label of a Splendid sweater reads “Made of Italian Yarn” and “Made in China”. Splendid is a casual wear store which is known for their high-quality clothing sold at a premium price.

Exercise: Check your wardrobe and can you find any clothing that is also made through a “global supply chain?” Please feel free to submit your picture with a brief description of your item to shenglu@udel.edu.

BIS Released Assessment Report of the U.S. Textile and Apparel Manufacturing Sector

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The Bureau of Industry and Security (BIS) under the U.S. Department of Commerce recently released its assessment report of the U.S. textile and apparel (T&A) manufacturing sector. The report was based on a survey of 571 U.S. T&A manufacturers in summer 2017. These respondents include 230 textile mills (NAICS 313), 128 textile product mills (NAICS 314), and 213 apparel manufacturers (NAICS 315).

Below are the key findings of the study:

The state of the U.S. textile and apparel (T&A) manufacturing sector

  • U.S. T&A manufacturing has shrunk significantly: the value of T&A shipments (seasonally adjusted) in 2016 ($68 billion) was almost 56% decrease in real terms since 1995 ($153 billion).
  • U.S. T&A manufacturing has undergone substantial structural change: textiles and textile products accounted for 82% of the total shipments of the U.S. T&A industry as of 2016, compared to 57% in 1995. Notably, only 18% of shipments came from apparel manufacturing in 2016, compared to 43% in 1995.
  • U.S. T&A manufacturing sector is hiring less: Between 1990 and 2016, total employment decreased by 79%, from 1.7 million to 352,000 workers; over the same period, over 86% of apparel manufacturing jobs disappeared.
  • U.S. T&A manufacturers are making more capital investments: The overall total Capital Expenditures (CAPEX) of the 571 respondents increased 90 percent from 2012 to 2016 (from $1.6 billion to $3.1 billion). Particularly, the CAPEX of textile mills grew by 80 percent over that period—mostly on “Machinery, Equipment, and Vehicles.”
  • North Carolina hosted the largest number of U.S. T&A facilities (22 percent of the respondents), followed by Georgia (10 percent), and South Carolina (9 percent).
  • China, Mexico, and Canada are the most popular destinations for foreign investments by U.S. T&A manufacturers.

Competition landscape and factors

  • Respondents listed a total of 1,309 U.S. competitors and 552 non-U.S. competitors. Chinese companies were cited as the number one source of foreign competition.
  • “Quality,” “Lead Time,” and “Innovation” were the top three competitive advantages of U.S. T&A manufacturers as they related to foreign competition. “Labor Costs” was regarded as the top disadvantage of U.S. T&A manufacturing.
  • 43 percent of respondents believed that reshoring was occurring in U.S. T&A manufacturing. Almost all of these respondents believed that “Shorter Lead Times” and the “Marketability of the ‘Made in USA’ Label” were the factors driving the trend.
  • The Affordable Care Act (ACA), Minimum Wage regulations (Federal, State, and Local), and U.S. Trade Policy were the top governmental regulations and provisions cited as negatively impacting the competitiveness of U.S. T&A manufacturers.
  • 61 percent of respondents reported that they had difficulties hiring and/or retaining employees for their T&A operations, specifically production line workers such as operators and machine technicians. The skill gaps in the labor market for those positions were by far the biggest ones identified for the industry.
  • 43 percent of respondents believed that reshoring was occurring in T&A manufacturing (i.e., the practice of transferring a business operation that was moved to a non-U.S. location back to the United States.) Textile manufacturers were more likely to be aware of reshoring.

Trade and U.S. textile and apparel manufacturing

  • On average, respondents say 48 percent of their textile and textile products are “100 percent made in the U.S.”, while for apparel it was around 54 percent.
  • U.S. T&A exports dropped 10 percent between 2012 and 2016, from $2.2 billion to $1.98 billion. On average, exports accounted for only 12 percent of respondents’ total sales.
  • 33 percent of respondents considered themselves to be dependent on foreign sources for supplies, which was highest among textile mills.
  • 37 percent of respondents reported that they considered themselves to be dependent on non-U.S. sourcing for their machinery or equipment.

Berry Amendment and U.S. textile and apparel manufacturing

  • For textile mills, an average of 12 percent of U.S. output was Berry Amendment-related; for textile product mills the average was 21 percent, and for apparel production, it averaged 26 percent. 67 percent of respondents believed that the Berry Amendment had a positive impact on their organization’s business.