China’s Changing Role in the World Textile and Apparel Supply Chain (updated October 2018)

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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 33.7 percent in 2017.  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 by value, 47 percent of Bangladesh’s textile imports came from China in 2017, up from 39 percent in 2005. We observe similar trends in Cambodia (up from 30 percent to 65 percent), Vietnam (up from 23 percent to 50 percent), Pakistan (up from 32 percent to 71 percent), Malaysia (up from 25 percent to 54 percent), Indonesia (up from 28 percent to 46 percent), Philippines (up from 19 percent to 41 percent) and Sri Lanka (up from 15 percent to 39 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

27 thoughts on “China’s Changing Role in the World Textile and Apparel Supply Chain (updated October 2018)”

  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 has expanded and developed the textile and apparel industry and has became one of the leaders in apparel exports. Many companies around the world outsource their production to China and other developing countries to keep their production costs down. China is now trying to increase the standard of living for their citizens, so they are pushing towards becoming a capitalistic working country like the US or EU. China is increasing their technological advancements and investing in capital intensive machinery. The people in China are being trained to work these machines and are gaining high skilled jobs. Since China is moving more towards textile and capital intensive production, this allows more apparel production to other countries. Now, Bangladesh and Vietnam have the opportunity to produce more apparel and export it to other parts of the world. It will be interesting to follow this and see how developing countries will produce apparel and maybe expand to a more capital intensive presence in the future.

  4. When people think of Asia in the textile and apparel supply chain, the first country that comes to mind typically is China. Looking at the graphs, it is very interesting how China reached its peak in market shares in leading apparel imports markets in 2010, only a few years after the Great Recession in the US. Many companies presumably started to outsource garments to China after the Recession as a way to save some money on labor. Now however, China is starting to lose some of its market share to cheaper Asian countries. Apparel brands and retailers care about the bottom line and want to be able to source garments from the cheapest places possible. In that regard if China is losing some of its apparel industry, it is becoming a larger textile supplier. China is going through the stages of development of a country, much like the US did and is exporting more textiles. I am curious to know which of the six stages of development China is currently in and if the country will ever reach post maturity. I am also interested in the future of China to know if it will ever lose most of its apparel industry (like the US did) and will focus more on its textile industry.

    1. great summary and comments! In my view, China’s textile and apparel industry has reached the maturity stage. Believe it or not, China’s apparel imports enjoyed a very fast growth in recent years–many are from less-developed countries such as Cambodia, North Korea, and Bangladesh. One difference between the US and China is the nature of the economy. Somehow government policy has more influences on the future of the textile and apparel industry in China. For example, you may feel amused by so many detailed policy goals set by China: https://shenglufashion.com/2016/10/04/chinas-13th-five-year-plan-for-its-textile-and-apparel-industry-key-numbers/

  5. Considering the “China plus Vietnam plus many” sourcing model, it is no wonder that the number of market shares China has have reduced in recent years. What I am wondering is if it will be enough to be the largest textile exporter in order to remain a relevant competitor in this industry. There is almost no future value in selling low-value goods and there is no point in advertising clearances, so China must find an attractive solution to alter this sourcing model. According to CNBC, labor costs are almost double than that in some Southeast Asian countries– Why is this? I’m intrigued to see what they will do reduce labor costs and the oversupply in homes.

  6. China was originally able to produce so many apparel products at a cheap price because of a combination of cheap labor and very skilled workers. However, minimum wage is increasing in China so their cost of labor is increasing which then increases the prices of their products. Because of this China is becoming more and more of a developed country. I wonder if China is going to give in to the rising labor costs and lose an advantage that has put them above other leading exporting countries in the past or if they are still going to try and reduce their costs in some other areas keeping their low cost to produce products.

  7. A very nice article potrayed by the writer, According to me , China is among the strongest countries in apparel & textile industry . It graduallly changes their business model to get the remarkable success all over the countries.

  8. According to what we learned about the flying geese pattern from the lecture, it is not very surprising to me. Indeed, the industry in China will become more capital-intensive in the future, so textile manufacturing will be larger than the apparel industry in China. Also, more and more advanced textile products will be produced by China such as synthetic fibers, industrial textile, and medical textile products. Therefore, it is believed that the value and quantity of “made in China” textile products will be higher and more in the Asia export to the world, but the value of “made in China” apparel products will be lower in Asian countries exports to the world.

  9. I agree with Professor Lu that China has reached the maturity stage when it comes to the apparel industry. Their exports have peaked for a while and now they will start to decline. Less developed countries such as Bangladesh, Cambodia, and Vietnam are on the rise in apparel manufacturing and exporting. They have even cheaper prices and similar speed in comparison to China. I think China will become a lead exporter of textiles now instead. They have become more developed and they are equipped with advanced technology that other asian countries do not have. China will definitely be a huge exporter to other asian countries, and even developed countries across the world as well. Importing textiles from China is probably still cheaper than importing them from countries like the U.S.

  10. After reading this article is has become increasingly clear that countries are advancing at a rapid rate. First through technology. China is now able to produce textiles at faster and more unified rates compared to previous decades. However, being that their market share is on the downfall, what will be their new advantage within the market? I feel their best bet is to capitalize on this new technology and create cheaper textiles. Secondly, I have to think that such rapid growth goes hand and hand with trading policies. Could China improve some of its trading relations and export more? And, with other countries trailing China’s heels in the process, how can China find new markets? Trading is key here because they may be able to produce textiles however how will they find the markets that need it?

    1. what do you mean “what will be their new advantage within the market? ” Why do you suggest ” I feel their best bet is to capitalize on this new technology and create cheaper textiles. “?

  11. I think it’s fascinating to see this shifts in the Asian supply chain. Based on history and economical facts, once countries become more developed and advanced, it is natural for them to shift from a more labor intensive economy to a more capital intensive economy. It will be interesting to see countries such as Vietnam and Cambodia claim larger pieces of the apparel market, while China will start to become a larger player in the textile market instead. The flying geese model, and China’s emergence as a key player in the world’s textile market, could be a huge threat to the U.S. and its already established textile industry.

  12. Referring back to what we learned in class with shifts in the supply chain, I think textile manufacturing will be larger than the apparel industry in China. China is pushing towards becoming a capitalistic working country like the US. They are trying to improve their standard of living and increase their technological advancements by investing in capital intensive machinery to improve in production. Since China is moving more towards textile and capital intensive production, this allows more apparel production to other countries. China is also starting to lose some of its market share to cheaper Asian countries. Retailers want to be able to source garments from the cheapest places possible, and this is no longer China. Less developed countries like Bangladesh and Cambodia have been the popular go-to manufacture because they export apparel at cheaper prices and similar lead times in comparison to China. I am interested to see if China becomes like the US in the future- losing most of their apparel industry. It will also be interesting to see if this ever happens to any of the current underdeveloped countries (Bangladesh, Cambodia, etc.) in the future and what that will mean for apparel and textile production.

  13. It is not surprising that China remains the largest exporter. China has reached full maturity in the market. As China is declining, developing countries are rising in apparel manufacturing. Today, Chinese factories are extremely technology driven. Retailers want to source their garments from the cheapest suppliers, which is why there is a shift from China to developing countries.

  14. I did not feel surprised by knowing China plays an important role as the textile supplier in Asia because China encourages its companies to automate, boost research budget and make more higher-value products. With the development of society, China has great potential to dramatically change the composition and direction of the region’s trade flow. I think it is possible for China to be a capitalism and labor-intensive country, so it does not only the biggest apparel exporter, but also one of the leading textile exporter. Will China lose its comparative advantages? I think the answer is no because no other developing countries can compete with Chinese factories in term of automation and efficiency.

  15. I would not doubt that China is one of the most competitive nation of textile and apparel industry in the world. Based on the statistics, almost every country in the world are now relying on China’s imports. As know as the world biggest textile manufacturing nation, I believe it is still possible that China could improve rapidly on their capital-instance sector. I would suggest that the world should be prepared if China grow into a nation of exporting both capital and labor intense goods. Or this situation is impossible?

  16. I think it is very interesting that we are starting to see apparel production move away from China. For years many countries couldn’t keep up with the high production levels and extremely cheap labor costs. But as the article was saying, the world is becoming increasingly advanced as a whole and this is allowing others to start dropping their production prices as well.

  17. With constant factory inspections and new regulations it is no surprise that brands are moving out of China for their sourcing needs. Consumers are now very conscious of brands ethical and sustainable decisions and to ensure that production meets these standards, the factories have to change their practices or the brands have to re-locate where they source from. However, I was unaware that China also supplied surrounding exporters in Asia. Could they have just found their new role in the T&A industry? What issues are accompanied with sourcing from countries such as Bangladesh? Corruption and overlooked issues were a large factor in Chinese factories.

  18. I agree with the fact that China may be starting to reach its peak when it comes to the apparel industry. As discussed in class on multiple occasions, Vietnam has been a viable source of manufacturing and is only increasing in popularity for fashion brands as the years progress. The idea that China will lose its comparative advantage in the apparel industry is not going to ring true any time soon due to its large labor force and excellence when it comes to sourcing certain products. I do believe, though, that brands are going to start sourcing less from China and relocate their manufacturing in places like Bangladesh and Vietnam. With the impending tariff negotiation, I believe that China will start to see more of a decrease in exporting in the very near future.

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