(The full article is available HERE)
First, the total value of Japan’s apparel imports has been growing steadily in line with consumption patterns. Between 2010 and 2018, the value of Japan’s apparel imports enjoyed a 2.7% compound annual growth rate, which was lower than the US (3.4%), but higher than the EU (1.9%) and the world average (1.3%) over the same period.
Second, while China remains the top supplier, Japanese fashion brands and retailers are also diversifying their sourcing bases. Similar to their counterparts in the US and EU, Japanese fashion brands and retailers are actively seeking alternatives. Imports from Vietnam, Bangladesh, and Indonesia have been growing particularly fast, even though their production capacity and market shares are still far behind China.
Third, Japanese fashion companies are increasingly sourcing from Asia. As of 2018, only 7.5% of Japan’s apparel imports came from non-Asian countries (mostly western EU countries), a notable drop from 11.4% back in 2000. A good proportion of Japan’s apparel imports from Asia actually contain fibers and yarns originally made in Japan. For example, it is not difficult to find clothing labeled ‘Made in China’ or ‘Made in Vietnam’ that also includes phrases such as ‘Using soft, slow-spun Japanese fabric’ and ‘With Japanese yarns’ in the detailed product description.
Fourth, overall, Japan sets a lower tariff barrier for apparel than other leading import countries. As of September 2019, there were around 15 FTAs and TPAs in force in Japan, whose members include several 1st tier apparel supplying countries in Asia, such as Vietnam, Bangladesh, India, Indonesia, and Cambodia. Most of these trade programs adopt the so-called “fabric-forward” rules of origin (also known as “double-transformation” rules of origin). Additionally, Japan is actively engaged in negotiations on a trilateral free trade agreement with China and South Korea, and the Regional Comprehensive Economic Partnership (RCEP), which involves Japan, South Korea, China and members of the Association of Southeast Asian (ASEAN) countries. Once reached and implemented, these trade agreements will provide new exciting duty-saving sourcing opportunities, including from China, the top apparel exporter in the world.
Video 1: How one Chinese shirt-maker uses automation to safeguard its future
Video 2: Chinese investors move clothing factory to Bangladesh
Video 3: Can Vietnam become the next China?
Discussion questions (for FASH455: Please finish watching ALL the three short videos above before sharing your viewpoints)
- How are textile and apparel “Made in Asia” changing its face? What are the driving forces of these changes?
- What are the examples of the “flying geese model” from the videos? Overall, why or why not do you think this model is still valid today?
- Why or why not do you think the U.S.-China tariff war has fundamentally changed the patterns of textile and apparel production and trade in Asia?
The study was based on a survey of 64 sourcing executives from vertical apparel retailers, hybrid wholesalers, and sportswear companies, with a total sourcing volume of $100 billion. Below are the key findings of the report:
- More sourcing executives now focus on process improvements in their companies, such as sustainability and transparency (56% of respondents), digitalization of sourcing process and related areas (45% of respondents), consolidation of supplier base (42% of respondents), end-to-end process efficiency (41% of respondents) than shifting sourcing countries (20% of respondents). Related, as cost gaps between sourcing destinations are narrowing, apparel companies are shifting from minimizing the price of supply to a focus on customer-centric, agile product development to meet customer demand. Digitalization, such as intelligent sourcing, is one of the most promising areas.
- Affected by the on-going U.S.-China tariff war, two-thirds of surveyed companies expect their overall sourcing cost to increase in the years ahead, including 37.5% expecting a 2-4% increase and 25% expecting 1-2% increase. However, only 3.1% of respondents expect a significant cost increase (>4%).
- Echoing the findings of other recent studies, respondents plan to source relatively less from China through 2025. Bangladesh, Vietnam, Myanmar, and Ethiopia are among the top alternative sourcing destinations. Meanwhile, more companies are considering near-sourcing. The biggest challenge, however, is limited fabric production capacity, NOT higher wages.
- Sustainable apparel sourcing is regarded as a must—70% of EU companies and 35% of North American companies surveyed say “responsible and sustainable sourcing was on the CEO agenda.” Top challenges to achieve sustainable apparel sourcing include “no common, objective industry standard on sustainable sourcing”, “consumers lack a clear picture of what sustainable fashion is all about”, “mixed influence of the sourcing function in company-wide sustainability strategy.” Further, more companies prioritize environmental-sustainability initiatives (issues such as sustainable material, recycled material, traceability, and packing) than social sustainability initiatives (issues such as) fair on living wage and decent work). Additionally, respondents hold competing views on whether sustainability will increase sourcing costs overall. Around 58% of respondents see additional costs for sustainable sourcing between 1% and 5%.
- Sustainability will play an increasingly important role in how apparel companies select their suppliers. Some surveyed apparel brands and retailers say they have upgraded their supplier ratings over the last couple of years, moving away from viewing sustainability simply as a compliance-based hygiene factor and instead embracing criteria that are more sophisticated.
- There is also a need to shift from the transactional-based, season-by-season and the low-commitment relationship between apparel companies and their vendors to strategic partnerships between the two. Around 73% of respondents plan to consolidate their supplier base by at least 5% over the next few years. Related, apparel companies increasingly empower suppliers for self-auditing with tools like the Higg Index.
#1 How do you think it would be possible for the United States to successfully re-shore apparel manufacturing when so many other countries have the advantage in speed, efficiency, and cost?
#2 The Berry Amendment is highly favored by NCTO and is seen as being good for the U.S textile industry and American pride. Why or why not do you think Berry Amendment should be applied to other segments of the fashion industry? Will such an initiative gain broad support?
#3 Why do you think NCTO suggests the trump administration impose tariffs on finished apparel items from China, whereas U.S. fashion brands and retailers oppose the tariff action strongly?
#4 Assume you are a sourcing manager for a major US fashion brand, how would you rank the following regarding importance when determining a sourcing destination: Speed to Market, Sourcing Cost, Flexibility and Agility, and Risk of Compliance? Why would you rank them as such?
#6 Why do you think U.S. fashion brands and apparel retailers are sticking with sourcing from China, when there are less expensive products in other countries, such as Bangladesh and Vietnam?
#7 According to the 2019 US fashion industry benchmarking study, some apparel retailers source from more than 10 or even 20 different countries or regions. What are the benefits of adopting such a diversified sourcing base? Is it necessary?
(Welcome to our online discussion. For students in FASH455, please address at least two questions and mention the question # in your reply)
(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.
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:
- What do Americans think of “Made in China” today?
- Do the classes you take help with your career preparation?
- Have you taken any internship classes at UD? What did you do?