How Has COVID-19 Affected Apparel Exports from China, Vietnam, and Bangladesh?

Key findings:

compiled by Victoria Langro and Sheng Lu (2021)

During the pandemic, three factors are most relevant to a country’s apparel export performance: government lockdown measures, textile raw material access, and comprehensive export competitiveness. Against these three factors, apparel producers and exporters in China, Vietnam, and Bangladesh face common but differentiated business challenges and opportunities during the pandemic (see the table above).

China, Vietnam, and Bangladesh all suffered an unprecedented (nearly 30% year over year) drop in their apparel exports to the world in 2020 (Q1-Q3) due to COVID-19. This result mirrored the reduced import demand in the world’s major apparel consumer markets, where the local economies were also hit hard by the pandemic, including the US (down 2.3%), the EU (down 4.3%), and Japan (down 4.8%).

However, the three countries’ export performance is most different in the US market—China’s apparel exports dropped by 31.6%, much steeper than Vietnam (down 6.9%) and Bangladesh (down 12.6%). It seems that even though COVID-19 may favor China as an apparel sourcing base from an economic perspective, US fashion companies have given more weight to non-economic factors, such as the outlook of the trade war, in their sourcing decisions involving China.

COVID-19 had disrupted apparel exporters’ regular production and export schedule in 2020. The lockdown measures in these three countries seem to affect their export seasonal pattern most significantly. For example, as the first country hit by COVID-19, China’s apparel exports were at the bottom from February to April 2020; however, China’s apparel exports recovered quickly since May 2020 when factories resumed production. In comparison, apparel exports from Vietnam and Bangladesh were at their lowest level from April to May and May to June 2020, respectively, when their factories had to close.

Additionally, Bangladesh’s apparel export seasonality had experienced a more dramatic change in 2020 than in China and Vietnam. A possible reason behind the phenomenon is the export product structure. Notably, China and Vietnam export a more diverse range of products, whereas apparel exports from Bangladesh concentrate on basic fashion items.

Industry sources also indicate that between February 2020 and February 2021, US apparel imports from China and Vietnam see a significant structural change—they include more COVID-popular items such as sweaters, smock dresses, and sweatpants, and fewer dresses, shirts, and suits. However, over the same period, the product structure of US apparel imports from Bangladesh barely changed, and they also included few COVID-popular categories mentioned above. In other words, despite order cancellations, garment factories in China and Vietnam seem more likely to receive new sourcing orders than their counterparts in Bangladesh because of advantages in production flexibility and agility.

Further, China, Vietnam, and Bangladesh all turned less diversified in their apparel export market during the pandemic. Notably, the US, EU, and Japan have become more critical export markets ever. Compared with fashion companies’ efforts in sourcing diversification, it could be more challenging for garment-producing countries to diversify their export market during the pandemic.

Further reading: Victoria Langro and Sheng Lu (2021). Sourcing’s new order – Covid’s impact on world’s top three apparel exporters. Just-Style.

Author: Sheng Lu

Professor @ University of Delaware

8 thoughts on “How Has COVID-19 Affected Apparel Exports from China, Vietnam, and Bangladesh?”

  1. From the data, given, what struck me was the huge drop in exports in apparel (31%) from China. While the trade war may have caused demand pressure, the Chinese response to COVID-19 (strict shutdowns) and the worldwide impact the virus is having is heavily impacting the industry to the point, where many think it’s better to move out of China right now. In the short run, it doesn’t seem to make sense for companies to maintain large operations when the demand is so small at the moment. Currently, the only fabric goods that have not lost significant demand are athleisure goods aside from PPE. Many are predicting that such trends will stay as more people plan to work from home, as companies relax their dress code (or people just hide it), not go out as much, and going out to conventions and meetings are not going to be as prevalent as once was. It seems like the world has shifted even more online. For the men at least, it may not be that basic goods will be dress shirts, pants, shorts, and the things we typically wear to work for a while. It might be that basic goods may be sweatpants, hoodies, t-shirts, and pajamas, which do not change much every season and if man-made, can be easily transformed.

    1. You made some great points. I am not surprised China’s exports have dropped because throughout the year people were consuming less which we know because demand for certain products was not as high. I think once the pandemic hit a lot of companies did not need the exports they would normally need from China. Another trend I think we could see is companies wanting to operate more domestically or closer to home, because if something similar to the pandemic were to happen in the future, businesses may not suffer as much if operations are domestic.

      1. great discussion here. Just to add a point–there is a seasonal pattern of US apparel imports from different sources. For example, to fulfill consumers’ last-minute holiday orders, which require faster speed to market, U.S. fashion companies typically do relatively more near-sourcing from September to December. In comparison, U.S. fashion companies place more sourcing orders with Asian suppliers from June to late September/early October.

        And when i compare China’s market shares from Dec 2018 to Dec 2020, the result suggests a more significant negative impact of the trade war on China’s market shares in the US apparel import market.

        Echoing the comments above, COVID has made it challenging to adjust sourcing base simply because companies don’t have the sources to do so. And covid somehow “favors” China as it has one the most complete textile and apparel supply chain in the world.

  2. I was not surprised to hear that China’s apparel exports dropped by 31.6% just because of the strict shutdowns that were in place. I was also not surprised to see that Vietnam was only down 6.9% and Bangladesh was down 12.6%. As I discussed in another blog post, I think the U.S. as well as other countries are going to start sourcing more from Vietnam and Bangladesh and less from China, which is represented in the data. U.S. fashion companies are starting to take into account the outlook of the trade war and other non-economic factors. It was also understandable that the type of apparel imports for the U.S. has changed significantly. Apparel imports are including more COVID-popular items such as sweaters, smock dresses, and sweatpants, and fewer dresses, shirts, and suits, which is not a shock given that a lot of people even still today are working from home.

    1. Everything seems so predictable and understandable, then why would fashion companies still feel very uncertain about the sourcing outlook this year? How to explain companies’ concerns about market uncertainties?

  3. I definitely expected to see a drop in in exports apparel in countries due to COVID-19, but 31.6% was really shocking. This gave me a really good perspective on how much COVID-19 has really affected apparel exports from countries. These three countries, China, Bangladesh and Vietnam all experienced this, especially China. Along with this, it is not surprising that US imports from China are going down, because the US is starting to source more from Bangladesh and Vietnam. I also expected to read about the types of clothing that were more in demand when the pandemic started. A lot of comfy clothing (sweatshirts, sweatpants, etc.) became much more in demand, and I think this trend is going to continue. COVID-19 has made a tremendous impact on apparel exports, many of these impacts that may be permanent.

    1. it is not surprising that US imports from China are going down, because the US is starting to source more from Bangladesh and Vietnam. But why?

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