The Future of Asia as a Textile and Apparel Sourcing Base—Discussion Questions from Students in FASH455

Garment factories in Vietnam adopt RFID; Video credit: Li &Fung

#1: How to explain the phenomenon that US fashion companies are diversifying apparel sourcing from China, but not so much from the Asia region? For example, as of 2020, still, around 75% of US apparel imports came from Asian countries.

#2: From the readings and your observation, to which extent will automation challenge the conclusions of the “flying geese model” and the evolution pattern of Asian countries’ textile and apparel industry over the past decades?

#3: It could be a crazy idea, but given the current business environment, what would the textile and apparel supply chain in Asia look like without “Made in China”? What would be the implications for US fashion companies sourcing strategies?

#4: RCEP members are with a diverse competitiveness in textile and apparel production and exports. Several leading Asian apparel-exporting countries are not RCEP members (such as Bangladesh). Is it unavoidable that RCEP will create BOTH winners and losers for textile and apparel trade? How so?

#5: Is the growth model and development path of Asian countries’ textile and apparel industry an exception—meaning it is challenging to apply it to the rest of the world, such as the Western Hemisphere and Africa? What is your view?

#6: What is your outlook of Asia as a textile and apparel-sourcing base in the post-Covid world? Why?

(Welcome to our online discussion. For students in FASH455, please address at least two questions and mention the question number (#) in your reply)

Author: Sheng Lu

Professor @ University of Delaware

19 thoughts on “The Future of Asia as a Textile and Apparel Sourcing Base—Discussion Questions from Students in FASH455”

  1. #1. Although it may seem as US fashion companies are diversifying their apparel sourcing and stemming away from China, they actually aren’t and 75% of US apparel imports are coming from Asian countries. When COVID-19 hit China, the US was severely impacted as China was and is a huge partner in US supply chains. With this interruption in the supply chain it was nearly impossible to get basic needs let alone apparel. Because of this experience, many US fashion companies are looking elsewhere to source from or to come up with alternatives so they are less reliant on China. For instance, many are looking to source from the Western Hemisphere. Though this idea may sound like it would be go immediately into affect, many companies have yet to stray away from China. In other words, US fashion companies are limiting their exposure to China but still keep their relationships with them as a sourcing partner while looking elsewhere that could satisfy near-shoring option. Some reasons as to why they may not have abandoned sourcing from China is the cost and time it will take to create new partners, the cost of production and labor is cheaper in China etc.

    1. too little incentive to diversify? really no feasible alternative? “Made in Asia” is becoming ever more competitive and hard to say no?

  2. #2: In the flying geese model, it is the idea that the most developed country in the region is the “lead goose” and the least developed countries in the region are the ends of the ‘V.’ Essentially as the the “lead goose” becomes more competitively advantageous and more capitalized it will shed the labor intensive and low productivity to the least developed countries. With that being said, automation can challenge the conclusions of this model. Such as, if all the countries in the region start to become more automated the less developed countries in the region will start to catch up to the more developed countries in the region. In other words, the ends of the ‘V’ in the flying goose model will start catching up to the “lead goose.” Thus, the model will not resemble a ‘V’ rather a straight line as all the regions could be on the same playing field. On top of that, it will destroy the competitive advantages within each region. Although this scenario is a very realistic situation to consider, it may take a long time for the less developed countries to catch up. The developed countries in the region are already ahead and with automation it will put them even farther. Thus making a little hard for the less developed countries to be on the same playing field right away.

    1. Very great thought! Some personal comments: 1) While the flying geese model focuses on the manufacturing sector only, we now have a more sophisticated service sector that can contribute to job creation and economic growth (such as tourists, transportation, healthcare, and education). 2) regardless of automation, always, there will be some sectors that are relatively more capital or technology-intensive than others. The production factors can be extended beyond capital and labor also, such as human resources/skilled labor. This means the flying geese model can apply to the modern economy in the 21st century. 3) The country-specific factor is also something interesting to explore. For example, it seems East Asian countries overall are more successful in taking advantage of the flying geese model compared with some Southeast Asian countries.

  3. #6: I think that Asia will continue to be a sourcing base given the fact that America has not fully recovered from the effects of the pandemic. China has recovered much quicker than we have, therefore I think they will be stronger than many countries for a very long time.

  4. #3 Oh wow a world without “Made in China” seems crazy and impossible. If there was no more “Made in China” or say China was no longer on the map, their duties would simply be passed on to someone else. I think that we would see the US become the primary source for textiles and maybe Japan would soon be up there with us, but for apparel manufacturing it would become more diverse than it already is. There would no longer be this super country that controls most of apparel manufacturing and you would see some of the smaller countries getting more developed and being able to provide adequate manufacturing and be similar to China. The implications for US sourcing strategies would essentially be the same, but also different. Instead of having a major hub of sourcing they would have to become more diverse, which they already started to do, it would just have to be on a larger scale. I think there would no longer be a major hub, just because China had the land and labor to be the center for apparel manufacturing.

  5. #3: It seems that many US fashion brands and retailers are looking to diversify where they are sourcing from more recently, so a supply chain that does not involve China may be more plausible than one may think. Vietnam has become an increasingly popular country to source from in Asia, and so I think without China, Vietnam would be the front-runner for apparel manufacturing and sourcing. As long as these Asian countries have the capacity to handle what China currently does, even if it is divided amongst different countries, I think it could be possible to source apparel from other Asian countries. Especially in the case of the Flying Geese Model, without China, the other countries who may be within the same tier, or even higher, would just step up and be able to improve their production in apparel as well as textiles.

    #6: I think Asia as a textile and apparel-sourcing base post-Covid will be resilient and prove their strength within the industry. China was the first to be hit with the virus and the first to bounce back and get back to work, providing much of the PPE needed to the rest of the world, as well as all of the apparel being bought online. RCEP has also shown that Asian countries are willing to work together to become a great force within the trade and apparel industry. I do think there may be some push back to sourcing from Asian countries after Covid because the US realized how dependent they were on other countries and want to localize their sourcing more, however, I do not think that the US will completely isolate their apparel sourcing to the western hemisphere– they will still source from Asia because of its convenience and cost.

  6. #4 – Yes it is unavoidable that the RCEP will result in both winners and losers of the trade agreement. The winners are automatically those within the Asia-Pacific region because they will benefit immensely from the trade deal. Those countries will have lower tariffs to pay, may get easier access at customs, have improved market access for services and significantly better investment opportunities. Those benefits may not be universal for all countries and that explains why the agreement will have winners and losers regardless. The RCEP is the agreement to reduce trade barriers across 15 countries in the Asia-Pacific region; combining ASEAN and non-ASEAN neighbors and the forming world’s largest trading bloc. The agreement essentially will make it easier to manufacture and sell goods in the region. China, for example, is the biggest winner of the agreement and its economy will only grow as a result of the reduce trade barriers so they can fill the market with cheap products. Therefore, the countries not involved that have preexisting relationships with the RCEP countries, may be seen as the losers. That said, it will be difficult for fashion brands and companies in the United States to compete in Asia with the brands that have better access tot he opportunities. Furthermore ,countries like India and Bangladesh also will never be seen as winners of the agreement. India voluntarily withdrew from the agreement and it is only hurting them. That said, it is impossible that this agreement would be one sided with just winners or just losers. Unfortunately, there are two sides to every story.

    #6 – Post- COVID, I think Asia as a textile and apparel-sourcing base will come out strong and continue their efforts to be a sourcing base and will decelerate their economy. Yes, COVID has impacted and hurt many factories in the industry, but I think most will be able to bounce back with help. China was one of the first countries to be on lockdown due the pandemic, however they were the first to get back to work and export supplies to the rest of the world. Furthermore, the RCEP agreement allows Asia-Pacific countries to work together and benefit one another and this deal couldn’t have come at a better time. The pandemic has cause many jobs to be loss, production to be slow and much more, but the opportunities RCEP gives to these countries will benefit what was impacted.

  7. 2. The flying geese model describes how there are regional divisions of labor in Asia and manufacturing is based on hierarchy of economic development. So more developed countries focus on textiles and developing countries focus on apparel. Automation in a way could challenge this model because it is giving more technology and capacity to developing countries to produce at a faster rate at a higher quality. Because of this it could move developing countries into a higher economic development stage, which would disturb the model.
    6. This is a difficult question because it is hard to predict sourcing strategies, especially with Covid. However, I think that companies will continue to source in Asia post-Covid because the region will continue to have the capacity and affordable economic factors to produce textiles and clothing. However, I think that sourcing from China may go down because the U.S. might think we are too dependent on one country. We might need to reduce the amount of vendors but they still need to be very flexible. We learned that the hard way during Covid when China was hit the worst.

  8. posted on behalf of kfoley17

    1) I think the explanation of U.S. companies diversifying apparel sourcing from China but not the Asian region has to do with political tensions. I think the trade war really deterred companies and it made them rethink their sourcing and production strategies. I also think China becoming less attractive to do business with compared to other countries also adds to it. To me, companies decided to rethink strategies and other Asian countries seemed to be a good alternative. Another reason could be changing strategies to be more in the U.S. is not something to happen overnight and will take companies a long time to fully produce in the U.S. Because of this, companies did not look to go the U.S. when looking for sourcing outside from China, they just looked more at what the next best option was in the region.

    6) My outlook for China in a post Covid world is more companies retreating from there and choosing to source elsewhere. Political tensions along with ethical, environmental reasons and pressure from the industry are reasons companies might leave China. I think these reasons are going to cause companies to rethink their strategies and looks for alternatives to China. I also believe Covid in general caused brands and retailers to really open their eyes that if something like this were to happen again, sourcing closer to home or sourcing totally domestically makes things a lot easier. Covid showed brands and retailers how hard it can be to maintain sourcing and production relationships abroad. In general, I think this might cause companies to rethink China and their strategies. Overall, my outlook is that for U.S. companies China is going to be less of an attraction post Covid.

    1. Great thoughts. Two follow-up comments: 1) I do believe the impact of non-economic factors on sourcing is REAL. For example, the alleged forced labor issue related to Xinjiang, China, and a series of actions taken by the U.S. government (such as the CBP withhold release orders) have significantly affected U.S. cotton apparel imports from China. Measured by value, only 15.4% of U.S. cotton apparel came from China in 2020 (and 15.6% in the most recent 12 months), a significant drop from 27% back in 2018. While China’s total textile and apparel exports to the US decreased by 26% in the most recent 12 months (i.e., March 2020-February 2021), China’s cotton textiles and cotton apparel exports to the US went down by over 40%. 2) I think fashion brands and retailers have to consider a wide range of factors when deciding where to source their products. Often it requires companies to strike a balance. For example, China is becoming an increasingly important consumer market for many fashion brands and retailers. Also, given the current COVID situation in India, fashion brands and retailers may have to find alternative sourcing base (https://www.indiatoday.in/magazine/cover-story/story/20210510-covid-s-second-wave-hits-india-s-63-4-million-msmes-1796991-2021-05-01)
      You may also find this article interesting: https://www.scmp.com/economy/china-economy/article/3130567/china-trade-xinjiang-exports-us-doubled-first-quarter-even

  9. #1: I think US fashion companies are diversifying apparel sourcing from China because we realized how dependent we were on them when the pandemic hit. It is obviously not good or efficient to have all of your eggs in one basket, which is why we see companies diversifying apparel sourcing from China. I also think the trade war occurring between the US and China also contributes to why US fashion companies are trying to move to other countries in Asia besides China. Asia provides cheap labor that other countries cannot match up with, which is why the imports are still coming from Asian countries, but just moving away from China to diversify and avoid tariffs.

    #3: Without “Made in China” the supply chain in Asia would heavily rely on Vietnam and Bangladesh as they are China’s main competitors at the moment. US fashion companies would still source from Asia because Vietnam and Bangladesh still offer a lot of benefits similar to that of China, if not better. Since the US imports a lot of apparel from China they would have to relocate where they import from but I believe they would remain in Asia for the benefits of cheap labor.

    1. Good comment! A follow-up comment on your answer to question #3: It is not rare to see US companies actually source MORE apparel from Vietnam than from China today. Particularly for cotton apparel, only 15% of US imports came from China in 2020 & 2021 (Jan-Mar). This suggests that it is not necessarily a “mission impossible” to totally give up sourcing from China, at least for apparel. That being said, the bigger concern is on the textile side—in fact, China is playing a more significant role as a textile supplier for many apparel-exporting countries in Asia. The lack of textile supply is also a key factor why near-sourcing from the Western Hemisphere hasn’t enjoyed much growth despite the US-China tariff war.

  10. #3: It’s honestly hard to imagine a world or retail market without “Made in China” on most products. I think the textile and apparel supply chain in Asia would be much more diverse and possibly give many subordinate Asian countries the chance to develop and thrive economically and socially, like Bangladesh or Vietnam. Without China taking control over the supply chain, I wonder if sourcing would be more affordable for US fashion companies, or if it would actually complicate their sourcing strategies. For one, we might not see tariff wars like we have with China at the moment, which might open up the possibility to create more trade agreements with various countries, making the overall market much more global and diverse.

  11. #1: There has been a lot of competition in the Asia region since Covid-19 hit. Since the pandemic hit, we could not source from China. This resulted in the US looking for alternative countries to rely on, which strengthens Asias competition because it competes with countries who are trying to produce things domestically. In conclusion, although US imports from Asia went down from 2019-2020, Covid strengthens sourcing in Asia because even if the U.S. sources less from China they will still source from Asia.

  12. The Flying Geese model supports the idea that Asia will continues to hold a great portion of the market share in producing clothing and will continue to do so in the near future. Asia still holds a high percent of apparel. The less capital intensive countries (Asia) are making the apparel and the less labor intensive countries (U.S.) are importing the apparel. There will be change in how each countries will contribute. Even though China’s market share is declining, Asian countries are still involved and manufacturing will not leave Asia. Asia’s percentage of apparel imports stay stable, and they have the largest share. Trade in Asia is increasing while trade in China decreases.

  13. 3. Given the current business environment, the textile and apparel supply chain in Asia would look very different without the “Made in China” label. There are a few implications for the United States fashion companies sourcing strategies. Although that does sound crazy and unimaginable, China would be replaced in a heartbeat. I say that because when one lacks in one department, there will always be someone or something there to bring it back up. Another Asian country will step in and replace what China was doing. The United States would also step up and be the most influential source for textiles. It would also make it be more diverse, like they wanted to begin with.

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