Asia’s Growth Potential as an Apparel Sourcing Base—Discussion Questions from FASH455

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#1 In 2017, over 75 percent of U.S. apparel imports came from Asia (including around 35 percent from China, 13 percent from Vietnam, and 6 percent from Bangladesh). Based on the readings and our class discussions, why or why not do you think Asia’s market share may continue to rise in the years ahead?

#2 Vietnam is often treated as the “next China” for apparel sourcing. However, some argue that Vietnam’s export potential for apparel could be more limited than we anticipated because of its small population size. What is your evaluation?

#3 It does not seem U.S. companies have a particular role to play in the Asia-based textile and apparel supply chain because of the “flying geese” pattern. What is your view?

#4 If U.S. and China were able to solve the trade dispute by early next year, would sourcing from China become popular again among U.S. fashion brands and apparel retailers? What are the most critical factors that drive China’s competitiveness as an apparel sourcing base in the next five years? Overall, is “Made in China” over?

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

Sourcing Strategies of U.S. Fashion Brands and Apparel Retailers: Discussion Questions from FASH455

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#1 Assume you are a sourcing manager for a major US fashion brand, how would you rank the followings regarding importance when determining a sourcing destination: 1) Speed to Market; 2) Sourcing Cost; 3) Risk of Compliance; 4) other factors (please specify). Why would you rank them as such?

#2 According to the 2018 US Fashion Industry Benchmarking Study, some apparel retailers report sourcing 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?

#3 How has President Trump’s trade policy agendas affected U.S. fashion brands and apparel retailers’ sourcing strategy? What could be the long-term effect and why?

#4 U.S. fashion brands and retailers plan to source less from China and move towards other apparel suppliers like Vietnam or Bangladesh. Is this a short-term response or a reflection of companies’ adjustment of its long-term sourcing strategy? Why?

#5 Most U.S. apparel companies have already shifted their businesses to non-manufacturing activities such as design, branding, sourcing and retailing. Why or why not do you think it is still meaningful to give attention to apparel manufacturing in the U.S.?

#6 Based on the 2018 US Fashion Industry Benchmarking study, why or why not do you think U.S. fashion brands and apparel retailers have given enough attention to sustainability and social responsibility issues in their sourcing practices? What could be done further?

#7 Any other topics/questions do you think next year’s US Fashion Industry Benchmarking Study could include and why?

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

USITC Releases New Study on the State of the U.S. Textile and Apparel Manufacturing Sector

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A recent study released by the U.S. International Trade Commission (USITC) provides a comprehensive review and valuable insights into the state of textile and apparel manufacturing in the United States. According to the study:

First,  data suggests a mixed picture of the recovery of textile manufacturing in the U.S.

  • Total capital expenditures in plants and equipment for the textile sector increased by 36 percent in the 2013–16 period. Interesting enough, much of the new investment is by foreign firms, including new investments by Chinese and Indian firms, as well as by firms from Mexico, Canada, Turkey, and Saudi Arabia.
  • U.S. textile shipments increased in 2017 to $39.6 billion, but remained 3 percent below the 2013 level. The result suggests that rather than simply increasing capacity, some of the new investment is likely replacing existing equipment, as firms upgrade and modernize their manufacturing processes and/or focus their operations on different products. [Note: shipments measure the dollar value of products sold by manufacturing establishments and are based on net selling values, f.o.b. (free on board) plant, after discounts and allowances are excluded]
  • At $10.6 billion, U.S. textile exports in 2017 were also below the five-year high of $12.1 billion in 2014.
  • Employment in the textiles sector declined by 4 percent from 131,000 in 2013 to an estimated 126,000 in 2017. Meanwhile, official data on labor productivity index for yarns and fabrics show steady declines during 2013–16.

Second, some evidence suggests that reshoring has taken place in recent years in the apparel sector, although on a modest scale.

  • For the 2013–16 period, capital expenditures were up 5 percent to $301 million, suggesting capital investment in the apparel sector may be increasing, as the industry begins to adopt more labor-saving technologies.
  • Domestic shipments of apparel showed modest increases in the past two years, reaching $12.0 billion in 2016 and $12.5 billion in 2017, after a record low of $11.5 billion in 2014 and 2015.
  • Employment in the apparel sector steadily declined during 2013–17, down 21 percent from 145,000 workers in 2013 to 120,000 workers in 2017. Official data on labor productivity also showed steady declines during 2013–16.
  • U.S. fashion companies continue to source apparel from the United States, although in a relatively small amount.

Third, the advantages of making textiles and apparel in the United States include:

  • Advantages of producing textiles in the United States include local and state incentives for investment, and the benefits afforded by free trade agreement (FTA) preferences (i.e., the “yarn-forward” rules of origin) that encourage the use of U.S.-produced inputs in downstream production in FTA partner countries, energy cost and the availability and reliability of high-quality cotton. Meanwhile, product innovation and automation are important aspects of the U.S. textile sector’s competitiveness strategy.
  • Advantages of producing apparel in the United States include improved lead times, better quality control, and more flexible production. Many domestically made products also use “Made in USA” branding to capitalize on the buy-American trend and the appeal of “Made in USA.” The adoption of various automation and digital technologies to accelerate the process of product development, improve the fit of the final product and reduce the needs for skilled sewing operators may also help improve the competitiveness.  

Debate on Used Clothing Import Ban: Discussion Questions from FASH455

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Background: In a proclamation released by the White House on July 30, 2018, President Trump announced to suspend Rwanda’s duty-free treatment for all African Growth and Opportunity Act (AGOA)-eligible apparel products until Rwanda “comes back into compliance with the AGOA eligibility requirements.” Losing the AGOA benefits means Rwanda’s apparel exports to the United States now will be subject to the most-favored-nation (MFN) tariff rate, which averaged 12.8% for knitted apparel (HS chapter 61) and 10.1% on woven apparel (HS chapter 62). 

Back in June 2017, the U.S. Trade Representative Office (USTR) announced to conduct an out-of-cycle review of Rwanda, Tanzania, and Uganda’s AGOA eligibility in response to a petition filed by the Secondary Materials and Recycled Textiles Association (SMART). The SMART petition asserts that a March 2016 decision by the East Africa Community (EAC), which includes Kenya, Rwanda, Tanzania, and Uganda, to phase in a ban on imports of used clothing and footwear is imposing significant economic hardship on the U.S. used clothing industry. 

Discussion questions:

#1 Is it worth it to ban imports of used clothing in East Africa? Isn’t reusing or repurposing used clothing will be beneficial to the environment, and will promote trade, and provide lower priced to the less fortunate?

#2 Why or why not do you believe that the import ban on used clothing will boost the cotton, apparel, textile, and leather local textile industries in EAC countries and allow for an increase in jobs and economic growth there?

#3 Notably, almost none of the used clothing exported from the US to EAC countries are actually “Made in USA”—they were originally imported from Asian countries such as China, Vietnam, and Bangladesh. Also, most U.S. used clothing exports to EAC were “free giveaways” by U.S. consumers. Is it ethical for SMART to oppose the used clothing import ban so that its own can make a profit?

#4 Most EAC members are the least developed countries. Should they have the rights to reject used clothing from developed countries and start the industrialization process, or should the principle of “free trade” apply to used clothing trade?

#5 If all parties involved in the dispute on the second-hand clothing ban were to come to a compromise, what could that potentially look like and how might we go about it? Is it even possible?

#6 Why or why not do you think the booming of the used clothing trade challenges the stage of development theory we learned in week one (i.e., a country’s textile and apparel industry theoretically will go through six development stages)?

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

Recommended reading: Why is the used clothing trade such a hot-button issue

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?