First, U.S. fashion brands and retailers are sourcing less from China, particularly in quantity. Notably, the number of “Made in China” apparel newly launched to the market had significantly dropped from 26,758 SKUs in the first quarter of 2018 to only 8,352 SKUs in the first quarter of 2019 . Nevertheless, consistent with the macro-level trade statistics, China remains the single largest apparel supplier to the U.S. retail market.
Second, apparel “Made in China” are becoming more expensive in the U.S. retail market, yet remain price-competitive overall. Notably, apparel “Made in Vietnam” is becoming more expensive in the U.S. retail market too—an indication that as more production is moving from China to Vietnam, apparel producers and exporters in Vietnam are facing growing cost pressures.
Third, U.S. fashion retailers are shifting what apparel products they source from China. U.S. apparel retailers have been sourcing less lower value-added basic fashion items (such as tops, and underwear), but more sophisticated and higher value-added apparel categories (such as dresses and outerwear) from China since 2018. The shifting product structure could also be a factor that contributed to the rising average retail price of “Made in China” in the U.S. market.
On the other hand, U.S. retailers adopt a very different product assortment strategy for apparel sourced from China versus other regions of the world. There seems to be much fewer alternative sourcing destinations for more sophisticated product categories, such as accessories and outerwear. Somehow ironically, moving to source more sophisticated and higher value-added products from China could make U.S. fashion brands and retailers even MORE vulnerable to the tariff war because of fewer alternative sourcing destinations.
In conclusion, the results imply that China will remain a critical sourcing destination for U.S. fashion brands and retailers in the near future, regardless of the scenario of the U.S.-China tariff war. Meanwhile, we should expect U.S. fashion companies continue to adjust their sourcing strategy for apparel “Made in China” in response to the escalation of the tariff war.
I encourage everyone to watch the video above, which provides an excellent wrap-up for FASH455 and reminds us of the meaning and significance of our course. The names of several experts featured in the video should sound familiar to you, including David Spooner (former U.S. Chief Textile Negotiator and Assistant Secretary of Commerce), Julia Hughes (president of the US Fashion Industry Association, USFIA) and Auggie Tantillo (president of the National Council of TextileOrganizations, NCTO).
First of all, I hope students can take away essential knowledge about textile and apparel (T&A)trade & sourcing from FASH455. As you may recall from the video, in FASH455, we’ve examined the phenomenon of globalization and its profound social, economic and political implications. We also discussed various trade theories and the general evolution pattern of a country’s T&A industry and its close relationship with that country’s overall industrialization process. We further explored three primary T&A supply chains in the world (namely the Western-Hemisphere supply chain, the flying geese model in Asia or “factory Asia” and the phenomenon of intra-region T&A trade in Europe). Last but not least, we looked at trade policies that are unique or critical to the T&A sector (e.g.,: tariff, and the yarn-forward rules of origin) as well as the complicated factors behind the making of these trade policies. No matter your dream job is to be a fashion designer, buyer, merchandiser, sourcing specialist or marketing analyst, understanding how trade and sourcing work will be highly relevant and beneficial to your future career given the global nature of today’s fashion industry.
Second, I hope FASH455 helps students shape a big picture vision of the T&A industry in the 21st-century world economy and provides students a fresh new way of looking at the world. Throughout the semester, we’ve examined many critical, timely and pressing global agendas that are highly relevant to the T&A industry, from apparel companies’ social responsibility practices, the debate on the textile and apparel provisions in the U.S.-Mexico-Canada Free Trade Agreement (USMCA or NAFTA2.0) and Trump Administration’s trade policy agenda to the controversy of second-hand clothing trade. It is critical to keep in mind that we wear more than just clothes: We also wear the global economy, international business, public policy and trade politics that make affordable, fashionable, and safe clothes possible and available for hardworking families. This is also the message from many of our distinguished guest speakers this semester, and I do hope you find these special learning events enlightening and inspiring.
Likewise, I hopeFASH455 can put students into thinking the meaning of being a FASH major/minor(as well as a college graduate) and how to contribute to the world we are living today positively. A popular misconception is that T&A is just about “sewing,” “fashion magazine,” “shopping” and “Project Runway.” In fact, as one of the largest and most economically influential sectors in the world today, T&A industry plays a critical and unique role in creating jobs, promoting economic development, enhancing human development and reducing poverty. As we mentioned in the class, globally over 120 million people remain directly employed in the T&A industry, a good proportion of whom are females living in poor rural areas. For most developing countries, T&Ausually accounts for 70%–90% of their total merchandise exports and provide one of the very few opportunities for these countries to participate in globalization. Indeed, T&A is such an impactful sector, and we are as important as any other majors on the campus!
Last but not least, I hope from taking FASH455, students can take away meaningful questions that can inspire their future study and even life’s pursuit. For example:
How to make the growth of global textile and apparel trade more inclusive and equal?
How to make sure tragedies like the Rana Plaza building collapse will never happen again?
How will automation in apparel manufacturing change the future landscape of apparel sourcing?
How to use trade policy as a tool to solve some tough global issues such as labor practices and environmental standard?
Is inequality a problem caused by global trade? If global trade is the problem, what is the alternative?
These questions have no good answers yet. But they are
waiting for you, the young professional and the new generation of leaders, to
write the history, based on your knowledge, wisdom, responsibility, courage,
So what do you take away from FASH455? Please feel free to
share your thoughts and comments.
EU region as a whole remains a leading producer of both textile and apparel. The value of EU’s T&A production totaled EUR142.9bn in 2017 (Statistical Classification of Economic Activities or NACE, sectors C13, and C14), which was divided almost equally between textile manufacturing (EUR77.4bn) and apparel manufacturing (EUR65.4bn).
Regarding textile production, Southern and Western EU where most developed EU members are located such as Germany, France, and Italy, accounted for nearly 80% of EU’s textile manufacturing in 2017. Further, of EU countries’ total textile output, the share of non-woven and other technical textile products (NACE sectors C1395 and C1396) has increased from 20.2% in 2011 to 23.2% in 2016, which reflects the on-going structural change of the sector.
Apparel manufacturing in EU includes two primary categories: one is the medium-priced products for consumption in the mass market, which are produced primarily by developing countries in Eastern and Southern Europe, such as Poland, Hungary, and Romania, where cheap labor is relatively abundant. The other category is the high-end luxury apparel produced by developed Western EU countries, such as Italy, UK, France, and Germany.
It is also interesting to note that in Western EU countries, labor only accounted for 21.1% of the total apparel production cost in 2016, which was substantially lower than 30.1% back in 2006. This change suggests that apparel manufacturing is becoming capital and technology-intensive in some developed Western EU countries–could be the result of increased investment in automation technology.
Because of their relatively high GDP per capita and size of the population, Germany, Italy, UK, France, and Spain accounted for 60.8% of total apparel retail sales in EU in 2017. The market structure remains stable overall.
Intra-region trade is an important feature of EU’s textile and apparel industry. Despite the increasing pressure from cost-competitive Asian suppliers, statistics from the World Trade Organization (WTO) show that of EU region’s total US$65.3bn textile imports in 2017, as much as 58.2% (or US$38bn) were in the category of intra-region trade. Similarly, of EU countries’ total US$166.4bn apparel imports in 2017, as much as 47.2% (or US$78.6bn) also came from other EU members. In comparison, close to 97% of apparel consumed in the United States are imported in 2017, of which more than 75% come from Asia (Eurostat, 2019; WTO, 2018).
#1 Do you think it is a good move for companies to embrace
the “China plus Vietnam plus Many” sourcing strategy, especially
after learning about the working conditions in developing countries such as
Bangladesh? Do you think this could backfire on companies?
#2 Why or why not do you think sourcing from Asia will
become less attractive relative to sourcing from the Western Hemisphere due to the
increasing importance of “speed to market” in U.S. fashion apparel companies’ sourcing
#3 As sustainability becomes more prevalent throughout the
fashion industry, will there be a way to lower costs, while still creating
garments that are better for the environment, and have transparency with consumers
about factory conditions? Why?
#4 According to the article, “more and more well paid
and high quality jobs in the US fashion industry will depend on international
trade and the global value chain.” How do you feel about the quality of
the US fashion industry depending so heavily on factors outside of the US? Do
you see this changing in the future, and if so explain how.
#5 Most U.S. apparel companies have already shifted their
businesses to non-manufacturing activities such as design, branding, sourcing
and retailing. Is it still meaningful to give so much attention to apparel
manufacturing in the U.S.?
#6 When purchasing your garments from either online stores
or brick-and-mortar stores, do you look to see what country your goods are produced
in and on a scale from 1 to 10 with 1 being the least important 10 being the most
important, how significant is it to you to know where your goods are coming
from and how much of a factor does that play into your buying decision?
#7 If it is predicted that more US fashion companies’
sourcing could be from nearshore due to automation technology, what would
happen if they technology was implemented in a place where there were lower
labor costs (for the people operating the machines)? Would the US continue to
use nearby manufacturers or would they resort to wherever is cheaper?
#8 Do you think “made in the USA” apparel is truly telling the whole story of the supply chain? Do you think that it is truly more ethical? Or do you think it is just a way for retailers to charge more for apparel? If producing products in the U.S. is much more expensive than importing products from other countries, how are companies such as Walmart able to sell products with labels that say “Made in U.S.A”?
[For FASH455: 1) Please mention the question number in your comments; 2) Please address at least TWO questions in your comments]
The size of the U.S. textile and apparel industry has significantly shrunk over the past decades. However, U.S. textile manufacturing is gradually coming back. Notably, the value added of U.S. textile manufacturing reached $18.88 billion in 2017, the highest level since 2009.
Nevertheless, the share of U.S. textile and apparel
manufacturing in the U.S. Gross Domestic Product (GDP) dropped to only 0.15% in
2017 from 0.57% in 1998, as the case in most advanced economies with a mature industrial
It is also important
to note that U.S. textile and apparel manufacturing is changing in nature.
For example, textiles had accounted for over 80% of the total output of the
U.S. textile and apparel industry as of 2017, up from around 50% in the late 1990s. Meanwhile, clothing had only
accounted for 12% of the total U.S. fiber consumption in 2012 (the latest data
available), whereas the manufacturing of non-apparel textile products in the
United States, such as industrial and technical textiles, has been growing particularly
fast over the past decade.
are NOT coming back to the U.S. textile and apparel industry. In 2018, U.S.
textile manufacturing (NAICS 313 and 314) and apparel manufacturing (NAICS 315)
lost 2,100 and 4,800 jobs respectively. However, improved productivity is one critical
factor behind the job losses.
Regarding international trade, the United States remains a leading textile exporter and apparel importer overall. Interesting enough, both the value of U.S. textile and apparel imports enjoyed much faster growth in 2018 than in the previous years. Notably, for the first time since 2001, the U.S. textile sector (NAICS 313) experienced a trade deficit ($172 million) rather than a trade surplus. Meanwhile, the U.S. trade deficit in apparel (NAICS 315) reached $86,097 million in 2018, up nearly 6% from a year ago. These unusual trade patterns could be partially affected by the U.S.-China tariff war, which didn’t seem to be helpful with solving the trade deficit concerns.
The UK government on March 13, 2019 released the temporary
rates of customs duty on imports if the country leaves the European Union
with no deal. In the case of no-deal Brexit, these tariff rates will take
effect on March 29, 2019 for up to 12
According to the announced plan, around 87% of UK’s imports by value would be eligible for zero-tariff in the no-deal Brexit scenario.
Specifically for apparel products, 113 out of the total 148 tariff lines (8-digit HS code) in Chapter 61 (Knitted apparel) and 145 out of the total 194 tariff lines (8-digit HS code) in Chapter 62 (Woven apparel) will be duty-free. However, other apparel products will be subject to a Most-Favored-Nation (MFN) tariff rate ranging from 6.5% to 12%.
Meanwhile, the UK will offer preferential tariff duty rates for apparel exports from a few countries/programs, including Chile (zero tariff), EAS countries (zero tariff), Faroe Islands (zero tariff), GSP scheme (reduced tariff rate), Israel (zero tariff), Least Developed Countries (LDC) (zero tariff), Palestinian Authority (zero tariff), and Switzerland (zero tariff).
On the other hand, the EU Commission said it would apply the Most-Favored-Nation (MFN) tariff rates on UK’s products in the no-deal Brexit scenario rather than reciprocate.