Call for Papers: Textile and Apparel Trade and Trade Policy in the 21st Century Global Economy

Book title: Textile and Apparel Trade and Trade Policy in the 21st Century Global Economy

Editor: Dr. Sheng Lu, Associate Professor, Fashion and Apparel Studies, University of Delaware (shenglu@udel.edu)

Publisher: Springer (https://www.springer.com/)

Subjects: Economics, Business & Management

About the book: This edited book intends to address the following three topics:

1. Global Textile and Apparel Trade: The value of textile and apparel (T&A) trade exceeded US$726 billion in 2016, making T&A one of the world’s most globalized and economically important sectors in the 21st century. 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. The stakes are high that these LDCs find a way to improve the competitiveness of their T&A industry in the increasingly intense global competition and steadily achieve social and economic upgrading. Quality scholarships can have a significant role to play in the process. Particularly, this book intends to explore how the T&A industry, through international trade, can play a uniquely critical role in creating jobs, promoting economic development, enhancing human development and reducing poverty.

2. Textile and Apparel Trade Policy: T&A might be the only industry other than agriculture that is regulated most heavily by trade policies, because of its global presence and the complex social, economic and political factors associated with the sector. From the debate on the U.S. trade deficits to the renegotiation of the North American Free Trade Agreement (NAFTA), nearly all critical and high-profile trade policy agendas today involve the T&A sector. Trade policy also affects business activities in the T&A industry substantially as well as the destiny of millions of workers directly employed by the sector. Specifically, this book intends to explore the T&A-specific sectoral impact of major mega-free trade agreements and other critical trade policy debates that are closely associated with the T&A sector.

3. Textile and Apparel Sourcing and Supply Chain Strategies: Sourcing and supply chain management are at the core of T&A companies’ business activities today. Research on sourcing and supply chain strategies contributes to the development of firm theory in the T&A industry and explains the pattern of T&A trade at the microeconomic level. Specifically, this book intends to explore fashion brands and apparel retailers’ shifting global sourcing and supply chain strategies in response to the changing business environment in the T&A sector.

Interested researchers may contact the editor with initial ideas or abstracts. The work must be completed by the time of full paper submission and should not be published elsewhere. The followings are potential book chapters to be considered (but not limited to):

Part I Patterns of Textile and Apparel Trade in the 21st Century Global Economy

  • Patterns of world textile and apparel trade in the post-quota era
  • Textile and apparel trade as an economic development tool
  • Social and economic impacts of textile and apparel trade
  • Measuring the economic competitiveness of textile and apparel exports

Part II Textile and Apparel Trade Policy

  • Textile and apparel specific sectoral impacts of free trade agreement and trade preference programs
  • Textile and apparel specific rules of origin and its economic impacts
  • Utilization of free trade agreement in the textile and apparel sector
  • Debate on the second-hand clothing trade ban

Part III Global Sourcing and Supply Chain Strategies of Textile and Apparel Firms

  • Shifting global sourcing strategies of fashion brands and apparel retailers
  • Promote textile and apparel sourcing and trade in socially compliant and sustainable ways
  • Impact of automation and digital technologies on the future landscape of apparel sourcing and trade

Due dates:

  • December 15, 2018: Abstract submission for editor’s review (up to 2 pages outlining background, approach, and outcomes of the proposed research)
  • May 15, 2019: Full paper submission for peer-review
  • August 15, 2019: Revision submission
  • September 15, 2019: Final paper submission to the editor for publication

Manuscript requirements:

  • 6,000–8,000 words including references
  • Up to 3 tables and 2 figures
  • Black and white
  • APA style

You can download the full Call for Papers (CFP) announcement from HERE 

Global Value Chain for Apparel Sold at Target

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A global view in mind means more career opportunities: except material production and cut and sew, other well-paid jobs in the apparel value chain stay in the United States.

Source: Moongate Association (2017). Analyzing the Value Chain for Apparel Designed in the United States and Manufactured Overseas

Outlook 2018: Apparel Industry Issues in the Year Ahead

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In January 2018, Just-Style consulted a panel of industry leaders and scholars in its Outlook 2018–Apparel Industry Issues in the Year Ahead management briefing. Below is my contribution to the report. All suggestions and comments are most welcome!

1. What do you see as the biggest challenges – and opportunities – facing the apparel industry in 2018, and why?

One of the biggest opportunities facing the apparel industry in 2018 could be the faster growth of the world economy. According to the International Monetary Fund (IMF), the global growth forecast for 2018 is expected to reach 3.7 percent, about 0.1 percent points higher than 2017 and 0.6 percent points higher than 2016. Notably, the upward economic growth will be broad-based, including the United States, the Euro area, Japan, China, emerging Europe and Russia. Hopefully, the improved growth of the world economy will translate into increased consumer demand for clothing in 2018.

Nevertheless, from the macroeconomic perspective, oversupply will remain a significant challenge facing the apparel industry in 2018. Data from the World Bank and the World Trade Organization (WTO) shows that, while the world population increased by 21.6 percent between 2000 and 2016, the value of clothing exports (inflation-adjusted) surged by 123.5 percent over the same period. Similarly, between 2000 and 2016, the total U.S. population increased by 14.5 percent and the GDP per capita increased by 22.2 percent, but the supply of apparel to the U.S. retail market surged by over 67.8 percent during the same time frame. The problem of oversupply is the root of many challenges faced by apparel companies today, from the intense market competition, pressure of controlling production and sourcing cost, struggling with excessive inventory and deep discounts to balancing sustainability and business growth.

2: What’s happening with sourcing? How is the sourcing landscape likely to shift in 2018, and what can apparel firms and their suppliers do to stay ahead?

The 2017 US Fashion Industry Benchmarking Study, which I conducted in collaboration with the US Fashion Industry Association (USFIA) earlier this year, provides some interesting insights into companies’ latest sourcing strategies and trends. Based on a survey of 34 executives at the leading U.S. fashion companies, we find that:

First, most surveyed companies continue to maintain a relatively diversified sourcing base, with 57.6 percent currently sourcing from 10+ different countries or regions, up from 51.8 percent last year. Larger companies, in general, continue to have a more diversified sourcing base than smaller companies. Further, around 54 percent of respondents expect their sourcing base will become more diversified in the next two years, up from 44 percent in 2016; over 60 percent of those expecting to diversify currently source from more than 10 different countries or regions already. Given the uncertainties in the market and the regulatory environment (such as the Trump Administration’s trade policy agenda), companies may use diversification to mitigate potential market risks and supply chain disruptions due to protectionism.

Second, although U.S. fashion companies continue to seek alternatives to “Made in China” actively, China’s position as top sourcing destination remains unshakable. Many respondents attribute China’s competitiveness to its enormous manufacturing capacity and overall supply chain efficiency. Meanwhile, it is interesting to note that the most common sourcing model is shifting from “China Plus Many” to “China Plus Vietnam Plus Many” (i.e. China typically accounts for 30-50 percent of total sourcing value or volume, 11-30 percent for Vietnam and less than 10 percent for other sourcing destinations). I think this sourcing model will likely to continue in 2018.

Third, social responsibility and sustainability continue to grow in importance in sourcing decisions. In the study, we find that nearly 90 percent of respondents give more weight to sustainability when choosing where to source now than in the past. Around 90 percent of respondents also say they map their supply chains, i.e., keeping records of name, location, and function of suppliers. Notably, more than half of respondents track not only Tier 1 suppliers, suppliers they contract with directly, but also Tier 2 suppliers, i.e., supplier’s suppliers. However, the result also suggests that a more diversified sourcing base makes it more difficult to monitor supply chains closely. Making the apparel supply chain more socially responsible, sustainable and transparent will continue to be a hot topic in 2018.

3: What should apparel firms and their suppliers be doing now if they want to remain competitive further into the future? What will separate the winners from the losers?

I assume many experts will suggest what apparel firms should change to stay competitive into the future. However, the question in my mind is what should companies keep doing regardless of the external business environment? First, I think companies should always strive to understand and impress consumers and control their supply chains. Despite the growing popularity of e-commerce and the adoption of transformative new technologies, the fundamental nature of apparel as a buyer-driven business will remain the same. Second, companies should always leverage their resources and stay “unique,” no matter it means offering differentiated products or value-added services, maintaining exclusive distribution channels or keeping the leadership position in a particular niche market. Third, apparel firms should always follow the principle of “comparative advantage” and smartly define the scope of their core business functions instead of trying to do everything. Additionally, winners will always be those companies that can take advantage of the mega-development trends of the industry and be willing to make long-term and visionary investments, both physical and intangible (such as human talents).

4: What keeps you awake at night? Is there anything else you think the apparel industry should be keeping a close eye on in the year ahead? Do you expect 2018 to be better than 2017, and why?

I think the apparel industry should keep a close eye on the following issues in 2018:

  • The destiny of the North American Free Trade Agreement (NAFTA): The potential policy change to NAFTA means so much to the U.S. textile and apparel industry as well as suppliers in other parts of the world. Notably, through a regional textile and apparel supply chain facilitated by the agreement over the past 23 years, the NAFTA region has grown into the single largest export market for U.S. textile and apparel products as well as a major apparel sourcing base for U.S. fashion brands and retailers. In 2016, as much as half of U.S. textile and apparel exports went to the NAFTA region, totaling US$11billion, and U.S. apparel imports from Mexico and Canada exceeded US$3.9billion. Understandably, if NAFTA no longer exists, sweeping changes in the trade rules, such as import duties, could significantly affect the sourcing and manufacturing behaviors of U.S. textile and apparel companies and consequentially alter the current textile and apparel trade patterns in the NAFTA region. For example, Mexico’s focus on basic apparel items suggests that U.S. importers could quickly source from elsewhere if duty savings under NAFTA are eliminated.
  • The possible reaching of the Regional Comprehensive Economic Partnership (RCEP): Even though RCEP is less well-known than the Trans-Pacific Partnership (TPP), we should not ignore the potential impact of the agreement on the future landscape of textile and apparel supply chain in the Asia-Pacific region. One recent study of mine shows that the RCEP will lead to a more integrated textile and apparel supply chain among its members but make it even harder for non-RCEP members to get involved in the regional T&A supply chain in the Asia-Pacific. This conclusion is backed by the latest data from the World Trade Organization (WTO): In 2016, around 91 percent of Asian countries’ textile imports came from other Asian countries, up from 86 percent in 2006. The more efficient regional supply chain as a result of RCEP will further help improve the price competitiveness of apparel made by “factory Asia” in the world marketplace. Particularly in the past few years, textile and apparel exports from Asia have already posted substantial pressures on the operation of the textile and apparel regional supply chain in the Western Hemisphere.
  • Automation of apparel manufacturing and its impact on the job market: Recall my observations at the MAGIC this August, several vendors showcased their latest technologies which have the potential to automate the cut and sew process entirely or substantially reduce the labor inputs in garment making. The impact of automation on the future of jobs is not a new topic, but the apparel industry presents a unique situation. Globally, over 120 million people remain directly employed in the textile and apparel industries today, a good proportion of whom are females living in poor rural areas. According to the World Trade Organization (WTO), for quite a few low-income and lower-middle income countries such as Bangladesh, Gambia, Pakistan, Madagascar, Sri Lanka, and Cambodia, as much as over 70 percent of their total merchandise exports were textile and apparel products in 2016. Should these labor-intensive garment sewing jobs in the developing countries were replaced by machines, the social and economic impacts will be consequential. I think it is the time to start thinking about the possible scenarios and the appropriate policy responses.

The 2 Euro T-shirt

 

This video is a great reminder of the impact of our fashion apparel industry, in particular through trade and sourcing. One key learning objective of FASH455 is to help students get aware of those critical global agendas that are highly relevant to the textile and apparel sector.

Discussion Question: After watching the video, do you have any new thoughts about how you can contribute to the building of a better world as a FASH major?

Apparel Sourcing in 2017: Results from the Just-Style State of Sourcing Survey

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The latest Just-Style State of Sourcing Survey conducted in December 2016 suggests a few trends of apparel sourcing in 2017:

  • Exchange rate volatility and rising raw material and labor costs are among the top concerns for apparel sourcing in 2017. Around 69% of survey respondents expect overall sourcing costs to rise in 2017, compared with 54.5% in last year’s survey. The fluctuating exchange rate, buyer’s expectation for higher quality of products and complex compliance requirements are among the major factors driving up the sourcing cost.
  • Apparel companies expect more uncertainties regarding the political and policy environment in 2017. Specific concerns for apparel companies include trade policy under Trump’s Administration, possible renegotiation of trade agreements such as the North American Free Trade Agreement (NAFTA) and Trump’s threats to impose a 45% punitive tariff on US textile and apparel imports from China. Respondents say the uncertainties make it challenging for companies to do strategic planning in advance
  • Sourcing will play an increasingly important role helping companies achieve strategic goals. It is highly expected that sourcing can contribute to meeting the fast-evolving demands of omni-channel retailing, consumers’ expectations for a more convenient shopping experience, as well as greater product innovation across all sales channels. A few respondents say they will use process and productivity improvement and closer collaboration with key suppliers to try to achieve these goals and mitigate any sourcing cost increases.   
  • Sourcing destinations may continue to slightly adjust in 2017. Specifically, 72.1% of respondents say they are looking for alternative source of supply in 2017 compared with 69.2% last year. Popular emerging sourcing destinations include Central America and the United States, EU, UK, Vietnam, Bangladesh, Indonesia and Kenya. However, the survey also confirms that China‘s dominance as the top apparel supplier is unlikely to change anytime soon – with a rise in the number of respondents looking to increase orders from the country in the upcoming year.

Respondents of the survey include manufacturers (29%), importers, agents or sourcing office executives (23%), retailers (12%), fiber, yarn, or fabric suppliers (11%), consulting, research, government, trade institute, NGO and university fields (14%) and software suppliers (2.6%).

Full report of the survey is available HERE.

2016 August Sourcing at Magic Debriefing

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New landscape of sourcing

  • Sourcing is turning from regional to global. In the past, U.S. apparel companies/fashion brands set up regional offices to handle sourcing. Nowadays, companies are building a global infrastructure to develop, source and market their products around world. Global rather than regional sourcing also allows companies to improve sourcing efficiency and reduce total product and distribution cost while maintaining quality of their product and services.
  • U.S. apparel companies/fashion brands are going with fewer but more capable vendors (“super vendors”). For example, executive from a leading U.S. apparel brand said their company has shrunk their sourcing base by 40% in the past few years. At the same time, they now expect their vendors to be able to supply on a global scale, including having multiple manufacturing facilities around the world and being able to provide value added services such as design and product development.
  • Related, sourcing is shifting from cut-make-and trim (CMT) to full package. This is consistent with our findings in the latest USFIA benchmarking study which suggests that vendors are highly expected to have the capacity of supplying raw material.
  • U.S. apparel companies/fashion brands are also investing to build a more partnership-based relationship with vendors— help vendors reduce cost, become more innovative and have the same vision looking at the whole picture of the supply chain. At the same time, U.S. apparel companies/fashion brands see vendors as their “ambassadors” and want to know more about them—what they believe, what they can bring to the table and how they treat their workers.
  • Companies are redefining the role of sourcing in their businesses. Sourcing is no longer treated as a technical function, but an integral part of a company’s overall business strategy.  

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Made in USA

  • There is a noticeable interest in sourcing textiles and apparel “Made in USA” at Magic. A dozen U.S.-based apparel companies attended the Magic show and their booths attracted a heavy traffic. According to representatives from these companies, U.S. consumers’ increased demand for apparel “Made in USA” has been a strong support for their business growth in recent years.
  • Nevertheless, apparel “Made in USA” often contain imported inputs today. I specifically asked a few vendors where their fabrics come from. All but one company said fabrics were imported because it was so hard to find domestic suppliers, especially for woven fabrics. Interesting enough, some companies feel OK to label their apparel “Made in USA” even though they use imported fabrics. According to them, apparel can be labeled “Made in USA” as long as “domestic content exceeds 60% of the value of the finished product.”
  • At a seminar, some entrepreneurs which make and sell “Made in USA” apparel and accessories said price and production cost remain one of their top business challenges. I asked the panel whether going high-end is the only option for the future of apparel “Made in USA” given the high labor cost in the country. They disagreed—saying technology advancement and design innovation could help reduce production cost. However, all panelists admit they carry some luxury product lines. Additionally, some companies choose to emphasize concepts other than “Made in USA”, such as “hand-made” and “Pride in Seattle”, in order to make their products look more personal to consumers and allow more flexibility in sourcing raw material.

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Updates of sourcing destinations

  • Ethiopia: as I observe, Ethiopia is THE star at this year’s Sourcing at Magic. The country was repeatedly mentioned by panelists at various seminars as a promising and emerging sourcing destination. Several events at the show were also exclusively dedicated to promoting apparel and footwear “Made in Ethiopia”. A couple of reasons why Ethiopia is so “hot”: 1) the ten year extension of AGOA creates a stable market environment encouraging sourcing from Africa and investing in the region (and for sure the duty free access both to the US and EU market).  2) Located in the middle of Africa, Ethiopia is regarded as a hub that has the potential to take a leadership role in integrating the apparel supply chain in the region. 3) It is said that Ethiopian government is very supportive to the development of the local textile industry.  4) Many U.S. fashion companies feel sourcing from Ethiopia involves less risks of trade compliance than sourcing from some Asian countries such as Bangladesh.  
  • China: China unarguably remains the No.1 textile and apparel supplier to the U.S. market—in terms of numbers, around 60% vendors at the Magic show came from China. But I notice that booths of Chinese vendors didn’t have much traffic this time, an interesting signal for sourcing trend in the upcoming season. Nevertheless, while U.S. apparel companies/fashion brands are placing more emphasis on supply chain efficiency, quality of products, speed to market and added value in sourcing, “Made in China” will continue to enjoy many unique advantages over other suppliers. Plus, Chinse factories are actively investing overseas, from Southeast Asian countries to Africa. This makes Chinese factories likely to grow into “super vendors” that western fashion brands/retailers are looking for. To certain extent, macro trade statistics alone may not be able to fully reveal what is going on in apparel sourcing and trade.   
  • Vietnam: Regarding the future of Vietnam as a sourcing destination for U.S. apparel companies/fashion brands, somehow I hear more concerns than excitements at Magic. The uncertainty surrounding the ratification of TPP by the U.S. Congress definitely has made some companies hold back their investment and sourcing plan in Vietnam. Another big concern is Vietnam’s labor shortage and limited manufacturing capacity: apparel factories in Vietnam are already competing with electronic industry for young skilled workers. US companies also have to compete with their EU counterparts for orders in Vietnam. The newly reached EU-Vietnam Free Trade Agreement (EVFTA), which is very likely to be implemented earlier than TPP, provides Vietnam duty free access also to the EU market. And EVFTA adopts a much more flexible rule of origin than TPP, making it easier for Vietnam factories to actually use the agreement.

Sustainability

The awareness of social responsibility and sustainability has much improved: everyone in the industry is talking about them and have a view on them. On a voluntary basis, some companies are making efforts to improve traceability of their products, i.e. to help consumers know exactly where their clothing comes from and what is happening at the upstream of the supply chain. Yet, how to encourage factories to share their information and control tier 2 and tier 3 suppliers remain a challenge. 

by Sheng Lu

Note: Sourcing at Magic is one of the largest and most influential annual textile and apparel sourcing events hosted in the United States. Special thanks to the Center for Global and Areas Studies at the University of Delaware for funding the trip.