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China’s footwear market share in the US revived a little in July

Trump administration’s latest round of 15% tariffs imposition on $112 billion of Chinese goods which started from September 1, made the footwear importers pick up the pace of shipments from China in July.

China was the only country of the top five suppliers of footwear imports to the US- making up 89% of all shipments-to post a decline in value in January. As an influence of President Trump’s trade war, its position as the top in the U.S. market kept falling in April.

China footwear market US
Figure: China’s footwear import market share in value terms increased to 49% for the year through July.

But in July, Trump administration’s new round of tariffs imposition from September 1 played a different role. China’s footwear import market share in value terms increased to 49% for the year through July compared to 48.2% for the first half of the year through June, although it was down from a 53% share for all of 2018, data from the Commerce Department’s Office of Textiles & Apparel (OTEXA) showed.

In volume terms, China’s market share ticked up to 65.5% from 65.3% month to month, but still below the 69.7% share for 2018.

According to analysis from the Footwear Distributors & Retailers of America (FDRA), for the month compared to June, footwear imports from China were up 7% compared to a 15.9% increase from the rest of the world.

However, footwear imports from the still top supplier for the year to date through July were down 7.3%, to a value of $7.37 billion, compared to $7.95 billion a year earlier, according to OTEXA.

 

China Footwear import market share in US increase

China’s decline was even more pronounced in volume terms. Shipments from China fell 12.5% to 912.25 million pairs in volume till July from 1.04 billion pairs in the year-ago period as companies diversify their sourcing in lieu of ongoing tariff threats from the Trump administration.

FDRA said, duties reached a record July take of $300.2 million. Full-year average duties per pair are on track to climb to a record high in 2019 at that pace. They said, “If Chinese duties per pair rise as much as expected, many importers soon will have nowhere to turn to avoid paying even higher duties per pair.”

Trump says that the trade deficit with China hurts the US economy. When he raised tariffs in May, he told companies that they could reduce costs by shifting production. While China is still the top supplier and has shown some resiliency, the U.S.-China trade war has clearly caused importers to shift their sourcing strategies.

OTEXA’s latest report shows the next five top suppliers–Vietnam, Indonesia, Italy, India and Cambodia–all are gaining ground in year-to-date shipments to the U.S.

A redrawing of manufacturing map has also been seen in the last decade. Since 2010, Adidas has cut the share of footwear it makes in China in half. The country that has absorbed most of that business is Vietnam.

A similar situation is playing out at Nike. A decade ago, China was its main footwear producer. Today, Vietnam owns that title.

“Since most of this product is leather shoes, the tariffs, unfortunately, went into effect at the start of September versus in mid-December. We pulled forward as much inventory as we could for receipt ahead of September 1 and have been working with our vendors to share the now higher cost. The devaluation of the Chinese yuan  is also helping lessen the near-term impact.”

Mimi Eckel Vaughn, CEO, Genesco

Nathan Serphos, senior vice president of accessories and footwear for Michael Kors, told last month to Sourcing Journal that four years ago the company imported 80% of its footwear from China and 20% elsewhere. “By year-end, we’ll probably be 80% non-China and 20% China,” Serhpos said. “So in that sense, I think we’re quite there already in mitigating the risk.”

Mimi Eckel Vaughn, Genesco’s Chief Operating Officer, said on the company’s conference call last week that on an annual basis, about one-third of its merchandise is imported from China.

“Since most of this product is leather shoes, the tariffs, unfortunately, went into effect at the start of September versus in mid-December,” Vaughn said. “We pulled forward as much inventory as we could for receipt ahead of September 1 and have been working with our vendors to share the now higher cost. The devaluation of the Chinese yuan  is also helping lessen the near-term impact.”

At the same time, footwear imports from Vietnam, the No. 2 supplier of footwear to the US increased 11.5% to $3.55 billion for the year to date through July. This gave the country a 26.3% import value market share, which dipped from 26.8% a month earlier, but was still ahead of the 23.5% share it held in 2018.

Imports from Indonesia were up 7.9% in the period to a value of $923.77 million, while India’s shipments rose 9% to $238.44 million and imports from Cambodia jumped 33% to $244.11 million. Italian footwear imports increased by 3.9% to $926.99 million.

Looking at imports by category, athletic footwear shipments dipped 0.9% in July, according to FDRA, as declining shipments from China offset increases from Vietnam and Indonesia. Boot imports were up 10.9%, as surging shipments from Vietnam offset a decline from Indonesia.

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