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China’s market share continuing to decline in US

Just a month before Trump administration’s latest round of 15% tariffs imposition on $112 billion of Chinese goods, USA companies imported $14.47 billion worth of apparels from China, the still-top supplier in the year through July.

China’s market share in U.S apparel

That is a 2.33% increase compared to a year earlier, according to the US Commerce Department’s Office of Textiles & Apparel’s (OTEXA) new data released on September 4, Wednesday.

Though it is an increase, the analysts are considering it as tepid gains compared to last year as the U.S.-China trade war has influenced importers to diversify their sourcing to avoid risk and now higher prices.

China held a 32.26% market share in of U.S. apparel imports in value terms for the 12 months through July, an erosion of 3.6% in three and a half years, according to OTEXA. For the year through July 2018, China’s apparel market of U.S. apparel imports was 33.1%, compared to 33.7% for the year ended Dec. 31, 2017. Looking even further back, China’s market share at the end of 2016 was 34.59%, and 35.86% a year before that.

The statement of Manny Chirico, Chairman and CEO of PVH Corp. is more alarming than the statistics. He said to Sourcing Journal last week, “Moving into 2020, we have significantly moved a lot of our production where we could out of the China market. Next year, we will be somewhere between 10 to 12% of our U.S.-required production coming out of China,” down from 34.59% just three years ago.

The scenario is going in favor of China’s Asian neighbors. The slow decline and flight from the country has enabled them to gain ground. For the year to date through July, shipments from no. 2 supplier Vietnam rose 13.05% to a value of $7.8 billion, while imports from third-place Bangladesh increased 11.53% to $3.57 billion.

China market share U.S.apparel imports

“The tariffs have accelerated that movement,” Chirico said, describing the cause and effect of the situation. “We recognized what was ahead of us over the next three to four years…and we opened up Africa. We moved to some other locations throughout Asia and we tried to position ourselves with key fabric suppliers throughout the world that would enhance our supply chain.”

Talking about denim Robert Antoshak, Managing Director at Olah Inc., which produces the Kingpins show, said, “People are diversifying their denim sourcing locations. Some people are getting out of China and some people are staying in China. Some are adding another component and finishing it in another country so they don’t have to say Made in China and can avoid tariffs. Others are just moving out entirely. There is definitely confusion in the marketplace.”

Art Peck, President and CEO of Gap Inc. told that they have been migrating sourcing out of China for the last several years and they would continue to do this responsibly going forward. As three years ago, about 25% of their product was manufactured in China. “In our most recent disclosure, that number was down to 21%”, Peck said. So it can be said without any ambiguity that supply chain diversification is in full effect.

Latest data from the Commerce Department’s Office of Textiles & Apparel (OTEXA) also reflects it.

Among other Top 10 suppliers in Asia, shipments from India were up 9.56% to $2.63 billion, imports from Cambodia gained 6.36% to $1.45 billion and Pakistan’s shipments rose 9.38% to $849 million.

Western Hemisphere countries have also benefitted from the spreading out of sourcing and the desire for a percentage of production based closer to market. Overall shipments from the region rose 5.46% in the period to $8.38 billion and a 17% market share.

Among the Top 10, imports from Honduras were up 13.29% to a value of $1.58 billion and shipments from El Salvador rose 9.38% to $1.09 billion.

Significant gains were also seen from Sub-Saharan Africa, as imports from the region rose 22.23% to $803.66 million, led by Kenya, Madagascar, Ethiopia and Mauritius.

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