China has long been the leading manufacturer of denim in terms of volume, and when it comes to getting denim apparel to the United States, the Asian powerhouse is still the largest supplier—though its share continues to slide which leaves many countries quickly gaining ground getting the favor of US-China trade war.
It’s likely that no matter what happens with the Trump administration’s threat to impose stiff punitive tariffs on Chinese apparel imports, the damage has already been done as the industries’ focus from China has already been shifted.
Much of the mood has been forced on the industry by the U.S.-China trade war that has resulted in high anxiety over precisely when apparel imports from China will be hit by tariffs of as much as 25 percent by the U.S. as a weapon against what the White House and the U.S textile industry charge is China’s failure to reform and police its intellectual property rights policies and unfair government subsidies of exporters.
Many importers have clearly taken the risk of huge duties on Chinese goods as a potential threat to their business and decided to limit their exposure to the once-dominant Chinese market, even with the imposition of those tariffs now on hold.
Designer Shirley Zheng of House of Gold, which operates denim mills in China, said, “We definitely took a little hit” from the U.S.-China trade war.
While the mill’s European customers are still buying textiles from China, she said prices for packaging and manufacturing in China are getting too high for most, so House of Gold is looking outside of China for large-scale production in countries like Pakistan, Bangladesh, Vietnam and Mauritius. This statement clearly strengthens the focus shifting phenomenon of the industries from China.
Robert Antoshak, Managing Director at Olah Inc. (https://olah.com/), 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 percent of their product was manufactured in China.
“In our most recent disclosure, that number was down to 21 percent.”
It can be said without any ambiguity that supply chain diversification is in full effect and the latest data from the Commerce Department’s Office of Textiles & Apparel (OTEXA) also reflects it.
The swing in production is most evident among the top suppliers of blue denim apparel, 97 percent of which are jeans. Denim apparel imports from China dropped 5.16 percent in value to $287.49 million in the year through May, compared to the same period in 2018. This brought China’s market share for jeans imports down 1.77 percent to 23.35 percent for the year.
The next four top suppliers all gained ground on China in the 12-month period, according to OTEXA.
In the second place spot, Mexico, which has had its own round of tariff threats from the White House, though they seem to have subsided for now, saw its jeans imports increase 17.61 percent in the first five months of the year to reach $332.43 million in value. Mexico’s market share rose 11.55 percent to 21.98 percent for the year.
Denim apparel imports from third-place supplier, Bangladesh, were up 6.26 percent year to date to $183.42 million, as the country’s market share advanced 7.61 percent to 14.62 percent. Vietnam’s jeans shipments to the U.S. jumped 35 percent to $105.07 million in the first five months of the year, compared to the year-ago period. This lifted Vietnam’s market share 40.49 percent to 8.2 percent.
Rounding out the top five was Pakistan, with its shipments to the U.S. increasing 10.58 percent to $95.37 million. Pakistan’s market share was up 11.87 percent in the 12 months to 6.48 percent.
At last month’s Kingpins New York show Ebru Ozaydin, Senior Vice President of sales and marketing at Pakistan’s Artistic Milliners said, “There’s no doubt that the trade war between the U.S. and China has resulted in production being spread out across Asia and being a Pakistan manufacturer, we have benefited.”
The Western Hemisphere, led by Mexico, Nicaragua and Guatemala, continued to increase its denim production, too.
Imports from the region rose 14.83 percent year to date through May to $414.07 million. This gave the Western Hemisphere a 27.64 percent market share, with a 10.4 percent gain for the year.
Unlike Mexico; Nicaragua and Guatemala are part of the Central American Free Trade Agreement (CAFTA), which allows duty-free treatment under certain input stipulations and has boosted exports for U.S. yarn and fabric manufacturers. Jeans imports from the CAFTA countries rose 26 percent to $43.75 million in the first four months of the year compared to the year-ago period.