US imports from Vietnam grew 38.1% in February

US imports from Vietnam grew 38.1% in February

Apparel imports into the US bounced back in February, with all but one of the leading supplier countries booking growth, and six of those hitting double-digit gains. Vietnam led the field, with Cambodia and Indonesia also making the top three.  

The latest figures from the Department of Commerce's Office of Textiles and Apparel (OTEXA) show the volume of US apparel imports from all sources grew 19.4% year-on-year in February, up from the 6.5% growth seen in January. Imports during the month reached 2.37bn square metre equivalents (SME), up from 1.98bn SME in the prior year. 

In value terms, imports rose 7.6% year-on-year to $13.72bn in February. 

In terms of individual supplier countries, nine of the top ten recorded growth. Shipments from China – the largest supplier of apparel to the US – increased 22.4% to 943m SME. Nearest rival Vietnam grew 38.1% to 306m SME compared to the same month in the year before.

And Bangladesh, ranked number three in the top ten league table, saw apparel shipments rise 10.1% to 170m SME. 

Of the remaining supplier countries, Indonesia recorded the strongest growth at 33.4% to reach 130m SME, followed by Cambodia, which recorded an increase of 29.6% to 94m SME. India followed, recording an increase of 14.4% to 105m SME, followed by Pakistan, which recorded an increase of 6.2% to 47m SME. Mexico recorded growth of 5.8% to 79m SME, and El Salvador saw an increase of 2.8% to 66m SME. 

However, a decline was record by Honduras of 1.2% to 87m SME. 

Meanwhile, total US apparel and textile imports were up 19.5% in February, amounting to 5.3bn SME, up from 4.36bn SME in the same period a year ago, with textiles up 19.6% to 2.85bn SME.

Facts behind the figures

While there are concerns that increasing wages are undermining the competitiveness of China's garment production on the world stage, and that manufacturing growth is slowing, the country continues to lead the way when it comes to efficiency and infrastructure.

China remains a compelling source for apparel buyers as rising prices are largely being offset by productivity gains. With its 10,916 garment manufacturers with annual sales above CNY20m (US$3.05m) churning out 29.6bn pieces in 2014, up 1.6% year-on-year, no country can match China in terms of the size of its supply base, its range of skills, its quality levels, its product variety and the completeness of its supply chain.

However, the falling value of the Chinese yuan is being seen as a lever for US brands and retailers to try to drive down product costs, with one analyst describing it as a "tailwind for those sourcing apparel from China". The flipside for retailers and brands shipping in goods to sell in China is to take a hit on margin or increase the price of their products.

A survey in February revealed that US apparel executives believe China will still be the first choice sourcing destination over the next two years, but they expect the country's lead to narrow.

US apparel execs see China sourcing lead narrowing

Vietnam, meanwhile, has benefited as producers and buyers diversify their supply chains, helped by its low labour costs and its industry focus on specialisation, modernisation, and increasing value added.

Foreign direct investment continues to flow into the country, and the conclusion of negotiations on the Trans-Pacific Partnership (TPP) trade agreement means Vietnam is expected to be one of the biggest beneficiaries. A forecast in Euromonitor International's 'Apparel and Footwear 2016' report singled Vietnam out as one of the most promising markets moving forward.

Indeed, the country continues to gain US market share, throwing the Central American region into a scramble to devise new competitive strategies as its textile exports slow. 

The Vietnam Textile and Apparel Association (Vitas) is confident the country's garment and textile exports will grow on average by 11.5% per year to 2020. However, some industry observers have questioned whether the Southeast Asian country really is ready to reap the benefits that will come its way once the TPP deal goes live.

Vietnam "most promising market" moving forward

PSF 2016 – Is Vietnam ready to reap the benefits of TPP?

Bangladesh's clothing industry also continues to build on its momentum as a low-cost sourcing destination, despite factory safety issues. Since the collapse of the Rana Plaza building in April 2013, two major industry-backed remedial plans, together with one supported by the government, have worked to resolve issues over safety and worker rights, including the closure of some garment factories.

However, a fire in February at a garment factory deemed to be on track with remedial action has served to highlight the race against time to make Bangladesh's garment factories safe, and renewed fears for workers' safety.

Another Bangladesh factory fire highlights safety issues

Cambodia's apparel industry is the country's largest manufacturing sector, despite being blighted by strikes, wage disputes, and factory faintings. Garment manufacturers have called for a focus on productivity in the sector as a 9.4% rise in the minimum wage for clothing workers to US$140 per month kicked in earlier this year. They are also urging buyers to increase their prices for Cambodian goods. A national campaign to push multinational brands to pay suppliers a minimum wage of $177 – which labour rights groups and unions believe is a fair minimum wage – began in November last year.

The country's garment and footwear exports earned around $6.3bn in 2015, recording a growth rate of nearly 6.7% when compared with the year before, according to recent figures from the Cambodian Ministry of Commerce.

Cambodia garment exports reached $5.7bn in 2015

Year-to-date

While monthly trade data is often volatile, with big swings from one month to the next, a broader view of the year so far shows total US apparel and textile imports grew 12.6% between January and February to reach 10.27bn SME, up from 9.12bn SME in the prior year. Within this, textiles increased 12.4% to 5.72bn SME, while apparel shipments were up 12.8% to 4.55bn SME. 

In value terms, total US apparel and textile imports were up 7.7% to $17.88bn, from $16.60bn a year earlier. Apparel imports climbed 7.6% to $13.72bn, while textiles rose 8% to $4.16bn.

Seven of the top ten apparel supplier countries booked growth. Movement within the top three during the month shows China rose 16.6% to 1.89bn SME, Vietnam grew 27.2% to 588m SME, and Bangladesh increased 12.8% to 346m SME.