Emerging Asian countries hold apparel sourcing key
Emerging Asian countries hold the key to future apparel sourcing, according to a new research report from just-style
Emerging Asian countries hold the key to the future of the global apparel sourcing industry, according to a new research report from just-style.
Bangladesh, Vietnam, Cambodia and Pakistan will retain the focus of the industry thanks to their low labour costs and fast response times to pressurised buyers, says the report, 'Apparel Sourcing in Asia – forecasts to 2016.'
These countries will also hold off the challenge from emerging competitor nations in Latin America as we progress further into 2012, but the most interesting new region for the apparel sourcing industry outside China is likely to be Turkey.
These changes come as doubts grow over the future of China as a viable competitor to low-income country clothing exporters, with the Chinese government renewing its efforts to shift its country’s workforce from low-margin industries like clothing towards jobs involving improved skill levels and higher technology.
This, the report suggests, is likely to impact China’s position as the clear global leader in apparel sourcing, a status which will probably also be weakened by rising labour costs and exchange rate appreciation.
Indeed, China’s clothing prices could rise 20% faster than its regional competitors over the next five years, thus losing market share to low-income countries, particularly in apparel segments such as low-value basics.
Shift in spending power
Meanwhile, while most of the global trade in clothing will remain fixed on EU countries, the US and Japan over the next five years, this situation is slowly shifting – because these nations only account for about 10% of the global population and are seeing their spending power growing at a much slower rate than developing markets.
Instead, the fastest future growth in retail clothing will come from China, Eastern Europe, Russia, India, Turkey and Brazil, the report argues.
Other factors influencing the global apparel sourcing industry include inventory pressures brought about by continued volatility in consumer confidence and spending power.
This makes it difficult for retail buyers to predict demand even on a monthly basis, leading to squeezed inventories and reduced orders to compensate for the continued uncertainty.
In this scenario, the report says, agility and responsiveness are becoming the key to success in the apparel market, as well as the most important differentiating factors for apparel buyers.
The report also identifies the recent dramatic growth in the global paraxylene (PX) and polyester market, fuelled by recent highs in cotton prices – although these have since receded.
This demand has benefited Asian countries with a strong synthetic fibre industry, and prices and margins have remained strong, even as cotton prices have fallen, but growth will slow as cotton supply recovers during 2012.
Finally, the report suggests that local retailers and domestic buyers in Asian markets will continue to play an important role in the apparel sourcing industry, particularly those in China and India – and that importance is likely to grow as the rapidly expanding middle classes exert a growing influence.
There is still room for growth in the Chinese market despite the relatively high expenditure on clothing, the report finds, but the market is “gradually reaching saturation” – meaning that neighbouring Asian markets could become more dynamic catalysts for growth in future years.
Click here for more information on the report 'Apparel sourcing in Asia – forecasts to 2016.'
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