The garment trade's next revolution - what's likely to change between 2011 and 2016

Published: December 2010

Publisher: Clothesource Limited

Product ref: 110322

Pages: 92

Format: PDF

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EXECUTIVE SUMMARY

The world trade in clothing underwent repeated dramatic changes between 2007 and 2010. Between 2007 and 2008, buyers forecast rapid inflation – which hardly materialised, as demand was hit by the 2008/9 recession in key Western markets. The recession in fact depressed demand far less than most observers expected – but, coinciding with the final removal of Western barriers against Chinese apparel imports, caused havoc among many garment makers outside China, and temporarily forced Chinese prices down.

The end of the 2008/9 recession coincided with sharp increases in fibre and fabric prices, continuing healthy growth in China’s domestic market, wage rises in a number of countries and a temporary lull in new factory construction. This resulted in upward pressures on prices – but a surprisingly (to some) continuing growth in China’s share of Western apparel markets.

These changes were the result of both short-term changes in the trading environment and of fundamental, long-term, transformations in the influences on garment buyers and sellers throughout the world.

The Garment Trade’s Next Revolution 2011 Edition is the follow-up to the best-selling 2010 edition. Fully updated to reflect sales, prices, issues and rules in late 2010, it forecasts the world up to 2016, and national shares of the world garment trade for the top 80 supplying countries.

Introduction

1. 2008/10: How a 20-year emerging-market garment-making boom went into reverse. And back again
1.1 World apparel market 1990-2010
1.2 2007/8: Rapid Asian growth sparks “overheating” panics
1.3 2008/9: Not so much as collapse as a gentle and temporary slowdown
1.4 Growth in 2010 and its apparent effects
1.5 China’s changing business strategies
1.6 What changed – or we thought changed – in 2008, 2009 and 2010

2. Changes among garment makers: 2000-2010
2.1 Winners
2.1.1 Longer term winning and losing countries
2.1.2 Long term winning and losing regions
2.1.3 The effect of an integrated raw material industry
2.1.4 The impact of duty free deals
2.2 How prices changed
2.3 The Basic Economics of emerging-market garment making
2.3.1. Where the costs lie
2.3.2: Cost and revenue unpredictability
2.3.3: Impact on garment manufacturers
2.4 Producer government intervention
2.5 Trade Barriers
2.6 How the EU, US and Japan differ in category sourcing strategies

3 Changes among buyers: 2000-2010
3.1 Where the buyers are
3.2 Where the buyers weren’t
3.3 Western buyer concentration
3.3.1 Even in the West: retailing is still fragmented, still fragmenting
3.3.2 Buying: new strengths emerge
3.4 Apparent results
3.4.1 Lower inventory
3.4.2 Faster SKU churn

4. Principles underlying sourcing: 2011-2016
4.1What we knew: The Twelve Laws of Sourcing 2009
4.1.1. Hotspots: No new ones: offshore move complete but scope for new challengers
4.1.2. Factories’ problems: China, not recession
4.1.3 China: Ruthless, shameless, loaded, focused
4.1.4 Garment making: Inherently unstable
4.1.5 Buyers: Increasingly focused on “whole-life” profitability
4.1.6 Recovery: What recession didn’t cause, recovery won’t cure
4.1.7 US & EU Neighbours: Losing share to nimbler Asians
4.1.8 Vertical integration: Not yet a competitive advantage
4.1.9 Ethical sourcing: Activists, not consumers, set the agenda
4.1.10 Protectionism: Barriers are falling and won’t be rebuilt
4.1.11 “Fringe” countries: Many endangered
4.1.12. The underlying principle: China rules - Till the next revolution
4.2 2011-2016: Issues we know will influence the garment trade
4.2.1 China’s working population starts falling
4.2.2 The effect of trade embargoes or sanctions
4.2.3 Changes in preferential trade rules
4.2.4 Japan’s production relocation
4.2.5 Trade rules enforcement
4.2.6 Changing compliance/ethics standards
4.2.7 Fabric and fibre
4.3 New issues that MIGHT emerge between 2011 and 2016
4.3.2 Buyers need to re-learn negotiating skills
4.3.3 Currency may be the new protectionism
4.3.4 Energy

5.Countries
5.1Key trends: Top ten supplying countries
5.1.1 China
5.1.2 Bangladesh
5.1.3 Turkey
5.1.4 Honduras
5.1.5 India
5.1.6 Vietnam
5.1.7 Indonesia
5.1.8 Pakistan
5.1.9 El Salvador
5.1.10 Mexico
5.2 Regional summary
5.2.1 Non-China Asia
5.2.2 EU Neighbours
5.2.3 US Neighbours
5.2.4 Africa
5.2.5 New countries

6. Recent History: Major supplying countries

7. Assumptions for 2016 forecasts
7.1 Forecasting method
7.2 Purchasing Assumptions: % change on previous yr
7.3 Market share assumptions

8. General Environmental Forecasts for top 80 countries

9. 2010-2016 Forecasts
9.1 Garment export volumes 2008-2016 (mn pieces)
Afterword

Tables
Table 1: Fastest growing garment traders: 2010/2008
Table 2: Fastest growing apparel exporters: 2004-2010
Table 3: Fastest fallers from 2004
Table 4 Price change by country: 2008-2009
Table 5: Trade restrictions imposed by major apparel markets: 2009/10
Table 6: US and EU sources of casualwear
Table 7: US and EU sources of tops and dresses
Table 8: US and EU sources of intimatewear/swim
Table 9: US and EU sources of formalwear
Table 10: Countries subject to boycott/sanctions, 2010
Table 11: Sourcing history 2004-2010q2 Major suppliers
Table 12: Base Market size assumptions by year
Table 13: Key market share assumptions: Sales to EU
Table 14: Key Market share assumptions: sales to US
Table 15: Key market share assumptions: Sales to Japan
Table 16: Trading environment forecast: Top 100 garment exporters
Table 17: Garment Export Volumes by country 2008
Table 18: Garment Export Volumes by country 2009
Table 19: Garment Export Volumes by country 2010
Table 20: Garment Export Volumes by country 2011
Table 21: Garment Export Volumes by country 2012
Table 22: Garment Export Volumes by country 2013
Table 23: Garment Export Volumes by country 2014
Table 24: Garment Export Volumes by country 2015
Table 25: Garment export volumes by country 2016

Figures
Figure 1: World apparel imports 1990-2010
Figure 2 Apparel retail price index: 1996-2010
Figure 3: annual change in apparel imports: 1991-Q3 2010
Figure 4: Quarterly growth in garment trade
Figure 5 Chinese garment prices in US
Figure 6: Worldwide food prices: 2004-2010
Figure 7 US apparel import prices: 2009 and 2010
Figure 8: Change in apparel exports by region: 2004-2010
Figure 9: Garment export growth 2004-2010: textile makers vs. textile importers
Figure 10: Imported clothes price index: 2004-2010
Figure 11: China price history: 2004-2009
Figure 12: China's changing stance on export rebates
Figure 13: US clothing inventories
Figure 14: China's population 2000-2030
Figure 15: FTA candidates: price index with & without duty
Figure 16: Asian producers' share of Japanese clothing imports 2008/9