Blog: Leonie BarrieChina's currency conundrum

Leonie Barrie | 2 September 2015

Fears over the state of the Chinese economy continued to jolt financial markets during the past week. Yet apparel industry executives are playing down the potential impact of the decision by China's central bank to reduce the value of the yuan and cut interest rates further.

For his part, Mike Flanagan asks: why the fuss about China’s yuan devaluation? While pretty trivial by the standards of the past 50 years, it has managed to raise all sorts of hackles, he writes.

One analyst has suggested tumbling markets and economic uncertainty in China could deliver a tough blow to several specialty retail and apparel companies - with the biggest risks including China revenue exposure and a potentially slower economy driving lower consumer spending.

But US retail giant Gap Inc said it remains bullish on its long-term growth prospects in China despite the yuan deflation, while also revealing it is on track with its strategic restructuring.

Industry excitement might be mounting ahead of impending trade deals involving Vietnam – but there are concerns, too, as to whether the country has the skills and capacity to cope.

While Nicaragua's top apparel and footwear manufacturers say they plan to double their size in three years as the Central American nation rushes to meet rising demand from US apparel brands.

Easy access to cheap capital, infinite computing power, and “the Uberfication of everything” are converging to create a perfect storm of disruption that's starting to shake up the apparel industry, according to Kurt Cavano, founder and chief strategy officer of GT Nexus. In a two-part interview he talks about the implications for retail and the supply chain.

And in other news, Adidas Group is trying to help resolve a dispute at an Indonesian footwear supplier; Luen Thai Holdings says Vietnam will continue to be the country of choice for apparel manufacturing in the foreseeable future; and retailer H&M is offering a EUR1m (US$1.1m) grant to encourage sustainable innovation.


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