Apparel shipments from China increased 5.8% in November

Apparel shipments from China increased 5.8% in November

Apparel imports into the US bounced back in November as retailers stocked up on merchandise ahead of the holiday season, with all but one of the leading supplier countries booking the growth. While China rebounded from its decline in October, five of the top ten suppliers, including Vietnam and Bangladesh, managed to book double-digit gains.

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 8.5% year-on-year in November, up from the 0.04% drop seen in October. However, compared with October's numbers, apparel imports into the US in November were down by a whopping 19.8%. Imports reached 1.98bn square metre equivalents (SME), up from 1.83bn SME in the prior year when shipments were hampered by the West Coast ports slowdowns. 

In terms of individual supplier countries, all but one of the top ten recorded growth. Shipments from China – the largest supplier of apparel to the US – increased 5.8% to 821m SME. Nearest rival Vietnam grew 16.9% to 236m 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 16.9% to 117m SME.  

Of the remaining supplier countries, Indonesia recorded the strongest growth at 20.1% to reach 96m SME, followed by India (up 15.8% to 71m SME) and Honduras (up 13.4% to 89m SME). Year-on-year import gains were also reported by Pakistan (up 9.3% to 42m SME), El Salvador (up 5.8% to 61m SME), and Mexico (up 0.6% to 70m SME). 

Cambodia, however, saw apparel shipments decline 18.5% to 61m 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 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 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.

And data released this week shows manufacturing activity across all industries in China has declined for seven of the past eight months. While December's reduction was modest, it contrasted with a stabilisation in November, and appears to dash hopes that recent government efforts to stimulate the economy through a series of interest rate reductions have started to take effect.

China manufacturing activity declined again in December

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 recent conclusion of negotiations on the Trans-Pacific Partnership (TPP) trade agreement means Vietnam may benefit significantly. Luen Thai Holdings is the latest company to boost its business in Vietnam, announcing in August it will continue to devote resources and efforts in its Vietnam projects. 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, maintaining steady growth.

Vietnam forecasts textile and garment export growth

Bangladesh's clothing industry 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. The country is now working to achieve its goal of doubling exports to $50bn by 2021, but will need to address a number of challenges first, its garment manufacturing association has said. A new training initiative recently launched to strengthen workplace cooperation in the country's ready-made garment (RMG) sector.

Bangladesh RMG training on workplace cooperation

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 renewed focus on productivity in the sector ahead of a 9.4% rise in the minimum wage for clothing workers to US$140 per month that will kick in this month. 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 $177m – which labour rights groups and unions believe is a fair minimum wage – began in November.

Brands face renewed criticism over Cambodia wages

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 7.5% between January and November to reach 58.83bn SME from 54.71bn SME in the prior year. Within this, textiles increased 8.6% to 33.63bn SME, while apparel shipments were up 6.2% to 25.20bn SME. 

All but one of the top ten apparel supplier countries booked growth. Movement within the top three during the 11 months shows China rose 5.7% to 10.58bn SME, Vietnam grew 14.3% to 2.90bn SME, and Bangladesh increased 16% to 1.73bn SME.

The other winners included India (up 6.9% to 952m SME), El Salvador (up 3.2% to SME), Honduras (up 3.1% to 1.02bn SME), Cambodia (up 2.3% to 973m SME), Indonesia (up 1.1% to 1.17bn SME), and Pakistan (up 0.7% to 545m SME). 

However, Mexico saw its apparel shipments drop 1.3% to 838m SME.