China had the lowest per unit apparel price of the top ten suppliers to the US in 2018, but Cambodia saw the largest rise in shipments

China had the lowest per unit apparel price of the top ten suppliers to the US in 2018, but Cambodia saw the largest rise in shipments

Despite concerns about sourcing from China amid an intensifying trade war with the US, newly-published figures show China continues to dominate US apparel imports – with import volume rising and prices continuing to fall in 2018. 

The latest full-year data from the US Department of Commerce's Office of Textiles and Apparel (OTEXA) confirms that China remains by far the largest apparel supplier to the US, with a 41.9% share of the total, helped by the size of its supply base, its range of skills, its quality levels, its product variety and the completeness of its supply chain. In 2018, shipments from China to the US moved up by 1.34% to US$27.4bn year-on-year. In volume terms, there was a rise of 2.7% to 11.67bn square metres equivalent (SME).

Drilling down further, China's apparel per unit prices are the lowest of all the top-10 supplier countries – falling in 2018 for the sixth year running.

During the year, the per unit price of apparel in China stood at $2.35 per SME, a 1.3% drop against last year's figure, and down from a high of $3.02 in 2011. It is the only country among the top ten apparel importers into the US to have seen an average drop in prices over the last eight years.

This is despite an ongoing feud with the US, which imposed tariffs of 10% on US$200bn worth of Chinese goods last September. Another increase to 25% had been planned for 1 March, but the rise was postponed by President Trump, citing progress in talks between Washington and Beijing. The tariff increase is now on hold until further notice as the US and China try to conclude negotiations for a signing summit between Trump and President Xi later this month or in April.

While apparel is not among the products affected by the higher tariffs, there is concern that it might be included if the trade war deepens.

So it is not surprising that the US import figures also suggest buyers are sourcing more apparel elsewhere, including countries such as Cambodia and Nicaragua.  

Cambodia's moment

Apparel is Cambodia's largest manufacturing sector according to the re:source by just-style strategic sourcing tool, accounting for almost 80% of the country's total exports – despite being blighted by strikes, wage disputes, and factory faintings. But according to a recent study from the International Labour Organization, there has been an improvement in labour standards, with violations falling and compliance on the rise.

Cambodia's garment shipments to the US have gradually declined over the past eight years, largely due to a lack of preferential US access. In 2018 it had the fifth-largest US market share at 3.9%, so is behind China and Vietnam (at first and second, respectively), though its share did rise from 3.81% last year, moving it up one place on the league table.

Cambodia is not the cheapest place to source from either. On a per unit basis, apparel prices rose in 2018 to $2.39 from $2.31 a year earlier. 

But despite this, of the top ten supplier countries, Cambodia saw the largest shipment increase from 931m SME to 1bn SME year-on-year, or 12.19% to $2.4bn in value terms. 

Meanwhile, Nicaragua, which only joined the list of the top-10 US apparel suppliers last year, saw the second highest growth in shipments at 9.96% to $1.6bn. In volume terms this was a rise from 531m SME to 560m SME. On a per unit basis, its apparel prices increased to $2.91 from $2.78 last year.

Vietnam, which carried the second largest US market share at 13.39% in 2018, saw shipment volumes increase from 3.6bn SME to 3.7bn SME against the same period the year before, a rise of 5.78% in value terms to $12.2bn.

And despite a 2.2% year-on-year price rise on an apparel per unit basis to $2.79, Bangladesh still managed to record shipment volume growth of 4.36% to 1.93bn SME and 6.65% to $5.4bn in value terms.

Mexico shipments edge up

It was a different story for Mexico and Indonesia, the former only seeing a marginal increase in shipment values and the latter a decline. Mexico and Indonesia's apparel per unit prices are at the higher end of the spectrum of $3.96 and $3.81 respectively – the highest of the top-ten. For Indonesia, shipment volumes fell 4.4% to 1.17bn SME, and slipped 1.83% to $4.47bn by value.

However, despite uncertainty around renegotiations around the key North America Free Trade Agreement (NAFTA), which rumbled on throughout 2018, shipments from Mexico edged up 1.3% to 850m SME. Shipment value fell 5.7% to $3.4bn, pushing down average unit apparel prices by 7.3%. In October last year it was agreed that NAFTA would be replaced by the United States-Mexico-Canada Agreement (USMCA), with new apparel-specific rules of origin

India, Honduras in market share table switch-up

Conversely, a 46% hike in apparel per unit prices to $3.50 was not enough to dampen the growth of imports from India. Its shipments increased 5.2% to 1.08bn SME in volume terms and 3.42% to $3.8bn in value terms, increasing the country's US market share to 3.9% and bumping it up one place in the league table.

On the other hand, despite a plunge in apparel per unit prices of 25% to $2.59, shipments from Honduras fell 6.94% in volume terms to 991m SME; in value terms, a fall of 30% to $2.56bn. Its share of the US market subsequently fell to 3.56% from 3.93% a year earlier, pushing it down from having the sixth largest US market share to the seventh. The country is in the midst of its Honduras 2020 plan, which aims to triple apparel exports to $7.4bn and generate 200,000 new jobs, but has been battered by political and economic headwinds.

El Salvador, with only a 2.74% market share, booked a flat performance in value terms, at $1.9bn, while volumes fell 2.1% to 763m SME. Its price per apparel unit rose to $2.50 from $2.47 year-on-year.

US apparel imports by volume (SME) – Market share

201020112012201320142015201620172018
China41.98%40.81%41.72%41.75%42.03%41.84%41.53%41.91%41.92%
Vietnam7.72%8.37%9.06%9.78%10.73%11.52%12.46%13.28%13.39%
Bangladesh6.49%6.45%6.43%6.81%6.28%6.87%6.92%6.84%6.95%
Indonesia5.10%5.48%5.33%5.08%4.86%4.64%4.71%4.53%4.22%
Honduras5.14%4.96%4.72%4.32%4.23%4.09%4.02%3.93%3.56%
India3.92%3.77%3.53%3.56%3.73%3.76%3.88%3.81%3.90%
Cambodia3.83%4.35%4.39%4.29%3.98%3.86%3.36%3.43%3.62%
Mexico3.85%3.96%3.79%3.66%3.58%3.30%3.27%3.09%3.05%
El Salvador3.31%3.28%3.33%3.21%3.08%2.99%3.07%2.88%2.74%
Pakistan2.82%2.62%2.46%2.35%2.29%2.17%1.99%1.97%2.00%

Source: The Department of Commerce's Office of Textiles and Apparel (OTEXA)

Average price (US$) per SME

Average price (US$) per SME

201020112012201320142015201620172018% change y-o-y
China2.693.022.942.872.762.682.52.382.35-1.3
Vietnam3.083.323.313.343.373.373.223.213.282.2
Bangladesh2.452.932.942.9232.892.852.732.792.2
Indonesia3.513.863.913.943.883.913.713.723.812.4
Honduras1.92.212.292.332.382.42.363.462.59-25
India3.23.693.643.633.553.583.492.393.546
Cambodia2.352.52.442.42.432.362.372.312.393.5
Mexico3.724.024.124.054.073.963.874.273.96-7.3
El Salvador22.222.332.332.412.42.352.472.51.2
Pakistan2.142.642.532.532.492.432.362.782.44-12
Nicaragua2.772.782.914.6

Source: The Department of Commerce's Office of Textiles and Apparel (OTEXA)

Apparel volumes (m SME) – 8-year overview

20112012201320142015201620172018% change y-o-y
China9738.179881.910369.8710780.0611385.741117511365116702.6
Vietnam1998.3792145.0412430.3552751.0833135.5553352360237273.4
Bangladesh1539.5271521.9161692.4471609.7051869.9431862185419354.3
Indonesia1307.3971262.6631261.8021246.3911264.028126812291174-4.4
Honduras1182.7911118.7051073.3221084.7821114.3710811065991-6.9
India899.513834.972885.229956.6971023.5451044103210865.2
Cambodia1037.3661039.1621065.0491020.7081051.48490393110088.2
Mexico946.174897.016908.5916.85898.3998808398501.3
El Salvador782.192789.751796.812788.692813.004825780763-2.1
Pakistan625.846581.654584.016586.273590.9695355335584.6
Nicaragua5315315605.4

Source: The Department of Commerce's Office of Textiles and Apparel (OTEXA)