Cambodia booked the highest year-on-year growth increase at 22.33%

Cambodia booked the highest year-on-year growth increase at 22.33%

All of the top ten individual supplier countries to the US recorded growth in imports in October, with those from Vietnam at their highest for the last 12 months, suggesting sourcing may be shifting from China to Vietnam over tariff fears.

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 was up 5.16% month-on-month in October to 2.85bn square metre equivalents (SME). The figures for October also show a 14.5% rise in volume against the same month last year, and 11.6% growth in value terms year-on-year to US$8.5bn. 

In terms of individual supplier countries, all of the top-ten recorded a year-on-year increase in October, with Cambodia booking the highest growth.

China – the largest supplier of apparel to the US – saw shipments increase 19.26% year-on-year to 1.33bn SME. However, imports from the country were down 1.48% month-on-month from the 1.35bn SME recorded in September.

The second-largest supplier, Vietnam, booked a year-on-year increase of 16.32% to 387m SME – this compares to September's increase of 7.87%.

Bangladesh, ranked number three in the top-ten US apparel supplier league table, booked the fifth-highest growth, with exports up 11.33% to 157m SME. Ahead of both Bangladesh and Vietnam was Pakistan which booked a 16.74% rise to 52m SME – the third-highest growth of the top ten countries.

However, Cambodia topped the list in September with a 22.33% rise year-on-year to 111m SME.

Of the remaining countries, El Salvador reported a 12.3% increase to 71m SME, while Honduras, India, and Indonesia booked a rise of 7.76%, 2.93%, and 2.68% respectively. Mexico booked the lowest increase of 0.67% to 72m SME.

Textile and apparel imports, meanwhile, grew 13.33% year-on-year to 6.82bn SME, and in value terms by 11.9% to $11.2bn. Textiles alone, meanwhile, recorded growth of 12.53% to 3.96bn SME, and in value terms were up 12.9% to $2.68bn. 

Apparel volumes - 12-month overview

OctoberNovemberDecemberJanuaryFebruaryMarchAprilMayJune July AugustSeptemberOctober
China111585579410039275556258059341172129113511330
Vietnam333271261352315248299322304345331317387
Bangladesh142142131189167156163163167172158171157
Indonesia11383791131109711691929010492116
Honduras79956266788273908985879078
India93746510493981101058792848193
Cambodia9169729890758164611039010191
Mexico72706063737975797874756572
El Salvador64716449597054706769696563
Nicaragua4543.535454948nullnullnullnullnullnullnull

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

Year-to-date and six-year overview

In value terms, total US apparel and textile imports were up 5.32% to $94.57bn in the year-to-date, from $89.8bn in the same period a year ago. Apparel imports grew 3.85% to $71.03bn, while textiles were up 10.01% to $23.55bn.

Eight of the top ten apparel supplier countries booked growth during the first ten months of the year, with Cambodia once again seeing the largest increase at 13.49% to 2.07bn SME.

Vietnam registered the second highest gain, at 7.35% to 10.56bn SME. Imports from China, meanwhile, were up by 1.61% to 23.53bn SME. The country remains by far the biggest supplier of apparel to the US with a 42% share of the market. Bangladesh, the third-largest supplier with a share of 6.9%, saw exports grow 6.7% compared with last year to 4.65bn SME.

Pakistan meanwhile, reported a 6.75% increase year-on-year to 1.15bn SME, and India a 4.11% rise to 3.35bn SME. Honduras booked a 2.19% rise to 2.13bn SME, while El Salvador recorded an increase of 1.82% to 1.62bn SME.

Indonesia and Mexico reported the only declines at 1.5% to 3.87bn SME and 3.69% to 2.89bn SME, respectively.

Taking a broader look at the data over an eight-year period from 2010 to 2017, Vietnam is the only country in the top ten to have seen a steady increase in import volumes to the US, growing from 1.91bn SME in 2010 to 3.60bn SME in 2017 – growing its share of total imports from 7.72% to 13.28%.

China's imports have fluctuated over this period, from 10.4bn SME in 2010, falling to 9.74bn SME a year later, before reaching a peak of 11.38bn SME in 2015. Shipments dipped again in 2016 to 11.17bn SME, and last year grew to 11.36bn. The country has lost marginal US apparel market share, from 41.98% in 2010 to 41.91% in 2017.

Cambodia, Indonesia, Mexico, El Salvador and Pakistan are all exporting less to the US now than they were eight years ago. Cambodia fell from 947.1m SME to 931m SME in 2017, decreasing its share of the total from 3.83% in 2010 to 3.43% last year.

Apparel volumes - 8-year overview

20102011201220132014201520162017
China10387.059738.179881.910369.8710780.0611385.741117511365
Vietnam1910.5041998.3792145.0412430.3552751.0833135.55533523602
Bangladesh1606.0741539.5271521.9161692.4471609.7051869.94318621854
Indonesia1261.8231307.3971262.6631261.8021246.3911264.02812681229
Honduras1271.91182.7911118.7051073.3221084.7821114.3710811065
India971.113899.513834.972885.229956.6971023.54510441032
Cambodia947.1081037.3661039.1621065.0491020.7081051.484903931
Mexico952.327946.174897.016908.5916.85898.399880839
El Salvador819.839782.192789.751796.812788.692813.004825780
Pakistan697.933625.846581.654584.016586.273590.969535533

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

Facts behind the figures

Cambodia booked the highest growth of the top ten countries for the month of October, picking up from where it left off in July when the country last topped the list. It was beaten off the top spot by Pakistan in August and Bangladesh in September.

The 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 focus on productivity to offset rising wages, and are also urging buyers to increase their prices for Cambodian goods.

This week, a new assessment from the International Labor Organization (ILO) found an improvement in labour standards in the country's garment and footwear industry with violations falling and compliance on the rise.

Its annual Better Factories Cambodia (BFC) report, published on 4 December, shows the number of factories in compliance with all critical issues has increased from 33% to 44% since the launch of public reporting in 2013. The number of violations of the 21 critical issues decreased from 329 to 234 for the same period.

In addition, Cambodia's economy is expected to continue to grow over the next few years, new figures show, boosted by garment and footwear exports, and despite trade-related external risks.

The country's economic growth rate, which has been trending downward since 2013, should marginally expand to reach 7.1% in 2018, driven by strong domestic and external demands, according to the latest World Bank Cambodia Economic Update report published this week.

Meanwhile, the latest import figures continue to confirm China's appeal to apparel buyers despite the country's trade tensions with the United States.

More companies say they plan to further diversify their production in response to the changing business and trade policy environment, especially with regards to China. This does not seem to be due to concerns about cost, but rather the worries about the escalating US-China trade tensions.

Some believe the ongoing trade dispute could accelerate the trend for American apparel brands to shift their sourcing away from Chinese suppliers with sub-Saharan African nations potentially set to have the most to gain. 

China, however, appears to be looking to mitigate any effects of the trade spat where it can and in September declared it will cut costs for foreign companies that want to trade with it. General customs clearance time for imports and exports and related supervision documents will be reduced by another one-third this year, and clearance fees will be lowered.

Meanwhile, a 90-day ceasefire between China and the US was welcomed by US associations representing apparel and footwear brands and retailers this week. The deal was struck following a meeting between President Trump and President Xi on the sidelines of the G20 in Argentina.

The move allows talks to take place between the two sides. Had a deal not been struck, tariffs on US$200bn worth of Chinese goods would have risen from 10% to 25% at the start of 2019.

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. The country also continues to lead the way when it comes to efficiency and infrastructure.

Indeed, Greater China is, for the first time in centuries, set to overtake the US as the world's largest fashion market in 2019, according to a new study, amid a year of "urgent awakening" for the industry as global growth slows. 

Benefiting from an expected decrease in sourcing from China by US fashion companies, Vietnam and Bangladesh are expected to play a bigger role as apparel suppliers for the US market. However, there are lingering concerns about the limits of Vietnam's production capacity; and while Bangladesh enjoys a prominent price advantage over many other Asian suppliers, the risk of non-compliance remains a notable weakness.