The recession has hit apparel retailers and their suppliers in different ways. While Western retail sales have fallen, not all manufacturing countries have followed suit. Many of Asia's weaker producers are seeing sharp export declines, but exports are growing from the rest of the region. What really influences manufacturers' success, says Mike Flanagan, is their ability to turn the current environment to their advantage.

"Plunging retail sales in the United States are leading to a reduction of garment export orders in Bangladesh," says the Washington-based International Monetary Fund (IMF) in its May report.

Earlier, the UN-sponsored Asian Development Bank (ADB) - another taxpayer-funded organisation -forecast that in constant 2004 prices, total Asian textile and apparel exports will drop in 2009 by about $8bn.

It's quite an achievement to cram so many misconceptions into two sentences. But many people who should know better still believe Asian garment makers will see their sales fall this year.

So it's worth looking closely at the IMF's specific claim about Bangladesh.

First, America's clothing sales aren't "plunging". Sales in US clothing specialists were down 6.5% in April on the previous year, which takes them to about the same level as 2006.

And by the standards of America's car companies, house builders or airlines, this is still spectacularly healthy.

However, these clothing specialists are losing their grip on share of US clothing sales.

At Wal-Mart, overwhelmingly America's largest clothes retailer (with roughly twice the apparel sales of Gap, the country's largest specialist), they're actually growing.

Things might be tough in America's malls: but clothes sales aren't "plunging."

And what's America got to do with it anyway?

European demand
Most Bangladesh apparel exports don't go to the US: they go to Europe, where unsurprisingly the country's market share is growing.

Bangladesh is the world's cheapest mainstream clothes manufacturer - and when the going gets tough, lowest-cost suppliers really get going.

Bangladesh's clothing exports have been up on last year every month so far in 2009.

It's quite possible Bangladesh won't sustain this apparel export growth though. With unemployment throughout the affluent world still rising, clothing sales are likely to stay depressed for some time.

But:
• They'll be depressed in different ways in different countries (official data shows the number of clothes sold by UK clothing retailers is currently rising year-on-year as prices collapse).

• The final abolition of anti-China quotas in the US is making life tougher there for non-Chinese exporters. As US importers began to realise these quotas aren't returning, China's share started rising - and by April, Bangladesh's exports to the US started to fall.

• Asian competitors to Bangladesh - at least those in India, Sri Lanka, Indonesia and Vietnam - are putting up tougher competition.

So it's possible Bangladesh's exports might fall in the future.

But falling sales at the branch of Gap nearest the IMF's lavish headquarters doesn't mean sales are down at branches of Inditex, Primark, Uniqlo or H&M (or Asda or Aldi) in London, Paris, Rotterdam or Tokyo. Or that they will be. 

World clothing industry
That's partly because there's a great deal more to the world's clothing industry than just one country. Also, recession-induced falling sales - particularly in the US - aren't the only game in town.

• China's not alone in dealing with fewer restrictions on its trade. Vietnam is no longer subject to a little-understood procedure called "self-initiation" in the US, so importers can buy from Vietnam with greater confidence.

• The US has also abandoned its penal import duties on Honduran socks, made it easier for Asian fabric to be used in garments produced in Haiti, and implemented duty-free trade with Peru.

• The EU extended duty-free access for Sri Lanka for another year. It scrapped anti-dumping duties against Pakistani bed linen and reduced them against South Korean yarn manufacturer Huvis.

• Japan's announced it wanted its clothes retailers to depend less on China as a source, and to develop sourcing from the rest of Asia.  And that's just what they've done.

• In some countries - like Kenya, Madagascar and Nepal - civil unrest has caused severe disruption to garment production in the past eighteen months. With deliveries postponed, buyers have lost confidence, and regaining it is likely to be a long haul.

• Throughout the developed world, established clothing specialist retailers are facing tougher competition from discounters and innovators - and their profits are being hit by growing use of the internet for clothes buying. Those bricks and mortar shops, with lower sales, still have to have the rent and fuel bills paid.

The impact of recession
The recession has hit in different ways.

• It has come in two distinct waves. First, a catastrophic disappearance of credit in 2008 led to buyer bankruptcies and arbitrarily cancelled orders. This phase wiped out an untold number of vulnerable developing-world garment manufacturers. Now we're in the second wave: dismal (but by no means "plunging") sales mean jittery buyers, so orders are being delayed as long as possible, and buyers are squeezing prices.

• The UK has seen its currency fall 35% against the US dollar in a few months - though as this article was being finished, it had appreciated again by 18%. Official data shows its retailers are selling more clothes than last year, though, as savage price reductions mean real clothing bargains in the shops.

• India's currency has see-sawed every which way, so it's now got a cheap currency and sales to the EU and US are growing as a result. Indeed, as in Vietnam, the recession has created a labour shortage. Migrant garment workers returned home as factories closed at the beginning of the crisis, and many are reluctant to return to city jobs they now see as risky.

• It has hit different garment manufacturers in different ways. In Bangladesh, for example, we're still regularly hearing stories of factories going out of business, unable to pay outstanding wages. Yet the country's biggest textile business Beximco, together with its subsidiaries, now claims to have cleared a $400m default on loans reported in February. Bigger businesses survived the first wave better, and are in good shape to compete in the less dramatic second wave.

This ever-changing competitive environment means it's not falling Western retail sales that influence manufacturers' success: it's the overall ability of garment makers to make that environment work for them.

Many of Asia's weaker producers (like those in the Philippines and Cambodia) find that difficult, and are seeing sharp export declines. So are factories in Europe, Africa and Central America.

But clothing exports are growing from the rest of Asia - and there's growth too in one or two places that are today's sourcing hotspots: Haiti and Laos.

In total, garment exports to Europe, North America and Japan from the six Asian countries that account for 80% of Asia's apparel exports (China, Indonesia, Vietnam, Bangladesh, Sri Lanka and India) are actually up so far this year.

It's more subtle than that, of course: Honduras' exports to the US are down - but with duties against its socks removed, it's re-established itself as America's biggest sock supplier.

And, with the world's garment production increasingly concentrated in Asia's Big Six, fewer clothes are being made elsewhere - so Asia's not exporting as much yarn and fabric to producers in Europe, Africa and the Americas.

It's important to poor countries, whose ability to raise money is harmed or made more expensive by  bad logic, to correct the sloppy assumption that slow Western sales mean falling exports for everyone. 

And it's important to traders to keep abreast of how all these different pressures net out.

Two new initiatives might help. The first is the "Global Sourcing Skills" seminar being organised by Clothesource and the Industry Forum in London on 23 June.

The companion volume "Global Sourcing in an Uncertain World" is now available from just-style.

Mike Flanagan is chief executive of Clothesource Sourcing Intelligence, a UK-based consultancy that provides the western apparel buying community with objective information on apparel production, trade, price competitiveness, and apparel producers in over 100 countries. The new suite of Clothesource Guides help buyers find the best value - and give emerging-market lobbyists hard data on what their competitors offer.