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The suppliers side of the apparel industry – why them and not us?

By David Birnbaum 05 Aug 2021

The apparel industry is undergoing existential change. To survive, factories, suppliers and their national industries must recognise, accept and deal with that change.

The suppliers side of the apparel industry – why them and not us?

If you want to explore the changes taking place within the suppliers side of the apparel industry you must first start with accurate data.

These are the ten most important garment exporters:

 

Apparel industry professionals are finally beginning to accept that our global garment industry is dominated by two tier-1 players — China and the EU that together account for 58.7% of global garment exports.  Everyone else has been relegated to tier-2, tier-3 or tier-4 status.

However, as we can see from the graph below the relative position between China and the EU has changed, with China’s market share declining and the EU’s market share rising. It would seem that in the near future the EU will become the world’s largest garment exporter, which leads us to the fundamental question:

 

The suppliers of the apparel industry - Why them and not us?

Clearly those who still believe that customers want low Free on Board (FOB) above all else and that low FOB prices can be achieved by low worker wages, excessive overtime, and poor working conditions must finally recognise their beliefs are no longer based on reality. Low FOB prices no longer equal more business and that business is moving to a place where wages are 20 times higher.

 

 

The industry has moved from commodities to fashion.

Fashion garment production is not limited to China and EU. As we can see below others are playing an increasing role in this higher-value-added sector.

 

 

The mass-market commodity sector is being squeezed

 

Where once commodity producers were the big winners, they have become the big losers.

 

 

Put it all together and the data is clear,

 

While it is too early to suggest that the entire commodity sector will be marginalised but when fashion now accounts for 70% of global garment exports compared to 17% for commodities, there is indeed an existential problem.

Why them and not us? Because you are in a dying sector?

Click here to read David's comment piece on why Singapore could be the ultimate winner post-Covid-19.