The average unit price of apparel shipped into the US from China has fallen 2.6% to $2.27 in the first six months of 2019

The average unit price of apparel shipped into the US from China has fallen 2.6% to $2.27 in the first six months of 2019

Threats of looming tariffs on apparel imports from China have seen sourcing costs spike for US fashion brands looking to alternative destinations such as Vietnam, Bangladesh and India. But unit prices on products from China have fallen in the first half of this year.

Indeed, the unit price of US apparel imports from all sources increased 1.4% year-on-year in the first six months of 2019, according to the latest data from the Office of Textiles and Apparel (Otexa).

And as companies respond to the threat of higher China tariffs by moving sourcing orders to Bangladesh, Vietnam and India, the average prices of US apparel imports from these countries – the main alternatives to China – have also increased in the period from January to June this year versus last.

The Otexa data confirms the per unit price of apparel from Bangladesh increased 5.6% during the first five-months, while from Vietnam it climbed 2.9%, and from India there was a rise of 2%.

This result is far from surprising, however, since garment factories in these countries are under growing cost pressure in the face of surging sourcing orders from US fashion companies, and many are constrained by a limited labour force, infrastructure, supply of raw material and production capacity. 

In contrast, the unit price of apparel from China actually fell by 2.6% – far below the world average – which is largely because Chinese vendors have been lowering their prices to keep orders amid the tariff war.

The findings tally with those of a recent survey of US fashion sourcing executives by the US Fashion Industry Association (USFIA), which found the Section 301 punitive tariff action by the US against China is "pushing up the price of US apparel imports across the board, making increasing production and sourcing cost the top business challenge for respondents in 2019."

One respondent commented: "There is not enough capacity outside of China, and capacity will start to come at a higher premium in other countries such as Bangladesh and Vietnam."

Yet despite the unit price of apparel from Bangladesh seeing the highest jump of the top-five largest US apparel supply countries, respondents say it continues to offer the most competitive price followed by Vietnam, Indonesia and India.

And China's lower pricing practice may not be sustainable in the long run as China is no longer regarded as a "cheap place" to make garments and some major cost factors such as wage levels have been rising quickly in the country.

The table below shows average price per square metres equivalent (SME) of apparel imported from nine of the largest suppliers to the US year-on-year in the period from January to June.

Average price of US apparel imports – January-June (US$ per SME)

Country 20182019% change year-on-year
China 2.332.27-2.6%
Vietnam3.113.20+2.9%
Bangladesh2.692.84+5.6%
Indonesia3.623.67+1.4%
India3.483.55+2.0
Cambodia2.372.59+9.3%
Honduras2.482.70+8.9%
Mexico3.753.79+1.1
El Salvador2.432.40-1.2%
Pakistan2.342.44+4.3%
WORLD2.942.98+1.4%

Source: Otexa