China losing share in global textiles and clothing market
According to the World Trade Organisation, exports of Chinese textiles and clothing have declined sharply since 2014, from US$236 billion in 2014 to US$206 billion in 2016. Thus, its share by value in the global textile and clothing market fell from 38.6% in 2015 to 35.8% in 2016, with shrinking trend in major markets like US, European Union and Japan.
As per Chinese customs data, exports of clothes and accessories fell by 0.4% in 2017, while textiles exports saw annual growth of 4.5% during the year.
After being termed as a low cost manufacturer decade ago, labour costs in China have been rising steadily. The minimum wage in Shenzhen is now about USUS$336 per month – more than double the values in some Southeast Asian countries.
Some big clothing brands are struggling to retain margins and secure finance, hit by the industry restructuring. Revenues are sliding at Fuguiniao, a Hong Kong-listed menswear and shoe manufacturer based in Fujian, since 2015. The company reported a net loss of 10 million Yuan (US$1.57 million) in the first half of 2017, a bond default this year, and it has debts piled up at 3 billion Yuan.
Expert observed that the Chinese textile and clothing makers are at low risk from the looming trade war between China and US, given that they export little to America compared to other sectors. US brands have started to diversify their sourcing to other suppliers.
For many US brands, one-third of their goods are from China, a third from Vietnam, and the rest is from other countries, reports said.
According to Sheng Lu, assistant professor of fashion and apparel studies at the University of Delaware, the “made in China” goods are not losing their price competitiveness because of the overall supply chain efficiency. “It is also important to recognise that China is playing an increasingly important role as a textile supplier for apparel exporting countries in Asia,” Sheng reportedly said.
According to Sheng, Bangladesh’s textile imports from China, measured by value, rose from 39% in 2005 to 47% in 2015. A similar trend could be seen in Cambodia, Vietnam, Malaysia and other developing countries in Asia.
