In September 2015 apparel imports into the US continued on their upward trajectory, with seven of the top ten supplier countries booking year-on-year growth. Bangladesh led the pack, posting a solid double-digit gain, with strong increases also recorded by Indonesia, Vietnam and Pakistan. As per the latest figures from the Department of Commerce’s Office of Textiles and Apparel (OTEXA) the volume of US apparel imports from all sources grew 4.8 per cent year-on-year in September 2015, down from the 13.5 per cent increase in August 2015. Imports reached 2.69 billion square metre equivalents (SME), up from 2.56 billion SME in September last year 2014. Official data showed on November 05, 2015 that Bangladesh’s exports rose 21.15 percent to US$2.37 billion in October 2015 from a year earlier, driven by stronger overseas sales of garments. The Export Promotion Bureau (EPB) said that exports from July to October, the first four months of the 2015-2016 financial years, rose nearly 5 percent to US$10.13 billion from the same period a year earlier, 3 percent short of the target. Sales of garments, comprising woven items and knitwear, totaled US$8.24 billion in the July-October (2015) period, compared with nearly US$7.75 billion a year earlier. Breaking it down into individual supplier countries, seven of the top ten recorded growth shipments from China – the largest supplier of apparel to the US – were up 1.48 per cent to 1.32 billion SME. Nearest rival Vietnam grew 10.6 per cent to 281 million SME, compared to the same month September a year back in 2014. Bangladesh, ranked number three in the top-ten league table, saw apparel shipments rise 41.6 per cent to 157 million SME. Of the remaining supplier countries, Indonesia recorded the strongest growth at 16 per cent to reach 99 million SME, followed by El Salvador up 13.8 per cent to 76 million SME and Pakistan up 13 per cent to 51 million SME. Year-on-year import gains were also reported by India up 10.5 per cent to 74 million SME. However, three countries saw apparel shipments decline during September 2015. Cambodia recorded the largest drop at 3.52 per cent to 109 million SME, followed by Honduras down 3.5 per cent to 101 million SME, and Mexico down 1.74 per cent to 72 million SME. While there are concerns that increasing wages are undermining the competitiveness of China’s garment production on the world stage, the country continues to lead the way when it comes to efficiency and infrastructure. As rising prices are largely being offset by productivity gains China remains a compelling source for apparel buyers. With its 10,916 garment manufacturers with annual sales above CNY20 million churning out 29.6 billion pieces in 2014, up 1.6 per cent year-on-year, 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 outweigh others. However, the falling value of the Chinese Yuan is being seen as a lever for US brands and retailers to drive down product costs, with one analyst describing it as a “tailwind for those sourcing apparel from China”. The flipside for retailers and brands shipping in goods to sell in China is to take a hit on margin or increase the price of their products. Data released this week also shows the overall weakening of China’s manufacturing industry has slowed down, prompting hopes the government’s stimulation efforts are starting to take effect. Meanwhile, Vietnam has benefited as producers and buyers diversify their supply chains, helped by its low labour costs and its industry focus on specialisation, modernisation, and increasing value. Foreign direct investment continues to flow into the country, and the conclusion of 7 (seven) years of negotiations on the Trans-Pacific Partnership (TPP) trade agreement on 05 October 2015 means Vietnam may benefit significantly. Luen Thai Holdings is the latest company to boost its business in Vietnam, announcing in August 2015 it will continue to devote resources and efforts in its Vietnam projects. Recent information shows that the Chinese apparel exports to the US market grew only 2.37 per cent during the period from January to October of the current calendar year 2015. The Chinese authorities, sensing the backlash of the TPP, have already started to shift large volume of pipeline investment to Vietnam for survival of its RMG sector and also to reap the benefit of the TPP. It is learnt that some of the renowned global retailers started to give additional importance to Vietnam and shifted a good number of manpower from Bangladesh offices to Vietnam to harvest the TPP benefit. Despite factory safety issues the Bangladesh’s clothing industry continues to build on its momentum as a low-cost sourcing destination. Since the collapse of the Rana Plaza building in April 2013, two major industry-backed remedial plans, together with one supported by the government, have worked to resolve issues over safety and worker rights, including the closure of some garment factories. Bangladesh’s garment manufacturing association has said that the country is now working to achieve its goal of doubling exports to US$50 billion by 2021, but will need to address a number of existing challenges first including political unrests. According to data released by the Office of Textiles and Apparels under the US Commerce Department the TPP final deal has started pinching Bangladesh RMG sector though it is yet to be signed. Bangladesh apparels export to the US market grew 11.40 per cent while Vietnam export to the US market rose to 13.86 per cent during the last 10 months from January to October of 2015. During the said period Bangladesh earned US$4.66 billion and Vietnam earned US$9.03 billion from their RMG exports to the US. During the corresponding period of 2014 export earnings from RMG were respectively US$4.19 billion and US$7.93 billion for Bangladesh and Vietnam from the US. Vietnam will enjoy duty free export facility to the US market along with other markets under the TPP domain after the signing of the TPP to widen the gape of RMG export earnings from the US in favour of Vietnam. Moreover, on the other hand Bangladesh will have to compete with Vietnam in US RMG market by paying around 15 per cent tax. The global apparel exporters circle predicted that RMG export growth of Vietnam would increase more after the implementation of the TPP, which would be a matter of concern for Vietnam’s competitors like China and Bangladesh. It is to be noted that the Chinese apparel exports to the US market has already been affected due to rise in Vietnam’s export because of TPP. Despite being blighted by strikes, wage disputes, and factory faintings the Cambodia’s apparel industry is the country’s largest manufacturing sector. Garment manufacturers have called for a renewed focus on productivity in the sector ahead of a 9.4 per cent rise in the minimum wage for clothing workers to US$140 per month agreed for the beginning of next year 2016. They are also urging buyers to increase their prices for Cambodian goods. In September 2015, construction of a specialised training institute for the country’s garment workers got underway in Phnom Penh. It will train local workers to fill middle management positions in factories across the country, and offer vocational training programmes such as specialised design and pattern making courses, with the costs paid by employers. Movement within the top three – China, Vietnam and Bangladesh – during the seven months of year 2015 shows China rose 7.2 per cent to 8.69 billion SME, Vietnam grew 15.2 per cent to 2.38 billion SME, and Bangladesh increased 13.8 per cent to 1.43 billion SME. The other winners included India up 7.2 per cent to 799 million SME; Cambodia up 4.2 per cent to 816 million SME; Honduras up 3.8 per cent to 837 million SME; El Salvador up 2.2 per cent to 609 million SME; and Pakistan up 0.4 per cent to 448 million SME. However, Mexico saw apparel shipments drop 0.6 per cent to 692 million SME, while Indonesia’s shipments were down 0.5 per cent to 960 million SME. While monthly trade data is often volatile, with big swings from one month to the next, a broader view of the year 2015 so far shows total US apparel and textile imports increased 8.92 per cent between January and September to reach 48.43 billion SME from 44.46 billion SME last year 2014. Within this, textiles grew 10.6 per cent to 27.69 billion SME, while apparel shipments were up 6.76 per cent to 20.74 billion SME. All but two – Mexico and Indonesia – of the top-ten apparel supplier countries booked growth.
