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Friday, December 7, 2018

Cambodia leads US apparel import growth in September - just-style.com

Cambodia booked the highest year-on-year growth increase at 22.33%

Cambodia booked the highest year-on-year growth increase at 22.33%

All of the top ten individual supplier countries to the US recorded growth in imports in September, with those from Vietnam at their highest for the last 12 months, suggesting sourcing may be shifting from China to Vietnam over tariff fears.

The latest figures from the Department of Commerce's Office of Textiles and Apparel (OTEXA) show the volume of US apparel imports from all sources was up 5.16% month-on-month in October to 2.85bn square metre equivalents (SME). The figures for October also show a 14.5% rise in volume against the same month last year, and 11.6% growth in value terms year-on-year to US$8.5bn. 

In terms of individual supplier countries, all of the top-ten recorded a year-on-year increase in October, with Cambodia booking the highest growth.

China – the largest supplier of apparel to the US – saw shipments increase 19.26% year-on-year to 1.33bn SME. However, imports from the country were down 1.48% month-on-month from the 1.35bn SME recorded in September.

The second-largest supplier, Vietnam, booked a year-on-year increase of 16.32% to 387m SME – this compares to September's increase of 7.87%.

Bangladesh, ranked number three in the top-ten US apparel supplier league table, booked the fifth-highest growth, with exports up 11.33% to 157m SME. Ahead of both Bangladesh and Vietnam was Pakistan which booked a 16.74% rise to 52m SME – the third-highest growth of the top ten countries.

However, Cambodia topped the list in September with a 22.33% rise year-on-year to 111m SME.

Of the remaining countries, El Salvador reported a 12.3% increase to 71m SME, while Honduras, India, and Indonesia booked a rise of 7.76%, 2.93%, and 2.68% respectively. Mexico booked the lowest increase of 0.67% to 72m SME.

Textile and apparel imports, meanwhile, grew 13.33% year-on-year to 6.82bn SME, and in value terms by 11.9% to $11.2bn. Textiles alone, meanwhile, recorded growth of 12.53% to 3.96bn SME, and in value terms were up 12.9% to $2.68bn. 

Apparel volumes - 12-month overview

China 1115 855 794 1003 927 555 625 805 934 1172 1291 1351 1330
Vietnam 333 271 261 352 315 248 299 322 304 345 331 317 387
Bangladesh 142 142 131 189 167 156 163 163 167 172 158 171 157
Indonesia 113 83 79 113 110 97 116 91 92 90 104 92 116
Honduras 79 95 62 66 78 82 73 90 89 85 87 90 78
India 93 74 65 104 93 98 110 105 87 92 84 81 93
Cambodia 91 69 72 98 90 75 81 64 61 103 90 101 91
Mexico 72 70 60 63 73 79 75 79 78 74 75 65 72
El Salvador 64 71 64 49 59 70 54 70 67 69 69 65 63
Nicaragua 45 43.5 35 45 49 48 null null null null null null null

Source: The Department of Commerce's Office of Textiles and Apparel (OTEXA)

Year-to-date and six-year overview

In value terms, total US apparel and textile imports were up 5.32% to $94.57bn in the year-to-date, from $89.8bn in the same period a year ago. Apparel imports grew 3.85% to $71.03bn, while textiles were up 10.01% to $23.55bn.

Eight of the top ten apparel supplier countries booked growth during the first ten months of the year, with Cambodia once again seeing the largest increase at 13.49% to 2.07bn SME.

Vietnam registered the second highest gain, at 7.35% to 10.56bn SME. Imports from China, meanwhile, were up by 1.61% to 23.53bn SME. The country remains by far the biggest supplier of apparel to the US with a 42% share of the market. Bangladesh, the third-largest supplier with a share of 6.9%, saw exports grow 6.7% compared with last year to 4.65bn SME.

Pakistan meanwhile, reported a 6.75% increase year-on-year to 1.15bn SME, and India a 4.11% rise to 3.35bn SME. Honduras booked a 2.19% rise to 2.13bn SME, while El Salvador recorded an increase of 1.82% to 1.62bn SME.

Indonesia and Mexico reported the only declines at 1.5% to 3.87bn SME and 3.69% to 2.89bn SME, respectively.

Taking a broader look at the data over an eight-year period from 2010 to 2017, Vietnam is the only country in the top ten to have seen a steady increase in import volumes to the US, growing from 1.91bn SME in 2010 to 3.60bn SME in 2017 – growing its share of total imports from 7.72% to 13.28%.

China's imports have fluctuated over this period, from 10.4bn SME in 2010, falling to 9.74bn SME a year later, before reaching a peak of 11.38bn SME in 2015. Shipments dipped again in 2016 to 11.17bn SME, and last year grew to 11.36bn. The country has lost marginal US apparel market share, from 41.98% in 2010 to 41.91% in 2017.

Cambodia, Indonesia, Mexico, El Salvador and Pakistan are all exporting less to the US now than they were eight years ago. Cambodia fell from 947.1m SME to 931m SME in 2017, decreasing its share of the total from 3.83% in 2010 to 3.43% last year.

Apparel volumes - 8-year overview

China 10387.05 9738.17 9881.9 10369.87 10780.06 11385.74 11175 11365
Vietnam 1910.504 1998.379 2145.041 2430.355 2751.083 3135.555 3352 3602
Bangladesh 1606.074 1539.527 1521.916 1692.447 1609.705 1869.943 1862 1854
Indonesia 1261.823 1307.397 1262.663 1261.802 1246.391 1264.028 1268 1229
Honduras 1271.9 1182.791 1118.705 1073.322 1084.782 1114.37 1081 1065
India 971.113 899.513 834.972 885.229 956.697 1023.545 1044 1032
Cambodia 947.108 1037.366 1039.162 1065.049 1020.708 1051.484 903 931
Mexico 952.327 946.174 897.016 908.5 916.85 898.399 880 839
El Salvador 819.839 782.192 789.751 796.812 788.692 813.004 825 780
Pakistan 697.933 625.846 581.654 584.016 586.273 590.969 535 533

Source: The Department of Commerce's Office of Textiles and Apparel (OTEXA)

Facts behind the figures

Cambodia booked the highest growth of the top ten countries for the month of October, picking up from where it left off in July when the country last topped the list. It was beaten off the top spot by Pakistan in August and Bangladesh in September.

The apparel industry is the country's largest manufacturing sector, despite being blighted by strikes, wage disputes, and factory faintings. Garment manufacturers have called for a focus on productivity to offset rising wages, and are also urging buyers to increase their prices for Cambodian goods.

This week, a new assessment from the International Labor Organization (ILO) found an improvement in labour standards in the country's garment and footwear industry with violations falling and compliance on the rise.

Its annual Better Factories Cambodia (BFC) report, published on 4 December, shows the number of factories in compliance with all critical issues has increased from 33% to 44% since the launch of public reporting in 2013. The number of violations of the 21 critical issues decreased from 329 to 234 for the same period.

In addition, Cambodia's economy is expected to continue to grow over the next few years, new figures show, boosted by garment and footwear exports, and despite trade-related external risks.

The country's economic growth rate, which has been trending downward since 2013, should marginally expand to reach 7.1% in 2018, driven by strong domestic and external demands, according to the latest World Bank Cambodia Economic Update report published this week.

Meanwhile, the latest import figures continue to confirm China's appeal to apparel buyers despite the country's trade tensions with the United States.

More companies say they plan to further diversify their production in response to the changing business and trade policy environment, especially with regards to China. This does not seem to be due to concerns about cost, but rather the worries about the escalating US-China trade tensions.

Some believe the ongoing trade dispute could accelerate the trend for American apparel brands to shift their sourcing away from Chinese suppliers with sub-Saharan African nations potentially set to have the most to gain. 

China, however, appears to be looking to mitigate any effects of the trade spat where it can and in September declared it will cut costs for foreign companies that want to trade with it. General customs clearance time for imports and exports and related supervision documents will be reduced by another one-third this year, and clearance fees will be lowered.

Meanwhile, a 90-day ceasefire between China and the US was welcomed by US associations representing apparel and footwear brands and retailers this week. The deal was struck following a meeting between President Trump and President Xi on the sidelines of the G20 in Argentina.

The move allows talks to take place between the two sides. Had a deal not been struck, tariffs on US$200bn worth of Chinese goods would have risen from 10% to 25% at the start of 2019.

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. The country also continues to lead the way when it comes to efficiency and infrastructure.

Indeed, Greater China is, for the first time in centuries, set to overtake the US as the world's largest fashion market in 2019, according to a new study, amid a year of "urgent awakening" for the industry as global growth slows. 

Benefiting from an expected decrease in sourcing from China by US fashion companies, Vietnam and Bangladesh are expected to play a bigger role as apparel suppliers for the US market. However, there are lingering concerns about the limits of Vietnam's production capacity; and while Bangladesh enjoys a prominent price advantage over many other Asian suppliers, the risk of non-compliance remains a notable weakness.



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