Falling China Apparel Exports & Rising Indian Apparel Exports?
13 October 2022, Mumbai:
As per global apparel trade estimates," In the changing global sourcing landscape, China's market share in the apparel exports globally market has come down from 35.15% in 2016 to 29.91% in the first half of 2021 and expectedly it is a secular trend going forward. Apparel exports from China amounted to $120.70 billion in 2020 owing to COVID-19 and roughly dropped to $107.73 billion or thereabouts in 2021. Global exports shrank by 16.96% over 2018 to $403.12 billion in 2020 thanks to COVID-19. Furthermore, slackened by 6.59% hitting approx $376.56 billion by 2021. What is more disturbing is China's apparel exports to the US its key export destination shockingly contracted by around 9.65% in the last as many six years leading to China’s share plummeting to 24.03% in the US apparel imports in 2021 all the way from mighty 35.86% way back in 2015".
Another interesting piece of China's apparel trade data as per one of the industry studies is," Chinese apparel shipment is reflective of the state of 'Unit Prices' the same has shown a serious decline slipping to the US $ 1.76 per SME in 2021 from the earlier US $ 2.35 per SME way back in 2017; that’s sanguine 25.10% decline in unit prices and is clearly an upsetter giving width away to the competition.
According to World Trade Organization (WTO), The EU apparel market which is collectively the world’s biggest importer of apparel contributes to as high as close to 21% of the world’s apparel imports value. And, even here China is losing grip and the trend is starting to show up as there are imponderables.
Albeit as things stand China continues to boast of EU's single largest apparel exporter nation enjoying a whopping 30% of its imports (Extra EU-27) value in 2021, whilst notably its value-wise share shrank from € 21.90 billion in 2015 to € 21.67 billion in 2021 to drive the point home.
Winsome Lose Some
Some of the plausible reasons responsible for a secular decline in China's Apparel Exports are as follows:
As manufacturing costs keep rising in China forcing supply chains to plan to migrate their manufacturing units from China to other competitive geographical territories where government incentives/sops such as taxes and labour costs/arbitrage make sourcing comparatively less expensive. US ban on China cotton over the issue of Alleged unethical practices in its Xinjiang region led to a reputational loss for the Chinese textile and apparel (T&A) manufacturing sector.
China plus one strategy China plus two strategy China's supply chain alternate plans All of the above led to several companies/supply chains re-aligning/recalibrating giving way to businesses having migrated their manufacturing plants from China to other credible sourcing hubs such as south Asia, Southeast Asia, Africa, and where not.
Rethink reliance on China
Post Covid-19 world and emerging geopolitical developments and brewing Anti-China sentiments/China getting internationally isolated and a belated sense of realization of over-dependence on China are certainly leading to China's apparel exports declining and to the credit of its Asian counterparts which were opportunistically fast to seize the opportunities and build on it too.
There is a case for questioning China’s prominence in apparel and textile (T&C) exports as its secularly declining now and is likely to persist if data is anything to go by. We are living in a world of uncertainty and the article is a deep dive into witnessing that apparel sourcing is shifting to countries such as Bangladesh, India, Pakistan, and Indonesia, and there is a case for it that is it a structural shift than transitory.
Is India in a sweet spot?
Let us size up now how is India stacked up in the contemporary world. Happy to report here that given the government sources' trade data, "In a post-Covid-19 era, India has in the FY (financial year) 2022 ended up hitting historic textiles and apparel (T&C) exports $44.4 billion numbers, which of course has Handicrafts share too. The breakdown of the same is that RMG/apparel Exports experienced a rise of 22% to USD 1.46 billion in December 2021 up from a modest USD 1.20 billion in the corresponding period of 2020 which is pretty encouraging as per the MoT (Ministry of Textiles) claims to see their efforts coming to fruition". With anti-China sentiments on the increase in the US, and worldwide putting India in a sweet spot, the region's textile industry sees/sniffs an opportunity to tap into the American apparel/garment market. Industry players also indicate that following the China Plus One strategy, there is at least a 20% shift of exports from that country to India.
