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Trade uncertainties drive up U.S. fashion industry's sourcing costs from Asia: study

(Xinhua)    14:44, July 27, 2019

NEW YORK, July 26 -- The imposing or threat to impose tariffs on imported goods by the U.S. government has driven up U.S. fashion brands' sourcing costs substantially from Vietnam, Bangladesh, India and China, according to a newly-released study.

Named as the 6th Fashion Industry Benchmarking Study, the study is based on a survey of 39 large and medium U.S. fashion brands, retailers, importers and wholesalers in April and May, 2019 by Sheng Lu, associate professor with Department of Fashion and Apparel Studies of the University of Delaware in cooperation with U.S. Fashion Industry Association (USFIA).

The study presents some troubling findings. "Not just costs in China are increasing, but the costs to source in the main alternatives to China, especially Vietnam, Bangladesh and India, also are soaring," said Julia K. Hughes, president of USFIA.

The unit price of U.S. apparel imports across the aboard increased by 10.7 percent in the first five months of 2019, according to the study.

The unit price of U.S. apparel imports in the first five months of 2019 from Bangladesh, Vietnam and India shot up 25.6 percent, 23.4 percent and 21.2 percent, respectively, the study showed citing statistics from Office of Textiles and Apparel under U.S. Customs and Border Protection.

"It's not really surprising because everybody wants to go there and they have very limited infrastructure and labor force," said Lu at a seminar at textile and garment exhibition Texworld USA 2019 on Wednesday.

Still, the number one driving factor of higher costs is shipping and logistic costs this time rather than wages or raw materials in earlier cases, stressed Lu.

Meanwhile, the unit price of apparel imports from China only grew 3.3 percent in the same period, according to the study.

Around 50 percent of respondents say their Chinese suppliers actually lowered sales price to keep sourcing orders while only around 3.7 billion U.S. dollars or about 9.3 percent of textile products imported from China are now subject to new U.S. tariffs, says the study.

Lu said U.S. actually imported less apparel from the Western hemisphere especially from Mexico and tariff measures increased the production costs of a lot of U.S. companies.

The biggest challenge now for the fashion industry is the impact of increasing production and sourcing costs and 84 percent of respondents said it is a challenge this year, according to the study.

Meanwhile, only 64 percent of respondents said they were "optimistic" or "somewhat optimistic" about the outlook for the next five years in comparison with 84 percent one year ago.

U.S. tariffs will do little to shake China's role as a dominant textile and apparel supplier for the U.S. market with only 6.7 percent of respondents expecting to decrease sourcing from China significantly in the next two years, according to the study.

No other country or region in the world could match China's enormous production capacity in the textile and apparel industry in the foreseeable future and China also doesn't have a near competitor in terms of variety of products, the study added.

Statistics show that China supplied 36 percent of total U.S. apparel imports by quantity and 33 percent by value in 2018 with Vietnam, the second largest supplier, only taking 13 percent of market share in the U.S. market.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Xian Jiangnan, Bianji)

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