ApparelStrategist.com

(First Published in December 2009) Crazy as it sounds, I headed to the mall last weekend to participate in the Black Friday festivities. The stores, particularly those with big “40% off everything” signs, were packed.

As I looked through rack after rack of clothing in store after store, I couldn’t help but notice the huge variety in Countries of Origin. Sweats from Pakistan, dresses from India, jeans from Guatemala and tops from Vietnam were just a sampling of what I found. And then there was China. 

The Big Source President Obama made his first official trip to China last month. At about the same time, the U.S. Department of Commerce Office of Textiles and Apparel released detailed apparel import data for the first nine months of 2009, the first year in decades of dramatically relaxed China quotas. A glimpse into the detail of these figures underscores just how big a part of our apparel market China has become, and should provide some “handwriting on the wall” for industry pundits misguided enough to think the relentless quest for lower cost of goods sold is going to slow down any time soon.     

Growing Share in a Shrinking Market During the first nine months of 2009, the total dollar value of US apparel imports dropped 12.5% compared to the same period in 2008. Imports of cotton apparel, the largest fiber category, fell 21%, while those of man-made fibers declined 9%. However, China’s apparel shipments to the US increased 3% in the period. Though not a big percentage increase, it represented $3.3 billion dollars. China’s share of US imported apparel has grown from 31% in the first nine months of 2008 to over 36% in the same period this year. In other words, they gained five points of share! The next largest share gains, those of Vietnam and Cambodia, were each less than 1 percentage point.

Some Perspective In the first nine months of 2004, China’s share of US apparel imports was 13.5%, but has increased steadily every year since the advent of more relaxed quota restrictions. Continuing this trend, in a few years half of all imported apparel will be from China. 

China’s Key Categories The top apparel categories shipped by Chinese factories to the US in order of dollar value were: women’s cotton pants ($1.5 billion), women’s cotton knit tops ($1.4 billion), man-made fiber dresses ($710 million), men’s cotton pants ($683 million), and women’s man-made fiber knit tops ($626 million.) In all but one of these categories (China’s share of dresses was flat), their share gain was between 8 and 15 percentage points.

Unit Values of Apparel Imports The average value of a unit of apparel imported into the US fell 4% in the period, but the average value from China fell by 6%, meaning that China’s share gain came via lower unit costs. China’s unit value declines have ranged from 11% to 22% in those top categories, in all cases at least double the average declines for the values of all imported goods in those categories. In other words, factories in China have fared pretty well in this recession, and will no doubt capitalize on the recovery.

Who Will Innovate? The one nagging question on the minds of designers and merchandisers these days is how to be creative and innovative now that over a third of our apparel comes from a place whose primary role is to be the low-cost producer. Although I don’t consider myself protectionist in the traditional sense of the word, the process of creating beautiful, high-quality apparel needs protection if our industry is to begin growing again. The consumer has all but told us that she doesn’t find anything compelling her to open up her wallet. It’s a given that without creativity, apparel becomes a commodity, a mere shelter from the elements. The pressure for cheaper, but not necessarily better, goods has already put many a small specialty fabric mill out of business. It has made it virtually impossible for entrepreneurs to launch new concepts because production minimums are too high. 

As consumers become used to ton-and-gun fabric. boring styling and basic workmanship, there will be no turning back. Will high-quality, interesting apparel, like so many other things, become items to be enjoyed by only a select few? Let’s not let that happen.

Judith Russell is Executive Editor of ApparelStrategist.com.

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