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China’s Import Share Erosion Continued in July Ahead of Apparel Tariffs

The tide is definitely shifting for apparel sourcing for U.S. companies, which have been forced to make changes mainly due to the U.S.-China trade war.

In the run up to this month’s imposition of 15 percent tariffs on apparel imports from China, companies imported $14.47 billion worth of goods from the still-top supplier in the year through July, a 2.33 percent increase compared to a year earlier, according to new data released Wednesday by the Commerce Department’s Office of Textiles & Apparel (OTEXA).

Those are tepid gains compared to years past, as the U.S.-China trade war has caused importers to diversify their sourcing to avoid risk and now higher prices.

Manny Chirico, chairman and CEO of PVH Corp., said last week, “Moving into 2020, we have significantly moved a lot of our production where we could out of the China market. Next year, we will be somewhere between 10 percent to 12 percent of our U.S.-required production coming out of China,” down from 30 percent just three years ago.

China held a 32.26 percent market share in of U.S. apparel imports in value terms for the 12 months through July, an erosion of 3.6 percent in three and a half years, according to OTEXA. For the year through July 2018, China’s apparel market of U.S. apparel imports was 33.1 percent, compared to 33.7 percent for the year ended Dec. 31, 2017. Looking even further back, China’s market share at the end of 2016 was 34.59 percent, and 35.86 percent a year before that.

The slow decline and flight from China has meant gains for many of its Asian neighbors. For the year to date through July, shipments from No. 2 supplier Vietnam rose 13.05 percent to a value of $7.8 billion, while imports from third-place Bangladesh increased 11.53 percent to $3.57 billion.

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“The tariffs have accelerated that movement,” Chirico said. “We recognized what was ahead of us over the next three to four years…and we opened up Africa. We moved to some other locations throughout Asia and we tried to position ourselves with key fabric suppliers throughout the world that would enhance our supply chain.”

Among other Top 10 suppliers in Asia, shipments from India were up 9.56 percent to $2.63 billion, imports from Cambodia gained 6.36 percent to $1.45 billion and Pakistan’s shipments rose 9.38 percent to $849 million.

Western Hemisphere countries have also benefitted from the spreading out of sourcing and the desire for a percentage of production based closer to market.

Overall shipments from the region rose 5.46 percent in the period to $8.38 billion and a 17 percent market share. Among the Top 10, imports from Honduras were up 13.29 percent to a value of $1.58 billion and shipments from El Salvador rose 9.38 percent to $1.09 billion.

Significant gains were also seen from Sub-Saharan Africa, as imports from the region rose 22.23 percent to $803.66 million, led by Kenya, Madagascar, Ethiopia and Mauritius.