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China’s Market Share Loss in Intimate Apparel Sourcing Sees Shifts for the Category

Sourcing trends in the innerwear sector are a mixed bag, but imports of various products into the U.S. follow the shifting trade winds created by factors that include politics and policy, costs and speed to market.

While China dominates the cotton and manmade fiber nightwear and pajama category, the production powerhouse has lost market share in the sizable underwear segment, where manufacturing is spread throughout numerous regions and countries.

China’s dominance as a supplier for the product category to the U.S. market has it holding a 55.8 percent share of the $1.76 billion import sector for the year through October. This represents a 9 percent increase as shipments reached $983.94 million in value in the period.

The next six major suppliers are all from volume-oriented and low-cost production Asian countries.

Cambodia, the No. 2 supplier of intimates to the U.S., held a 4.25 percent market share in the most recent report from the Commerce Department’s Office of Textiles & Apparel (OTEXA), with imports share rising 4.25 percent on $210.83 million in goods. Vietnam’s market share jumped 23.65 percent to grab an 11.51 percent market share on $202.73 million worth of goods imported.

India’s market share increased 5.34 percent in the period to 5.38 percent on imports valued at $94.83 million. Bangladesh posted a 32.37 percent increase to hold a 3.77 percent market share on $66.33 million in imports, while Indonesia increased its market share 10.67 percent to reach 2.9 percent on imports of $51.07 million and Sri Lanka posted a 15.29 percent hike to a market share of 1.9 percent on imports valued at $3.39 million.

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It’s quite a different story for underwear imports, which accounted for $3.71 billion worth of goods in the 12 months through October. China is also the top supplier in the sector, but saw its market share fall 1.42 percent to $824.4 million in value in the period. This follows along the generally flat growth curve for apparel during that same time, which has been blamed in part on the U.S.-China trade war and real and threatened tariffs imposed by the Trump administration, plus the resultant overall move by companies to diversify their sourcing strategies.

Manny Chirico, chairman and CEO of PVH Corp., which makes the Calvin Klein and Tommy Hilfiger underwear brands, said the trade war and tariff threats have had an impact on the company’s sourcing.

“We have been strategically moving because of cost pressures, because we didn’t like the way that market was developing for the U.S. market,” Chirico said. “We’ve used our China sourcing base for China and also for the European market, and that’s been a really strong strategic move for us, particularly in the environment we’re in.”

Roughly 17 percent to 18 percent of the company’s overall production, representing about 8 percent to 9 percent of cost of goods sold, “is still coming out of China, and that number is about $75 million of tariff impact to our cost of product if it comes through at 25 percent,” Chirico said. That’s the threatened amount currently on the table for apparel goods from China.

“So, it’s not insignificant,” Chirico added.

According to OTEXA, Vietnam and India have picked up the slack as underwear suppliers, with notable gains by Thailand, Mexico and Nicaragua, too. Vietnam’s U.S imports market share of the category rose 4.69 percent to 15.71 percent on shipments valued at $583.57 million, while India’s market share increased 4.3 percent to 8.71 percent on $323.62 million in goods.

The Western Hemisphere held a significant 25.38 percent market share of underwear imports, a decline of 2.59 percent in the period. The pull for manufacturing in the region comes from most of those imports benefiting from duty-free status under the North American and Central American Free Trade Agreements, and the speed-to-market and order-replenishment capabilities.