Apparel / Textiles & Accessories

In July 2022, the American Fashion Industry Association released its annual industry benchmark report, the ninth consecutive year that the association has released a report. Based on the survey results of member companies, the report analyzes the main opportunities and challenges faced by the US textile and apparel industry and enterprises and the procurement trends of US textile companies. This article focuses on excerpting and summarizing the part of the report on the purchasing trend of American textile and apparel enterprises. The views expressed in this article do not represent the views of the Chamber of Commerce.

1. Procurement of American textile and garment enterprises in 2022

(1) The purchasing diversification trend of American textile and garment enterprises is more obvious, but Asia is still the main source of purchasing.

In order to adapt to the ever-changing business environment and deal with shipping delays, supply chain disruptions, and over-concentration of procurement sources, more and more American textile and apparel companies are paying attention to procurement diversification. The survey shows that in 2022, the purchasing places of American textile and garment enterprises include 48 countries and regions in the world, up from 43 in 2021. More than half of the surveyed companies will be more diversified in 2022 than in 2021. Among them, 53.1% of the surveyed companies will source from more than 10 countries and regions, up from 36.6% in 2021 and 42.1% in 2020. This is more pronounced in businesses with fewer than 1,000 employees.

While purchasing diversification, Asian countries still occupy a major position. Among the 10 most important purchasing countries of American textile and garment enterprises, Asia accounts for 8, of which China, Vietnam, Bangladesh and India are in the top four, with 91% respectively. %, 88%, 84% and 72% of the surveyed companies make purchases in the above countries. The only two non-Asian countries in the top ten are Mexico and the continental United States.

(2) "China + Vietnam + Others" is still the mainstream model of US textile and apparel procurement, but the connotation has changed.

On the one hand, China is still the main source of procurement for US textile and apparel companies, but US companies are less dependent on China. One-third of the respondents said that their purchases in China in 2022 will not exceed their total purchases. 10% of the respondents, and 50% of the companies surveyed said that their procurement in Vietnam exceeds that from China. At the same time, the share of "China + Vietnam" has also dropped from 40-60% a few years ago to 20-40%. On the other hand, member states of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) have become increasingly important sources of purchases. In 2022, about 20% of the surveyed companies said that their purchases in the above-mentioned countries accounted for more than 10%, In 2021, only 7% of the companies surveyed will achieve this ratio.

(3) Compared with ready-made garments, the procurement sources of textile raw materials are relatively concentrated

Asia, especially China, still dominates the procurement of U.S. textile raw materials, especially fibers and garment attachments (such as buttons, zippers, accessories, and labels). About one-third of the companies surveyed said they sourced all of their fiber from Asia. 93.8% of the interviewed companies purchased fibers in China, 87.5% of the respondents purchased clothing attachments in China, and 78.1% of the interviewed companies purchased yarns in China.

(4) The advantages and disadvantages of the main procurement sources have changed to a certain extent, and the price advantage in Southeast Asia is obvious.

According to the survey of the interviewed companies, in the eyes of American companies, there will be some changes in the advantages and disadvantages of each procurement location in 2022. Affected by shipping delays and supply chain disruptions, the United States and Mexico have more prominent advantages in terms of market response speed due to their geographical advantages. The price advantage is even more obvious in Southeast and South Asian countries such as Vietnam, Bangladesh and Cambodia, as well as members of the African Growth and Opportunity Act (AGOA). Respondents believe that China's advantage in purchasing flexibility has declined due to the epidemic prevention policy. Bangladesh's social responsibility risk has decreased and its competitiveness has increased.

2. The purchasing trend of American textile and garment enterprises in the next two years

(1) The trend of purchasing diversification will continue, and India, Bangladesh and Central American countries may receive more orders.

Nearly 40% of companies surveyed plan to adopt a diversification strategy in the next two years, sourcing from more countries and regions or partnering with more suppliers, up from 17% in 2021. Twenty-eight percent of the companies surveyed said they would not expand the scope of sourcing countries, but would cooperate with more buyers from these countries, down from 43 percent in 2021. The survey shows that India, the Dominican Republic-Central America Free Trade Area and Bangladesh have become the countries most interested in U.S. apparel companies to promote their procurement diversification strategy, with 64%, 61% and 58% of the interviewed companies saying they Purchases from the three regions mentioned above will increase in the next two years.

(2) American companies will reduce their dependence on China, but it will be difficult to decouple from China.

Most U.S. companies plan to reduce their dependence on China, but admit that they cannot “decouple” from China completely. 80% of the surveyed companies plan to continue to reduce their purchases from China in the next two years to avoid compliance risks brought about by the Xinjiang-related Act, and 23% of the surveyed companies plan to reduce their purchases from Vietnam and Sri Lanka. At the same time, the interviewed companies indicated that they could not "decouple" from China in the short and medium term, and some apparel companies regarded China as a potential sales market and planned to adopt the business strategy of "localized production + sales in China".