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This Year’s USFIA Fashion Industry Benchmarking Study: What Sourcing Executives Think
about China
The United States Fashion Industry Association (USFIA) released recently its fourth annual
Fashion Industry Benchmarking Study (the Study)1, which was based on a survey of sourcing
executives from 34 leading US fashion companies in April-May this year. The Study reveals the
executives’ views on the outlook of the US fashion industry, sourcing trends, compliance and the
US trade policy agenda, etc.
Our last issue of Asia Sourcing Flash summarizes the key findings of the Study, and in this issue
we will take an in-depth look at what sourcing executives think about China, which saw its share in
the US textile apparel import market continue to shrink, from 38.6% in 2015 to 36.8% in 2016 in
value terms2.
China’s unshakable position in textile and apparel sourcing
Although US fashion companies continue to seek low-cost alternatives to China, the country’s
position as the top sourcing destination remains unchanged. According to the Study, 91% of
fashion companies source from China, the most frequently used sourcing base. It is followed by
Vietnam (88%), India (76%) and Indonesia (73%). But to our surprise, the percentage was not
100% for the first time since the Study began in 2014, signaling a decline in China’s overall
attractiveness in textile and apparel sourcing and a shift in US fashion companies’ sourcing
strategies.
Among its Asian competitors, China has remained a dominant supplier in many categories of
textile and apparel products in the US (Figure 1). The Study shows that, for example, of the 106
categories of apparel, China was the top supplier for 88 categories.
1 For a full copy of the Study, please see http://www.usfashionindustry.com/pdf_files/USFIA-Fashion-Industry-Benchmarking-Study-2017.pdf 2 Data from the Office of Textiles and Apparel (OTEXA). In SME (Square Meter Equivalent) terms, China’s share in US textile and apparel import market slid mildly to 47.9% in 2016 from 48.6% in 2015.
Asia Sourcing Flash
31 July 2017
Fung Business Intelligence Global Sourcing
Timely alerts and insights tracking major developments in Asia’s fast-changing sourcing landscape
Asia Sourcing Flash 31 July 2017
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The Study also reveals that China’s competitiveness is built on its enormous manufacturing
capacity and overall supply chain efficiency. As one sourcing executive commented, “(Chinese
factories) are the giant and will remain so for the foreseeable future. We will never be completely
out of China due to their speed, ease of doing business. The only thing that could change that is a
protectionist agenda.” Another respondent put it, “Speed to market is keeping China relevant in
fashion apparel…China will remain competitive and continue to invest in technology to differentiate
and compete.”
Figure 1: China, Vietnam, Bangladesh and India as a top supplier in the US textile and apparel
import market in 2016: number of products (OTEXA code)
Yarns Fabrics Apparel Made-up Textiles
China 2 25 88 11
Vietnam 0 0 5 0
Bangladesh 0 0 2 0
India 0 2 1 5
Other countries 9 7 10 0
Source: Fashion Industry Benchmarking Study (2017), USFIA
Sourcing from China to decrease through 2019
In the next two years, 46.7% of the respondents expect to decrease sourcing from China, a decline
from 57.7% in last year’s survey, while the percentage of those expecting to maintain their current
sourcing value or volume from the country substantially increase from 15.4% last year to 46.7%
this year.
Figure 2: How do you think your sourcing value or volume from China will change in the next two
years?
Source: Fashion Industry Benchmarking Study (2017), USFIA
Asia Sourcing Flash 31 July 2017
3
Shifting from “China Plus Many” to “China Plus Vietnam Plus Many”
US fashion companies have continued to adjust their sourcing portfolio to balance the need of cost,
speed, flexibility and risk control. The most common sourcing model revealed from the Study has
shifted from “China Plus Many” to “China Plus Vietnam Plus Many”, suggesting Vietnam has
consolidated its position as the No.2 sourcing base for US fashion companies – even though its
preferential access to the US market provided by the Trans-Pacific Partnership has vanished. The
typical sourcing portfolio is 30-50% from China, 11-30% from Vietnam, and the rest from other
countries. This year, only 19% of sourcing executives report sourcing over 50% of their products
from China, fewer than in 2016 (23%).
The Study also examines the strengths and weaknesses of major sourcing bases in terms of
speed to market, sourcing cost and compliance risk.
Figure 3: Rating of sourcing base
Speed to Market Sourcing Cost Risk of Compliance
US ★★★★★ ★★ ★★★★
Mexico ★★★★ ★★★ ★★★
CAFTA-DR ★★★★ ★★★ ★★★
China ★★★ ★★★★ ★★★
Vietnam ★★★ ★★★★ ★★★
Cambodia ★★ ★★★★ ★★
Indonesia ★★ ★★★★ ★★★
Sri Lanka ★★ ★★★★ ★★★
India ★★ ★★★★ ★★
AGOA ★★ ★★★★ ★★★
Bangladesh ★★ ★★★★★ ★
Note: CAFTA-DR stands for the Dominican Republic-Central America Free Trade Agreement;
AGOA stands for the African Growth and Opportunity Act.
The results were based on respondent’s average rating for each sourcing base.★★★★★ means
much higher performance than the average and ★ means much lower performance than the
average. Source: Fashion Industry Benchmarking Study (2017), USFIA
Other findings related to China
Among the top business challenges, “finding a new sourcing base other than China” is less of a
concern to sourcing executives, which slid from the No.8 challenge in 2016 to No.13 in 2017. By
contrast, “protectionist trade policy agenda in the US” topped the list this year from No.10 in 2016.
As China is one of the major targets of Trump’s protectionism, US fashion companies should keep
a close watch on bilateral trade issues and have some contingency plans in place as a hedge to
unknown or onerous trade policies.
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