It is difficult to be optimistic about the growth of textile and clothing exports, and the signal of order transfer to ASEAN is obvious

More than half of 2014 has passed, and “okay”, “growing”, “flat” and “slightly rising” are the words most commonly used by most companies when describing textile and apparel exports to the United States in the first half of the year.
According to statistics from the China Chamber of Commerce for Import and Export of Textiles, in the first half of this year, China exported US$19.45 billion in textiles and clothing to the United States, achieving a steady growth of 6.9%. Among them, textiles increased by 5.7% and clothing increased by 7.4%.
Despite this, no export company dares to take it lightly. The interviewed companies all said that doing export trade is like being led by others. They are very passive. If they don’t pay attention to market changes, they will fall off the cliff.
Don’t be blindly optimistic in the face of growth
Zhu Zejiang, general manager of Tongze Company in Foshan, Guangdong, said: “This year does have a slight increase compared with last year, and our increase is about 10%. The first few months of the first half were relatively flat, and the increase in orders became more obvious after April. This is inseparable from the improvement of the U.S. economic situation.”
Just a few days before the interview, the U.S. Department of Commerce released data showing that the U.S. gross domestic product (GDP) increased significantly by 4% year-on-year in the second quarter of this year, which was higher than the industry’s expectation of 3%. Subsequently, the department released data showing that the personal income of U.S. residents in June increased by $56.7 billion, or 0.4%, compared with the previous month; the household savings rate that month was 5.3%, the same as the previous month. With income rising and the level of savings remaining unchanged, it is clear that Americans have increased their consumer spending.
According to statistics, personal consumption expenditures in the United States continued to rise in June, increasing by US$51.7 billion from the previous month, an increase of 0.4%, and the largest increase in three months. Personal consumption expenditures accounted for approximately 70% of the U.S. economy that month and became the main driving force for U.S. economic growth. In this regard, Zhu Zejiang said: “For enterprises exporting consumer goods such as clothing, the increase in the personal consumption index in the supply market will definitely lead to an increase in export orders. This is a very direct reflection.”
However, such growth still makes Zhu Zejiang dare not be overjoyed. Because he knows that the market is fickle, and the mediocre performance in the first quarter has been the best explanation for the ups and downs of the market. At the beginning of this year, affected by severe weather, the U.S. economy shrank by 2.1% in the first quarter. At the same time, in February, my country’s textile and apparel exports to the United States were US$1.73 billion, a decrease of 30.3%.
Any slight change in the market is related to the fate and prospects of export enterprises. With the ups and downs of the market in recent years, Tongze Company’s business scope has been tightened. For example, the previous trading of socks has stopped, and high-end underwear is no longer produced. Currently, it only focuses on the mid-range underwear category. Zhu Zejiang said helplessly: “This is something that can’t be helped. All export companies are passively controlled by the export market. Whatever they do or not do is actually passive. They have to obey the market and buyers. No one can have absolute control.” Initiative.”
It’s not just Chinese export companies that dare not let down their guard. Facing the volatile market, American buyers are also very cautious. They believe that American consumers are not as enthusiastic as before, and it is not easy to achieve sales growth. At the beginning of this year, the U.S. government predicted that economic growth would reach 3.1% this year and 3.4% in 2015. Now the Federal Reserve has adjusted its future growth expectations for the U.S., predicting growth of 3.9% to 3.2% in 2015. Some U.S. economists also pointed out that the overall growth of the U.S. economy is still sluggish, which can be seen from many aspects, such as low wage growth, unstable corporate profitability, and housing price growth hitting a new low in recent years. Therefore, it is too early to conclude that the U.S. economic growth is optimistic and U.S. export trade is improving.
​The signal of order transfer to ASEAN is obvious
Export quantity and growth rate are important indicators to measure China’s export trends, while the market share of Chinese products in the United States more truly reflects the position of China’s textile and apparel industry in the global industry.
According to U.S. Customs statistics, from January to May this year, China’s textile and apparel market share in the United States was 34.7%, a decrease of 0.5 percentage points from the same period in 2013. In January, the figure was 40.2%, from January to February it was 38%, and from January to March the figure dropped to 34.8%. It can be seen that in the first half of this year, the share of Chinese textile and apparel products in the US market has been decreasing month by month.
At the same time, from January to February, ASEAN’s market share in the United States was 20.1%, basically the same as the same period in 2013. Starting from March, this data began to increase. Based on data from January to May, ASEAN’s market share in the United States was 20.7%, an increase of 0.3 percentage points from the same period in 2013.
In Zhu Zejiang’s eyes, although the 0.3% increase is not large, it has sent a dangerous signal to Chinese export companies. “With this development, I’m afraid it will be a matter of time before the industry transfers.” He said, but at present, in the field of underwear, the phenomenon of order transfer is not common. “My customers have always said they want to go to ASEAN, but after inspection, they found that the conditions there are not mature yet. Underwear products are characterized by high requirements for comfort and relatively complex product processes, so they require high quality and ability of workers. , and the industrial base also needs to have a complete supply chain of main and auxiliary materials. These are what ASEAN countries currently lack, but these aspects are easy to improve, and it is estimated that they will improve soon.”
And Ningbo Soko��Fabric Co., Ltd. has actually experienced a shift in orders from buyers. Li Qihan, general manager of the company, said: “Some of our U.S. orders have been transferred to Southeast Asian countries. Although the number is not very large, it still gives us a warning. High labor costs and other operating costs have become something that companies and buyers have to face. The reason why buyers have not transferred most of their orders is because China has its own advantages, such as skilled workers, better equipment, and continuous technological innovation, so the products produced are of high quality. But countries like Vietnam, regardless of Both the industrial model and worker conditions are close to those of China, and the cost is lower, which poses a great threat to us.”
The American Chamber of Textiles and Apparel released data and said: “In April this year, the freight profits purchased by the United States from China fell by 3.2% from the previous month, but increased by 12.0% from the same period last year. This data shows that American buyers are not in a hurry. Leaving China, because the productivity here is high, the profits can significantly offset the price increases caused by rising costs.”
But at the same time, the chamber of commerce also said that although the textile and clothing imports from China are three times that of Vietnam, Vietnam is the biggest winner overall, and its freight profits are higher than those of other countries. In addition, with the conclusion of the Trans-Pacific Partnership Agreement and the Transatlantic Trade and Investment Partnership Agreement, Vietnam may increasingly demonstrate its industrial advantages.