Apparel & Textiles Industry Competition Heats Up as Chinese Labor Costs Increase, 6-5-2008
While China is has gained a dominant position in shoes, apparel and linens manufacturing, U.S. makers of these items have suffered a long period of decline. For example, over 98% of the shoes sold in America each year are imports, and the vast majority of these imports come from China. To consumers, this growing reliance on China as a low-cost producer has meant very low retail prices for goods of reasonable quality. However, recent significant increases in the value of the Chinese currency combined with rapidly rising labor costs put Chinese manufacturers in a much less competitive position by the beginning of 2008, and many plants in China are operating far below capacity. Competition, from very low cost nations in Africa, as well as Vietnam and elsewhere, is intense. Today’s environment of a global economic slowdown combined with rising prices will put a damper on the apparel and shoes industry. This is an arena where great changes may happen swiftly. Some of the trends driving the changes include:
1) Western Apparel Firms Enter the Chinese Market
While China’s exports have grown significantly for years, many Western apparel firms are opening retail locations in China, hoping to tap into the country’s growing middle class. U.S.-based manufacturers such as Nike are creating new designs and graphics especially for the growing Chinese retail market.
2) High-Tech, Nanotech and Smart Fabrics Proliferate
Today’s high-tech fabrics are either treated with chemicals, polymers or combinations thereof, or specially engineered for durability, stain-proofing, wrinkle-resistance or weather protection. In addition to these wonders, scientists are producing smart fabrics, which are engineered on a molecular level for wearability advantages as well as an astounding array of potential protective and clinical abilities.
3) Mass Designers and Retailers Speed Up for Fast Fashion
Several European mass retailers are experimenting with a new business model known as “fast fashion.” For these retailers, success comes from designing trendy, inexpensive clothes that mimic high-end fashion and that are delivered to consumers at lightning speed—two to four weeks after conception.
To find out more about these exciting trends and others, check out Plunkett’s Apparel & Textiles Industry Almanac 2008, or go to www.plunkettresearch.com and sign up for a subscription to Plunkett’s completely up-to-date online database!
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