China to bail out faltering clothing industry

The competitiveness of the Chinese clothing industry is set to weaken over the next few years as costs rise. As a result, export growth could falter, according to Issue No 168 of Textile Outlook International from the global business information company Textiles Intelligence.

Rising costs in China are already forcing an increasing number of Western apparel brands and retailers to cut back on their sourcing from China and have their apparel manufactured elsewhere. In response, the Chinese government is pursuing a policy of encouraging growth in the domestic clothing market in order to take up slack in its manufacturing sector caused by this apparent loss in competitiveness. The rise in costs in China stems in part from significant increases in fuel costs and shipping costs. Also, wage rates have risen to the point where they are higher than in many other Asian countries. Moreover, wage costs are set to increase further, given the Chinese government´s commitment to raising minimum wage rates by an average of 13 per cent per annum during 2011-15.

Early signs of a shift in apparel manufacture have been seen in EU and US clothing import trends. In 2013 China´s share of EU clothing imports from all sources in value terms fell from 41.7 to 40.1 per cent, having fallen sharply in the previous year. China´s share of US clothing imports from all sources fell from 37.8 to 37.3 per cent.