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China Extends Grip on Global Denim Production

Americans were true-blue to their jeans during the recession, and China reaped the rewards of their loyalty.

Appeared In
Special Issue
WWD Denim In Depth issue 05/20/2010

WASHINGTON — Americans were true-blue to their jeans during the recession, and China reaped the rewards of their loyalty.

China carved out a substantially larger share of the women’s denim market and continued to grow its piece of the men’s market last year in the midst of the global economic downturn that took its toll on sales in most apparel categories.

Overall imports of denim jeans to the U.S. rose 1 percent in 2009 compared with 2008, according to the Commerce Department’s Office of Textiles & Apparel. Traditional drivers of sourcing decisions like cost, on-time delivery and on-trend fashion and fit were even more important during the recession, experts said.

“The economic downturn certainly impacted sourcing,” said Kim Kitchings, senior director of corporate strategic planning and program metrics for Cotton Incorporated. “People were going to stay safe to some degree, where they had dependable and reliable vendors.”

China benefited from its well-established infrastructure and higher capacity, while Mexico held on to some of its more basic, commodity-based men’s denim. China’s share of the women’s denim market soared 84.9 percent in the 12 months ended Feb. 28, compared with a year earlier, to claim 46.5 percent of the total market, according to import figures compiled by International Development Systems Inc.

Mexico, the second-largest supplier of women’s jeans, saw its market share drop to 11.2 percent. Imports from most top suppliers declined in 2009, with the exception of China, Vietnam and Bangladesh. Shipments from Vietnam rose 33.6 percent to 6.5 percent of the market, while imports from Bangladesh increased 27.4 percent to account for a 4.9 percent market share.

Mexico held onto its slot as the top men’s jeans supplier by increasing its share by 5.6 percent to 41.9 percent. China was the second top supplier, with 16.4 percent of the market. China’s growth in 2009, however, was steeper in men’s than women’s, with shipments rising 86.3 percent.

The biggest losses for women’s jeans were incurred by Cambodia, Egypt and Pakistan, where market share fell 32.6, 27.6 and 24.7 percent, respectively.

Most other top supplier countries saw shipments of men’s jeans to the U.S. decline, with the exception of Bangladesh, Nicaragua and Cambodia. Denim imports from Nicaragua jumped 64 percent to claim a 3.1 percent market share. Bangladesh shipped 18.9 percent more jeans in 2009 than the previous year, accounting for 11 percent of the market. Cambodia increased its imports 8.5 percent to claim a 2.7 percent market share.

For men’s suppliers, the largest import declines were in Lesotho, Colombia and Vietnam. Shipments from Lesotho fell 32.1 percent, imports from Colombia decreased 31.4 percent and Vietnam’s denim shipments were down 13.8 percent.

Most of the losses incurred last year could be recouped this year as demand recovers, said Julia Hughes, president of the U.S. Association of Importers of Textiles & Apparel. Already the import figures from the early months of 2010 show a rebound compared to the 12-month statistics, she said.

Regardless of future import levels, China has emerged as the powerhouse of denim sourcing, as it has in many apparel categories.

“Everyone else is really a wannabe,” Hughes said. “Everyone else is striving, but China really owns [the denim] business now.”

Despite the increase in Asian sourcing, mounting macroeconomic pressures are likely to leave room for more than one country to serve the industry’s needs. China in particular has seen the cost of labor, freight and raw materials rise. Cotton prices have increased significantly since last year, rising to around 73 cents per pound at the end of April, compared with 40 cents a year earlier.

“There’s a lot of nervousness about China,” Hughes said.

Cost concerns are pushing more companies toward diversified sourcing strategies, she said.

“Even the people that were initially comfortable with a large percentage [in China] are rethinking that right now,” she added.

Jeff Rosenstock, vice president of General Sportswear, which manufactures private label jeans for major retailers, said his Western Hemisphere-based business has benefitted from some of the concern over concentrating too much production in China and its neighbors, many of which are impacted by similar forces.

“We’re having opportunities we didn’t have before,” Rosenstock said. “Retailers are coming to us with orders they can’t place in Asia.”

The average cost per unit of women’s jeans for the year through February was $7.02. The cost of women’s jeans from all of the top suppliers except Mexico were either flat or declined in price. Denim jeans from China during the same period cost $7.04, from Bangladesh they were $5.12 and those shipped from Vietnam averaged $5.63. Jeans from Mexico cost $9.79, a 4 percent increase over the previous year and the most expensive of the top suppliers.

The cost per unit for men’s jeans on average was $6.90 for the year through February.

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