Importers Weighing Their Options

Now that the day has come when WTO countries have dropped all quotas, importers aren't planning a headlong rush into China or any other country.


Likewise, Sattler said he’s not stepping up PVH’s operations in China.

“There can’t be many legitimate apparel companies or retailers planning a significant increase of their position in China without more clarity,” he said.

Still, Sattler acknowledged that PVH’s sourcing footprint will start to change in the coming weeks.

“Certain countries we will be exiting,” he said. “For example, the Ukraine and the [Persian] Gulf states. I can’t say that it’s all on Jan. 1, but shortly thereafter, we’ll be doing business with fewer factories.”

At the end of 2004, he said PVH regularly sourced goods from about 40 countries. Over the next few years, he expects to cut that to between 15 and 18.

Darling also said Li & Fung will reduce its presence from 40 countries to about 25.

“Certain countries existed only for quota that probably don’t have a competitive model without it,” he said. “But that doesn’t mean we’ll be leaving them wholesale in 2005.”

Under the quota system, companies were often prevented from buying as much as they would have liked from certain countries — such as China, India and Indonesia, for instance — because of the limits. This forced them to shift orders into some out-of-the-way countries — such as the island nations of Madagascar and Sri Lanka — that had available quota.

This resulted in many nations having a small share of the U.S. market. After China, which held a 17.3 percent share, and Mexico, which had a 9.5 percent share, 21 countries had market share ranging from 1 to 4.7 percent.

With the quotas lifted, executives said orders will concentrate on nations that have large workforces, a strong supply of textiles and other raw materials and well-developed logistics chains.

It’s not only manufacturers in the developing world who are waiting anxiously to see how the months ahead affect their business. U.S. manufacturers — who lobbied hard against the quota lifting — fear for their future.

“I’ve never seen my customers this confused,” said Jim Chesnutt, president and chief executive officer of National Spinning Co., a Washington, N.C.-based yarn maker. “We need to see if the retailers are going to turn their backs on us.”

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