Over the past few years, it has become commonplace for buyers to be heard saying China has become uncompetitive, and for China's competitors to repeat the claim even more loudly.
In our latest review "Is there an alternative to China as the dominant location for apparel sourcing?", Clothesource examines these claims, and compares them with the past few years' sales and pricing evidence about China and its 70 major competitors worldwide.
The simple evidence from rich-country import data is that, as far as the apparel trade is concerned, China's domination at the end of 2011 was completely unchallenged.
Clothesource has tracked every single garment imported into the EU, US and Japan since the year 2000. By quarter 3, 2011, China's 46.6%, share of the total apparel purchases by rich countries, measured in numbers of garments, was about as high as it had ever been (in Q3 2010 it had been 42%).
There was little sign of relative lack of competitiveness: in November 2011, the average price per square metre of Chinese clothes imported into the US was 12% higher than in November 2010, while garments imported from the rest of the world were 18% dearer. Before the "China's uncompetitive" myth took hold, average prices of apparel imported into the US from China ranged each month between 17% and 10% cheaper than average prices from the rest of the world: in November 2011, they were 16% cheaper.
The survey shows similar trends in European apparel imports, although Japan (which in 2008 imported 92% of its clothing from China) has reduced China's share - to a mere 88% in Q3 of 2011.
China's alleged "growing uncompetitiveness" went into reverse in mid-2011. The Western obsession about it does not describe a fundamental shift in world trade: just a brief blip which Chinese businesses seem to be getting over. It's now last decade's news: today's real story is the abrupt slowdown in clothing demand everywhere, and retailers' inability to put their prices up as fast as their costs are growing.
So why the myth? "Average clothing prices in the West have fallen steadily and consistently over the past 20 years" said Clothesource CEO Mike Flanagan. "So when imports from China started getting pricier in late 2010, most buyers went into shock. Chinese wags had got higher - though Chinese wages had never been the lowest in Asia anyway - and buyers assumed they'd get better value from countries with lower wages. The trouble was, raw material, energy prices and interest on loans were no cheaper anywhere else, labour accounts for a very small proportion of the cost of making clothes in Asia, and Chinese businesses seem to have found it easier to improve their productivity than their competitors. Running off to Bangladesh doesn't help a retailer duck the real problem of the slumpflation that's hitting them practically everywhere"
With dozens of tables, charts and country profiles, the survey concludes that there is little likelihood of any immediate substantial change in China's role. Barring some catastrophic event, China will continue to dominate global apparel sourcing overall until at least 2025 - and if it ever does begin to show significant share loss, there is no one alternative country to which production will shift.
But China does not dominate sourcing for every major buying country in every product category. In Is there an alternative to China as the dominant location for apparel sourcing?, Clothesource looks at why China dominates overall, the areas where it does not dominate, assesses the current and evolving competitiveness of alternative locations, and makes some tentative predictions of how garment manufacturing will develop to the end of this decade.
"The neurosis gripping many people in 2005 that China would take over the world's apparel manufacture entirely was always pretty silly" Flanagan added. "But so is the current fantasy that China can't compete. Buyers want to buy clothes made in properly equipped factories, with high-quality management, well-motivated staff, efficient control of labour, raw material and energy costs, and good transport links to well-operated ports where Customs procedures are carried out promptly by honest officials. China's got more such factories than anywhere else - and Chinese businesspeople are still investing more in new, more efficient, facilities than garment makers anywhere else. But, because China was never remotely likely to monopolise garment making, there's any number of manufacturers elsewhere in Asia, and in countries neighbouring the US and Europe, who'll be putting up tough competition over the next decade or two"
But sourcing from China has its dangers, as the market discovered between 2010 and 2011, and Clothesource believes all buyers need to have contingency plans for a re-emergence of those dangers.
So purchasers of Is there an alternative to China as the dominant location for apparel sourcing? will also be entitled to a discount on the 2012 edition of The Clothesource Handbook of Apparel Sourcing. This is the definitive detailed guide to the sourcing strengths and weaknesses of the world's 70 major apparel-making countries.
Is there an alternative to China as the dominant location for apparel sourcing? is £495 from Clothesource is £495 from Clothesource