Fashion Intel & Analysis

Fashion brands and retailers continue to make significant commitments to transparency in the apparel supply chain.  With greater media attention on due diligence and compliance efforts, we want to share with members the efforts by high-profile companies to share more information with the public.  Last week, on-line marketplace Amazon made the decision to disclose the names and addresses of over 1,000 suppliers of its Amazon-branded products, including apparel. 

The release comes less than a month after Amazon was criticized by the Wall Street Journal for sourcing from Bangladesh factories that do not meet labor and safety standards. The Amazon information includes details of its suppliers along with a statement that says Amazon is "committed to engaging with suppliers that respect human rights, provide safe and inclusive workplaces, and promote a sustainable future." The list includes factories in Vietnam, Taiwan, India, China, and Japan, among others. 

Human rights groups have supported the move by Amazon. The Human Rights Watch (HRW) called it a “useful first step toward transparency,” and encourages other brands and retailers to increase transparency, as well. "The decision by Amazon, the world’s largest online retailer, sends an unambiguous message that transparency is critically important and here to stay and grow," said Aruna Kashyap, senior women’s rights counsel at Human Rights Watch (HRW). "Brands that don’t publicly disclose their supply chains may not know where their products are made, making it harder to determine whether they are acting responsibly, and where the disclosure is not easily accessible, they make it difficult for workers to report labor abuses," she continued. 

During Centrestage, an annual international fashion trade fair in Hong Kong, show organizer Hong Kong Trade Development Council (HKTDC) conducted interviews with 233 buyers and 72 exhibitors to get an industry outlook regarding industry prospects, latest product trends, and e-commerce developments. They found that the industry is less optimistic about the market outlook for the next 12 months, with 16% of buyers and 39% of exhibitors expecting sales to decrease.  The major concern of the attendees is the slowing global economy and global trade tensions. 

Among the buyers, 35% expect an increase in the retail price in 2020, while 59% expect the retail price of their products to remain unchanged, and 6% foresaw a decrease. Only 10% of all exhibitors expected the FOB selling price of their products to increase. Regarding sourcing, 42% of buyers expect an increase in sourcing prices, while only 10% of exhibitors believe their production costs are likely to rise. 

Slowdown in the global economy was the biggest business challenge expected in 2020, with 49% of buyers and 57% of exhibitors sharing this concern. For buyers, the next major business challenges include increases in operating costs (46%), keen competition within the industry (41%), and the slowdown in mainland China’s economy (31%). Exhibitors are more wary of the slowdown of the mainland Chinese economy (42%), followed by changing global trade relations (36%), and the changing political environment (35%). Regarding U.S.-China trade tensions, both buyers (35%) and exhibitors (41%) expect a negative impact on apparel exports. 

The study also surveys buyers and exhibitors on product development strategies and e-commerce trends. The full study is available here.  

There are press reports every day that there is progress -- or there is no progress -- to finalize the “phase one” deal between the U.S. and China.  At this point there are no clear answers to the question whether the U.S. and China will sign a deal this year.  We continue to hear that many officials anticipate that the December 15th List 4B tariffs will be delayed.  But in the meantime we want to share the latest comments from President Trump that reflect the uncertainty.  When asked by a reporter yesterday if a deal would be completed this year, President Trump said, “I haven’t wanted to do it yet because I don’t think they’re stepping up to the level that I want.” He continued by saying, “We continue to talk to China. China wants to make a deal. The question is: Do I want to make a deal? Because I like what’s happening right now. We’re taking in billions and billions of dollars.”

Textile Exchange has released the 2019 Preferred Fiber and Materials Market Report (PFMR), a report that measures the production of fiber and materials with improved social and environmental impact. The report focuses on the industry’s supply side, analyzing production volumes, availability, and emerging fiber trends. 

This year’s report finds that global fiber production has doubled over the last 20 years to 107 million metric tons in 2018 and is expected to reach 145 million metric tons in 2030 if business as usual continues. More responsible options for almost all fiber categories are included in the 2018 production increase. The PFMR focuses on data in various fiber categories, including Plant-based Natural Fibers, Animal-based Fibers and Materials, Manmade Cellulosic Fibers, Synthetic Fibers, and looks at sustainability standards, initiatives, and trends, as well. The full report can be accessed here

U.S. Customs and Border Protection (CBP) has issued guidance on the latest round of exclusion request approvals for List 3, announced in the November 13 Federal Register.  According to the CSMS message, instructions for importers, brokers and filers on submitting entries to CBP containing products granted exclusions by the USTR from the Section 301 measures as set out in 84 FR 61674 are as follow:

  •  In addition to reporting the regular Chapters 39, 42, 44, 48, 50, 54, 60, 73, 82, 83, 84, 85, 87, 90, and 94 classifications of the HTSUS for the imported merchandise, importers shall report the HTSUS classification 9903.88.34 (Articles the product of China, as provided for in U.S. note 20(mm) to this subchapter, each covered by an exclusion granted by the U.S. Trade Representative) for imported merchandise subject to the exclusion.
  • Importers shall not submit the corresponding Chapter 99 HTS number for the Section 301 duties when HTS 9903.88.34 is submitted.

The CSMS message also included a Section 301 Goods of China Action Summary Table, which provides a summary of the tariff actions to date. The full CSMS message can be found here.