Inflation and the state of the economy weighs heavy on the minds of US fashion sourcing execs as they focus on deleveraging China and strengthening sourcing ties with CAFTA-DR members, the USFIA 2023 Benchmarking Study has revealed.
The latest set of results from the tenth United States Fashion Industry Association (USFIA) survey shows US fashion executives are exercising a level of caution as they move into 2024, with only half expecting sourcing volumes to rise, as concerns about inflation and the state of the economy continue.
The tenth edition of the report surveyed 30 executives from fashion companies between April and June 2023. The respondents to the survey included both large US fashion corporations and medium to small companies.
The biggest bugbear executives reveal in the tenth edition of the survey is the fragile US-China business relationship. With both Republicans and Democrats in Congress united in their agenda to lower their reliance on the Asian superpower, fashion businesses have had no choice but to respond, diversifying sourcing and lowering their leverage on China. Nearly 80% of respondents plan to reduce their China sourcing over the next two years.
One of the biggest issues, though not exclusive to China, is forced labour allegations and potential risks in the fashion supply chain. With the launch of the Uyghur Forced Labour Prevention Act (UFLPA) the US fashion industry has doubled down in its efforts to eliminate forced labour from the supply chain.
Exclusive analysis of US fashion sourcing and impact of economy
The report’s author Dr Sheng Lu, associate professor of fashion and apparel studies at the University of Delaware, tells Just Style exclusively: “One notable takeaway of this year’s study is that US fashion companies expressed a new level of anxiety and showed eagerness to reduce “China exposure” to mitigate the growing sourcing risks due to the deteriorating US-China relations and the Uyghur Forced Labor Prevention Act (UFLPA) enforcement.”
He points out that in the past, China was considered an “indispensable” apparel-sourcing destination because of its vast size and wide variety of products.
However, he states this year’s survey indicates that, in most cases, China is no longer the largest source of apparel imports for many US fashion companies regarding sourcing value or volume.
Lu adds: “Recent studies I conducted, which examined hundreds of thousands of actual apparel products sold in the US retail market, further reveal that the five largest Asian apparel suppliers other than China, namely Vietnam, Bangladesh, Cambodia, India, and Indonesia, collectively can offer a diversified product range almost equivalent to that of China. In other words, US fashion companies today are much more prepared to “de-risk” from China than they were in the past.”
Nevertheless, Lu believes the real challenge for “de-coupling” is that China remains a crucial textile supplier for most leading apparel-exporting countries in Asia.
He says: “This regional textile and supply chain continues to strengthen with the implementation of trade agreements, such as the Regional Comprehensive Economic Partnership (RCEP). Additionally, many US fashion brands still view China as a promising sales market with significant business growth potential. Thus, how to deal with China while balancing various interests will remain a heated debate and a key issue for US fashion companies.”
Among the positives, the survey notes the industry’s commitment to increasing apparel sourcing from recycled fibres or other sustainable fibres and strengthening ties with members of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR).
Lu is not surprised by these findings and says: “US fashion companies say finding alternatives to sourcing from China has become more urgent this year. This could potentially benefit suppliers worldwide, from Asian countries other than China, suppliers in the Western Hemisphere, and Africa.”
In terms of the focus on sustainability, he states: “It is encouraging to see that more than half of the respondents have already started to carry clothing made from recycled or other sustainable textile materials. The trend will continue, and it involves tremendous collaboration opportunities between the private sector, policymakers, and academia to jointly explore innovative ways to incentivise more sourcing and production of sustainable clothing products and develop a circular fashion business model.”