For decades, China reigned supreme as the world's leading textile and apparel (T&A) manufacturer and exporter. Its dominance in the global market has been undeniable, supplying a significant portion of clothing and textiles to countries worldwide. However, recent trends suggest a potential shift in this dynamic.

While China's market share peaked in the mid-2000s in the US market, both in terms of value and units, there has been a gradual decline in recent years. This decline, while subtle, indicates the US is increasingly diversifying its sourcing, potentially looking beyond China for its T&A needs.

What led to the change…

There are several reasons for this change. Rising production costs is foremost. As China's economic growth has led to higher labor and manufacturing costs, making it less competitive compared to other emerging economies in Southeast Asia. Moreover, ongoing trade disputes between China and major economies like the US have prompted businesses to explore alternative sourcing destinations.

Meanwhile, the COVID-19 pandemic exposed the vulnerabilities of relying heavily on a single source for critical goods. Consequently, companies are actively seeking to diversify supply chains and reduce dependence on China. Growing awareness about environmental and social issues associated with textile production in China has encouraged brands to seek more sustainable and ethical sourcing options.

Global trends

In fact, this shift is not limited to the US market. Evidence suggests a broader trend of diversification in textile and apparel imports globally.

For example, Australia despite fluctuating diplomatic relations, China remains Australia's primary apparel supplier. However, its share has decreased from a peak of 66.11 per cent in 2020 to 59.12 per cent in the first quarter of the current year. This indicates a growing inclination towards alternative sourcing destinations.

The EU too has been actively seeking to reduce its reliance on Chinese T&A imports. While China remains a significant supplier, countries like Bangladesh, Vietnam, and Turkey have increased their market share in recent years. This diversification strategy is driven by factors like cost competitiveness, sustainability concerns, and a desire to support regional economic growth.

In future, while China will likely remain a major player in the global textile and apparel market, its dominance is gradually eroding. The future points towards a more diversified landscape, with businesses spreading their sourcing across various countries. This shift presents both challenges and opportunities for different players in the global T&A industry.

The challenges include, maintaining cost competitiveness. As production shifts to other countries, maintaining cost competitiveness will be crucial for businesses. Ensuring ethical and sustainable practices is also a must. Companies must prioritize ethical and sustainable sourcing practices across their diversified supply chains. And businesses need to be agile and adaptable to navigate geopolitical risks and potential disruptions in global trade.

The opportunities

The opportunities are numerous for emerging economies. The shift away from China creates opportunities for emerging economies in Southeast Asia and other regions to expand their T&A industries. Diversified supply chains enhance resilience and reduce dependence on a single source, mitigating risks associated with disruptions. The trend towards diversification allows companies to prioritize sustainability and ethical practices in their sourcing decisions.

Thus the global T&A industry is undergoing a change. While China remains a key player, its dominance is gradually reducing as businesses seek to diversify their sourcing. This presents both challenges and opportunities for stakeholders in the global T&A landscape. Adaptability, ethical sourcing practices, and a focus on sustainability will be crucial for navigating this evolving terrain and ensuring a thriving future for the industry.

Led by Jam Kamla Khan, Federal Commerce Minister, Pakistan was conferred with the ‘Best Pavilion’ award at the Global Sourcing Expo, held at the Melbourne Convention Centre from Nov 19-21, 2024. The event featured exhibitors from major exporting nations, including China, India, Vietnam, Cambodia, and South Africa, making Pakistan’s recognition amid fierce competition particularly noteworthy.

The Pakistani pavilion was praised for its standout design, engaging displays, and the exceptional quality of its showcased products. This success highlights Khan’s visionary approach, which emphasises excellence in international representation and promotes Pakistan’s diverse export offerings. His directives to Trade and Investment Officers (TIOs) to create world-class pavilions at international exhibitions have bolstered Pakistan's presence on the global stage.

Sponsored by the Trade Development Authority of Pakistan (TDAP), the Pavilion featured 21 companies representing Pakistan’s textile, leather, and home textile sectors—key contributors to the $190 million out of $300 million in annual exports to Australia. The award was accepted by Zahid Hafeez Chaudhri, Pakistan’s High Commissioner to Australia on behalf of TDAP at the event’s Welcome Reception.

This award reflects Pakistan’s commitment to excellence and innovation in its export sectors that aim to enhance the competitiveness of Pakistani products and help them shine in the most competitive markets worldwide, said Khan.

A recent study by BCC Research forecasts, the global market for sustainable fabrics will reach $27.8 billion by 2029, growing at a compound annual growth rate (CAGR) of 8.1 per cent from 2024-29. This rise is driven by a combination of factors, including increasing environmental concerns within the textile industry, the growing popularity of organic and eco-friendly fashion, and heightened awareness of health risks associated with textile chemicals.

The sustainable fabric market is segmented by material, application, and region, with the clothing sector set to maintain its dominance through 2029. Asia-Pacific leads the market, accounting for nearly 40 per cent of the global share. The region's prominence is due to its large apparel and textile manufacturing hubs, including China, India, and Bangladesh, among other countries. A shift toward sustainable production practices is gaining traction across the Asia-Pacific, spurred by rising consumer demand for environmentally friendly products.

As sustainability becomes a priority in fashion, more manufacturers in the Asia-Pacific region are investing in greener practices, reflecting a broader global trend towards eco-conscious production. This shift is helping to reshape the industry, as consumers increasingly favor sustainable options in their clothing choices, pushing brands and manufacturers to adopt more responsible practices.

Overall, the growing focus on sustainability, health, and eco-friendly fashion is expected to drive significant growth in the global market for sustainable fabrics, making it a key area of interest for industry stakeholders in the years ahead.

In Q3, FY25, ending Nov 2, 2024, Gap Inc increased its net income to $274 million from $218 million in the same period last year. The company’s operating income rose to $355 million, compared to $250 million a year ago. Its net sales expanded by 2 per cent to $3.8 billion while comparable sales grew by 1 per cent Y-o-Y.

Expressing pride over the results, Richard Dickson, CEO, notes, the company’s net sales have grown for four consecutive quarters. The company is optimistic about the future and has raised its 2024 guidance for sales, gross margin, and operating income, citing strong business fundamentals. It estimates, its net sales will increase by 1.5 to 2 per cent this year, compared to previous guidance of less than 1 per cent. The company’s 2023 sales stood at $14.9 billion.

The company’s gross margin is expected to increase by about 220 basis points as against the prior forecast of 200 basis points. Operating income is projected to rise by around 60 per cent, up from the previous estimate of 50 per cent.

Benefitting from the holiday season, Gap Inc is already seeing positive results from campaigns like Gap's ‘Give Your Gift.’ Key categories such as activewear and denim have performed well, particularly at Old Navy, Gap, and Athleta. Wider leg and looser fit denim styles are proving popular, while activewear continues to be a significant growth area.

By division, the Q3, FY25 net sales of Old Navy rose by 1 per cent to $2.2 billion, while Gap brand’s net sales also increased by 1 per cent to $899 million. Comparable sales for Gap increased by 3 per cent, marking the fourth consecutive quarter of growth. Banana Republic saw a 2 per cent rise in net sales to $469 million, with strong performance in men's wear. However, comparable sales declined by 1 per cent, indicating ongoing adjustments in women's categories. Athleta’s Q3, FY25 net sales grew by 4 per cent to $290 million, with comparable sales rising by 5 per cent, driven by new products and effective marketing.

Emphasising the importance of ‘brand invigoration,’ particularly at Old Navy and Gap, which has led to market share gains, Dickson says, the company’s online sales rose by 7 per cent to 40 per cent of the company’s total sales.

Gap Inc. also introduced a new Gap store in Manhattan’s Flatiron district, showcasing the brand's refreshed aesthetics with dedicated spaces for key categories like fleece, denim, and khakis, as well as modern interpretations of its heritage. Dickson expressed confidence in the company’s assortments and momentum as it heads into the crucial holiday season.