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China to regain its top position after corona impact

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After weeks of factory shutdowns and logistical constraints, China is slowly resuming production, but the effects on global apparel firms may continue for the near future as the virus spreads. Countries such as Vietnam, Cambodia and Bangladesh continue to depend heavily on China for intermediate inputs such as raw materials and non-finished products and services. If the stock imported from China is exhausted, global textile and apparel industries are likely to face the brunt of disruption to the supply chain. Fast-fashion retailers, which rely on launching new lines every few weeks and keeping as little stock as possible, will be especially vulnerable to disturbances from suppliers.

Many businesses moved manufacturing to Vietnam, Cambodia and Bangladesh even before the virus reached China due to growing labor costs and confusion around the trade war between the US and China.

US imports of apparel and textiles from China dropped 25.4 percent year-on-year in the fourth quarter of 2019 while rising 14.3 percent from Cambodia, 8.6 percent from Bangladesh and six percent from Vietnam. The trend persisted in January with Cambodian exports to the U.S. increasing by 23.8 per cent compared with a 31.7 per cent decline in China shipments. But, once it recovers from the epidemic, China can still remain the top supplier.

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