US Fashion Industry sours on sourcing clothing from Vietnam

In the study conducted by the US Fashion Industry Association, a Washington, DC, group that works to eliminate tariffs and non-tariff barriers, nearly 70% of executives surveyed rated protectionist trade policies as their top concern.

That’s up from the No. 10 spot on the survey last year.

In the study, which surveyed 34 executives employed by large multinationals, China was reported the largest sourcing arena for clothing imports into the US and Vietnam was considered the second go to spot.

The percentage of respondents who reported they currently source product from China dipped 9% to 91%. In last year’s study, all the respondent multinationals reported they manufactured clothing and textiles in China.

While Vietnam was considered a popular sourcing destination, by the respondents, only 36% said they planned to increase their sourcing in that country over the next two years.

This is a 17% drop from the 53% that last year reported they were interested in increasing production in the Southeast Asian country.

The significant drop is attributable to the US pull-out of the Trans-Pacific-Partnership to which Vietnam was a signatory and that would have paved the way for duty-free clothing exports to the US and other TPP member countries.

Bangladesh has been a popular sourcing destination because of its low-cost labour, but the executives surveyed noted the country’s factories have a higher risk in complying with employment standards.

Only 32% of the US fashion industry executives surveyed expected to increase their sourcing in Bangladesh.

While duty-free imports are critical for keeping costs down, most of the 19 free-trade agreements the US has with other countries are underutilized, the results of the survey indicated.

Only the North American Free Trade Agreement was currently being utilized by more than 50% of the survey’s respondents.

Second on the list of concerns is competition from e-commerce sites that are cutting into brick-and-mortar store sales. Some 57% of respondents said they had concerns about the growth of companies such as Amazon.com and new entrants to online sales.

Notably, only 71% of the US fashion industry executives surveyed felt optimistic about the future of the clothing and textiles industry, down from 92.3% surveyed last year. That is a record low for the annual survey started in 2014.