What Products & Where
Countries to Diversify to Avoid an Over Reliance on China-Based Production
Given the shifting landscape of tariffs and the volatility of U.S.-China relations, apparel companies should consider diversifying their production bases to mitigate risk. Below are some of the top countries to consider for alternative sourcing:
1. Vietnam: One of the biggest beneficiaries of the U.S.-China trade war, Vietnam has become a leading alternative for apparel manufacturing. The country has a robust textile and garment industry, competitive labor costs, and favorable trade agreements with the U.S., including the U.S.-Vietnam Trade Agreement.
2. Bangladesh: As one of the largest garment exporters in the world, Bangladesh offers low labor costs and a well-established infrastructure for clothing and textile manufacturing. Bangladesh does have risks relating to political uncertainty and flooding so it should not be a single source country nor is it a good home for an emerging or medium sized brand.
3. India: India is another alternative, particularly for companies looking for a large, cost-effective labor force. While there are logistical challenges to consider, such as longer shipping times, India is a good location for larger brands looking for diversification.
4. CAFTA Countries (El Salvador, Guatemala, Honduras, Nicaragua): For North American companies, CAFTA countries offer the advantage of proximity and trade agreements that allow for no duties on specific products when using yarn originating from the US or CAFTA region. With a strong manufacturing base, these countries have been expanding the amount of their exports over the past 5-10 years and will continue to do so. These countries are a great source for tees and are starting to expand into a more diversify fabric range.
Guatemala: best for medium to higher quality goods.
El Salvador, Honduras, Nicaragua: best for lower quality goods.
5. Cambodia and Indonesia: Both countries have established garment industries with competitive labor costs. They may not have the same scale as China or Vietnam, but they are increasingly becoming important players in the global textile market.
6. Pakistan: Has an established garment and textile industry with competitive labor costs and access to a wide variety of cotton-based products. Synthetics are starting to gain a foothold in country but the manufacturing expertise for nicer quality is not yet developed. Pakistan is best for fleece and terry-based items.
Country Core Competencies:
1. Vietnam: Technical outerwear, fleece, activewear, swimwear, underwear, footwear.
2. Bangladesh: Tees, sweaters, polos, jackets, wovens, jackets, headwear, underwear.
3. India: Tees, shirting, dresses, denim.
4. Guatemala: medium to higher quality tees, growing industry of lifestyle polos, fleece, terry and activewear.
5. El Salvador: Basic quality tees (open end yarn), some activewear and underwear.
6. Honduras: Basic quality tees (open end yarn), wovens.
7. Nicaragua: Basic quality tees (open end yarn), denim, some activewear.
8. Cambodia: Denim, dresses, some activewear.
9. Indonesia: Dresses, swimwear, activewear, woven, denim.
10. Pakistan: Fleece, terry, jersey, denim, wovens, socks, some activewear.
11. Sri Lanka: Intimate wear, activewear, leggings.
12. Mexico: Denim.
*In any region there are good factories, not so good factories and a lot in between. Success will be dictated by those partners that choose to build quality into their products and processes.
Articles of Interest
https://www.nytimes.com/2024/11/08/us/politics/trump-tariffs-china.html
https://www.cnn.com/2024/11/08/economy/steve-madden-china-trump-tariffs/index.html
https://www.cnbc.com/2024/11/12/trump-tariffs-companies-scramble-lobbyist-loopholes.html
https://www.yahoo.com/news/trump-ups-ante-tariffs-vowing-001501760.html