The Global Village Stares at the First World Trade War

The US Fashion industry has already expressed its concern over the trade war that has just begun about which no one really knows anything as to what shape it may take in the coming months and its implications on world trade in textiles and clothing. No wonder a difficult time is predicted for global textile manufacturers and traders. China has remained the world’s top apparel supplier, with Vietnam a rising star at #2. As global uncertainty is on the rise, companies are being advised to start assessing their supply chains and look for alternative sourcing options. Even Chinese firms have stepped up their investment in neighboring countries with a long-term goal of making China a major textile supplier for apparel-exporting countries in Asia. This is important in view of the fact that – in the last year – 8 out of 10 of the top sourcing destinations are located in Asia.

However, what should be worrisome for the Chinese industry is that they lag behind their western counterparts in the use of data, the Cloud, real time information sharing, total information transparency and data analytics. In the present times the data is the most valuable business tool. The lack of use of expert systems as decision tools can offset any or all the benefits of an established production infrastructure and work practices. If Chinese suppliers lose any of customers, who obviously have very strong skills in these digital traits, they also lose an opportunity to be in touch with global apparel brands and supply chain managers and the expertise they bring with them. This can be with respect to the development of global fashion industry and consumer insights, the best practices for international sourcing, the hazardous chemicals control, and the green supply chain.

Financial experts in the US are advising their clients (buyers, sourcing agents and private labels/brands) to look for alternative production sources in view of the potential tariffs and trade war with China. The possible sourcing destinations being discussed are Bangladesh, India, Pakistan and the Middle East — or the Western Hemisphere — Mexico, Central America, etc. The apparel companies need to expand their supply sources. It is common for apparel companies to source goods from many countries — including China, Cambodia, Vietnam, Guatemala and Mexico — as well as domestically. This type of diversification helps companies compete on price as well as on quality and delivery times.

The coming months are expected to see hectic activities with apparel supply chain executives and sourcing agents hopping from one country to another in search for their future suppliers and also suppliers in finding out ways and means to retain their existing customers. Nobody had expected that the global village that we created in the last two decades will have to witness the first world trade war so soon. We don’t know who all will be the winners but surely the global village will be the ultimate loser!

Managing Editor