Textile and apparel exports hit the highest level in the same period in history
According to China Customs statistics, from January to September, China’s textile and apparel exports totaled US$227.59 billion, a year-on-year increase of 5.6% and an increase of 12.7% over the same period in 2019, the highest level in the same period in history. The export scale of China's textile and clothing can still reach new highs even when the export of anti-epidemic materials such as masks has dropped by 80% and a number of unprecedented costs have risen. The main reasons are that China's industrial chain has exerted its strong advantages; second, international demand has continued to pick up; It is the return of some orders one after another; the fourth is the price increase factor pushing up the export value.
Apparel exports hit a new high for the same period since 2016, but the growth rate has slowed down quarter by quarter
From January to September, clothing exports amounted to US$122.42 billion, a year-on-year increase of 25.3% and an increase of 8.5% over the same period in 2019, a record high for the same period in six years. In the first and second quarters of this year, the growth rate of China's clothing exports was 47.4% and 35.7% respectively. Due to the high base last year, the growth rate in the third quarter slowed down significantly to 9.4%, but the export scale remained at a historically high level.
Explosive demand in the U.S. market leads high growth
Driven by the US fiscal and monetary stimulus plan, international demand has exploded in compensation. Especially since March, U.S. clothing retail has hit a record high, breaking the record for six consecutive months, and superimposed on the repeated epidemics in Vietnam, the second largest clothing supplier in the U.S., driving China’s clothing exports to maintain rapid growth. Especially from July to August, about half of the growth of China's clothing exports came from exports to the United States.
China's market share in the United States and Japan is stable, and its share in the European Union is squeezed by Turkey and others
In the first eight months, China's apparel import market share in the United States, the European Union, and the United Kingdom decreased by 0.7, 2.3, and 3.1 percentage points year-on-year, and its market share in Japan and South Korea increased by 0.8 and 1.7 percentage points year-on-year. Among other major suppliers, Turkey performed well, with exports increasing by 30.3% in the first eight months. Although India experienced the impact of the epidemic, its apparel exports still grew by 36.5% in the first half of the year, and Vietnam increased by 15.8% in the first eight months.
Trend Outlook 1: Affected by the high base of last year, it is expected that the growth rate of apparel exports in the fourth quarter of this year will continue to "follow", but it will remain resilient.
The demand recovery in the international market is gaining momentum, but the negative impact of the threat of high inflation on consumption cannot be ignored. The increase in the price index of personal consumption expenditure in the United States in August hit a new high since 1991. The European Union and Japan have repeatedly swayed during the "blockade" and "unblocking", and consumption has not yet returned to the pre-epidemic level. The governors of the four major central banks in the United States, Europe, Japan, and the United Kingdom warned at the end of September that the deterioration of supply chain bottlenecks would lead to continued high inflation.
Supply chains in other countries are gradually recovering, and the scale and sustainability of the return of orders should be carefully studied and judged. Ho Chi Minh City has gradually resumed work and production after it was unblocked. In early October, the resumption rate was nearly 90%, and the employee rework rate was nearly 60%. The export orders of some enterprises have been received until the second quarter of next year.
Trend Outlook 2: As external demand recovers, the industry will face greater cost and capacity pressures.
Sea freight rates remain high, and it is difficult to fully alleviate the tightness of shipping capacity. The US government recently required Long Beach and Los Angeles ports to implement all-weather operations, which is expected to accelerate the operation of the crowded supply chain, but the bottleneck is difficult to eliminate in the short term. On October 9, the Shanghai Export Container Freight Index failed to continue the previous callback trend and still rose to 4647. 6 points, which was 6 times the low of last year.
The price of cotton and other raw materials has risen irrationally from the fundamentals of supply and demand, driving some intermediate products to follow the price increase, far exceeding the ability of downstream enterprises and the market, and profits are severely squeezed.
Tight energy supply and rising prices have become a common phenomenon, which has inhibited the production capacity of all links in the entire industry chain. First, it is difficult to complete orders, second, delivery time cannot be guaranteed, and third, it has boosted the cost of various factors.
The RMB exchange rate remained strong and continued to reduce export profits. In the first three quarters, the average RMB exchange rate appreciated by about 8% compared with the same period last year.
In the first eight months, the average unit prices of woven and knitted garments in China increased by 9.1% and 7.5% year-on-year, respectively, showing the impact of rising costs on export prices. In the future, whether costs can continue to be passed on to prices will be restricted by many factors.
Source: Clothing Branch of China Chamber of Commerce for Import and Export of Textiles