91 percent increasing capacity in expectation of elimination of quotas as WTO ruling takes effect January 1, Global Sources reports
Hong Kong — December 2, 2004 — More than 91 percent of mainland China summer garment suppliers are expanding production capacity in anticipation of increased orders once export quotas are lifted, starting next year, according to a supplier survey by trade consultancy Global Sources.
A World Trade Organization ruling will see the lifting of export quotas on textiles and clothing among WTO members beginning on January 1, 2005. While the removal of the quotas is expected to hurt — if not cripple — many producers in the United States in the absence of any remedial action by the U.S. government, the Global Sources survey of 205 suppliers in China revealed that two-thirds of the respondents expect capacity increases of more than 20 percent.
Of the suppliers featured in the survey, 92 percent anticipate higher sales for the summer 2005 season than 2004. More than 60 percent of respondents expect sales to increase by more than 10 percent, with 24 percent preparing for increases of more than 25 percent. Mainland China is presently the world's largest clothing exporter.
More than half of the survey's respondents indicated plans to increase capacity 20-50 percent by hiring more workers, purchasing additional machinery and/or expanding existing factories. Additionally, one-third are currently planning or building new garment plants.
"Suppliers are gearing up for more orders," noted Michael Kleist, editor-in-chief of Asian Sources' Fashion Accessories & Supplies, whose team conducted the survey. "Many makers are simply responding to advance notification from their current U.S. and European buyers to be ready for increased orders if quotas aren't replaced with some other restriction."
Seventy-five percent of suppliers see the European Union as a post-quotas growth market, while 68 percent regard the United States in the same light. As a direct result of increased concentration on Western markets, the percent of exports to Asian markets is expected to decrease.
Currently China is the largest single country exporting clothing to the United States, having pulled ahead of Mexico last year. The Caribbean, as a region, is still the largest exporter of clothing to the U.S. market, although China could take the number one spot once the quotas are lifted.
Global Sources' report, "China Supplier Survey: Summer Garments 2005 Buying Season," includes manufacturers from 15 provinces and regions in China, including the seven major production hubs of Guangdong, Zhejiang, Jiangsu, Shandong, Fujian provinces, and the Shanghai and Beijing/Tianjin municipalities.
For more information on the challenges and opportunities presented by increasingly global supply chains, see the special in-depth report in the August/September 2004 issue of Supply & Demand Chain Executive, which includes the following articles:
For a look at how Tyco Fire & Security is tackling trade compliance issues in its global supply chain, see "Turning Global Trade Compliance Into a Competitive Advantage," in the August/September 2004 issue of Supply & Demand Chain Executive.
Hong Kong — December 2, 2004 — More than 91 percent of mainland China summer garment suppliers are expanding production capacity in anticipation of increased orders once export quotas are lifted, starting next year, according to a supplier survey by trade consultancy Global Sources.
A World Trade Organization ruling will see the lifting of export quotas on textiles and clothing among WTO members beginning on January 1, 2005. While the removal of the quotas is expected to hurt — if not cripple — many producers in the United States in the absence of any remedial action by the U.S. government, the Global Sources survey of 205 suppliers in China revealed that two-thirds of the respondents expect capacity increases of more than 20 percent.
Of the suppliers featured in the survey, 92 percent anticipate higher sales for the summer 2005 season than 2004. More than 60 percent of respondents expect sales to increase by more than 10 percent, with 24 percent preparing for increases of more than 25 percent. Mainland China is presently the world's largest clothing exporter.
More than half of the survey's respondents indicated plans to increase capacity 20-50 percent by hiring more workers, purchasing additional machinery and/or expanding existing factories. Additionally, one-third are currently planning or building new garment plants.
"Suppliers are gearing up for more orders," noted Michael Kleist, editor-in-chief of Asian Sources' Fashion Accessories & Supplies, whose team conducted the survey. "Many makers are simply responding to advance notification from their current U.S. and European buyers to be ready for increased orders if quotas aren't replaced with some other restriction."
Seventy-five percent of suppliers see the European Union as a post-quotas growth market, while 68 percent regard the United States in the same light. As a direct result of increased concentration on Western markets, the percent of exports to Asian markets is expected to decrease.
Currently China is the largest single country exporting clothing to the United States, having pulled ahead of Mexico last year. The Caribbean, as a region, is still the largest exporter of clothing to the U.S. market, although China could take the number one spot once the quotas are lifted.
Global Sources' report, "China Supplier Survey: Summer Garments 2005 Buying Season," includes manufacturers from 15 provinces and regions in China, including the seven major production hubs of Guangdong, Zhejiang, Jiangsu, Shandong, Fujian provinces, and the Shanghai and Beijing/Tianjin municipalities.
For more information on the challenges and opportunities presented by increasingly global supply chains, see the special in-depth report in the August/September 2004 issue of Supply & Demand Chain Executive, which includes the following articles:
- Making Global Supply Chains Work Supply and demand chain practitioners take on the challenges and opportunities of world marketplace.
- The Hidden Costs of a Global Supply & Demand Chain - Veteran industry observers warn of potential hidden costs of offshoring.
- Mastering the Complexity Challenge in the Global Supply Chain - While many companies are acting globally, they are still thinking locally.
- Ensuring Security of Supply in the Lean Supply Chain - Balancing the demands of security with the requirements of today's lean supply chains
- The World Is Enough - Making the global high-tech supply chain more accessible.
For a look at how Tyco Fire & Security is tackling trade compliance issues in its global supply chain, see "Turning Global Trade Compliance Into a Competitive Advantage," in the August/September 2004 issue of Supply & Demand Chain Executive.
