U.S. fashion companies are broadening their sourcing strategies to reduce dependency on traditional markets like China, Vietnam, and Bangladesh due to rising geopolitical uncertainties. However, this shift does not signal a departure from Asia, but rather a diversification within the region, according to a recent global study.
Shifts in Sourcing Preferences
The “2024 Fashion Industry Benchmarking Study,” released on Monday by the United States Fashion Industry Association (USFIA) and the University of Delaware, reveals significant changes in apparel sourcing patterns. Conducted between April and June 2024, the survey included executives from 30 leading fashion brands, retailers, importers, and wholesalers, including some of the largest U.S. fashion entities.
Despite Asia remaining the primary source for apparel, the study highlights a notable reordering among top suppliers. The report shows that seven out of the ten most utilized sourcing destinations for 2024 are based in Asia, although their rankings have shifted.
China and Vietnam Remain Dominant
According to the study, China and Vietnam continue to lead as top sourcing destinations with utilization rates of 100% and 89%, respectively. However, India has seen a significant rise in usage, surpassing Bangladesh for the first time. India’s utilization rate stands at 89%, making it the second most popular destination, up from fourth place in 2023. In contrast, Bangladesh has dropped to fourth place with an 86% utilization rate, down from third in 2023.
Emergence of New Sourcing Locations
The report also highlights increased interest in sourcing from Cambodia, Indonesia, and Pakistan, with utilization rates of 75% and 61%, respectively. This indicates a broader diversification of sourcing bases within Asia.
Concerns and Future Outlook
Challenges with Sourcing from Bangladesh
The study notes a decrease in interest in expanding sourcing from Bangladesh, with only 48% of respondents expressing interest over the next two years, down from 52% in 2023 and 58% in 2022. Concerns about social compliance remain a significant factor, exacerbated by recent high-profile labor protests over minimum wage increases. Despite its cost competitiveness, Bangladesh’s limited product diversification and ongoing social responsibility issues have constrained its appeal.
India’s Rising Status
India has emerged as a key player in the apparel sourcing landscape, with nearly 60% of respondents planning to increase sourcing from the country through 2026. India’s growing prominence is supported by its status as the world’s third-largest textile exporter and the sixth-largest apparel exporter in 2022, based on value.
Studies indicate that India’s advanced local textile manufacturing capabilities mean that its apparel exports to the U.S. rely less on imported components compared to countries like Bangladesh, Cambodia, and Vietnam. Additionally, India’s role as a strategic partner with the U.S. contributes to its perception as a lower-risk sourcing destination in terms of geopolitical concerns.
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