Shipping Figures Show U.S. Apparel, Footwear Imports Shifting From China to SE Asia, Central America

NEWARK, N.J., May 9, 2011 /PRNewswire/ -- China's share of U.S. imports is declining in labor-intensive goods such as footwear and apparel, and sourcing is shifting to other countries, according to a new analysis of container import data by The Journal of Commerce/PIERS. The data show a diversion in offshore sourcing of products for the United States to manufacturing centers in Southeast Asia and Central America.

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The shift is evident in three key categories of labor-intensive product, categories most easily prone to source-country shifting due to the impact higher costs have on the goods' competitiveness.

Mainland China's share of footwear imports dropped from 75 percent in the first quarter of 2010 to 73 percent in the first quarter of 2011. China's share of U.S. menswear imports dropped from 25 percent to 22 percent in the first quarter of 2011 compared to the first quarter of 2010. In women's and infants' wear China's market share dropped from 34 to 31 percent.

"The results of this analysis underline the change of trend direction in U.S. imports of footwear and apparel from China, from upward to flat to downward, as manufacturing firms flee the country on rising wages," said Mario Moreno, economist for The Journal of Commerce/PIERS.

China remains by far the largest supplier of containerized goods to the United States, and this position isn't seeing significant erosion. During the first quarter, imports from China accounted for 45 percent of overall U.S. imports, a drop of one percentage point from the first quarter of 2010. The second-largest source country for container cargo in the first quarter was South Korea, at a 4 percent share, followed by Japan with a 3.7 percent share, according to JOC/PIERS data.

In 2010, U.S. footwear imports from China rebounded by 11 percent over 2009, but the overall U.S. foreign demand for footwear grew 16 percent in 2010, with Vietnam and Indonesia as markets that saw higher rates of growth compared to China, indicating sourcing shifts to these markets.

In the case of menswear, sourcing division is favoring the India Subcontinent, led by Bangladesh, and Central America, led by Honduras. Menswear imports from the India Subcontinent and Central America were up by 22 percent and 57 percent, respectively, year to date (January through March 2011), while imports from China in the first quarter fell by 1 percent, a significant variance in performance.

Regarding women's and infants' wear, inbound shipments from China are clearly trending down as they increase from other sourcing markets. Imports globally dropped 5 percent in 1Q 2011, but declined 12 percent from China during this same period. Imports in this category from Southeast Asian nations, led by Vietnam and Cambodia, showed strong 1Q growth at a rate of seven percent.

The data also illustrate a shift in production within China from the South China region to the north and interior regions of China where goods exit the country via the Yangtze River and nearby ports such as Shanghai and Ningbo.

Moreno said the shift reflects ongoing changes in China's labor market, as wages increase and the working population sees more employment options, changing the Chinese economy "from its export engine toward a pro-consumption model, as outlined in the recently released 12th Five-Year Plan."

The strengthening of China's currency is also reducing already tight profit margins for manufacturers of low-value goods such as footwear and apparel. "As a result, many firms are moving their manufacturing facilities of footwear and apparel out of China to Southeast Asia, the India Subcontinent and Central America," Moreno said.

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SOURCE The Journal of Commerce/PIERS