Apparel Industry:
China
“The Sleeping Dragon”
By:
Amanda LaConte
Kate McElroy
Brian Morris
History of Multi-fiber Agreement (MFA)

1974: Replaced Long Term Agreement (LTA)
 Extended coverage to wool & manmade fibers and imposed a
growth rate on quotas

1994: MFA Expired
 US imposed quotas on developing country exports

1995: MFA replaced by Agreement on Textiles and Clothing
(ATC)
 Increased quota growth rates so remaining quotas would be phased
out by 2005

2004: US imposed a higher number of binding quotas on China
 China:
31/87 binding quota restrictions
 Thailand: 1/46 binding quota restrictions
Trends in U.S. Imports from China, 1990-2005
250,000
The effects of China joining
the WTO with the removal
several quotas
Imports
200,000
150,000
100,000
Restrictions placed on
Chinese exports
50,000
0
1990 1992 1994 1996 1998 2000 2002 2004
Years
Impacts of Quota phase-out in 2005

Consumers in importing countries “benefit”
 Cheaper prices and more choices

Producers in importing countries “lose”
 Can not compete with the cheaper prices

Globalization increases trade worldwide with integration of
apparel textiles trade

Foreign Investment flows out of previously-unrestricted
countries to previously-restricted ones
 Smaller developing countries suffer
U.S. Trade with China over the Years
Annual Growth Rate
1990-2000
21%
2000-2005
19%
What will the Future hold for the US?
Figures are in millions of US dollars
Year
Future Imports
2010
592,631
2020
3,511,477
2030
20,806,314
2040
123,282,242
2050
730,475,905
15
Wool Apparel
PRICE OF CHINESE
APPAREL IMPORTS
10
US $
5
Cotton Apparel
Apparel
Man-made Fiber Apparel
2004
2005
YEAR
2006
United States is China’s #1 Customer
China's Top Trade Partners in 2005 ($ million)
100,000.00
75,000.00
50,000.00
25,000.00
ia
st
ra
l
ds
Au
et
h
N
e
Th
Country/Region
er
la
n
ay
sia
M
al
ap
or
e
y
Si
ng
m
an
an
G
er
iw
Ta
Ko
re
a
g
ut
h
Ko
n
an
on
g
Ja
p
H
So
U
ni
te
d
St
a
te
s
0.00
United States is China’s #1 Customer
China's Top Trade Partners in 2005 ($ million)
100,000.00
75,000.00
50,000.00
25,000.00
ia
st
ra
l
ds
Au
et
h
N
e
Th
Country/Region
er
la
n
sia
ay
M
al
ap
or
e
y
Si
ng
m
an
an
G
er
iw
Ta
Ko
re
a
g
ut
h
Ko
n
an
on
g
Ja
p
H
So
U
ni
te
d
St
a
te
s
0.00
Population
(Millions)
% of Pop
Employed in
Apparel
143
1.3%
China
1,300
0.4%
India
1,100
0.4%
151
0.5%
Sri Lanka
19
1.8%
Thailand
62
1.4%
Vietnam
82
2.4%
Bangladesh
Pakistan
% Change in US Apparel Imports
2004-2005
60
China
50
40
30
20
10
India
Bangladesh
0
-10
-20
-30
Pakistan Sri Lanka
Thailand
Vietnam
China’s Manufacturing Industry

Four Main Categories in China’s Manufacturing Industry

Ratio of Employees per Corporation is significantly higher for the
Apparel Industry

However, this table does NOT display the number of Establishments
per Corporation

One of China’s main focus in
manufacturing involves more
workers and corporations in the
Apparel Industry
Number of
Industrial
Corporations
(10 000)
Ratio of
Employees
per
Employees
(10 000)
Corporation
Manufacturing of Apparel
16
1,583
99
Manufacturing of Industrial Goods
23
1,085
47
Manufacturing of equipment
32
11
1,996
483
62
44
Manufacturing of Food and Agriculture
Revenue of Industrial Corporations
Mining and
Quarrying
Electricity, Gas and
Water Supply and
Production

The Manufacturing Industry
generates the greatest
amount of revenue from
sales and customer
activities.
Manufacturing
13% Food and
Agriculture
Breakdown of the
Manufacturing :
Industry
20% Apparel
19% Industrial Goods
48% Equipment
U.S. Employment in Apparel Manufacturing
(Thousands)
900
Employees
750
600
450
300
150
0
1996
1998
2000
2002
Year
2004
2006
China’s Competitive Advantage

Large, highly productive, low cost labor
force

Price competitiveness

Efficient port facilities
 China’s shipping time to the US
“12-18 days”
“With Quotas gone and Chinese goods setting the market’s
price floor, those who cannot compete on price are marching
to a familiar anthem…”


Quality
Quick Return



need a steady delivery of
finished goods
focus on supply chain
management
Customer Service
Globalization has altered the Dynamics
of the Apparel Industry.
IT’S TIME WE TAKE NOTICE
Made in China