China's dominance in the US garment import market is waning. After reaching a peak around 2010, its market share, both in terms of value and the number of units, has been steadily declining. This trend has significant implications for both the US and Chinese economies, as well as the global garment industry.

Statistics clear the picture

China's share of US garment imports peaked around 2010, with nearly 40 per cent market share in value terms and over 45 per cent in units. Since then, there has been a consistent decline, with China’s share in 2024 estimated at around 25 per cent in value and 35 per cent in units. Interestingly, the decline is more pronounced in terms of value than units, suggesting a shift towards cheaper garments from other sources. The Office of Textiles and Apparel (OTEXA) data too supports the trend. For example, in 2010, China accounted for 39.5 per cent of US apparel imports by value. By 2023, this had fallen to 27.2 per cent.

There are several reason for this decline. For a start, rising labor costs in China is a major factor. As China's economy has grown, so have wages, making it less competitive as a source of low-cost garments. Meanwhile, US importers are increasingly diversifying their sourcing to reduce reliance on any single country, particularly in light of geopolitical uncertainties and supply chain disruptions. Growth of other manufacturing hubs like Vietnam, Bangladesh, and India has increased competition, attracting investment and market share. OTEXA data too reveals, Vietnam has been a major beneficiary of this shift. Its share of US garment imports by value has increased from 7.9 per cent in 2010 to 15.7 per cent in 2023. In fact, Nike, once heavily reliant on China, has significantly diversified its sourcing. In its 2023 fiscal year, Vietnam accounted for 31 per cent of its footwear production, surpassing China's 24 per cent reveals Nike Fiscal Year 2023 Impact Report.

Nearshoring is another factor as some US companies are shifting production closer home, to countries in Central America and the Caribbean, to reduce lead times and transportation costs.

Implications of the shift

For the US: The diversification of sourcing can enhance supply chain resilience and potentially create new opportunities for trade with other countries. However, it may also lead to higher prices for consumers in the short term.

For China: The decline in garment exports puts pressure on its economy to move up the value chain and focus on higher-value-added industries.

Global garment industry: The shift is creating a more dynamic and competitive global garment industry, with implications for labor standards, environmental sustainability, and trade policies.

While China is unlikely to lose its position as a major garment supplier to the US entirely, its dominance is clearly diminishing. The trend towards diversification and regionalization of production is likely to continue, shaping the future of the global garment industry. This presents both challenges and opportunities for all stakeholders, and it remains to be seen how these will play out in the years to come.