China’s exports declined by 6.1 per cent over the previous year in August. The country continues to face challenges in rebalancing to cope with slowing export demand, particularly after the recent yuan devaluation.
China has been making strategic investments outside of its own market into other Asian countries which offer more competitive labor costs. While China remains the largest supplier of textile apparel to the US, Vietnam’s apparel exports to the US showed a 12.7 per cent year over year increase. Cambodia’s exports also showed a 7.2 per cent increase in July 2015 compared to July 2014.
Vietnam ranked second among the EU’s largest trading partners in 2014, exceeded only by China. With the long-awaited free trade agreement finally reached between the EU and Vietnam, this developing economy is due for further expansion and is rapidly becoming the new dominant force for apparel.
Bangladesh now meets the criteria to be reinstated in the Generalized System of Preferences (GSP) trade program, having lost its membership in 2013. The 2015 depreciation of the rupee to a two-year low is expected to have mixed effects on India’s fiber, yarn and apparel exports. While the rupee’s depreciation makes Indian exports more competitive, most of India's cotton (70 per cent of total fiber exports) historically went to China where buyers, after the yuan was devalued in August, will likely attempt to renegotiate prices. As a result, Indian exporters will see increased pricing competition and will not get the full benefit of the rupee depreciation.
