Numbers Game - Import Data Spin
James M. Borneman, Editor In Chief
or those affected by shifts in the apparel sector, the first release of import data since
quota removals took effect January 1 brought home the new reality of textile trade. Some of the
data came from Chinese export figures, and the resounding “I told you so” from many observers
With preemptive surge measures held up in court, the most important variable — time — is slipping away for many non-Chinese suppliers. The first data from Chinese Customs, as reported by Global Trade Atlas, showed eight safeguard request categories increasing an average 546 percent in quantity and 353 percent in dollar value when comparing January 2005 with January 2004.
January 2005 saw an average 93 million units worth $246 million imported from China compared with January 2004’s 18 million units worth $61 million. The average unit prices out of China on eight safeguard request categories — brassieres, cotton knit shirts, men’s woven shirts, cotton trousers, dressing gowns, underwear, man-made fiber knit shirts and man-made fiber trousers — were down an average 25 percent.
The largest increase was in cotton knit shirts — from 941 thousand units in January 2004 to 18 million units in 2005 — a 1,836-percent gain. Valuewise, the category grew from $3 million to $31 million, or 963 percent. Unit prices for cotton knit shirts dropped 45 percent from $3.12 per shirt in 2004 to $1.71 in 2005.
Running a close second for explosive growth were cotton trousers, increasing 1,332 percent in units and 932 percent in value, while price per unit declined 28 percent to $3.63.
The data spinning continues as US Department of Commerce Office of Textiles and Apparel numbers follow the Chinese Customs data. Without going number by number, increases are there, and the quota effect seems empirical. The question is, what’s next?
If safeguards are enacted, they will hold the import growth rates down. But import levels are not rolled back to pre-surge levels, and the industry will simply await the next surge in early 2006.
There are those who believe these data show a good thing — more stuff at lower cost. Will retail prices fall 25 to 45 percent on the safeguard categories and reflect the new China price? Probably not. The excuse is, the risk of safeguards prevents retailers from feeling secure in pricing at these new levels.
Long-term, how can anyone feel secure that these are real prices? If it weren’t China and it weren’t textiles, you’d have to wonder if it would be happening at all. How do oil prices almost double while cotton knit shirt prices are cut in half? Are markets or manipulation at work here? These surges continue to reshape what is left of the non-Chinese apparel supply chain. If not dealt with to achieve true prices, they will not only irrevocably damage US textiles, but also curtail future options and impair performance of the very retailers that support them.