Dive Brief:

• Nearly 80% of surveyed fashion executives plan to reduce their sourcing from China over the next two years, according to the latest industry benchmarking survey from the U.S. Fashion Industry Association.
• A record high of 15% of executives reported that their companies are planning to “strongly decrease” sourcing from China. And over 40% said they sourced less than 10% of their apparel products from China. That share represents a 10 percentage point jump from last year and 20 percentage point increase from 2019.
• The report, a collaboration with Sheng Lu, an associate professor at the University of Delaware’s Department of Fashion & Apparel Studies, noted that “U.S. fashion companies are deeply concerned about the deteriorating U.S.-China bilateral relationship” and are accelerating their pivot from the country to mitigate risk.

Dive Insight:

Fashion is in no way alone in looking to de-risk by reducing reliance on China. The risks aren’t just geopolitical. Snarls at ports and factory shutdowns during the pandemic exposed just how damaging overreliance on a single country can be to supply chains. 

A report from analytics firm Everstream earlier this year listed China sourcing as the chief risk facing supply chains in 2023. China sourcing also factored into other risks highlighted by Eversteam, including ESG-related risks.

For fashion executives, forced labor allegations and potential risks in the fashion supply chain ranked as the second most serious business concern behind inflation and the economy, according to USFIA. While not singularly a China problem, the country’s role in the forced labor of the Uyghur people has made sourcing from China especially fraught. 

As one example, big-and-tall clothing specialist Destination XL has sharply reduced its production sourcing from the country. “We’re basically not in China anymore,” CEO Harvey Kanter told Supply Chain Dive earlier this year. At the time, Kanter pointed to forced labor of Uyghurs in the Xinjiang region as the primary risk and impetus for avoiding in sourcing from the country.

For all of the above reasons, and the continuation of Trump-era tariffs on China imports, apparel sellers are pulling back as a cohort from China. Of the surveyed fashion executives, 61% said that China is no longer their top supplier country, according to the USFIA report. That is a record high and has roughly doubled since the pre-pandemic years, when around 25% to 30% said the same.

Asia as a continent remains important to the fashion supply chain. Nearly all (97%) fashion executives said at least 40% of their total sourcing value comes from Asian countries other than China. 

Yet China, too, remains important to the apparel industry. Despite all the diversification efforts, China is still the largest sourcing base for materials, with a more than 70% utilization rate for various textile raw materials, including yarns, fabrics and textile accessories such as buttons, zippers and trims.