The U.S.-China trade war benefits Taiwan’s textile industry from its diversified layout
Since the start of the U.S.-China trade war, the textile industry has not been directly affected by tariffs, but apparel brands have not dared to take it lightly, and have used diversified procurement to diversify risks. Taiwanese textile industry operators with factories in Vietnam and other Southeast Asian countries believe that the trade war has changed orders The effect is fermented.
The United States is currently imposing additional tariffs on $250 billion of Chinese goods. Clothing and shoes are generally excluded, temporarily escaping the impact of increased tariffs. However, the prospects for the 90-day deadline for the U.S.-China trade negotiations are unclear. If the negotiations fail, the U.S. may increase the tariff rate on $200 billion of Chinese goods from 10% to 25% and expand the scope of the additional tariffs.
The TexworldUSA Winter Exhibition, the largest textile and fabric exhibition in the East United States, was held in New York from January 21 to 23, 2019, with 24 Taiwanese manufacturers participating. Trade wars, tariffs, and strategic procurement are among the topics discussed at this exhibition. Many Taiwanese manufacturers are also concerned about the impact of the U.S.-China trade war.
Li Yongli, deputy business manager of the sales department of Hongyuan Development (Shanghai) Co., Ltd., a subsidiary of Far East Group, said in an interview that for manufacturers, the US-China trade war is a “psychological war” and has a greater impact on psychological fear.
Although Hongyuan Company, which specializes in functional fabrics, has a factory in Shanghai, half of its customers are in the United States, including sportswear giant Nike. Hongyuan built a factory in North Carolina for North American customers. The fabrics are shipped to factories in Haiti to make garments, and then shipped back to the United States for sale. They enjoy tax-free treatment and have the geographical advantage of being close to the market.
Li Yongli said that the elastic fabric of sportswear is special, and tailors have to overcome the shrinkage problem. Even if the international trade situation changes, most brands still dare not transfer orders. After all, if there is a quality problem and the product cannot be put on the market, the loss may be greater than the transfer. The tariff savings after placing the order are huge.
In recent years, many apparel brands in the United States have adopted the “China + Vietnam + Multi-Country” procurement strategy in order to diversify risks, and China’s proportion has shrunk. A recent survey by the United States Fashion Industry Association (USFIA) showed that Chinese goods accounted for 11% to 30% of apparel and footwear imported into the United States in 2018, which is lower than the previous 30-50%.
Vietnam enjoys preferential tariffs for textile exports and has become a production base for many Taiwanese companies, including Zhansong, which started with nylon yarn 30 years ago. Zhansong entered the knitted fabric market two years ago, focused on the Southeast Asian supply chain, and chose to buy land and set up a factory in Vietnam. Now the production line is on track.
Lin Yuru, deputy business manager of Zhansong, said that she met many customers who wanted to find suppliers outside China during this exhibition. She believed this was a sign of the fermentation of the transfer order effect of the US-China trade war.
Yiquan Enterprise, which designs and produces embroidered lace fabrics, has a factory in China. In the past, it mainly exported its products to Europe. In recent years, it has focused on developing the US market. Yi Chuan general manager Ong Shi-yin said that although it has a factory in China, some graphic embroidery is still produced in Taiwan. Even if the United States targets Chinese textiles and imposes additional tariffs in the future, Yi Chun can still provide fabrics from Taiwan to meet customer needs.
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