How coronavirus is impacting the global clothing industry


just-style's ongoing coverage of the coronavirus (Covid-19) outbreak looks at its effect on global fashion retailers and their supply chains.

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“Life is shorter, live it. Love is rare, grab it. Anger is bad, dump it. Fear is awful, face it. Memories are sweet, cherish it.”

In the first quarter of 2020, the coronavirus pandemic led to a 3% drop in global trade values. COVID-19 could trigger the biggest economic contraction since World War II, affecting all industries from finance to hospitality.

As there is significant uncertainty about how the epidemiological and economic situation will evolve, assessing the duration and the gravity of the pandemic seems like an impossible task.

However, recent forecasts suggest: trade volumes decreasing between 13% and 32% in 2020 (WTO, 2020), global growth falling to -3% (IMF, 2020) and different maritime seaborne scenarios ranging from a return to sector average (around 3% p.a.) after 2022 to growth rates falling by 17% by 2024 (Stopford,2020)[i].

Industries whose operations are more globalized (and particularly those that rely on Chinese inputs for production) were most exposed to initial supply chain disruption due to COVID-19. This was the case for precision instruments, machinery, automotive and communication equipment (UNCTAD, 2020).

Given its non-essential nature, the fashion industry faces significant risks. Indeed, in times of COVID-19, as consumers around the world remain in lockdown, they no longer need new products. This industry is characterised by a highly integrated global supply chain.

In it, many developing countries play the role of the supplier of low-cost inputs. This article highlights some of challenges and concerns that some of these countries face, many of which are dependent on textile and garment exports.

The textile industry supply chains, trade logistics and developing countries

The accession of China to the WTO (2001) and the expiry of the WTO Agreement on Textiles and Clothing (which ended a 10-year trade regime managed through quotas) on 1st January 2005 contributed to making China an important centre of textile and clothing global value chains (GVCs).

These two developments led to shift apparel production and sourcing (by globalized retailers and producers) to China and other Asian countries because of low labour costs (UNCTAD, 2005), following the cost-reducing logic of GVCs.

As wages gradually rose in China and Chinese plants moved to produce higher-value goods, countries like Bangladesh, Pakistan and Vietnam, with lower wages costs started attracting factories to relocate their production from China.

At the global level, China remains an important supplier of fashion goods (as shown in Figure 1) but has also become an important consumer of this industry.

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