In the latest edition of the ‘2023 Fashion Industry Benchmarking Study’ conducted by the United States Fashion Industry Association, Bangladesh has once again emerged as the most competitive country in terms of product prices among global apparel manufacturing nations. However, the study revealed a decline in price competitiveness for Vietnam in 2023.
The report highlighted the growing social and labor compliance risks associated with sourcing from China, Vietnam, and Cambodia. Surprisingly, the social and labor compliance risks related to Bangladesh have decreased over the past two years, although some concerns remain.
This year’s benchmarking study was based on a survey of 30 executives from leading US fashion companies conducted from April to June 2022. According to the report, Vietnam’s average rating for price competitiveness dropped from 3.8 to 3.5 in 2023. Respondents attributed this decline to inflation and wage increases in the country, impacting its competitiveness as an apparel-sourcing base.
China and Vietnam were rated as the most competitive countries in terms of sourcing flexibility and agility, largely due to the lifting of Covid restrictions, resulting in improved supply chain movement. Interestingly, several suppliers, including Vietnam, Bangladesh, India, Sri Lanka, and CAFTA-DR members, received better ratings for their sourcing flexibility and agility performance.
The report also highlighted concerns about potential links between products from China and Vietnam to forced labor in China’s Xinjiang Uyghur Autonomous Region. Consequently, US fashion companies are actively seeking to reduce their exposure to China and plan to increase sourcing from Vietnam, Bangladesh, and India over the next two years.
The study found that Bangladesh’s rating regarding social and labor compliance increased from 2.0 in 2022 to 2.5 in 2023, attributed to collaborative efforts in enhancing social responsibility practices in the Bangladeshi garment industry since the Rana Plaza tragedy.
Asia continues to dominate as the primary apparel sourcing base for US fashion companies, with seven out of the top ten sourcing destinations in 2023 being based in Asia. China and Vietnam lead the pack with 97 percent utilization each, followed by Bangladesh (83 percent) and India (76 percent).
Intriguingly, the US fashion companies’ apparel sourcing model has evolved from ‘China plus Vietnam plus Many’ to ‘Asia plus Rest of the world.’ Almost all respondents indicated that at least 40 percent of their total sourcing value or volume now comes from other Asian countries, excluding China.
Vietnam stood out as the largest source of imports for approximately one-third of respondents, and fashion companies frequently distribute their sourcing orders evenly among Vietnam, Bangladesh, and other Asian countries.
Moreover, US apparel imports from the five largest Asian suppliers (Vietnam, Bangladesh, Indonesia, India, and Cambodia) – excluding China – reached a record high of 44.3 percent in the first five months of 2023, a notable increase from 37.1 percent in 2019 before the pandemic.
