Based on the World Trade Statistical Review 2021 report released by the World Trade Organization (WTO), here is a big-picture overview of the latest world textiles and apparel trade patterns.

Pattern 1: Covid-19 significantly affected the world textiles and apparel trade volumes, resulting in substantial growth of textile exports and a declined demand for apparel. 

While world textiles and apparel trade volumes usually change in the same direction, the two sectors had to deal with very different market conditions during the pandemic. Driven by increased personal protective equipment (PPE) production, global textile exports grew by 16.1% in 2020, reaching US$353bn. In comparison, affected by lockdown measures, worsened economy, and consumers’ tighter budget for discretionary spending, global apparel export decreased by nearly 9% in 2020, totaling US$448bn, the worst performance in decades. The apparel sector is not alone. The world merchandise trade in 2020 also suffered an unpresented 8% drop from a year ago, with Covid-19 to blame.

Notably, as economic activities returned in the second half of 2020, the world clothing export quickly rebounded to around 95% of the pre-Covid-19 level by the end of 2020. That being said, the unexpected resurgence of Covid-19 cases in summer 2021, especially the delta variant, caused new market uncertainties. Overall, the world textile and apparel trade recovery process from Covid-19 will differ from our experiences during the 2008 global financial crisis. It is the pandemic that “sets the agenda.”

Pattern 2: Covid-19 did NOT shift the competitive landscape of the world textiles and apparel trade exports; Meanwhile, textile exports from China and Vietnam gained new momentum during the pandemic.

Table 1 Top Ten World Textile Exporters in 2020 (by Value)

Data source: World Trade Organization (2021)

As Table 1 shows, China, the European Union (EU), and India remained the world’s three largest textile exporters in 2020. Together, these top three accounted for 65.8% of the world’s textile exports in 2020, similar to 66.9% before the pandemic (2018-2019).

The United States dropped one place and ranked the world’s fifth-largest textile exporter in 2020 (was 4^th from 2015 to 2019), accounting for 3.2% of the shares (was 4.4% in 2019). Production disruptions at the beginning of the pandemic and the shift toward PPE production for domestic consumption were the two primary contributing factors behind the decline in US textile exports. Meanwhile, the Western Hemisphere remains the single largest export market for US textiles due to the regional trade patterns. Around 67% of US textile exports went to the Western Hemisphere in 2020, including 46% for members of the US-Mexico-Canada Trade Agreement (USMCA) and another 17.2% for members of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR).

Further, China and Vietnam enjoyed a substantial increase in their textile exports in 2020, up 28.9% and 10.7% from a year ago, respectively. The complete textile and apparel supply chain and considerable production capability allow these two countries to switch clothing production to PPE manufacturing quickly. In particular, Vietnam exceeded South Korea and ranked the world’s sixth-largest textile exporter in 2020 (US$10 bn of exports), the first time in history. The change also reflects Vietnam’s continuous efforts to strengthen the local textile production capability and upgrade the textile and apparel industry are paying off. Keeping the momentum, Vietnam will likely surpass the United States and become the world’s fifth-largest textile exporter in 2021 or 2022.

Pattern 3: fashion companies’ efforts to diversify apparel sourcing from China somehow slowed during the pandemic. 

Table 2 Top Ten World Apparel Exporters in 2020 (by Value)

Data source: World Trade Organization (2021); *Note: Hong Kong’s apparel exports mainly were re-export.

China, the European Union, Vietnam, and Bangladesh unshakably remained the world’s four largest apparel exporters in 2020. Altogether, these top four accounted for 72.2% of the world market shares in 2020, higher than 71.4% in 2019.

Notably, as Table 3 shows, while China steadily accounted for declining shares in the world’s total apparel exports since 2015, its market shares rebounded to 31.6% in 2020 from 30.7% in 2019. We can observe a similar pattern in Canada (up from 36.2% to 41.2%) and the EU (31.2% to 31.3%), two of the world’s leading apparel import markets.

Even in the US market, where Chinese goods face adverse impacts of the tariff war, the market shares of “Made in China” only marginally decreased from 30.8% in 2019 to 29.8% in 2020, compared with a more significant drop before the pandemic (i.e., fell from 34.4% 2018 to 30.8% in 2019).

Table 3 China’s market shares in the world’s leading apparel import markets (by value)

Data source: UNcomtrade (2021)

Several factors could explain the resilience of China’s apparel exports. The first factor is that fashion brands and retailers’ particular sourcing criteria match China’s competitiveness during the pandemic. As noted in the 2021 Fashion Industry Benchmarking Study released by the US Fashion Industry Association (USFIA) in July 2021, respondents regard China as a highly competitive sourcing base against the most critical apparel sourcing factors during the pandemic such as flexibility, agility, and sourcing cost. Other industry sources also indicate that between February 2020 and February 2021, US apparel imports from China see a significant structural change—they included more Covid-19-popular items such as sweaters, smock dresses, sweatpants, and fewer dresses, shirts, and suits.

Secondly, China has one of the world’s most complete textile and apparel supply chains, allowing garment factories to access textile raw material and accessories locally. Unlike many of its competitors in Asia, garment factories in China were less vulnerable to shipping disruptions during the pandemic thanks to the option of locally sourcing textile raw material. In recent years, China is also playing an increasing role as a leading textile supplier for other apparel-producing countries in Asia. For example, as of 2019, over 60% of ASEAN members’ textile imports came from China, more than doubled from only 29% in 2005.

Thirdly, compared with many other apparel exporting countries, China suffered a shorter Covid-19 lockdown period and resumed apparel production earlier and more quickly. For example, most Chinese textile and apparel factories started to reopen in April 2020, and they resumed an overall 90%-95% operational capacity rate by July 2020. In comparison, in Bangladesh, the world’s third-largest apparel exporting country, due to limited resources available in support of reopening, as of August 2020, garment factories there still only recovered to around 60%-80% of their total production capacity, after a nearly four-month lockdown from March to June 2020.

Nonetheless, fashion companies are NOT reversing their long-term strategies to reduce “China exposure” for apparel sourcing. On the contrary, non-economic factors, particularly the concerns about forced labour in China’s Xinjiang region, push most Western fashion brands and retailers to develop apparel sourcing capacities beyond China. Meanwhile, no single country has yet and will likely become the “Next China” because of capacity limits. Instead, from 2015 to 2020, China’s lost market shares in the world apparel exports (around 7.8 percentage points) were picked up jointly by its competitors in Asia, including ASEAN members (up 4.4 percentage points), Bangladesh (up 1.3 percentage points), and Pakistan (up 0.3 percentage point). Such a trend is most likely to continue in the post-Covid-19 world.

Pattern 4: Developed economies led textile PPE imports during the pandemic, whereas the developing countries imported fewer textiles as their apparel exports dropped.

Table 4 Top Ten World Textile Importers in 2020 (by Value)

Data source: World Trade Organization (2021)

As Table 4 shows, Covid-19 resulted in an unusual world textiles and apparel trade import pattern in 2020. On the one hand, the value of textile imports by developed economies, including EU members, the United States, Japan, and Canada, surged by more than 30% in 2020, driven mainly by their demand for PPE. The result also reveals the significant contribution of international trade in supporting the supply and distribution of textile PPE globally.

On the other hand, the developing countries engaged in apparel production and exports drove the import demand for textile raw materials like yarns and fabrics. However, most of these developing countries’ textile imports fell in 2020, corresponding to their decreased apparel exports during the pandemic (Table 4).

Pattern 5: Despite Covid-19, the world apparel import market continues to diversify. The import demand increasingly comes from emerging economies with a booming middle class.

Table 5 Top Ten World Apparel Importers in 2020 (by Value)

Data source: World Trade Organization (2021)

As shown in Table 5, affected by consumers’ purchasing power (often measured by GDP per capita) and the size of the population, the European Union, the United States, and Japan remained the world’s three largest apparel importers in 2020, a stable pattern that has lasted for decades. While these top three still absorbed 56.2% of the world’s apparel imports in 2020, it was a new record low in the past ten years (was 58.1% in 2019 and 61.5% in 2018), and much lower than 84% back in 2005.

Behind the numbers from the world textiles apparel trade patterns in the Statistical Review 2021, it is not the case that consumers in the EU, the United States, and Japan necessarily purchase less clothing over the years. Instead, several emerging economies have become fast-growing apparel-consuming markets with robust import demand. For example, despite Covid-19, China’s apparel imports totaled US$9.5bn in 2020, up 6.5% from 2019. From 2010 to 2020, China’s apparel imports enjoyed a nearly 15% annual growth, compared with only 0.56% of the traditional top three. Around 30% of China’s apparel imports today are luxury items made in the EU. As consumers’ purchasing power in these populous emerging economies continues to improve, we could expect these countries to play a more significant role in driving the growth of apparel production and trade in the post-Covid-19 world. 

By Just Style