HONG KONG — The shifting winds of global trade — from the industrial evolution of China to political wrangling in the U.S. — are likely to get even more turbulent in coming months.
Issues in China, including new labor and environmental regulations, rising costs and geographical movement of factories are combining with ongoing actions in Europe and the U.S. aimed at protecting domestic industries to create an uncertain environment in manufacturing circles. But top sourcing executives attending the Prime Source Forum here on Tuesday said there are still growing production opportunities throughout Asia and in Eastern Europe, and that China, with all its problems, will be a manufacturing power for some time to come.
William Fung, group managing director of sourcing giant Li & Fung Ltd., delivered the keynote address and delivered a far-ranging assessment of how he sees the global sourcing industry in the next three years: "The globalization of manufacturing and outsourcing is unstoppable. Young people in the West are no longer willing to work in factories."
With China accounting for more than 30 percent of Li & Fung's sourcing needs, Fung emphasized a number of issues it faces, including new labor and environmental regulations, factory movement and protectionist measures imposed by other countries.
"We're facing the end of the quota regime, but other things will happen," he said, referring to the possibility of further restraints, such as countervailing duties and antidumping measures, following the end this year of quotas the U.S. imposed in a 2005 U.S.-China accord.
He said the upcoming U.S. presidential election makes predicting the future even more difficult.
"[Sen. Barack] Obama is criticizing things like NAFTA," Fung said. "I don't understand that. I don't know how much is rhetoric, but there will be a big change of government in America."
Speakers on several panels elaborated on some of the issues Fung highlighted. Thomas Glaser, president of VF International, argued that the reasoning behind U.S. protectionist measures is specious. He highlighted what he called "five big fat trade lies," including his number one: "cheap Asian imports equal deficits."
Steve Lamar, executive vice president of the American Apparel & Footwear Association, said: "We've been kicking around the word protectionism like it's a bad word, but in Washington that label is worn as a badge of honor."
Scott Quesenberry, special textile negotiator for the Office of the U.S. Trade Representative, defended the U.S. position.
"The policy of the U.S. is toward free trade," Quesenberry said. "The President feels strongly about this."
He acknowledged the country's bilateral trade agreements can cause what Fung called the "spaghetti bowl" effect, but said more such agreements are in the works. The U.S. is currently waiting approval from Congress of bilateral trade deals with South Korea, Panama and Columbia.
When positing how trade could become freer, Quesenberry said, "Our biggest hope is Doha — it's not dead, but we have a problem. We have to see real market access in developing countries."
The Doha Round of global trade talks, aimed at lowering tariffs and other barriers to international commerce, have been stalled over agricultural subsidy issues, notably cotton, and the tariff-dropping formulas.
Quesenberry added, "At the end of this year, the U.S. will end its quota with China and we don't see a follow-on. We don't see how it would happen given the rules set by the WTO."
The volatility and viability of Chinese manufacturing were analyzed from various angles. John Cheh, chairman and chief executive officer of Esquel Group, who also is chairman of the Foreign Advisors of the Textile & Apparel Committee of China, said it was vital for foreigners to have a voice in China because outside investment is responsible for more than 40 percent of production there.
The group has helped develop transparency, equity and value-based credit in China, but Cheh sees a bumpy road ahead with the possibility of antidumping action in Europe under a monitoring program put in place this year, new labor laws in China, the appreciation of the yuan coupled with a weak U.S. dollar, new environmental standards and labor shortages. Trumping them all, however, is the global economic situation.
"We're faced with difficult growth in production and export," Cheh said. "The cost pressure on the supply side is tightening and on [the other] side retail sales are weak among the major markets, especially in the U.S. We have the makings of a very difficult time."
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)
Not only does #TheProfit return to CNBC tonight, but @marcuslemonis has launched @shopmarcus, a new shopping and lifestyle retail experience in Aspen and Chicago, with more locations to come. The retail stores offer in-store stylists and a variety of contemporary womenswear selections.
“It’s life, I’m going to face it,” @mingxi11 sighed. “I fell, but you know, I think the most important thing is that I get back up. I had the love, the help from my sister — the girl next to me Gizele [Oliveira] — she’s so nice. When I went backstage everybody was trying to comfort me like ‘Oh Ming, it’s OK.’ I’m really, really touched. I think it’s them who gave me the courage to go back on stage for the finale,” Xi told WWD of her fall at the @victoriassecret fashion show. (📷: David Fisher) #wwdfashion #vsfashionshow #victoriassecret
@louisvuitton tapped @therealpeterlindbergh for its latest city-centric photo book, which is part of a series called Fashion Eye. The primarily black and white book captures the spirit of Berlin in 57 images shot between 1989 and 2019. “Berlin is an inspiration for me, more than a city. I mean @millajovovich is simply Berlin!” said Lindbergh. #wwdfashion
“You know, I think audiences expect a certain performance so I have to deliver to them what they’re expecting to a certain degree. But I’m also a different actor and a different person, I have my own spin on the character,” says @noahegalvin of his takeover of the leading role in “Dear Evan Hansen” following the departure of @bensplatt, who originated the role. Read WWD’s interview with the 23-year-old actor on WWD.com #wwdeye (📷: @jilliansollazzo)
For pre-fall 2018, @etro created richly-colored wonderland, using tapestries, textiles and wallpapers from the Eastern world at large. The line featured floral and graphic prints and jacquard motifs, like this two-piece look featured here. #wwdfashion (📷: Giovanna Pavesi)
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)