By  on March 14, 2005

NEW YORK — Among factors, companies that take on responsibility for a firm’s receivables for a fee, the elimination of quotas on Chinese apparel has not fully affected the industry. But it will, they said.

What is unclear is how price points at the consumer level play out. Some say retailers and suppliers will reap the benefits of lower-priced goods, and not pass it on to the consumer.

David Milberg, president of Milberg Factors Inc., said uncertainty and conservative planning on the part of manufacturers late last year likely prevented the lifting of quotas from having a larger impact.

“Manufacturers were not altogether clear as to how this was all going to play out,” said Milberg, president of Milberg Factors Inc. “Heading into 2005, some clients were taking a wait-and-see approach.”

As a result, Milberg believes it is still too early to determine the impact the absence of quotas is having on the market. “My general sense is that not a lot has happened,” he said, adding that orders for most goods currently being sold were placed last year. Still, Milberg does not expect dramatic price-point deflation to kick in anytime in the near term.

Stanley Officina, president of Sterling Factors, believes the end of quotas will ultimately benefit just a few individual companies. In terms of its effect on the broader industry, Officina characterizes the end of quotas as a nonevent. “We have not seen any significant adjustments or changes,” said Officina. “My clients are not realizing any significant change in price.”

Officina also doesn’t believe cost benefits will ever reach the consumer level. “It’s not going to work its way down the food chain. Because you eliminate the cost of quota, everyone along that chain is going to take a little bit of the piece,” Officina said.

Milberg said his clients still have concerns about having all their production coming from one country. “Clients are leery of being too dependent on any one resource or country, they want to keep some diversity to protect themselves,” said Milberg.

“People also have to realize that there are production constraints,” Milberg added. “Despite how quickly it’s growing, China only has so much capacity. I get the sense that people are feeling their way through this right now.”

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