NEW YORK — Importers that sell to major U.S. retailers report they have or plan to move a portion of their manufacturing outside of China due to increased costs of raw materials and logistics, as well as the difficulties faced by Chinese factories in obtaining financing.
This story first appeared in the April 11, 2012 issue of WWD. Subscribe Today.
According to Capital Business Credit’s Global Retail Manufacturers and Importers Survey, 50 percent of U.S.-based importers have moved some of their manufacturing outside of China, and 34.2 percent are considering moving manufacturing outside of Asia.
When asked to which countries manufacturing is being moved, Vietnam was most popular at 33.3 percent, and the U.S. was also cited as a top choice at 27.8 percent. Other countries that were popular manufacturing destinations included Pakistan at 22.2 percent and Bangladesh at 16.7 percent. The Global Retail Manufacturers and Importers Survey polled more than 50 manufacturers and importers during the week of Feb. 27. Respondents consisted of manufacturers and importers in the apparel, housewares, home furnishings, fashion accessories and furniture industries.
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There’s been heightened interest in U.S. manufacturing in the last few years, as costs in China rose and retail and consumer buying patterns shifted toward faster delivery of better quality merchandise. A report from the United Nations Industrial Development Organization showed U.S. apparel production increased 2.6 percent in 2011, as U.S. textile manufacturing grew 3.8 percent. The U.S. Commerce Department said this month that U.S. apparel and textile exports to the world grew 13.7 percent to $22.4 billion in 2011 compared with 2010.
“While China will continue to be the dominant player when it comes to the manufacturing of goods sold in the U.S., there is an interesting shift that is occurring,” said Andrew Tananbaum, executive chairman of Capital Business Credit, a commercial finance company specializing in providing creative supply chain financing solutions. “The lending environment combined with a number of other factors, including cost of labor, raw materials and logistics, have made manufacturing in other countries, most importantly the U.S., more attractive. As the American economy continues to recover and retail sales continue to improve, the manufacturer-importer relationship will be critical in ensuring that enough goods are made and shipped to keep store shelves stocked.”