President Donald Trump isn’t the only one with China on his mind.
At the American Apparel & Footwear Association’s annual conference, which concluded Thursday, the question on everybody’s lips was whether the U.S. and China were finally ready to end their bitter trade feud.
Executives on hand for the conference, held just outside of Washington, D.C., were visibly anxious since many business plans have been mired in uncertainty over the past year as tariffs shot up and Washington accused Beijing of unfair trade practices.
“Our apparel and footwear business has been turned upside-down by the administration’s realistic attempt — in their minds — to create a new world order for trade,” Rick Helfenbein, president and chief executive officer of the AAFA, told WWD. “Anybody you walk up to blankly in the room [at the summit] and say ‘What’s going on?’, they say ‘China’.”
During a panel on the trade war, Wendy Cutler, a vice president at the Asia Society Policy Institute, said she expects the two sides will reach a deal.
“I think we’re in the final stretch, but there’s just a lot angst,” said Cutler, who was speaking from experience. She previously served as acting deputy U.S. trade representative, working on a range of U.S. trade negotiations and initiatives in the Asia-Pacific region.
But she warned that it will come with some concessions as the deal won’t be a “perfect” one, and even a resolution to the current impasse won’t solve all the issues between the two superpowers.
“It will just be one step in the longer-term rivalry between the U.S. and China. It’s not going solve all the problems….There are going to be a lot of other issues that serve as irritants in our relationship with China,” she said.
Among the business representatives airing their concerns over the trade war was Rob Sinclair, president of supply chain at Hong Kong-based Global Brands Group, whose current portfolio of apparel includes Sean John, Spyder, Kenneth Cole, Jones New York and Elie Tahari.
“You can’t plan. You’re a deer in the headlights when there’s uncertainty. That’s not good for business. I hope for all of us in the industry that they can come up with a solution. It may not be a perfect solution, but [it can be effective] as long as there’s some clarity and whatever they decide isn’t going to change two weeks later because of a tweet,” he said.
“Whatever they decide, just lock it in and then let’s get on with it so that we can plan properly.”
Also speaking at the event was Ted Dagnese, chief supply chain officer at Vancouver-based Lululemon Athletica Inc.
He said that even though the fitness apparel company has been fortunate, with its China spend in the single digits, it has still had to make some adjustments due to the trade war.
Apart from handbag retailers who were hit with tariffs, the fashion sector remained relatively unscathed from levies, but had the threat of levies hanging over them as the Trump administration threatened to unleash tariffs on all Chinese imports if talks fail.
As executives gathered for the AAFA’s conference, the already confusing picture of the Chinese economy grew only murkier, a troublesome development since more brands, especially at higher price points, are looking to the country’s consumers for growth.
China’s industrial output rose just 5.3 percent in the first two months of the year, according to government figures. That marked the slowest pace in 17 years. The country’s unemployment rate is also creeping higher. However, property investment has increased and retail sales have not fallen off a cliff, as some have feared.
“I’m not particularly worried about China. In fact, I’m not worried at all,” he said, adding that the country will act as the consumer to the world for the next quarter century.
“People ask me all the time, ‘where do you think China will go in the next 12 to 18 months?’ I have no idea, but I’m not particularly concerned. Where will it be in 10 years? It will be the largest economy in the world and the largest consumer in the world.”
Providing an insight to the Chinese consumer, Evans said they are very sophisticated and complicated when it comes to their shopping habits and it’s not just 1.4 billion people holding a can of Coke or a Pepsi — a very Nineties view of the Chinese consumer.
Breaking into China requires patience and sometimes customized products that match Chinese tastes, according to Evans.
Xia Ding, president of JD International Fashion, said the average Chinese luxury consumer is between ages 25 and 35, around a decade younger than in the U.S. and added that they’re not loyal to any one high-end brand, keeping retailers on their toes when it comes to their China marketing strategy.
She said that big brands used to talk down to Chinese consumers, but now have to engage with them more through the use of influencers rather than traditional celebrity-driven advertisements.