Global Brands And Retailers Are Paying Renewed Attention To Sourcing From China

According to PR Newswire, QIMA recently released its fourth quarter 2023 industry report. The report pointed out that against the background of cooling consumer demand, global brands and retailers seem to be putting Chinese procurement on their agenda again. At the same time, the cooling of demand for textile procurement in South Asia has a significant impact on Bangladesh, and a certain number of US and EU buyers are promoting cooperation with suppliers close to home.

The report also reminds that companies that implement supply chain diversification face more difficulties in product quality and need to focus on addressing this challenge.

China Once Again Joins The Competition In The Textile Market

In the past few years, Western buyers have shifted their purchasing weight to Southeast Asia and South Asia in order to diversify their supply chains. However, recent QIMA data suggests that US and EU buyer interest in Chinese purchases may be rising again. This shows that in the face of a possible economic recession and slowdown in consumption, brands and retailers may once again consider China as their first choice for procurement and supply markets to benefit from China's mature manufacturing infrastructure.

This trend is particularly evident in the textile and apparel industry. QIMA data for the first nine months of 2023 shows that global demand for Chinese textile inspection and auditing is up 14% year-on-year, with demand from Western buyers rising 17%.

Bangladesh Needs To Diversify Exports To Stay Competitive

Bangladesh's exports performed poorly in 2023, including its main textile and apparel industries. Inspection and audit demand for the textile and apparel industry fell 10% year-on-year in the first nine months of 2023, according to QIMA. Buyers from the United States, in particular, saw demand drop by 30% year-on-year.

Currently, the garment industry in Bangladesh is mainly based on cotton. Studies have pointed out that the country can benefit from expanding man-made textiles, and footwear, leather, home textiles, electronic and electrical products, etc. also have potential. If it is to compete on the global stage, Bangladesh needs to strengthen local institutions responsible for internationally recognized certifications and ensure that manufacturers have access to necessary testing.

Changes In Mexican Sourcing Illustrate The Importance Of Near-source Strategies

In a survey conducted by QIMA earlier this year, more than half of US and EU companies confirmed their interest in working with suppliers closer to home. Now, QIMA data shows these companies are moving full steam ahead with this plan.

In 2023, Mexico has become a very close trading partner of the United States, with inspection and audit demand in Mexico rising 17% year-on-year in the third quarter, according to QIMA. Mexico's advantages for U.S. buyers include geographic proximity, zero tariffs, low labor costs and a relatively mature manufacturing base, so the country is attracting new business at an alarming rate. However, there are also infrastructure, power supply and security challenges associated with sourcing from Mexico.

At the same time, EU brands maintain close trade relations with suppliers in the Mediterranean region. QIMA data shows that demand for inspections and audits showed double-digit growth in the third quarter of 2023, and this growth occurred both in some countries/regions that have established good supplier markets (such as Turkey) and in Among emerging manufacturing partners (such as Jordan, Tunisia and Egypt).

Product Quality Is An Important Challenge In Implementing Supply Chain Diversification

According to previous QIMA industry reports, companies that have recently implemented geographic diversification of their suppliers face more difficulties with product quality than those that have not diversified. QIMA's latest product inspection data provides additional context for this finding.

Less mature supply markets tend to have higher product defect rates, which is reflected in the percentage of products that exceed acceptable quality standards (AQL). However, even in mature purchasing markets, large amounts of new business may have a negative impact on product quality. For example, QIMA's inspection data for the first nine months of 2023 shows that the proportion of

Vietnam's products exceeding AQL increased by 44% year-on-year. A similar situation exists in the nearshore manufacturing market, with product defect rates in Mexico more than doubling year-over-year.