The future of the apparel and textile industries: prospects and choices for public and private actors

The expectation that Chinese apparel and textile exports will swamp the US and EU retail markets now that international quotas on those products have been eliminated has fueled much of the discussion of the future of these industries. Although imports from China have surged since the elimination of quotas on 1 January 2005, this conventional wisdom masks important choices that remain for public and private policies over time. In particular, two factors will continue to have major effects on the location of apparel and textile production going forward. First, public-policy choices will continue to influence sourcing location; in particular, as they relate to tariffs and regional trade polices as well as to policies affecting the linkages between countries. Second, the lean-retailing model that now prevails requires apparel suppliers to replenish basic and fashion basic products on a weekly basis. As that retailing model became dominant in the 1990s, so too did the advantage of sourcing these apparel items closer to the US market so that products could be manufactured and delivered more rapidly from a smaller finished-goods inventory. Even though costs remain a driving factor, we show that proximity advantages for certain classes of products will continue in a postquota world as retailers raise the bar ever higher on the responsiveness and flexibility required of their suppliers.