Here's a look at share trends over time for producers of US apparel and Footwear. Don't get caught in the web of extrapolated changes in the Yuan across Softlines retail.
Without a doubt, the question I’ve been peppered with the most this week has been what the dispersion is of apparel and footwear production by country – especially China. Not a surprise given the revaluation of the Yuan.
Here’s some eye candy showing the obvious…that about 36% of apparel that we wear is made in China, but closer to 76% of footwear. Facts are facts, but I think that these numbers can be misleading. First off, why did China’s apparel share triple over 8 years? Partially bc an archaic quota system was removed that opened up apparel trade between the US and non-WTO countries. But also because the currency arb allowed it to occur. If a strengthening Yuan makes production cost-prohibitive, then several things will happen – 1) China will likely lower its VAT tax to offer some form of relief to exporters, and 2) other Asian and Latin American countries are likely to gain share vis/vis undercutting China on price.
This is not to say that there will not be transitional pains…but simply that we cannot look at Macro changes like this in a vacuum.