Chinese Mills on the Outlook for ‘Made in China’ Denim
China has long been the leading supplier of denim to the United States, but lately this dominance has been challenged.
From January to May 2020, the denim imports from China to the U.S. dropped 67 percent. As a result, Mexico and Bangladesh surged ahead of China in import volume, leaving China in third place.
Even before the impact of the coronavirus, China’s denim imports to the U.S. had been slowing as a result of the trade war between the two nations. With brands seeking to mitigate risk factors including tariff hikes, there has also been a push to diversify the supplier base outside of China. In response, Chinese manufacturers are expanding to locations such as Vietnam to avoid future disruptions.
Despite the upheaval in the market, Chinese mills are optimistic about the position and future for China-made denim. During a Carved in Blue webinar on Sept. 9, executives from seven producers shared their experiences after reopening and their strategies for differentiating themselves in the market. Much of the focus is on innovation, sustainability and unique styles that will stand out and retain customer loyalty.
“For the next five years, it’s going to be tough for all of us. But we feel that if we can withstand this storm, we’re going to come out stronger than ever, for anyone that can withstand this storm,” said Gary You from Blue Diamond/House of Gold. “This time actually allowed us to restructure, reorganize and time to think, and I think it’s actually been good, because I think everybody was moving so fast.”
Here are some of the insights from the discussion.
Why mills are less likely to move out of China than cut and sew facilities:
“China still holds lion’s share of a lot of the mills, and on top of that some of the best mills in the world, from the standpoint of product and pricing and value proposition. And that’s not going to change. To move a mill is tens of millions of dollars, if not close to $100 million. To move a garment manufacturing facility is a fraction of that. Not to mention the amount of science and physics and understanding of chemistry that comes along with the mill. So it’s not a very easy thing,” said Michael Morrell from Freedom.
The truth behind “Made in China”:
“’Made in China’ right now at our company is influenced by Italian fabric designers. We have now a new crew from Turkey, we have me as a German, we have Hong Kong with influences from Canada to Australia. And we have Lenzing fibers in our denim from Austria. So is this really made in China still? I think it’s made globally. And everyone should acknowledge that it’s…produced in China but we actually are a global citizen now, and should overcome some political tensions,” said Tim Huesman from Panther Denim/Tat Fung.
Why transparency is a balancing act:
“Transparency is a really delicate point to discuss, because the more transparent you are, the more information you give to the brands and the final consumer, the more questions arise. And it could be also a problem to answer to the additional questions…Transparency is very important now, but it has to be done carefully and be sure 100 percent of what is being posted on the website and the campaign, because it could also bring other problems to the brand,” said Tomasso Rulli from MTI/Mozartex.
Whether the consumer really cares about transparency:
“I don’t think that the final consumer cares much about transparency, especially for the ones buying cheap. Maybe it’s a bit different for a consumer for high-end or luxury brands, because of course they want probably to know if it’s worth it to pay for what they are buying. I believe all level brands should be the ones to guarantee to their consumer that they are producing in the right place using the right company. And it’s up to the producer to be transparent, and share the information that can be shared,” said Enrico Forin from Advance Denim.
How the denim market can remain relevant amid pandemic style:
“This kind of reminds me of 2016 when athleisure was everything. Denim was going away because of yoga pants, and what were we going to do, start making indigo yoga pants? We ultimately found solutions to create product that complemented that knit type of product, that super soft, luxe type of nontraditional denim to combat that athleisure trend. And I think through other innovations, we can easily help to preserve the denim market,” said Tyler Cole from Prosperity.
The broader uses for indigo as consumers seek comfort:
“I think that there’s a real opportunity to push indigo into other categories…Indigo is not only confined to five pocket, but we can really push it into shirting, to dresses, to plaids, to outerwear. So we’re actually seeing a great reaction from brands who are willing to do that, who are willing to take that leap,” said Chris Price from Stella Blu.
Watch the full discussion: