rise? Not up? All questions
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Chinese apparel export companies have finally seen some relief. At the recently concluded Autumn Canton Fair, the quoted prices for apparel export orders increased by approximately 30% year-on-year, with some products seeing price hikes as high as 40%. While this increase is understandable, many companies may find it challenging to sustain these higher prices in the coming months. Whether to raise prices or not has become a tough decision.
Compared to the sharp rise in raw material costs, the price increases at the retail level have been delayed. At an industry conference last year, Yang Shibin, chairman of the China Knitting Industry Association, expressed concern over the mismatch between upstream and downstream pricing. He noted that cotton prices had surged too quickly, while finished product prices had not kept up. He believed there was no effective transmission from the upstream to the downstream, and that sustained high raw material costs were unsustainable. His view was widely accepted within the industry, including by leaders from the China Cotton Textile Industry Association. However, this year’s cotton prices have remained stubbornly high, continuing to rise instead of falling.
Raw materials are just one of many burdens. This year, textile and garment companies have also faced severe labor shortages and rising energy costs. At every industry event, "cost" is always a central topic. The external environment for export companies has only made things worse. I recall attending the China Textile and Apparel Trade Fair in New York in July, where one exhibitor bluntly said, “Foreign buyers are pushing down prices aggressively.†At that time, many export companies were still reluctantly absorbing the rising costs. But by the time of the Paris trade fair in September, some exhibitors began advocating for price increases, and by November, those increases became a reality.
The long buildup behind these price hikes reflects the struggles and anxieties of clothing companies. According to a recent report on the economic performance of the knitting industry, rising costs and the appreciation of the RMB have now reached the limits of what enterprises can endure, potentially leading to fewer orders. Although the export situation this year is much better than last year, consumer demand in developed countries continues to shrink, with a growing preference for low-end products. In this context, the impact of price increases is hard to predict.
The trend of order shifting has intensified since 2008, and it is now unavoidable. It's time for textile and apparel exporters to make careful decisions about their future direction. Industrial restructuring and deeper industry insights have been called for for years, but now both internal and external conditions have made this issue more urgent than ever.