Apparel Industry: China “The Sleeping Dragon” By: Amanda LaConte Kate McElroy Brian Morris

History of Multi-fiber Agreement (MFA) 1974: Replaced Long Term Agreement (LTA)  Extended coverage to wool & manmade fibers and imposed a growth rate on quotas 1994: MFA Expired  US imposed quotas on developing country exports 1995: MFA replaced by Agreement on Textiles and Clothing (ATC)  Increased quota growth rates so remaining quotas would be phased out by : US imposed a higher number of binding quotas on China  China: 31/87 binding quota restrictions  Thailand: 1/46 binding quota restrictions

Trends in U.S. Imports from China, The effects of China joining the WTO with the removal several quotas Restrictions placed on Chinese exports

Impacts of Quota phase-out in 2005 Consumers in importing countries “benefit”  Cheaper prices and more choices Producers in importing countries “lose”  Can not compete with the cheaper prices Globalization increases trade worldwide with integration of apparel textiles trade Foreign Investment flows out of previously-unrestricted countries to previously-restricted ones  Smaller developing countries suffer

U.S. Trade with China over the Years Annual Growth Rate %19% YearFuture Imports , ,511, ,806, ,282, ,475,905 What will the Future hold for the US? Figures are in millions of US dollars

US $ YEAR Apparel Cotton Apparel Wool Apparel Man-made Fiber Apparel PRICE OF CHINESE APPAREL IMPORTS

United States is China’s #1 Customer

Population (Millions) % of Pop Employed in Apparel Bangladesh % China 1,3000.4% India 1,1000.4% Pakistan % Sri Lanka 191.8% Thailand 621.4% Vietnam 822.4%

China’s Manufacturing Industry Four Main Categories in China’s Manufacturing Industry Ratio of Employees per Corporation is significantly higher for the Apparel Industry However, this table does NOT display the number of Establishments per Corporation One of China’s main focus in manufacturing involves more workers and corporations in the Apparel Industry

Revenue of Industrial Corporations The Manufacturing Industry generates the greatest amount of revenue from sales and customer activities. Mining and Quarrying Manufacturing Electricity, Gas and Water Supply and Production 13% Food and Agriculture 20% Apparel 19% Industrial Goods 48% Equipment Breakdown of the Manufacturing Industry :

Employees

China’s Competitive Advantage Large, highly productive, low cost labor force Price competitiveness Efficient port facilities  China’s shipping time to the US “12-18 days”

“With Quotas gone and Chinese goods setting the market’s price floor, those who cannot compete on price are marching to a familiar anthem…” Quality Quick Return  need a steady delivery of finished goods  focus on supply chain management Customer Service

Globalization has altered the Dynamics of the Apparel Industry. IT’S TIME WE TAKE NOTICE Made in China