Bangladesh is becoming a more popular apparel sourcing destination for Western retailers thanks to the ongoing US-China trade war, said a latest survey by the AsiaInspection (AI), a Hong Kong-based global inspection and accreditation body.
Geographical diversification of sourcing is underway, driven by the need for cost optimisation that predates the current tariff battles, said the latest AI report, which was released on Thursday.
Among the respondents of the AI mid-year survey, up to three-quarters of businesses said they were already looking for suppliers in new countries or had plans to do so in 2018 -- and some of China's long-standing competitors are emerging as their top choices.
In Southeast Asia, the popularity of Vietnam and Cambodia is confirmed by the double-digit growth in the third quarter of 2018. Meanwhile, a notable portion of companies working in the cost-sensitive textile sector have mentioned of plans to expand their sourcing to other Asian manufacturing hubs such as Bangladesh.
“So far, the manufacturing giant China displays resilience amid the trade escalation, and remains confident in its status as a top sourcing destination,” said the report titled “Global Sourcing Trends: Embattled China vs. Regional Competition”. Indeed, the findings of the AI mid-year survey indicate that China remains among the top 3 sourcing countries for over 90 percent of respondents worldwide, while the dependence of North American and European buyers on China has actually increased in 2018 compared to the previous year.
On the micro level, Chinese businesses appear to be taking a somewhat relaxed attitude towards the trade war: among the survey respondents, only 36 percent of the Chinese companies said they felt affected by new US-China tariffs compared to almost 60 percent in the US.
The Trump administration has so far levied 25 percent tariffs on $50 billion of Chinese industrial goods and is considering imposing similar tariffs on another $200 billion of Chinese exports.
China immediately retaliated with a 25-percent tariff on imports of soy beans, other agricultural products and automobiles.