25% Of Global Sourcing Will Stay With China
In spite of much talk about countries thinking of moving out of China, and not putting all the eggs in one basket, 25 per cent of global sourcing will still stay with China, experts said at a virtual panel discussion. There may be some negative sentiments against China for the next 5-6 months, but ultimately retailers will go back to China for sourcing.
The trade war was already brewing before COVID-19 pandemic struck. Over the last two years, most sourcing directors had made strategic plans to step-by-step cut down on sourcing from China. "Their goal was to bring down China sourcing to 20-25 per cent, and many of them have actually implemented that. I personally don’t see China going lower than that. So, 25 per cent of global sourcing will still stay with China, but whatever has been thrown out has become good opportunity for other countries," Asmara Group CEO Venki Nagan said during the panel discussion on 'Buying agents and buying in the new global order', guest anchored by Fibre2Fashion Consulting Editor Richa Bansal.
China has a comparative advantage which is not going to disappear, as no other country has that kind of infrastructure which it built in the last 50 years, said Atul Nagi, VP-International Sales, Carpet Crafts LLC, Dubai. "China is intertwined in our daily living today. The price points that we live in and the price points that we expect, taking China out of the equation is not going to happen."
Echoing a similar opinion, Jyoti Saikia, CEO, Triburg, said: "Thinking about whether we can take away business from China is not of any value. China is here to stay. China provides certain benefits which nobody can take away from them."
If we look at what has happened to China in the last 2 months, the factories there have been up and running since the middle of February while the entire world is under lockdown. "India and emerging countries have lost big chunks of GDP in months whereas China’s trade has been up, all the metrics are up for them. They have a head start in terms of capacity, infrastructure, costing, innovation, efficiency and productivity. So, China is here to stay." Anika Passi, country manager, TW House Sourcing Pvt Ltd, said during the panel discussion organised by Buying Agents Association.
Sanjeev Jain, President & CEO, TQM Global Buying, too agreed that China is always going to be there, and any set back would only be temporary. "All the retailers sitting out in Europe and US – they cannot depend on smaller countries because they are still not geared up to supply them in those capabilities that they are looking for. They have huge demands, which other countries are still not having capacities to fulfill.
"From the perspective of apparels and textiles, China has developed so many types of blends and fabrics which we do not even have in India. Using those blends, they are able to get into the price economy. China is very good in polyesters. So ultimately when it comes to price or capacity, it is going to be China. May be for the next 5-6 months there is going to be some negative sentiments against China, but ultimately retailers are going to go back to China."
Elangovan, textile expert and chairman of Tiruppur-based Association of Buying Agents for Textiles (ABAT) said, "India lacks the ecosystem to replace China. India has been never been a candidate to replace China and it is not going to happen in the next 50 years."