Are the geographies of textile and apparel supply chains shifting?

The global economy has faced major disruptions in recent years, challenging the stability of the globalized production model and prompting expectations for more resilient, localized supply chains. These discussions mirror broader debates in economic geography and political economy on the possible ‘regionalization’ or ‘de-globalization’ of production networks. Across industries, these debates are shaped by disruptions such as climate change, digitalization, and geopolitical tensions, which all challenge the global division of labor established since the mid-1990s. A key issue is among all debates are rising US–China tensions, casting doubt on China’s role as a central global sourcing hub. This raises important questions: how are these disruptions reshaping production and sourcing patterns, and is China’s role changing?

Our new open access paper ‘Lead firm strategies in the global textile and apparel industry: Are disruptions reconfiguring the geographies of production?’addresses these issues by proposing a conceptual framework to analyze geographical restructuring, illustrated through the global textile and apparel industry. Since the early 2000s, major fashion brands and retailers have grown spectacularly based on the rapid expansion of physical retail in established and emerging markets, especially China; the rise of fossil fuel-based synthetic fibers; and China’s dominance in apparel and textile production, enabling low-cost supply chains.

Since the mid-2010s, however, key elements of this growth model have been increasingly challenged. Three major disruptions stand out. First, growth based on physical retail is being undermined by the rise of online sales, led by ultra-fast fashion platforms like Shein. Second, the fossil fuel-based production model faces mounting pressure from climate and sustainability policies. Third, reliance on China-centered supply chains is becoming more vulnerable due to geopolitical tensions, particularly between the United States and China. Against this backdrop, industry publications suggest that lead firms may adjust sourcing strategies, potentially reshaping the geography of the T&A industry and China’s role as a production hub. Some surveys suggest that that 70% of fashion brands’ and retailers’ executives have considered moving supply chains closer to end markets. Similarly, studies on US brands and retailers find a strong interest in diversifying away from China.

Our analysis shows that apparel assembly has increasingly shifted away from China to alternative locations, while production of key components remains centered in China. Lead firm sourcing strategies on China+1 and nearshoring did result in a significant diversification of apparel assembly beyond China, benefitting Bangladesh, Vietnam and Cambodia, and more recently Central America. While China has dominated since 2000, its global share declined from 43% to 26% between 2010 and 2022; in the US from 40% to 22%, and in the EU-15 from 31% to 20%. As Figure 1 shows, Bangladesh and Vietnam have been the main beneficiaries of this China+1 strategy, with Cambodia gaining to a lesser extent, while EU and US regional suppliers have largely stagnated. In apparel assembly, conditions favored this shift. Transnational suppliers expanded in Vietnam and Bangladesh during the 2010s, supported by low capital requirements - assembly plants can be established for around USD 1 million. Vietnam’s rise was further driven by state policies, including the EU–Vietnam Free Trade Agreement (EVFTA) and anticipated benefits from the Trans-Pacific Partnership (TPP), despite the latter not materializing.

Figure 1: Top 10 global apparel export countries (1,000 USD)

However, China continues to dominate in fabrics, fibers and accessories. This is due to the high investment costs for textile mills and fiber production limiting the supplier investment case. Further, China’s fabric, fiber and accessories ecosystem creates significant path dependencies. Lead firms’ product strategies are based on the advantages of the Chinese ecosystem, which is difficult to replicate in smaller exporting countries. Lastly, state action to incentivize the restructuring of the supply chain of fabrics, fibers and accessories has been largely absent. In textile exports, China remains the dominant global hub. Its share of fabric exports rose from 13% in 2000 to 44% in 2022, with particularly strong positions in synthetic fabrics (Figure 2), reaching 49% . Although its share in cotton-based fabrics has slightly declined, China still plays a central role, despite challenges such as the UFLPA, given that 85% of its cotton comes from Xinjiang and it supplies 20% of global cotton. China’s dominance is reinforced by its strong textile manufacturing base, with many leading firms headquartered there. Moreover, major apparel-exporting countries remain highly dependent on Chinese textiles: by 2022, several sourced over half of their fabric and yarn imports from China.

Figure 2: Top 10 global fabric export countries (1,000 USD)

Felix Maile, University of Vienna

Cornelia Staritz, University of Vienna

Read more in our open access paper