Global sportswear brands join chorus of China exodus

DHARAMSALA, 27 Aug: Amid the escalating trade war between the US and China, the global sportswear brands are said to be stepping up China exodus.

The trade war is pushing the biggest sportswear brands out of China and a quarter of the Chinese production capacity used by global sportswear brands is lying idle, Fortune reported citing an industry executive.

The sportswear labels are among the growing list of companies that have said they are pulling production out of China, alarmed by the intensifying trade war between Beijing and the U.S.

It now joins the likes of 50 other global companies, including Apple, Dell and HP, who have announced or are considering alternative plans to move to manufacture out of China, according to recent research by Nikkei Asian Review.

While most Chinese consumers favour casual, comfortable clothing designed to be suitable both for exercise and everyday wear from global labels like Nike, Adidas and Under Armour, Shui Po Ding, the founder and chairman of XTEP International Holdings Limited, a local sportswear firm is of the opinion that the gap between domestic brands and international brands will slowly be closed.

Still, he expects younger Chinese consumers, especially those born after 1990, to have a greater affinity to local brands.

They “are confident about China’s rise and identify with national brands,” he was quoted as saying in the report.

China’s $40 billion-a-year market for sports apparel is less than half of the market in the US, according to data from Euromonitor International.

Meanwhile, the reported late last month that based on the American Chamber of Commerce in China’s recent survey; about 41% of American companies are considering shifting manufacturing from China, or have already done so.

In the latest blow exchanged between the two largest economies of the world, the US President Donald Trump issued an order on twitter to the US businesses to cut ties in China in retaliation to China’s announcement on Friday that it was raising tariffs on $75 billion in US imports.

“Our great American companies are hereby ordered to immediately start looking for an alternative to China,” Trump tweeted on 23 Aug.

The US President further announced an additional duty on some US$550 billion of targeted Chinese goods, hours after China unveiled retaliatory tariffs on US$75 billion worth of US goods.

The two sides were due to meet in September in Washington but no specific dates have been released.

In the first half of 2019, China’s exports to the U.S. fell by 8.1% to $199 billion, according to the National Bureau of Statistics.

Facing the brunt of the trade war, it is reported that China’s economic growth slowed to 6.2% in the second quarter of the year, the weakest pace in 27 years.

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