The impact of the novel coronavirus can be felt around the world. The apparel and textile industry around the world is facing many challenges, from sourcing to retail, and this uncertainty is affecting businesses.
While the U.S.-China trade war has had a negative impact on China’s textile and apparel industry, the threat of the latest coronavirus is causing more uncertainty in the supply chain. Unpredictability about the extent to which the virus may spread, coupled with production delays in some regions, is creating uncertainty for global manufacturing sectors across sectors and could hamper export growth, adding to concerns over the first phase of the U.S.-China Uncertainty over cotton exports.
Demand for textile fibers declines
As Wood Mackenzie data shows, one impact of the virus outbreak may be weaker demand for textile fibers such as polyester, as business activity may come to a standstill. Due to weak demand, producers, spinners and weavers are likely to return to their hometowns, which could lead to further destabilization of the polyester chain. In addition to polyester, other related industries such as the xylene industry may also be affected.
Global cotton consumption may drop by at least 500,000 bales, resulting in an increase in ending stocks and a decrease in U.S. cotton exports, which may increase U.S. cotton stocks by more than 1 million bales to 5.9-6 million bales. . After a long-term decline in U.S. cotton exports, China’s cotton import demand has increased significantly in the past two years.
Brands close stores to prevent losses
In addition to textile manufacturers, many brands and fashion companies in China business is also in jeopardy. Some of the brands that have closed stores are: Nike, Adidas and Capri Holdings, which owns Versace, Jimmy Choo and Michael Kors. The brands warned investors that sales would take a hit if the virus continued to spread in China. To prevent this from happening, Capri has closed about 150 stores in mainland China, while Nike has closed about half of its stores and Adidas has closed a large number of stores with Ralph Lauren Co. and Tiffany & Co.
Due to the epidemic, Levi Strauss Company has closed about half of its stores in China and has been hit by the recent financial impact. The virus outbreak has also affected assessments of the world’s major luxury goods groups. For example, shares of Louis Vuitton and Kering lost about 5% and 6%. The pandemic also puts $149 billion worth of spending at risk.
As the epidemic intensifies, the Italian National Fashion Association announced its solidarity with China. During Milan Fashion Week, the Chamber of Commerce will launch a double event, including a special event and multiple video conferences. In the 2020/21 season, it will organize 56 runways dedicated to autumn and winter ready-to-wear. Fashion Week will kick off on February 18 with China’s solidarity movement. The opening of the Fashion Hub Market, a space dedicated to emerging creators, will serve as the backdrop for events.
Some Chinese designers based in Italy and Europe who usually show at Milan Fashion Week will not participate this time because of delayed shipments from China.
Meanwhile, US events have suspended the NE Materials Show scheduled for February 5 and 6 in Boston, as well as the NE Materials Show scheduled for February 12 and 13 in Oregon NW Materials Show held in Portland, CA. Organizers of the Hong Kong-based Asia Pacific Leather Fair said they were considering postponing the event at the end of March. Bangladesh’s major technology exhibition, Dhaka International Garment Machinery Corporation, has also been postponed.
Portland’s Premiere Visual Sports Show will take place as planned on February 12th and 13th, but will not host attendees and partners from China.
Procurement delays
Global fashion companies are currently following a “wait and see” policy. However, some delays in orders are inevitable. At the same time, shifting orders to other countries is not a quick fix at this point, as China is still the single largest supplier of textiles and apparel, with no substitutes; other apparel exporters (especially Asian countries) rely heavily on imports from China Textile raw materials such as yarn and fabric; in many garment factories in Asia and Africa, the management team comes from China. Moreover, many countries around the world are currently imposing travel restrictions on Chinese tourists. In fact, the current situation may prompt more companies to look for new sourcing destinations. Additionally, procurement costs are likely to rise for global fashion brands and retailers as it requires more resources to move products and establish new supply chains. </p
