In the purview of escalating trade war between the United States and China, global buyers are increasingly considering to pursue the China plus sourcing strategy, which is expected to benefit new geographies like Bangladesh and Vietnam, says a recent survey.
Geographical diversification of sourcing is underway, highlighted Asia Inspection, a Hong Kong-based global inspection and accreditation body, in their mid-2018 survey report ‘Trade Wars, Brexit, and Global Supply Chains in 2018’, published on October 4.
The new tariffs and geopolitical trends are already being reflected in the changing global sourcing patterns. Namely, up to three-quarters of respondents said that they have started sourcing suppliers in other countries in 2018, or have plans to do so, a media report said.
It also said, the survey was conducted in August 2018 by Asia Inspection to analyse the impact of the US-China tariff escalation on global supply chains and the resulting evolution of sourcing geographies during the first half of 2018.
Nearly two-thirds of the European respondents (buyers) say they have already started sourcing suppliers in new countries. In Asia (outside China), nearly all of the respondents have either started sourcing or are planning to do so from new countries. In the United States, 31 per cent of the buyers are already sourcing from new countries and 44 per cent are thinking to make the shift.
CHANCE FOR BANGLADESH’S APPAREL INDUSTRY TO GAIN
So, what are the major trends of the sourcing shift? Asia Inspection says, the trend is pretty specific and atop the list is to pursue a China plus strategy, especially among the companies in the United States. The report says, among the companies that name China among their top sourcing destinations, almost two-thirds are looking for suppliers in other countries; for US-based companies, this figure is closer to 75 per cent.
And the shift will benefit Bangladesh and Vietnam the most. The report says, China’s long-standing competitors – Vietnam, India and Bangladesh are emerging as top geographies for businesses looking to diversify their sourcing; and, Vietnam seems to be the top choice all over.
The report adds, textile and apparel brands are likely to look for new suppliers in Bangladesh; but the businesses in the industry are taking longer to execute their sourcing plans. Out of the 85 per cent of the businesses wishing to diversify their buying geography, less than half have already begun to follow through.
Also, notably, US companies are looking for new suppliers in North and Latin America, while 60 per cent of European companies plan to keep or expand their sourcing in the home region – in what is being viewed as a “close to home” sourcing pattern.
According to the finding of the report, 36 per cent of the respondents all over the world have said they have already implemented a sourcing shift for textiles and apparel; and nearly half – 48 per cent – say they are thinking about making a sourcing shift.