Fashion companies in the United States are diversifying their sourcing beyond China, Vietnam, and Bangladesh to manage rising geopolitical risks, though they are not abandoning Asia, according to a global study.

The ‘2024 Fashion Industry Benchmarking Study’ indicated that Asia remained the primary apparel sourcing base, but the leading suppliers within Asia had been gradually shifting.

The study revealed that seven of the top ten sourcing destinations in 2024 were based in Asia, though their ranking had changed compared to previous years.

Released on July 29, the eleventh edition of the survey was conducted by the United States Fashion Industry Association (USFIA) and the University of Delaware from April to June 2024.

The survey was conducted from April to June 2024 and included executives from 30 leading fashion brands, retailers, importers, and wholesalers, including some of the largest brands and retailers in the US.

The findings showed that China (with a 100 per cent utilization rate) and Vietnam (89 per cent utilization rate) remain at the top.

However, for the first time in the survey’s history, India (89 per cent utilization rate, ranked 2nd in 2024) has surpassed Bangladesh (86 per cent utilization rate, ranked 4th in 2024) in terms of sourcing.

Last year, India was ranked 4th and Bangladesh 3rd.

Additionally, the report highlighted a rise in sourcing from Cambodia (75 per cent utilization rate), Indonesia (75 per cent utilization rate), and Pakistan (61 per cent utilization rate), with these countries’ utilization rates approaching those of the top-tier suppliers.

The Fashion Industry Benchmarking Study revealed that approximately 48 percent of respondents were interested in expanding apparel sourcing from Bangladesh over the next two years, a decline from 52 percent in 2023 and 58 percent in 2022.

Concerns about high social compliance risks associated with sourcing from Bangladesh remained a significant issue for respondents.

The report noted, ‘For example, the high-profile labor protests over the minimum wage increase in late 2023 brought Bangladesh’s social responsibility record in the garment sector back into the news headlines.’

While Bangladesh is known for its price competitiveness in apparel sourcing, its export potential has been limited by a lack of product diversification beyond basic cotton items and knitwear.

The study also highlighted that, among Asia-based suppliers, India emerged as the most popular sourcing destination for 2024.

Nearly 60 percent of respondents planned to expand sourcing from India through 2026. India’s growth potential as a leading sourcing destination for US fashion companies was underscored by its status as the world’s third-largest textile exporter and the sixth-largest apparel exporter by value in 2022.

Other research indicated that India’s apparel exports to the United States depended much less on imported components compared to less economically developed countries like Bangladesh, Cambodia, and Vietnam, thanks to its more advanced local textile manufacturing capabilities.

Additionally, as India is increasingly viewed as a strategic partner of the United States, sourcing from there is seen as involving relatively lower geopolitical risks.

According to the report, 97 per cent respondents reported that at least 40 percent of their total sourcing value or volume now comes from Asian countries other than China.

Specifically, respondents typically sourced about 11-30 percent of their orders from major apparel-supplying countries like Vietnam, Bangladesh, and India.

In contrast, smaller-scale Asian countries such as Cambodia, Indonesia, and Pakistan generally accounted for 1-10 percent of a fashion company’s total sourcing value or volume due to their limited manufacturing capabilities.

The report also showed that Bangladesh continued to be the most competitively priced country for apparel manufacturing, scoring a 4 in price competitiveness among global apparel-producing nations.

In contrast, Vietnam received an average rating of 3.5 for price competitiveness.