Australian textile industry to benefit from US/China trade war?

As you may have seen in the news, the Trump government is moving forward on threats to impose a 25% tariff on nearly all Chinese exports to the United States. From what we have explored, this adds a big “cost” to the manufacturing process, which results in detrimental losses to profit margins. In our understanding, this will positively impact the Australian textile industry as we can now compete on pricing to encourage on shore manufacturing.

In an article written by Sidney Leng and He Huefeng from the South China Morning Post, they state that “The average retail price of clothing manufactured in China has more than double since the start of the trade war”. At Sublitech, and in talks with our local supply chain friends, we are noticing an increase in interest from big brands for onshore manufacturing. As has always been, Australia has higher quality, smaller minimums, better working conditions and the marketing benefit of “Australian Made” on their side, but always in competition with the cheaper prices of manufacturing in China. We’re seeing this as a game changer in competing with China and are encouraging brands to jump on board with onshore manufacturing.

In an article by McKinsey & Company, they stated “Some fashion companies have begun to reconsider their presence in, and exposure to, countries where tariff barriers could further increase the cost of doing business. Puma, Steve Madden, and Wolverine World Wide are among companies that stated they would consider moving production out of China. Many companies had begun this process before the trade tensions mounted, but they cite the recent developments as a tipping point.”

Owner of Sublitech, a local Australian sublimation company, Peter Faill states he is “looking forward to seeing an increase in production within Australia. We offer fast turn-around, high quality, local manufacturing avoiding headaches, no minimums, and now can compete on a cost front as well – it’s a very exciting time for us”.

If exporting from China to the US hits you with a 25% tariff, which impacts your profit margins, maybe it’s time to think about the extensive benefits of manufacturing on shore. Who doesn’t love an Australian Grown, Owned and Made business?

Stay tuned for more!