Talking in Circles
Jennifer Marks -- Gifts & Dec, October 10, 2005
After months of talks, negotiators from the Untied States and China appear to be nowhere near a resolution on the subject of textiles trade levels.
Some industry executives with ties to China predicted a year ago that textiles trade talks would in fact be a great pantomime — allowing each country to demonstrate to its constituents that it was sticking to its guns while in the meantime permitting trade to rise to a level tolerable to both. If that's the case, expect the lid to come down in the next 10 weeks.
One textiles executive recently shared a three-inch stack of correspondence between his company, a U.S. import agent and a manufacturing agent in China that concerned the executive's futile attempt to get a sample out of the manufacturer. Toward the end of the correspondence, the U.S. agent disclosed that China's government has urged manufacturers to self-restrict exports for the time being. No indication of how long the practice is supposed to last.
In the meantime, capacities on staples such as sheets and towels continue to balloon across Asia, with an emphasis on better-quality goods. This will come as a boon to U.S. retail buying offices, which feel increasingly comfortable handling in-line replenishment programs.
It has become clear as the new era of unfettered global sourcing has unfolded that what retailers want from U.S. suppliers is risk management on the fashion side of the business. In addition, retailers still view the supplier community as an idea bank. It remains to be determined how suppliers are going to turn a profit in the context of such as relationship.
This much is certain: Someone will figure it out.
New company names have already gone up on showrooms in the New York textiles buildings along Fifth Avenue. Some of those new names are backed by familiar faces. Others are new names only to the U.S. community, but purveyors of reputable brands in their home countries.
Business has been difficult this year. It will probably be difficult next year. But there is money to be made, even if for the time being there isn't as much of it around as there used to be.
Huge retail organizations tend to groan under the weight of their own mass. However smart those organizations may be, they will always need support from the outside. Smaller retail organizations, lacking the resources of their behemoth competitors, need even more support.
The game changes. Once it was about volume. Then it became about owning space. Now it's about profit.
The United States and China will ultimately settle on an arrangement that is acceptably profitable to them both. U.S. suppliers need to find similar accommodations with their own sources.
You either play the game or the game plays you.
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