The Accelerating Retreat From China

  • Jun 10, 2024

For decades, the promotional marketing industry has been closely tied to China. Of the hundreds of thousands of different items that are used in physical advertising, a large percentage have been manufactured in China, even though they are primarily decorated (branded) in the U.S. This includes not just hard goods (pens, mugs, etc.) but apparel as well. This extends, of course, to the retail world as well, as anyone who has looked at a label in WalMart can attest. A key component in T-shirts, polos, and other apparel is cotton, and the amount from domestic sources has shrunken over the past 50 years or so.

Things are changing. Starting around 2019, accusations of forced labor used in the production of cotton and other goods and materials in China, particularly in the Xinjiang province, became widespread. Recognizing the human rights implications and its impact on creating a just, equitable supply chain, the industry has moved quickly to ensure that the goods it offers are compliant and responsibly sourced. General public awareness of these concerns has increased in recent years, and Congress enacted bipartisan legislation in 2022 forbidding the importing of goods manufactured using forced labor. Support for this issue comes from across the political spectrum.

The retreat from China is not driven by just one issue—it is multidimensional:

  • Tariffs
  • Supply chain disruptions
  • China's rigid COVID lockdowns
  • Geopolitical tensions
  • Forced labor allegations

As China’s appeal as a source of production wanes, an alternative showing promise for importers is to bring their manufacturing bases closer to the U.S. border. Nearshoring production has been behind several promo companies’ decisions to establish facilities in Mexico and Latin America. We can reasonably expect these trends to continue, especially with regards to apparel. The next step in this progression is manufacturing entirely in the United States. Stay tuned for that topic next month.

Cotton fields

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