China may still be the “factory to the world” – but that factory is steadily getting smaller.

Supply Chain Digest Says...   Will this trend continue, with China’s global manufacturing falling still further? And if Yes, will any of that share make its way to US soil, with “reshoring” finally getting some real traction?     What do you say?   Click here to send us your comments       Click here to see reader feedback

According to data from transport economics firm MDS Transmodal, and as reported this week by CNBC.com, China is losing manufacturing and export market share in key product categories to lower cost Asian countries such as Vietnam, an existing trend exacerbated by on and off COVID lock downs in Chinese factory towns.

CNBC reports that China is losing share in many consumer product categories, including clothing, footwear, furniture, and luggage, while also seeing declines in its share of exports in non-consumer goods such as minerals and office technology.

As seen in the chart below, China’s share of global exports in apparel and accessories has fallen from 41% in 2016 to 37% so far in 2022; in furniture from 64% to 53%; in footwear from 72% to 65%, and in luggage and handbags from 83% to 70%.

Not dramatic declines for sure, but seemingly part of a real trend that is costing Chinese manufacturers billions of dollars annually.

Vietnam, which has advantages in its proximity to China and in its lower wages, has taken a lot of the global export share lost by China, with global exports up 360% since 2014. The MDS Transmodal data found Malaysia and Bangladesh have also taken apparel manufacturing share from China.

Another set of data from global visibility vendor Project44 finds the amount of ocean shipping capacity leaving Chinese ports has been dropping since the start of 2021.

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For example, CNBCC reports, pre-2021 monthly vessel capacity leaving China was about 11.2 million TEU.

But that has dropped to 8.6 million of TEU capacity departing Chinese ports in September, representing a 23.2% decrease.

Will this trend continue, with China’s global manufacturing falling still further? And if Yes, will any of that share make its way to US soil, with “reshoring” finally getting some real traction?

SCDigest has more confidence in the first proposition than the second.

What are your thoughts on this decline in China's export share? Let us know your thoughts at the Feedback section below.

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