European Clothing Retailers Breathe Sigh of Relief as China-EU Deal Saves Autumn Stocks

The agreement reached between China and the European Union to allow clothing shipments has saved European retailers from empty shelves this autumn. Despite welcoming the deal, retailers are concerned about the bureaucracy that will slow the process and warn that buyers might avoid China in the coming years due to continued uncertainty. The quotas imposed in June restricted 10 kinds of textiles, including sweaters, trousers, blouses, and bras. The deal will allow half of the excess garments into the market outside quota rules and half to be counted against limits for this year and next year.

Key Takeaways:

• Retailers welcomed the agreement, but expressed concern about the EU bureaucracy that will slow the process.
• The deal will allow retailers to access clothing shipments that have been waiting at docks all summer.
• Retailers warned that buyers might steer clear of China in the coming years due to continued uncertainty.
• European clothing importers may try to diversify their sourcing after this year's lessons, considering countries like Sri Lanka, Thailand, India, and Turkey.
• The total amount of clothing allowed under quotas next year will be higher than this year's amount.
• Many big clothing chains were already insulated from disruptions in trade between China and Europe due to shifting their sources of production away from the mainland.
• High-end, high-fashion retailers would not be affected by the deal, as their products require a higher level of manufacturing sophistication not easily found in China.

Statistics:

• 40,000-strong Association of European Textile Retailers is calling for the merchandise to be unblocked as soon as possible.
• 30% of Hennes & Mauritz's stock is bought from the mainland.
• The British Retail Consortium represents major British retailers, with a large number of certain bigger retailers in the UK being already well balanced in their arrangements.
• 8-12.5% - the annual growth in Chinese clothing exports limited under the original agreement until 2007.
• Half of the excess garments will be allowed into the market outside quota rules, and half to be counted against limits for this year and next year.

Sources:

• European Retail Briefing (Source not explicitly mentioned in the article, but appears to be a general European retail publication)
• BBC web forum (mentioned but not explicitly cited)
• European Union Trade Commissioner Peter Mandelson
• Chinese Commerce Minister Bo Xilai