Canada prefers economical imports to local expensive clothes

By Zhao Xinhua

Canada's textile industry is mainly composed of small and medium—sized enterprises. Trade liberalization has greatly changed Canada's textile industry, and many com—panies have successfully completed the strategic migra—tion from traditional textiles to high value—added textiles. In order to cope with the global competition, Canadian textile companies pay attention to acquiring new skills, using modern equipment and innovative technology to realize creative, innovative, unique and efficient products. In ad—dition, according to various free trade agreements recently signed by Canada, the diversification of export markets is part of the business plan of Canadian textile companies.

In recent years, Canadian textile enterprises have made great efforts to increase their investment in value—added textiles in such market segments as medical and health care, aerospace, environment and sustainable development, infra—structure, agriculture, and household textiles. Today, Canadian companies have stood out in several important market areas and technical applications, espe—cially in the fields of medical garments and sportswear.

Market order gradually restored

Largely due to the COVID—19 pandemic, Canada’s merchandise trade —and merchandise trade around the world—has been volatile in the last two years. Business closures to control the spread of the virus, shifts in spending patterns, volatile commodity prices, and lingering supply chain issues have all contributed to the disruptions in trade. Between February 2020 and May 2020, Canadian imports and exports both fell 29 percent.

As pandemic restrictions gradually eased, monetary policy become more accommodating, fiscal supports ma—terialized, and Canadians transitioned to working online, Canadian trade rebounded. As of October 2021, Canadian merchandise imports were 5.7 percent above 2019 aver—age (pre—pandemic) levels, while Canadian merchandise exports were 13 percent above pre—pandemic levels. Ap—parel retail sales in key North American markets such as the United States and Canada continued last year’s strong recovery. Canadian apparel, footwear and leather goods sales reached C $3.08 billion (US $2.4 billion) in February 2022, up 40.6 percent year—on—year.

In the first two months of 2022, Canada’s import of textile materials from China totaled 671.86 million US dol—lars, down 10.82 percent and accounting for 6.37 percent of Canada’s import from China. Imports from countries other than the United States were up 11.5 percent in March, reaching a record $24.5 billion. Imports from China (+29.4 percent) posted the largest gain by far. Among them, ap—parel, footwear and accessories (+ 15.9 percent) saw the biggest increase. China is still the largest source of textile and apparel imports for Canada.

Market that enterprises can't ignore

Most of the local high—end brand clothing is produced in Canada. However, the raw materials of Canadian clothing in—dustry depend on imports to a large extent, and the labor cost in Canada is high, so the local brand clothing is more expensive than the imported products. Therefore, cheap and high—quality imported products occupy a large part of the middle and low—end clothing retail market in the country.

The operation mode of garment factories in Canada is divided into four steps: promotion, placing orders, pro—duction and delivery. Each link is in accordance with the order to produce, basically avoid inventory overhang. Due to Canada’s special market operation mode, low barriers to market access. As long as the products are novel, the price is reasonable, and the service is thoughtful, Chinese enterprises can also enjoy a share of the Canadian market. In recent years, Canada has been ranked among the top 10 destination countries of China’s tex—tile and garment export market. Meanwhile, Canada is a highly developed industrialized country with a high standard of living. Therefore, Canada is a textile and garment market that cannot be ignored by foreign trade enterprises.

In March, the import of energy products increased substan—tially, and the prices of crude oil and asphalt increased signifi—cantly. More stress on pocketbooks as supply disruptions and strong demand continue to fuel consumer inflation. Headline consumer inflation (+5.1 percent) was at a 30—year high in Janu—ary 2022. Statistics Canada conducted the Canadian Survey on Business Conditions to better understand the ongoing effects of the pandemic on businesses and business expectations moving forward. Based on the results of the survey, while the majority of businesses in Canada expected to be impacted, smaller busi—nesses expected more significant impacts, such as a decrease in profitability and sales. Financial uncertainties deepen for many businesses as emergency support programs wind down. 71 per—cent of manufacturers expect higher input costs to be a barrier in the coming months.

Although the economy of Canada and its trading partners is gradually recovering from the pandemic, all industries will face different challenges when rebuilding international links. Canada's manufacturing industry is particularly vulnerable to the disrup—tion of the international supply chain, because it relies on both foreign suppliers to provide inputs and foreign markets for sales. Canada needs to balance the risks and profits related to the in—ternational supply chain in order to have a clearer understanding of the emerging trends and future trends of commodity trade.