29 June 2005 -  Exports of Korean Knit and Woven apparel drastically decline partly due to elimination of quotas and lower sales to US and European markets. Shipments rose to neighbouring China, Vietnam and Taiwan, however. Prices continued to rise, reflecting higher range production.

World exports of Korean knit apparel (HS 61) and woven apparel (HS 62) both declined in the period January to May 2005.

Statistics released by Korea International Trade Association (KITA), and detailed in our tables below, show that Korea is continuing to feel the train from cheaper competition.

Quota elimination in Europe and the United States is also behind the decline in sales, with buyers shifting to low-cost suppliers in Asia.

Sharp decline in US and Japan

For the first five months of 2005 compared to the same period last year, knit apparel suffered a 29% decrease in volume terms. The decline was even more severe in woven apparel where the figure dropped 35%.

The fall can be interpreted by analysing the data for US and Japanese imports for these two categories representing the two largest export markets.

Shipments of knit apparel to the USA fell 36% with a fall of 48% in woven apparel. Japanese intake in the same categories saw a respective decline of 19% and 42% during the first five months of 2005.

China, however, bucked this trend in declining Korean exports. In volume terms, it soaked up 28% of Korean woven apparel and had an 8% share of knit apparel. This represented an increase of 5% and 41.5% respectively for the first five months of 2005.

Vietnam also increased its share by 15.75% of woven apparel exports by consuming 5.77% of total Korean shipments in this category. As for knit apparel, Taiwan recorded a significant increase with a rise of 90% in volume terms taking its share to 4.7%.

Higher prices

Sales of Woven apparel also increased to Indonesia, the Philippines and Finland although their total share of the market remains relatively low. In the knit apparel category, Hong Kong slightly increased its volume of imports by 8%.

Prices were up more than 12% for knit apparel while rising more than 15% for woven apparel, as a clear sign that Korean exporters are shifting to higher valued products.

A report produced recently by the Korean Institute for Industrial Economics and Trade forecasts a favourable climate for business in the second half of 2005. However, it warned the textile industry that it will "continue to struggle".

Korea''s apparel industry may also be expected accelerating its relocation to low-cost countries that was initiated in the past two decades.