In June 2026, China's textile exports showed a rare divergence: garment shipments grew slowly while upstream yarn, fiber, and fabric exports remained strong. Behind this contrast lies a hard constraint of rules of origin on the 'China Plus One' supply chain model—moving sewing operations to Vietnam or Bangladesh is no longer a tariff-free pass.
Data Behind the Supply Chain Shift
Chinese customs data show that garment exports grew modestly in June, while textile raw material exports performed well. The US market offers a clearer picture: US imports of knitted and non-knitted garments from China fell notably, while Vietnam and Bangladesh saw steady growth in garment exports to the US. Yet remarkably, these two Southeast Asian countries continued to import large volumes of man-made filaments and staple fibers from China.
What does this mean? Chinese fabrics travel overseas, are cut and sewn in Southeast Asia, and then enter Western markets under local origin claims—this is the true picture of the current 'China Plus One' model. Companies believe that a 'Made in Vietnam' label can bypass tariff barriers, but they overlook that US and EU customs are tightening origin determination standards.
The Origin Trap: Yarn Tracing Becomes Key
EU and US rules for textiles enforce strict yarn and fabric tracing. The origin of a garment is not determined solely by where it is sewn; it traces back to the production source of the yarn and fabric. If core fabrics or fiber materials originate in China and only assembly occurs in Southeast Asia, customs may still deem the goods as Chinese origin, making them ineligible for tariff preferences.
For buyers, this means that earlier investments in relocation may be undermined, with risks of retroactive duties or cargo detention. Vietnam and Bangladesh lack sufficient spinning and weaving capacity to localize the full supply chain in the short term, so their dependence on Chinese inputs remains high. This is precisely the weak point that rules of origin can exploit.
Industry Impact: Relocation Is Not a Panacea
The 'China Plus One' strategy aims to avoid tariffs, but its effectiveness is being diluted. The outward shift of garment assembly is a trend, yet China's upstream raw material and fabric industries remain globally competitive. Companies must realize that relocation is not equivalent to risk avoidance—it merely shifts tariff risk from finished goods to inputs.
For Chinese textile firms, a more rational approach is to thoroughly understand the origin determination criteria of target markets before expanding overseas, and to prepare complete documentation of material sources, processing steps, and traceability. Those who only calculate labor costs and ignore regulatory risks may face customs challenges on their first shipment.