brassiere

China's US$2 billion women's undergarment export industry is facing barriers at home and abroad that threaten to limit the explosive growth suppliers anticipated post-quota. In 2004, total outbound shipments increased 20 percent from 3.5 billion to 4.2 billion pieces. Exports to the United States and the European Union increased in the first quarter of this year, but were down 17 percent overall despite quota elimination as a recent government-imposed tax affected growth in low-value products. Apart from this, the US has imposed a safeguard on imports of China-made panties and those on brassieres may be reimposed following a surge in shipments in the months after quotas were eliminated at the beginning of the year. While the tax has little effect on most apparel categories that are being levied, it is a burden for low-end underpants. The levy accounts for about 9.6 percent of a typical low-end underpant's cost. Since the average profit margin for most low-end makers is less than 10 percent per piece, most of these suppliers will face bankruptcy if they continue offering low-end products at the same price. To survive, many have passed all or most of the additional cost to buyers, while a few have shifted to more upscale manufacturing.