Focus on the Chinese Garment Market Developments

Focus on the Chinese Garment Market Developments

Chinese domestic garment sales (wholesale and retail) amounted in 2011 to CNY 571.3 billion or 25.1 more than in 2010. Based on a study by Hong Kong Trade Development Corporation (HKTDC) Research we give you an overview of the latest noteworthy developments

Some basic factors on the segments

Chinese consumption of garments is in a changing process. Most Chinese garment brands have been splitting into two major directions, one into up-market brands with high income consumers and their lust to enjoy luxury and high-end brands and the second is gearing to mass market strategy -like Zara and H&M – by offering affordable and trendy garments particularly favoured by the young crowd.

The women’s segment

The women’s apparel market is highly segmented and a category expressing fashion and colour to the fullest and is encompassing lines from high- to low-end products. There are numerous brands in this sector and domestic brands are mostly concentrated on the mit- to low-end segments.

The men’s sector

The men’s garment market – 2010 China’s male population was – according to official statistics – 687 million, representing 51.27 of the total population – is an important market. The market is undergoing a transition with new brands steadily appearing on the market. It is no longer dominated by Zhejiang but became an industrial Chinese cluster equally divided among Zhejiang, Fujian and Guangdong.

The textile playfield for children

Presently there are some 220 million children under age of 15 living in China or 16.6 % of the population. Parents’ spending on Children’s garment has pointed up in recent years and reached a volume of around CY 55 billion. With the standard of living on the rise in China the buying decisions are no longer based upon only practical aspects but there are considerations such as aesthetic and fashion, comfort and casual sportswear with cosy fabrics and loose-fitting designs becoming trendsetters. The list of the 10 best liked brands in this segment are Beler, D.D. Cat, ABC, Balabala, Wahaha Kids, Jojo, Pepco, RYB (Red-Yellow-Blue), Xiasohudian (Decimal Point) and Mickey Mouse.

The work wear sector

The work wear is drawing high attention since the concept is more widespread and the Chinese work wear industry became a large industrial factor. Looking ahead, this sector might one day become a new economic growth factor for the Chinese garment industry. The technological enhancement and content of such wear will result into differentiation work wear grades. Other important requirements are compliance with ergonomics and meeting the characteristics of the industry as well comfortable and practical wear, but also functionality in terms of the raw material of the fabrics, the non-hazardous use of dyes, radioactive resistance and many other qualities of concern.

The casual wear market

Casual wear categories are steadily changing and evolving. There is casual wear targeted to the mass market, but getting more fashion oriented. Fashion casual wear is geared to more style elements, whereas sports casual wear is getting more thematic oriented and business casual wear is getting more youth oriented and outdoor casual wear is getting more everyday-life oriented and denim casual wear gets more personal touch.

The sportswear sector

This sector underwent a rapid development over the last few years. In this market, domestic brands are dominating the second-tier and lower-tier cities while international brands such as Adidas, Nike and Puma are catering to the first and second tier cities but start to cater also to the other tier cities, as well as the domestic lines of Li Ning and Anta to Qiaodon, 361 and Xtep.

The specific market in spe

“Green economy” is a new segment for the garment market and its brands. For instance Li Ning is already responding to the low carbon requirement with its lines by launching environmental collections and advocating new environmental concepts of wearing clothes.

The sales channels

The sales channels are department stores, specialty stores and rural markets to multiple sales channels from warehouse-style shopping centres, supermarkets, cum chain store selling, professional garment markets and garment distributions centres to mail order, TV and e-commerce.

A survey by HKTDC shows that the most frequented stores – according to the respondents – are with 67 % department stores, followed by chain garment stores with 45 %, confirming the still importance of department stores as main sales point, also for accessories and especially for the mid- to high-end garment and brand-name garment. On the developments of professional garments, TextileFuture has reported before (see also News July 12, 2012 on How distribution works in third-tier Chinese cities).

The regional differences

There is to be added, that there are regional differences. For the South China region – represented by Guangdong and Fujian – they enjoy usually an early start, an unimpeded flow of information, good geographic locations and solid industrial bases marks these sites. The Guangzhou professional garment market is consisting of a Liuha cluster, centred in the near Baima and the Shahe cluster is centred around Shadong. More than ten wholesale centres can be found within the Liuhua garment wholesale commercial district. In addition, Humen Town in Guangdong is representing another area where a lot of garment wholesale activities are located. Fumin Commercial Building and Huanghe Fashion City are two other prime examples.

The East China has in some ways surpassed its Pearl River Delta counterpart. The examples of professional garment markets are The Qipu Lu professional market in Shanghai, Merchants Mall in Changshu, Light Textiles City in Keqiao, Woollen Sweater Market in Puyuan, the children’s wear market in Zhil, Sljiqing Market in Hangzhou and the Leather City in Haining.

The North China region is clustered around Beijing, Tianjin, Hebei and the Shandong area. The most representative professional market is Muxiyuan Commercial District in Beijing. At the same, it is the largest garment distribution market north of Yangtze River. The main trading markets for textiles, garment, footwear and headwear in Shandong include Jimo Garment Wholesale Market, Jichujan Garment City, Zibo Zhoucun Textiles World and Loukou Garment Wholesale Market in Jinan.

Specialty chain stores

Specialty chain stores are now the main model of selling branded garments and an important number of companies are adopting a combination of franchised stores and self operated stores, compensating for the shortcomings of not having sufficient control in franchising while avoiding the risk of investing too much in self operated stores. Large powerful brands tend to self operated stores. In order to expand visibility and enhance the image, many brands are enhancing their efforts in developing speciality stores.

Supermarkets and discount stores

Garment supermarkets and discount stores are the newcomers in the garment market. Garments sold through this channel are usually not most trendy in style, but represent affordability and quality. There are some garment brands taking advantage of the popularity of supermarkets to enhance visibility and enhance performance. Discount stores serve to maintain brand advantages while offering discounted prices as in wholesale markets.

The store-in-store development

Located in another store, the store-in-store location model is mostly used by large scale retailers like department stores and it is usually basically a specialty store of a particular brand, and its form and management are usually differing from other concession counters in the same store. Also the decoration of a store-in-store usually has a unique and distinctive style of its own in order to put the focus on the cultural characteristics for the brand. The heavy shopper traffic of gigantic stores is often the main attraction for manufacturers to set up shop.

The e-business channel

TextileFuture has thrown some light of the development of the e-business in China. The online sales of Garment in 2009 grew 97% year on year in China and has grown from CNY 15 billion in 2007 to CNY 115 billion in 2010, thus online shopping has become a consumption trend of growing mass appeal.

Other market facts

The Chinese garment market is highly fragmented and competition is very keen, for instance the men’s garment market in 2008, the top 100 brands accounted for 44.6 % of the market while the top ten brands had together a share of 20.3 % and the remaining 55.4 % of the market has been divided by brands with an individual share of less than 0.2 %.

The domestic brands have an important role. A number of superior domestic brands have assumed a leading position in the industry, such as Youngor in men’s suits, THREEGUN in knitted underwear, Bosideng in winter clothes, Septwolves in jackets, Joeone in trousers and Erdos in cashmere sweaters. Because there is a constant trading up positioning of shopping malls in large Chinese cities, some domestic brands have been forced to retreat from these and those are extending or moving into second-tier cities and wholesale markets. But of course, also domestic brands tend to upgrade their offering.

Traditional exporters are in urgent need of looking for new growth and therefore are turning their attention to the domestic market adding to the already heavy competition. Rising cost is another factor and force garment firms to move upmarket, bolster product design and to shift away from competing solely on price.

The high-end garment market is almost entirely the domicile for brands from France, Germany, Italy, Japan, the USA, Great Britain and Korea. The Hong Kong and Taiwan brands rather cater to the mid-end market, while domestic brands are mostly found in the mid- and low-end market, as pointed out before.

It looks like as the Korean garment industry is very bullish on the prospects of the Chinese market and is seeking ways of penetrating the Chinese market. The Korean garment industry started with casual wear and women’s wear and is active with a large number of brands in almost all categories including men’s wear, golf sportswear, children’s wear and underwear.

Import rules and Chinese regulations

For some garment items of man-made fabrics, custom duties is amounting to 17.5 % but some very popular categories are charged with only 14 to 16 % and all have to meet a certain set national standards. China encourages also the adoption of voluntary standards.

Since January 2005 there is a new regulation on textile in place, the National General Safety Technical Code for Textile Products with eco-safety requirements for textiles. The code classifies textile products into products for babies, products with direct skin contacts and products without direct skin contacts. The code sets also limits on formaldehyde contents and specifies requirements on banned azo dyes, pH, colourfastness and odour and provides the first time toxicity tdests in a product inspection standard.

Since August 2006 the first industry standard for antibacterial knitwear has been introduced. Since August 2009 eight newly developed of revised international standards including Safety Requirements on cords, drawstrings on Children’s Clothing, rule for Work Wear Inspection, and Qipao (Cheongsam) have been implemented. In October of 2010, 60 textile industry standards under the Calculation Method and Basic Quota of Overall Energy Consumption for Dyeing and Printing Enterprises came into force and since January 2010 there is also existing a national standard on neckties as well as on woven student uniforms and the requirement of protection against rain for rainproof garments using woven textile materials as main fabric.

More on standards can be had from www.standardcn.com and www.sac.gov.cn/templet/  

Selected 2011 Chinese garment imports

The following table presents selected China’s garment imports in 2011.

29. Handkerchiefs, not knitted or corcheted 1.1 62.9
30. Shawls, scarves, mufflers, manitllas, veils and the like 83.4 68.2
31 Ties, bow ties and cravattes, not knitted or crocheted 17.3 40.8
32. Gloves, not knitted or crocheted 7.7 64.3
Source: Global Trade Atlas / HKTDC

All in all, this overview is giving the most important facts on the Chinese garment market and we thank HKTDC Research for the valuable input www.hktdc.com 


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