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China’s Garment Market

I.  Market Overview

China’s 1.3 billion population constitutes a huge market for garments, and one that is growing year by year. According to figures released by Euromonitor, China’s adult garment market was worth around RMB1,457.8 billion in 2017, an increase of 5.2% year-on-year. Market value is expected to reach RMB1,592 billion by 2019.

Chinese garment brands can be divided into two major categories. The first comprises upmarket brands, targeted at consumers from high-income groups with growing spending power, an increasing taste for luxury and high-end brands, and a concern for garment quality and shopping experience. The second adopts a mass market strategy and, like Uniqlo, Zara and H&M, offers affordable and trendy garments especially favoured by young consumers.

Women’s garment market: Euromonitor data reveals the Chinese women’s garment market was worth around RMB923.2 billion in 2017, an increase of 5.7% over the previous year. Of this, women’s underwear showed the fastest growth, with a 7.8% increase. Market value is expected to reach RMB1,096.1 billion by 2021. The demand from young women for clothing with personal style is on the rise, with limited edition fashion, niche brands and designer labels gaining increasing popularity with consumers.

Men’s garment market: The consumer market for men’s garments is undergoing a growth period. According to Euromonitor data, the men’s garment market in China was worth RMB534.6 billion in 2017, an annual increase of 4.4%. Of this, men’s underwear showed the fastest growth with an annual increase of 6.5%. Market value is expected to reach RMB620.3 billion by 2021. As men are becoming more particular about their appearance than before, they are seeking on-trend clothing, which has in turn boosted demand for high quality garments. The market is offering a great diversity of men’s clothing; apart from formal suits, streetwear and crossover fashion (such as with automobile brands) are also attracting increasing interest from the younger generation.

Children’s garment market: According to China’s National Bureau of Statistics, in 2017 there were about 247 million children under the age of 15 in China. Moreover, 17.23 million new babies were born. This underscores the likely colossal size of the children’s garment market in the next few years. According to Euromonitor data, the mainland children’s garment market was worth RMB179.6 billion in 2017, a year-on-year increase of 14.3%. Of this, baby garments showed the fastest growth with a 17.2% increase.
According to a market survey conducted by HKTDC on China’s infant and children’s clothing market in 2017, respondents generally indicated a preference for shopping at physical shops in spite of the growing online market. The reason they gave was that at physical shops they could personally feel the quality and thickness of garments and avoid the problem of colour discrepancy, which may occur in online shopping. Product materials and safety designs were their primary considerations.

Casual wear market: As the economy grows, mainland consumers’ demand for casual wear is on the rise and casual wear categories are also changing and evolving continuously. Casual wear targeted at the mass market is getting more fashion oriented, fashion casual wear is getting more style oriented, sports casual wear is becoming more thematic, business casual wear is becoming more youth oriented, outdoor casual wear is getting more everyday-life oriented, and denim casual wear is getting more personalised. Presently, the Chinese casual wear market has a low degree of concentration and there is a host of domestic and international brands. International clothing brands, such as Uniqlo, which are known for their trendiness, large variety of styles and short lead times, have successively entered the mainland casual wear market, making competition ever fiercer.

Sportswear market: From Adidas, Nike, Puma, Li Ning and Anta to Qiaodan, 361 Degrees and Xtep, the sportswear market has posted rapid growth in the last few years. Euromonitor figures reveal that the size of the Chinese sportswear market grew 12.5% year-on-year to RMB212.1 billion in 2017. In this market, domestic brands are dominating the second-tier and lower-tier cities, while international brands are mainly concentrated in first- and second-tier cities. As Nike and Adidas are adjusting their market strategies and paying attention to the third- and fourth-tier cities, it is expected that cut-throat competition in sportswear will be set off in all market segments.

As profit margins get slimmer, the development of innovative technologies has become an increasingly important feature of competition among companies. For example, some garment brands are forming strategic partnerships with upstream manufacturers of simulation functional fibres. This gives rise to the gradual trend of upstream innovation in raw materials setting the course of fashion trends at the user end. Given that simulation functional fibres can ensure the attractiveness and comfort of garments while also catering to environmental and safety concerns, they enjoy obvious advantages over natural fibres in terms of price-performance ratio.

China’s imports of selected garments in 2017:

HS Code
Description
2017
Import Value
(US$ million)
2017/16
Growth
(%)
6101Men’s overcoats, car-coats, capes, cloaks, anoraks (including ski-jackets), wind-cheaters, wind-jackets and similar articles, knitted or crocheted32.67.9
6102Women’s overcoats, car-coats, capes, cloaks, anoraks (including ski-jackets), wind-cheaters, wind-jackets and similar articles, knitted or crocheted48.324.6
6103Men’s suits, ensembles, jackets, blazers, trousers, overalls, breeches and shorts (other than swimwear), knitted or crocheted236.620.9
6104Women’s suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, overalls, breeches and shorts (other than swimwear), knitted or crocheted385.011.2
6105Men’s shirts, knitted or crocheted119.44.1
6106Women’s shirts, knitted or crocheted16.9-15.3
6107Men’s underpants, briefs, nightshirts, pyjamas, bathrobes, dressing gowns and similar articles, knitted or crocheted51.924.8
6108Women’s slips, petticoats, briefs, panties, nightdresses, pyjamas, négligés, bathrobes, dressing gowns and similar articles, knitted or crocheted68.537.7
6109T-shirts, singlets and other vests, knitted or crocheted642.28.0
6110Jerseys, pullovers, cardigans, waistcoats and similar articles, knitted or crocheted793.929.2
6111Babies’ garments and garment accessories, knitted or crocheted109.31.8
6112Track suits, ski suits and swimwear, knitted or crocheted17.6-20.5
6113Garments, made up of knitted or crocheted fabrics, impregnated, coated, covered or laminated with plastics or other material; or rubberised fabrics4.857.6
6114Other garments, knitted or crocheted86.819.4
6115Socks, knitted or crocheted115.616.8
6116Gloves, knitted or crocheted20.524.4
6201Men’s overcoats, car-coats, capes, cloaks, wind-cheaters, wind-jackets and similar articles, not knitted or crocheted505.410.9
6202Women’s overcoats, car-coats, capes, cloaks, wind-cheaters, wind-jackets and similar articles, not knitted or crocheted531.96.5
6203Men’s suits, ensembles, jackets, blazers, trousers, overalls, breeches and shorts (other than swimwear), not knitted or crocheted826.6-2.1
6204Women’s suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, overalls, breeches and shorts (other than swimwear), not knitted or crocheted894.71.8
6205Men’s shirts, not knitted or crocheted218.6-4.2
6206Women’s shirts, not knitted or crocheted134.2-0.9
6207Men’s singlets, underpants, briefs, nightshirts, pyjamas, bathrobes, dressing gowns and similar articles, not knitted or crocheted6.2-27.1
6208Women’s singlets, slips, petticoats, briefs, panties, nightdresses, pyjamas, négligés, bathrobes, dressing gowns and similar articles, not knitted or crocheted14.7-5.3
6209Babies’ garments and garment accessories, not knitted or crocheted33.0-8.9
6210Garments, made up of fabrics, impregnated, coated, covered or laminated with felt, nonwovens, plastics or other material; or rubberised fabrics75.36.0
6211Track suits, ski suits and swimwear, not knitted or crocheted241.912.0
6212Brassieres, girdles, corsets, braces, suspenders, garters and similar articles and parts thereof140.23.3
6213Handkerchiefs, not knitted or crocheted1.66.2
6214Shawls, scarves, mufflers, mantillas, veils and the like128.37.5
6215Ties, bow ties and cravats, not knitted or crocheted9.18.4
6216Gloves, not knitted or crocheted7.815.5

Source: Global Trade Atlas

II.  Market Competition

With more and more new brands entering the market and international brands stepping up their presence in the mainland, market competition is heating up while the degree of brand concentration is going down.

In the garment market, domestic brands are dominant. A number of leading domestic brands have become the bellwethers of the industry. Examples include Youngor in men’s suits, Threegun in knitted underwear, Bosideng in winter clothes, Septwolves in jackets, Joeone in trousers and Erdos in cashmere sweaters. Nevertheless, because large shopping malls in large cities are constantly adjusting their positioning upwards, some domestic brands have been forced to retreat from these large city shopping malls and extend or move into second-tier cities and wholesale markets. However, domestic brands are also upgrading continuously and are rolling out bespoke services. In focusing on innovation and upgrading in response to market changes, they are driving the development of domestic apparel brands.

In recent years, due to rises in costs and erratic demand in international markets, foreign trade processing enterprises have begun looking urgently for new growth areas. Many of them have turned their attention to the domestic market, further intensifying competition. Rising costs are also encouraging garment enterprises to go upmarket, improve product design and move away from competing solely on price.

Currently, China’s high-end garment market consists almost completely of brands from France, Germany, Italy, Japan, the US, the UK and Korea. Hong Kong and Taiwanese brands are mainly concentrated in the mid-range market while domestic brands are mostly found in the mid- and low-end markets.

Overall, growth in the garment market has been relatively slow in recent years, but fast fashion and online sales have continued to rise. In particular, European brands such as Zara and H&M have posted marked growth in market shares. This is mainly attributable to their consumer-friendly prices as well as their diverse and creative styles, which helped ease the price pressure on consumers while meeting their shopping needs. It is understood that fast fashion brands represented by the likes of Zara, H&M, Gap and Uniqlo will quicken the pace of their penetration into the Chinese market, particularly in second- and third-tier cities.

III.  Sales Channels

Garment sales channels in the mainland have developed from the department stores, specialty stores and rural markets of the past to multiple sales channels, ranging from warehouse-style shopping centres, supermarkets and chain stores, specialised garment markets, mail-order, TV and online sales.

Department stores: In the past, large department stores were the main channels through which garments were sold. In recent years, as e-commerce flourishes, retail sales of garments in department stores have been declining. According to Euromonitor, garment sales in department stores accounted for 37% of the overall garment market in 2012, but this figure dropped to 22% in 2017. Meanwhile, the market share of online garment sales rose from 7.5% in 2012 to 29.1% in 2017.

Specialised garment markets: After years of development, as a mature model for the distribution of garment products, these markets are achieving good economic results and social influence, while establishing a sizeable industrial base. China’s main specialised garment markets are located in three regions:

  • South China region: Represented by Guangdong and Fujian, the specialised garment market in the South China region enjoys the advantages of having an early start, a free flow of information, favourable geographic locations and a solid industrial base. In Guangzhou, a specialised garment market has been formed, consisting of a Liuhua cluster centred around the Baima garment mart and a Shahe cluster centred around Shadong. More than 10 wholesale centres are located within the Liuhua garment wholesale commercial district. Humen Town in Guangdong is another area where a lot of garment wholesale activities take place. Fumin Commercial Building and Huanghe Fashion City are two prime examples.

  • East China region: The garment wholesale markets in East China are mainly found in Zhejiang, Jiangsu and Shanghai. Thanks to the geographic location and excellent development model of the Yangtze River Delta, the East China region garment economy has, in some ways, surpassed its Pearl River Delta counterpart. Notable examples of specialised garment markets include the Qipu Lu garment wholesale market in Shanghai, Merchants Mall in Changshu, Light Textiles City in Keqiao, the Woollen Sweater Market in Puyuan, Sijiqing Market in Hangzhou, and the Leather City in Haining.

  • North China region: The specialised garment markets in North China are mainly clustered around Beijing, Tianjin, Hebei and Shandong. Currently, the Muxiyuan Commercial District in Beijing is most representative of the specialised markets and is the largest garment distribution market north of Yangtze River. The main trading markets for textiles, garments, footwear and headwear in Shandong include Jimo Garment Wholesale Market, Zichuan Garment City, Zibo Zhoucun Textiles World and Luokou Garment Wholesale Market in Jinan.

Specialty stores: Selling in specialty chain stores is now a main model of branded garments sales and quite a number of enterprises are adopting a combination of franchised stores and self-operated stores. This can compensate 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 prefer self-operated stores so as to maximise brand influence. Many brands are stepping up efforts to develop specialty stores as a way to raise profile and enhance image.
Garment supermarkets and discount stores have become a new component of the garment retail landscape. Garment items sold in supermarkets are usually not the trendiest, but prices are more affordable and quality is more assured. There are also some garment brands which want to capitalise on the popularity of supermarkets to raise profile and boost sales. In discount stores, brands can maintain their advantages while offering discounted prices as in wholesale markets.

Store-in-store model: As the name implies, these are stores established in other stores, mostly large-scale retailers such as department stores. Store-in-store for fashion is basically a specialty store of a particular brand, and its form and management are usually freer than other concession counters in the same store. Yet they are not as completely free from restrictions as if they were independent because they still have to align with the overall operations of their respective hosts. The decoration of a store-in-store usually has a unique style of its own in order to highlight the cultural characteristics of the brand. The heavy shopper traffic of gigantic stores is often the main attraction for manufacturers to set up stores-in-store there.

Online shopping market: China’s online market has already come of age. According to figures from the National Bureau of Statistics, the size of China’s online shopping market reached RMB5,480.6 billion in 2017, up 28% year-on-year and accounting for about 15% of total retail sales of consumer goods. According to analysis by the China E-Commerce Research Center, the following are the main development trends in China’s e-commerce garment market:

(1) The overall online garment market will expand steadily to capture a substantial share of China’s e-tailing market;

(2) Sales of garments through mobile platforms will grow rapidly;

(3) Garment e-tailers will strengthen their own credibility by creating a transparent and safe online environment for consumers to shop and make payments;

(4) Physical stores and e-platforms will increasingly complement each other and online-to-offline (O2O) business will continue to integrate;

(5) Personalised custom-made services will draw the attention of clothing e-tailers so that manufacturing processes will be consumer oriented and garments tailor-made according to consumer demand.

In the B2C online garment shopping market, Tmall, JD.com and vip.com are the main platforms. There are three main reasons why brands as well as channel businesses are all scrambling to start e-commerce. First, e-commerce allows cost savings; second, it allows tracking of market and customer data; third, it is a major channel for inventory clearance.

Selected garment fairs to be held in China in the second half of 2018:

Date
Exhibition
Location
14-16 September 2018China (Dalian) International Garment & Textile Fair
Dalian World Expo Center/Dalian Xinghai Convention & Exhibition Center
27-29 September 2018China International Fashion Fair (Fall)National Exhibition and Convention Center, Shanghai
18-21 October 2018Ningbo International Fashion FairNingbo International Conference and Exhibition Center, Zhejiang
28-30 November 2018Shenzhen International Exhibition for Clothing OEM/ODMShenzhen Convention and Exhibition Center


IV.  Import and Trade Regulations

In a move to further liberalise the market and meet consumer demand, the State Council lowered the most-favoured-nation (MFN) rates on 1,449 imported consumer products as of 1 July 2018. Included in the list are garments, footwear, headgear, cosmetics and home appliances. The average import duty on garments, footwear and headgear has dropped from 15.9% to 7.1%.

Import Tariffs of Selected Garment Items in 2018

HS CodeDescription%
61046200Women's trousers, overalls etc6
61051000Men’s cotton shirts, knitted or crocheted6
61052000Men’s shirts, of chemical fibres, knitted or crocheted8
61059000Men’s shirts, of other textile materials, knitted or crocheted6
61061000Women’s cotton shirts, knitted or crocheted6
61062000Women’s shirts, of chemical fibres, knitted or crocheted8
61069000Women’s shirts, of other textile materials, knitted or crocheted6
61071100Men’s cotton underpants and briefs, knitted or crocheted6
61083100Women’s cotton nightdresses and pyjamas, knitted or crocheted6
61091000Cotton T-shirts, singlets etc, knitted or crocheted6
61099090T-shirts, singlets etc, of other textile materials, knitted or crocheted6
61102000Cotton pullovers etc, knitted or crocheted6
61103000Pullovers etc, of chemical fibres, knitted or crocheted6
61109010Pullovers etc, of silk, knitted or crocheted6
61109090Pullovers etc, of other textile materials, knitted or crocheted6
61112000Babies’ cotton garments and garment accessories, knitted or crocheted10
61179000Parts of garment or garment accessories, of other textile materials, knitted or crocheted6
62034210Men’s Arabian trousers, of cotton denim6
62034290Men’s trousers and overalls etc, of cotton denim6
62043200Women’s upper garment, of cotton6
62043300Women’s upper garment, of man-made fibres12
62045200Skirts and divided skirts, of cotton6
62046200Women’s trousers, overalls etc, of cotton6
62046300Women’s trousers, overalls etc, of man-made fibres12
62052000Men’s cotton shirts6
62053000Men’s shirts, of man-made fibres6
62059090Men’s shirts, of other textile materials6
62063000Women’s cotton shirts6
62064000Women’s shirts, of man-made fibres8
62069000Women’s shirts, of other textile materials6
62082200Women’s nightdresses and pajamas, of chemical fibres6
62179000Parts of garment or garment accessories, not knitted or crocheted6

Source: MFN Tariff Adjustment Table for Imported Consumer Goods issued by the Ministry of Finance in 2018

China requires all products (both domestic and imported) entering its market to meet certain compulsory national standards. All code names of Chinese compulsory standards are prefixed ‘GB’. In addition, China also encourages the adoption of voluntary standards, the code names of which all begin with ‘GB/T’. Industry standards are also divided into compulsory and voluntary. Garment making is a light industry and its corresponding standard codes begin with ‘FZ’ and ‘FZ/T’ respectively.

With effect from 1 December 2010, 60 textile industry standards under the Calculation Method and Basic Quota of Overall Energy Consumption for Dyeing and Printing Enterprises have been in force. These standards cover seven specialty fields, namely cotton textiles printing and dyeing (9), wool textiles (15), linen textiles (7), silk (4), knitting (11), threads and belts (4), and textile machinery and accessories (10). Of these 60 standards, three are adopted from international standards and, among these three, one is revised from an International Standardisation Organisation (ISO) standard, with the other two adapted from International Silk Association (ISA) standards.

Since 1 January 2010, the national standard GB/T 23314-2009 Neckties has come into effect. This standard defines for the first time the names of different types of neckties and various terms related to neckties. It sets out the indicators for formaldehyde contents, pH value, colourfastness, decomposable aromatic amines and odour in necktie fabrics. It also makes it compulsory for necktie accessories to meet indicators for physical and chemical properties.

GB/T 23328-2009 Woven Student Uniforms has been in force since 1 January 2010. Applicable to all student uniforms using textile woven material as main fabrics, this standard lays down the requirements, testing methods and classification rules for inspection as well as technical features, such as labelling, packaging, shipping and storage.

GB/T 23330-2009 Clothing - Requirement of Protection against Rain has been in effect since 1 January 2010. This standard is adapted mainly from the European standard EN 343: 2003 Protective Clothing: Protection against Rain and is applicable for rainproof garment using woven textile material as main fabric.

The revised version of GB18401-2010 National Textile Products Basic Safety Technical Code has been in effect since 1 August 2011. Under this new mandatory code, the age of an infant/young child is changed from 0-24 months to 0-36 months. The code also stipulates that the standards implemented for a product should be specified on a product tag, and that the type of safety technology used for the product should be described in accordance with the new standard. The new code also has more stringent controls over formaldehyde contents, pH value, colourfastness, odour and poisonous and hazardous substances, such as decomposable aromatic amine dyes.

FZ/T 73022-2012 Knitted Thermal Underwear has been in force since 1 June 2013. This new standard applies to the identification of the product quality for knitted thermal underwear. It also specifies the model number, requirements, test methods, rules of determination, product descriptions and packaging of knitted thermal underwear. According to its stipulations, heat retention rate, heat retention rate per unit weight and environmental indices should be specified on the outer packaging of thermal underwear. In particular, heat retention rate should not be less than 30%.

The new version of GB/T 5296.4-2012 Instructions for Use of Products of Consumer Interest - Part 4: Textiles and Apparel has been effective since 1 May 2014. It is a national mandatory standard that replaces GB 5296.4-1998 Instructions for Use of Products of Consumer – Instructions for Use of Textiles and Apparel. This new standard simplifies the contents related to mandatory labelling to keep in line with international requirements. It also specifies inapplicable product scopes, while adding informative documents for the judgment of defects and subdividing the specifications of various products.

GB 31701-2015 Safety Technical Code for Infants and Children Textile Products came into effect on 1 June 2016. A transitory period of two years was set and the new standard came into force across the board on 1 June 2018. This is the first mandatory national standard dealing specifically with textile products for infants and children (children’s wear). It adds a number of safety requirements for infant and child textile products on top of those for textile products in general. Safety technical requirements for infants’ and children’s textile products are divided into Category A, B and C in accordance with the differences in safety requirements, with Category A having the highest requirements, followed by Category B while Category C meets only basic requirements. Infant textiles shall comply with Category A. Textile products with direct skin contact for children shall at least comply with the requirements of Category B. Textile products without direct skin contact for children shall at least comply with requirements of Category C. The standard also requires that the instructions for use of textile products for children’s wear shall indicate the safety category and the words ‘Products for Infants Use’ must be added for infant textile products.

The Standardisation Administration of China introduced a number of national standards in December 2017 to further safeguard the textile and garment industry. Examples include Textiles – Test Methods for Nonwovens (GB/T 24218.16-2017 and GB/T 24218.17-2017), Textiles – Determination of Deodorant Property (GB/T 33610.2-2017), and Textiles – Testing and Evaluation of Sound Absorption Property (GB/T 33620-2017).

The Ministry of Industry and Information Technology approved 80 textile industry standards which went into effect on 1 April 2018. These include standards for textiles and raw materials such as Knitted Overcoat (FZ/T 73058-2017) and Knitted Jeanswear (FZ/T 73032-2017). Another 48 textile industry standards, including Windbreaker (FZ/T 81010-2018) and Testing Method of Scorch for Garment Lining (FZ/T 01079-2018), are to be implemented on 1 September 2018.

Content provided by Picture: HKTDC Research
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