CHINA FASHION BUSINESS

🔽The following discussion from the Coldyun Fashion Circle addresses industry-related questions and presents summarized insights. These shared ideas are a collective product of wisdom and do not represent Coldyun’s personal views. The aim is to provide valuable information to industry professionals.

Part 1

Overview of the Global Textile and Apparel Industry in 2023

Recently, I reviewed a report based on data from the WTO and UN about the global textile and apparel industry. The key points are summarized below:

Data Source:

Report Title: World Textile and Clothing Trade: Key Patterns and Emerging Trends

Author: Sheng Lu, University of Delaware

Publication Year: 2024

Statistics Year: 2023

Key Reasons for Sharing:

1. Contextual Comparison:
   Analyzing global data alongside China’s domestic data allows for a more accurate assessment of the current reality. For instance, if global performance is poor, weak domestic performance may reflect a regional manifestation of broader global trends.
2. Forecasting Trends:
   This analysis aids in predicting the overall trajectory of the industry.

Key Findings from 2023

Declining Export Share for China:

By the end of 2023, China remained the world’s largest exporter of textiles and apparel, but its market share saw a notable decline.

In the context of a slowing global economy and reduced consumer demand, 2023 marked the worst year for textile and apparel exports since the COVID-19 pandemic in 2020.

Global textile exports fell by 5.9%, while apparel exports declined by 9.6%.

Geopolitical Challenges:

Increasing geopolitical tensions and risk mitigation strategies by Western fashion companies pose significant challenges to China’s export outlook.

While China’s apparel export share has been declining since 2015, textile exports demonstrated slight growth in 2023.

Shifts in Global Export Patterns:

China remains the largest apparel exporter, but its growth rate is slowing.

The European Union has shown growth, while other regions are predominantly experiencing declines. This suggests the EU is strategically localizing apparel manufacturing.

Historical Context: The UK’s Role in Textile and Apparel

Historical Dominance:

In the late 19th century, the UK was the world’s largest textile exporter, leveraging its leadership during the Industrial Revolution, which originated in the textile sector.

Deindustrialization Strategy (1960–1980s):

The UK strategically shifted focus from industrial sectors to financial services, considering the latter more profitable and efficient.

Current Outlook: Return to Manufacturing

Both the UK and potentially the US are reevaluating manufacturing due to ongoing debates about the deindustrialization policy.

Many argue that this policy weakened the UK’s global economic competitiveness and caused significant unemployment during its implementation.

In the current economic downturn, reindustrialization may represent a viable pathway for economic revitalization.

From an ideological perspective, this period might present an opportunity to rebuild confidence in “Made in Britain” products. Similarly, the U.S. government has previously encouraged support for “Made in USA” goods.

Data from various regions and countries reveal a steady decline in the share of clothing imported from China (in terms of value). Nations such as Japan, Canada, the EU (including the UK), and the U.S. have all seen decreasing shares since at least 2010, making it a long-standing trend.

The chart highlights the production and export value of Chinese apparel. While production value has steadily increased, the export share has been declining, suggesting that most of the clothing produced is consumed domestically. Domestic sales now account for 70-80% of total production, reflecting significant overcapacity in the domestic apparel market.

The influence of diversified procurement strategies by fashion companies is increasingly evident. The dominance of top suppliers in global apparel exports has weakened, creating new opportunities for smaller and emerging exporting countries.

The Herfindahl-Hirschman Index (HHI), which measures market concentration, shows a year-on-year decline. This indicates that countries are adopting more diversified import strategies. For example, nations that previously sourced apparel from only four or five regions now procure from a wider range of suppliers, reflecting efforts to mitigate risks.

Developed countries remain key exporters of textiles, while middle-income developing countries are steadily expanding their textile production and export capabilities.

Regional trade patterns for textiles and apparel have strengthened due to the growing trend of nearshoring, particularly in the Western Hemisphere. This means countries are increasingly sourcing apparel regionally—Asia from Asia, Europe from Europe. Even within Asia, China’s share saw a significant decline in 2023.

Part 2

Where Is the Path Forward?

In summary, the global market outlook presents a challenging scenario for China’s textile and apparel industry, characterized by external and internal pressures. The oversaturation of the domestic market is deeply felt by those in the industry, while the cross-border market has also become intensely competitive.

Conclusion: Selling Alone Is Not Sustainable

The data conveys a clear message: selling goods alone is no longer a viable survival strategy. Domestic clothing companies must reevaluate their competitive approaches, whether through brick-and-mortar stores, domestic e-commerce, or cross-border e-commerce. True competitiveness lies in excelling in one of the following three areas:

1. Cost-Effectiveness

• It is important to clarify that cost-effectiveness does not simply mean offering cheap products. Many businesses sell low-priced goods, but this does not equate to true value.
• The apparel industry’s benchmark for cost-effectiveness is Uniqlo, which provides high-quality products at competitive prices.
• Uniqlo’s competitive pricing is not achieved through cost-cutting, material reductions, or profit sacrifices, but rather through operational efficiency. This demonstrates that true cost-effectiveness comes from optimizing efficiency, not merely achieving speed.
• Unlike traditional factories relying on cheap labor and overtime, Uniqlo’s supply chain management is among the best globally, comparable only to Zara.

2. Quality and Speed

• Companies must launch high-quality products faster than their competitors—by a week or even a month.
• While many e-commerce platforms are capable of speed, they often lack quality. Businesses that excel in both will gain a true competitive edge.
• Similar to cost-effectiveness, achieving quality and speed requires a robust supply chain and effective management.

3. Design, Innovation, and Brand Value

• These elements are deeply interconnected. A successful brand requires a clear design strategy and strong innovation capabilities.
• Even Uniqlo, known for its minimalist approach, is supported by a highly capable design and technology innovation team.
• Many brands mistakenly equate branding with marketing, spending heavily on promotions without building long-term value. Branding involves creating intangible assets, which must be grounded in excellent products. Good design and innovation lead to superior products, which form the foundation of brand value.
• Future Outlook
• Based on these criteria, it is foreseeable that over the next 5-10 years, businesses adhering to traditional sales models—whether in e-commerce or physical retail—will face closure. Only companies that adapt to these new demands will thrive in the evolving market.