Market Alert Report From MATRADE Beijing

PROMISING CLOTHING & APPAREL MARKET IN CHINA

According to statistics from Customs China Office, China exported US$ 46.9 billion worth of clothing or apparel products for the period January-November 2003, an increase of 25.2% as compared to exports in the same period 2002. 

China’s clothing industry is export oriented where 50% of its annual outputs are sold overseas. During the first 11 months last year, China produced 8.805 billion pieces of apparel, an increase of 12.3% as against the same period of 2002. Among the various categories of apparel, the production volume of down-filled coats recorded the highest growth of 35.5% as compared to growths recorded by other types of apparel.

China’s total sales volume of clothing last year grew at 9% as against 2002 and the sales volume accounted for 10% of China’s total sales volume of consumer goods. Despite the increase in sales volume, competition in clothing industry is getting fiercer. Retailers have been forced to cut prices and offer discounts, even at peak sales periods, and the present trend is expected to shrink the sales volume in the future. However, at the same time the declining retail price will generate and stimulate demand as nearly 50% of Chinese consumers prefer to make purchases when discounts are offered, especially when the season change.

As Chinese consumers become more affluent, prices are no longer serve as the determinant factor of purchasing consumers items. More consumers now have greater brand awareness and as for clothing industry, many second-rate brands have rushed into China in recent years. At the same time, the selection of domestic brands has skyrocketed. Various regions in China have also fostered their own brand. While Ningbo and Wenzhou, two booming cities in East China’s Zhejiang Province, are well known for its best-selling men’s clothes, ZhongShan, in South China’s Guangdong Province, is well known for its leisure apparel. In terms of women’s clothing, the best sellers are from Hangzhou, in East China’s Zhejiang Province, and Beijing.

Chinese consumers have now more channels to buy clothing. The traditional sales channels, which include department stores, chain stores and rural fairs, continuous to be popular places for shopping clothing. In the meantime, consumers can also now buy through television, e-commerce or mail. Although department stores remain the most important sales channel of brand-name clothing, chain stores and franchised stores have developed rapidly in China. In particular, the sales volume of some men’s brands and leisure brands, sold in chain stores, have increased as much as 30% annually.

VIEW FROM MATRADE BEIJING:

China’s clothing market is expected to continue booming this year. This could be attributed to the following factors:

i.          General estimates indicate a country’s clothing consumption volume will grow 0.4% when its gross domestic product increases 1%.

ii.               Babies spur demand for clothing

o        between 11 and 12 million babies are born annually in China. The present 1.285 billion population will add to 1.32 billion in 2005 and reach 1.4 billion in 2015.

o        Estimated baby clothing expenditure for the additional 11/12 million babies per year  is US$ 7.5 billion.

iii.         As more rural residents become city dwellers, under China’s urbanization scheme, the country’s clothing consumption will rise. Urban residents on average spend 3.7 times more than rural residents on clothing. About 20 million farmers are expected to migrate to cities starting from 2010.

iv.         The vast market potential, in terms of seniors and rural residents, has yet to be tapped. Chinese farmers’ purchasing power has grown substantially in recent years and young farmers prefer to spend on clothing. However, poorly knit clothes and out-dated fashions seem to be the only clothing items still available in rural areas.

v.         The underwear market segment is also promising, as more people are starting to enjoy better lifestyles.

The booming clothing and apparel industry in China provides opportunities to the Malaysian producers and exporters. The growing number of affluent consumers generates demand for branded and imported items. These consumers want to spend more in order to enjoy better lifestyles and therefore needs something of good and high quality products.

In addition to exporting directly to Chinese market, Malaysian companies may also consider to establish presence in the market by through setting up operation offices, franchised stores or boutiques in potential cities. This will help them promote their products directly to consumers.

  Back to Index of March 2004