The Chinese apparel industry is currently going through a downslide but looking at the larger picture its potential cannot be undermined. Growth in this sector is predicted and by 2015 the market will have recovered its former glory. There was a reduction in both the Chinese textile sector’s gross industrial output (18.8 percent) as well as the textile export rate (25 percent) during the first six months of 2012. Currently the sector is going through a recovery phase. There are more than 100,000 garment manufacturers employing over 10 million people in China. China finds itself as the largest manufacturer, exporter and consumer of garment products throughout the world. The Zhejiang region accounts for the maximum number of apparel clusters, followed by Jiangsu and Guangdong.
Certain segments within the Chinese apparel industry have witnessed growth in clusters for ex: the lingerie market accounted for a significant share together with the sportswear segment. According to a new research study by RNCos, the Chinese apparel market is estimated to grow at a CAGR of 7% during 2012-2016 and it is worth USD 138 billion in 2012. It is currently being dominated by the women’s wear segment which is expected to continue ruling in the future. The domestic market for apparel in China has been growing at an astoundingly high rate whereas the overseas demand is in decline. Other factors which have an influence on the local market are increasing foreign player participation, rising investments and domestic player’s expansion. On account of the increasing domestic demand for apparel, several leading fast fashion apparel players are expanding their focus from first tier cities such as Shanghai and Beijing to lower tier cities across the nation. Brands such as H&M, Gap, Uniqlo and Zara are aggressively opening new outlets across China.
Based on the current market trends and the increasing number of fashion conscious youth, the growth of the local industry will continue. However to recapture the overseas demand for Chinese apparel, manufacturers need to control labor costs, invest in technology updates and enhancement of product quality. The Chinese apparel boom has faded just yet.
Brickwork Sourcing provides end-to-end procurement research and consulting services to clients from all major continents. It specializes in assisting clients with low cost country sourcing as well as Indian market entry assessments.
Is the domestic demand for apparel in China taking a toll on its overseas exports?