Seize A New Round Of Market Opportunities In Industry Consolidation

Interpretation: Mao Zhenyu, Research Institute of Chinese property rights and PE market, Peking University

Core tips

Apparel industry boom in the three quarter of 2011

Production and management is not optimistic.

China's clothing industry prosperity index report shows that the three quarter of China

Since 2011, whether the sports brand clothing enterprises, or women's wear, suits and casual wear enterprises, have different degrees of raise prices.

In September 7th, at the thirteenth Jiangsu international fashion exhibition, Bosideng and other enterprises said that the price of new autumn and winter clothing increased by 10% to 20% this year due to the impact of rising raw materials and manpower costs.

From this we can see that the growth of retail sales in the three quarter is to a greater extent the growth of unit price, and the volume growth is relatively limited.

In the three quarter, the sales profit margin of garment manufacturing fell rapidly from 4.5% to 4.5% in the first quarter.

Rising cost is the main reason for the decline in profit margins.

On the one hand, the rise of wages and benefits coupled with the emergence of "labor shortage" has led to an increase in labor costs.

On the other hand, the rise in rents and the increase in pport prices have led to an increase in business costs; at the same time, water, electricity and other resources.

Industrial data in August 2011 showed that clothing and accessories exports amounted to $17 billion 88 million, a decrease of 1.19% compared to the same period, an increase of 26.91% over the same period last year.

The cumulative value of cotton yarn exports is 291 thousand and 200 tons, down 24.62% compared with the same period last year.

At present, the increase in the export volume of textile and garment industry is mainly due to the growth of unit price, rather than the expansion of orders. The PMI of new export orders in August dropped to 48.30.

On the one hand, this shows that the bargaining power of China's textile and garment industry has increased. On the other hand, it shows that the external market economic downturn has led to the shrinking of external demand, and the pfer of some orders to Southeast Asia and other countries with lower labor costs and lower rental costs.

In the four quarter, the growth of external demand in China's textile and garment industry will be weakened due to the slow recovery of the US economy and the short term difficulty in solving the European debt crisis.

Industry reshuffle trend is obvious

After preliminary seasonal adjustment, the total loss of garment manufacturing enterprises in the three quarter of 2011 was 1 billion 240 million yuan, up 124.7% from the same period last year, and the growth rate was 100.3%.

Taking into account the decline in the level of sales profit, labor, production, pportation, financing and other aspects of the cost continue to take many adverse effects, the garment manufacturing industry deficit situation may expand further in the near future.

At the same time, the end of the three quarter, the apparel manufacturing industry accounted for 67 billion 500 million yuan of finished product capital, an increase of 28.7% over the same period.

Statistics show that in 2010, China's clothing inventory reached 20% of the production volume, about 15 billion, and the annual growth rate remained at 10%.

According to the normal growth forecast, 17 billion pieces of clothing tail products will be produced in 2011.

Because of the obvious seasonal and fast updating of clothing products, how to deal with increasing inventory has become one of the most headache problems for the clothing industry.

If the product is overloaded, it will not only occupy the company's operating capital, but also waste manpower and material resources. It will also increase the management cost and profit cost of the company, lengthen the turnover cycle of the product, reduce the overall profit of the company, and even seriously affect the survival of the enterprise.

High inventory may have little impact on large enterprises with strong bargaining power and strong risk tolerance, but for small and medium enterprises, especially those with tight funds, excessive inventory will inevitably increase the risk of enterprise operation.

At present, the concentration ratio of China's clothing market is low, and the number of small and medium-sized enterprises is huge.

However, the number of large-scale enterprises and brand enterprises is increasing.

When the market structure has not yet stabilized, there will be a rapid growth of stamina enterprises.

Therefore, the garment manufacturing enterprises will face the situation of "strong Heng Qiang and the weak ones". The production and operation of difficult enterprises will be more difficult. The difficulties of small and micro enterprises will intensify, and the integration of industries will accelerate.

Seize future market opportunities

Although the production and operation of garment industry in the short run is not optimistic, in the long run, with the increase of income and the upgrading of consumption, China's clothing industry is still facing the opportunity of rapid development.

The 12th Five-Year plan outlines that the per capita disposable income of urban and rural residents can be controlled.

At the same time, China's consumption structure and consumption patterns are undergoing rapid changes, especially for young consumers.

First of all, the market is more pparent; second, consumers pay more attention to social interaction and socialization in shopping behavior. They interact with friends in electronic way, and no longer blindly believe in retailers. Third, consumption is more personalized, and they need more distinctive products.

Therefore, garment manufacturing enterprises can fully understand the changes of China's consumer market, and adopt effective ways to adapt to these changes and lead the market demand, so that they can remain invincible in the future competition.

First of all, two or three line cities should be arranged ahead of schedule.

During the "12th Five-Year" period, the consumption level of urban and rural residents in clothing will be greatly improved, especially the development speed of the two or three line cities may be substantially faster than that of the first tier cities. Therefore, it is important to seize the market share of small and medium-sized cities as soon as possible in the context of foreign demand and the increasing saturation of the first tier cities.

Many brand clothing enterprises are now adopting the strategy of sinking in the two or three line city expansion, which also confirms this point.

Secondly, we focus on constructing a unique and differentiated consumer experience.

As consumers become more familiar with fashion and the Internet, enterprises need to consider more ways to market their products.

BCG predicts that the number of Chinese online shoppers will increase from 145 million in 2010 to 329 million in 2015.

With the increasing number of consumers from the Internet, the importance of network channels is more and more obvious.

Although clothing is already a popular category of e-commerce, many industry analysts believe that no retailer has actually achieved a real multi-channel retail experience in China.

The real-time visibility of multi-channel inventory, the reliability of logistics services, the convenience of product return and the coordination of cross channel promotion will be an important guarantee for the network of garment market.