Analysis Of The Ten Key Trends Of Fashion Industry In 2017
After 2016, which has slowed down with turbulence and uncertainty, our analysts expect that in 2017, fashion The market will usher in a certain recovery. The industry will grow by 2.5% or 3.5% next year. This slight increase will be affected by several factors. First, the impact of macroeconomic environment, such as global GDP growth forecast, will increase by around 3.4% compared with 2016. However, when we published, the figure did not make any adjustments to the consequences of political turmoil in the United States and Britain.
Secondly, the investment industry expects the whole Latest fashion There will be improvement in the industry, especially by the leaders of various product categories in the industry, many of which will restructure and divest non core businesses with poor performance. This has been recognized by our executives. They also expect that all product categories will grow. 40% of the experts surveyed expect the industry to improve in 2017. However, it is also necessary to note that 37% of people expect the situation to get worse, and some of the heavyweight figures in the fashion industry, especially those in the high-end market, say that the industry may not be able to get any signs of recovery in 2017.
In terms of revenue, our analysts expect the fashion industry to grow by 2.5% to 3.5% in 2017, up from 2% to 2.5% in 2016. Although it is only a small sign of recovery, it has not been able to achieve the 5.5% annual growth rate over the years. Affected by these factors and the rebalancing of market environment in China and North America, growth in 2017 is expected to be consistent with GDP growth. Taking into account the changing political environment of countries and the result of the US general election, global GDP growth and other macroeconomic indicators, such as oil and futures prices, are quite volatile. To sum up, the fashion industry in 2017 will not have the same outstanding performance as GDP growth over the past ten years.

Market segment performance
According to the world clothing and shoe net, in 2017, we expect that all segments of the market will improve in addition to the discount market. We believe that the winner will continue to be a positive and light market segment, with sales growth of 3% to 4% and 3.5% to 4.5%, respectively. The two markets are benefiting from the change of consumption in the market. More and more consumers are switching from luxury goods to light luxury brands, and choose products that are cost-effective rather than discounted.
Despite the improvement in the high-end and mid market brand growth, their performance will not exceed the overall market growth and brand growth. The growth of high-end and mid range luxury brands in 2017 is expected to grow from 1.5% to 2.5%, about half of the growth rate from 2005 to 2015 (the composite growth rate of high-end brands is 6%, while the middle end) is the highest. brand Then it was 5%. In any case, growth has been improved compared with 2016. The two major segments, especially the mid market, will benefit from the rapid growth of e-commerce enterprises. In the future, the US's new economic policy in international trade and taxation will further affect growth.
However, we expect that the discount market will continue to grow 2% to 3% in the next year, which is the slowest part of all market segments and lower than its historical growth level. Some market competitors will inevitably grow harder and compete with those who offer cheap products and compete in a cost-effective market. Other competitors in the market will continue to grow with the expansion of geographical layout and the dense retail network. Although growth in 2016 and 2017 will not accelerate, some players in the market should be able to resist the impact of the cost-effective market and fight back.
Product category performance
We do not expect a product category to rise in 2017, most of which will be consistent with the overall growth of the industry and increase by 1 or 2 percentage points in 2016. Sportswear is expected to continue to lead and become a big winner, maintaining a growth rate of 6.5% to 7.5% next year, but this trend will be relatively small compared with 2016. Although the overall growth rate of sportswear seems to be no longer the two digit growth in the past, its product category sportswear and leisure wear (Athleisure) will continue to maintain the growth momentum mentioned above. The market for watches and jewellery will be expected to grow by a single digit between 2% and 3% in 2017. Although the market for high-end watches and jewellery will be improved, the growth level is expected to be between 1% and 2%. The main source of growth will come from the mass market (premium jewelry, fashion jewelry and silver ornaments). Generally speaking, if the enterprises want to be winners of their product categories, the homogeneity of each product category highlights the importance of channel strategy and explicit value proposition.

Growth sources
Although the industry's performance in 2017 will be more positive than in 2016, industry participants also need to recognize the challenges that will be faced in 2017. Survey data show that the most severe challenges facing next year will come from how to deal with turbulence and uncertainty, as well as changes in the global economy, and in this case, to achieve sales and profit growth. In addition, fashion executives continue to view competition from online players as one of the three major challenges they face next year.
Finally, the improvement of supply chain, the reduction of passenger flow and the acceleration of fashion cycle are also their concerns. On the one hand, these challenges highlight the fact that top executives will also face changes in the international economic situation, consumer habits and internal adjustment of the fashion system. On the other hand, these challenges are also balanced with the opportunities they face, such as improving consumer experience, integrating channels and digitalization of the value chain.
Interestingly, in 2017, the fashion industry wanted to focus on organic growth rather than cost reduction. According to data from the reporter - McKinsey Global Fashion format report, only 5% of executives think that cost instead of sales will become the focus of increasing profits. They feel that the potential for further cost cutting is running out: in recent years, enterprises have implemented multi-layer cost reduction measures, but they all think that profits must be started elsewhere. Enterprises seem to refocus on top line growth and emphasize continuous performance management. Major investment growth is expected to come from full channel integration, e-commerce and digital marketing.
In addition, through enhanced customer relationship management (CRM) can also bring organic growth, and store experience will continue to be the key to enhance revenue in 2017. In order to increase profits, fashion enterprises can not rely solely on the obvious cost control method, such as standard procurement optimization. Executives will focus on productivity and process improvement, indicating that mature procurement is also used as a lever to reduce costs.
In 2017, the fashion industry had the chance to take a firm foothold and set sail again. Next year, fashion companies will have the opportunity to learn from their 2016 experience through hard work in exchange for growth. The next 10 key trends next year reflect the timing of the fashion industry. These trends are drawn from a number of qualitative and quantitative analyses, desk studies, interviews with industry executives, interviews with journalists and McKinsey.
{page_break}1 aggravation of turbulence
Every year, MGI surveys the attitude of more than 1600 executives in various industries around the world in terms of macroeconomic and geopolitical environment in the coming year. In 2017, more than half of the respondents predicted that the economic situation will continue to face challenges and will experience uneven and volatile growth. In addition, internal contradictions and terrorism are still worried by many regional executives. Indeed, a recent report from the Armed Services Committee of the US Senate shows that the activities of terrorist organizations will increase in the coming year, perhaps to a record high.
Another uncertain factor came from the pending Britain's withdrawal from Europe, which means how a series of negotiations with the EU can be formally separated from the EU. Britain's departure from the European single market has led the pound to a 168 year low. At the same time, the market is unable to determine whether there is a specific negotiating timetable for Europe. As for the uncertainty of the existing and potential trade agreements, the result of the US general election is the free trade area which has been rejected by the local legislature and the trans Pacific Partnership Agreement shelved by the Chinese government.
With turbulence becoming the new normal of 2017, fashion companies should realize that their businesses will be affected at all levels. This includes overall consumer demand, tourist volume, price adjustment, exchange rate changes and labor and resource costs. Therefore, companies will need to adjust their strategies in the following 4 ways. 1., we should adopt a consumer oriented thinking mode to adapt to the needs of consumers in real time. 2., establish a flexible supply chain to ensure smooth operation. 3., brand, category and geographical product diversification. A senior executive from the global giants suggests that to achieve balanced performance, we need to understand the advantages of other regions when a region is weak. 4., control costs to ensure the safety of cash flow. In the end, even the most successful strategies need to be flexible in organizing patterns.
2 will China rebound?
Today, China plays a vital role in the global fashion industry, especially in the past few years, which has become the core of growth. The most important question now is whether China will rebound in 2017.

Fashion executives believe growth slowdown is only temporary. Indeed, in the long run, the foundation of China's fashion market is still very solid: the growing middle class, the rapid development of mobile electricity providers and the continuous upgrading of personal consumption. Between 2015 and 2025, China is expected to account for 28% of the world's new upper middle class and upper class families, while the United States is only 3%.
In addition, China is expected to further leverage macroeconomic leverage to stimulate investment and consumption. For example, Rating firm, Moodie, saw the 2016 series of fiscal and monetary stimulus policies, and raised its expectations for China's economic growth in 2017. The Chinese authorities have stimulated the economy through cheap credit and policy support, including the easing of money by the central bank, the reduction of bank deposit reserve ratio and the reduction of interest rates. The above factors should be able to offset the impact of anti-corruption campaign.
In 2017, Chinese consumers will have more exposure to fashion. E-commerce operators such as Alibaba and Shang pin Wang are making fashion more accessible in the country. In addition, mobile growth has become the most significant growth point of the fashion industry in China. Historically, fashion consumption is mainly driven by tourism. Chinese consumers need to travel to the US or Europe, while consumers in the three tier cities need to go to Beijing or Shanghai to find fashion products. Today, however, the rise of mobile e-commerce has made it easier for consumers to reach international brands.
International luxury brands will also become more attractive in 2017. This is mainly driven by products with simultaneous global listing. The reduction of distance and the reduction of information asymmetry will make the channel integrate. With the integration of online and offline channels, Chinese consumers will not have to worry about where to buy and how to buy at different prices.
Of course, the market is still facing some resistance. Although the internal macroeconomic situation is stable, external and international economic policies, especially after the handover of the US regime, will have a direct impact on China's consumption. Furthermore, economic stimulus does not directly lead to increased consumption. After years of rapid growth, brands need to realize that people's wardrobe is full, consumers are becoming more picky, and more and more Chinese consumers are pursuing more experience, learning, personal promotion and health.
3 acceleration of Urbanization
For many years, market forecasters have regarded urbanization as a key trend in development. The new class from fast-growing cities in emerging markets is well-off enough to create new shopping centres. This ability enabled them to become the core of the fashion revolution for the first time. Over the past 30 years, more than 400 million of China's population has moved into cities, and now a new wave of urbanization will continue in medium-sized cities such as China, India and other densely populated countries. These cities will reach the critical population threshold, and the formation of urban centers will provide opportunities for fashion enterprises to continue to grow.
Pune of India and Harbin of China are all typical of the medium-sized cities of the two countries. In 2017, the urban population will reach 700 to 8 million of the population, almost at the same level as London and Paris. As these second tier cities attract more residents and farmers' families move from rural areas to cities, the opportunities for fashion enterprises to expand are also expanding. In the next few years, global growth will shift to the East and the south. As McKinsey's urban growth forecasting tool FashionScope, which is a fashion industry, shows that urbanization in emerging cities will be the biggest driving force behind it.
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Under the environment of slow global growth, growth will be highly granular and uneven. Therefore, it is very important to examine the city's performance through a product category. For example, in the expectation of FashionScope, between now and 2025, Hongkong may be the world's first jewellery sales, leather goods sales are second, but the growth rate of clothing and footwear market is not even up to ten. When making decisions in 2017, fashion companies need to adjust their product structure at the urban level and consider where to invest for future growth. Delhi, such as China's Tianjin and India, is the fastest growing city for jewelry consumption, while shoe sales are excellent in Mexico City. However, success in a city does not mean that all product categories are very popular, and vice versa.
The importance of the city means that the design also takes special consideration of the city and the region. Kuwait in the Middle East, Guadalajara in Mexico and four tier cities in China are becoming the source of inspiration for creativity and products. To put it more broadly, we will see that fashion companies shift from the national market level to the urban level. From vague guidance to more detailed monitoring, strategic planning and business action. The challenge for the international brand in the coming years will be to establish a deeper relationship with the customers they attach importance to in various cities.
In adjusting the strategy around the local guests and expanding in the urban centers, the fashion companies running in the emerging markets also need to expect competition from local brands. They are also improving and trying to seize the market opportunity. For example, in India, H&M, Zara, Uniqlo and Mango are facing challenges from the largest retail group in India. They are also moving into fast fashion, not only on price, but also on product category and listing speed. Our analysis is expected that similar strategies will be adopted by local competitors in Africa, the Middle East, China, Korea and other key growth markets in the coming years.
4 smarter consumers
In 2017, consumer demand and behavior are expected to become more sophisticated, more scientific and technological, and more elusive than in the past, and fashion companies must strive to catch up.
Today's consumers are always on the line, getting a lot of information, being more interconnected with each other, more critical, and paying more attention to value and reality, and perhaps even more elusive. This new consumer choice combines different brands and designers and is more common than ever before. The main driving force behind the change in consumer behavior is the simplicity of information acquisition and interaction with brands, as well as the need for personalized demand and resonance with deeper values. As brands become more prevalent, consumers are beginning to break the market segments. For brands that rely on traditional loyal consumers to buy single market segments, the market is becoming more and more complex.
The more competitive territory, more brands, more channels and more retailers, further amplifying the complexity of consumers. The brand will need to rethink the future mode of the store and focus on optimizing the consumer experience, especially to enhance the full channel consumer decision-making process, so as to create a seamless shopping experience. This may change the shape of the store to get closer to the online experience, or to enlarge the mobile and digital experience in the store, and introduce a community-based retail concept.
As consumers improve their shopping behavior by technology, brands can take this as a competitive advantage and understand their consumers better. In 2017, investing in customer relationship management is very important. More important than ever. Fashion brands need to understand their consumers from a global perspective and have a better understanding of what they want, what they like, what they do not like and when and where to shop. Consumers are faced with so many choices that fashion companies need to extract valuable information from the data they own. The reason why the new brand is tight encirclement lies in the fact that many traditional fashion brands cannot satisfy consumers nowadays. These new brands, such as Olivia von Halle, Cambridge Satchel Company, Mansur Gavriel and Common Projects, take advantage of the best market or best strategy to break the sunrise, or to create a single selling style as their business strategy.
At the same time, technology is changing rapidly, making the interaction between brands and consumers increase. Virtual reality is red, some brands have launched immersive viewing experience, while other brands have established mobile payment, such as Alibaba's VR payment, allowing consumers to buy products displayed only by nodding their heads. The big winners in 2017 will be those who invest in the right technology products. Technology will help them understand and serve their customers and meet their current needs that are not met.
5 the needs of the two generation
Two distinct groups of consumers will continue to develop rapidly. They are elderly retirees, one millennial generation. In order to succeed, fashion companies need to pay attention to the way and attitude they communicate with these two groups.
Analysts from McKinsey predict that the elderly retirees in the developed countries will account for 1/3 of the total population in the next 15 years, from 164 million to 222 million. By 2025, the world's population over 60 will reach 30% in the developed economies, which is 13% in emerging economies. This represents a growth of 51% in the developed market, and will reach US $4 trillion and 400 billion by 2030.
For fashion companies, the market has huge opportunities. Therefore, brands need to find suitable ways to communicate with these valuable consumers. Part of the challenge will be how to balance the image of brand communication and weaken the concept of age. Brand will pay more attention to design language rather than service for a specific age group. In fact, some people in the market do not care about the rules of dressing according to age. In fashion icon Iris Apfel, "I think women who have their own style and know who they are are not required to dress up according to the age of 60, 20, or 90."
The second most important consumer group is the millennial generation. By the spring of 2017, the millennial generation was the largest population in the United States. Over the next ten years, their total income of $1 trillion is expected to be 30% higher than that of "X generation", 7.5 times higher than that of the baby boomers. Globally, 85% of the millennial generation lives in emerging markets and has Moyo's purchasing power of $3 trillion and 500 billion. This figure is expected to increase by 3 times by 2025. But catching this opportunity means that brands need to communicate more effectively with the millennials and respond to their needs more quickly.
For this reason, brands need to understand the motives behind the millennial fashion consumption attitude and behavior, and realize that they can not be cut across the board, but should be subdivided into multiple consumers. According to McKinsey's 2016 millennial survey, 11000 millennial consumers in the United States show that the main consumption drivers of the millennials are value, quality and image. Different categories of consumption have different emphasis on different factors, and many niche markets have been generated. The market includes price driven, not overly concerned about brands, decision making after deliberation, self-expression drive, willingness to pay high prices, etc. Compared with other age groups, the most prominent feature of the millennial generation is that they regard themselves as citizens of the world, live in an environment without borders, have similar educational and cultural backgrounds, and are driven by value to find links with brands.
In 2017, fashion companies need to consider changing their strategies to better serve these two groups. Instead of focusing on age, it is necessary to identify the values that resonate with those two ethnic groups.
{page_break}6 health bonus
Traditionally, health and fashion industries are not allies, but with the vigorous development of the health industry, the fashion industry will not profit from it or compete with it. In the past few years, fashion companies have begun to pay attention to the trend of healthy new lifestyle, leisure and sportswear began to rise.
In order to seize this opportunity, fashion brands are also launching their own sportswear and product lines. The revolutionary aspect of the product is to provide customers with a healthy experience, which is loved by younger and more active consumer groups. Similar cases include Nike's night running club and Reebok's mobile CrossFit gym. These activities and other experiences are very important. Today consumers are interested in personalized, changing experiences to achieve "better themselves". It also helps create more niche markets such as sports shoes, otherwise it will be classified as general merchandise.
Nowadays, fashion only responds to some healthy activities, which are often isolated. The main focus is on the creation of physical products to respond to people's desire to become more slim. Some brands focus on narratives and establish emotional connections with customers, while others attract consumers by emphasizing environment and using organic fabrics. However, the experts we interviewed indicated that these reactions were limited. The concept of health transcends the concept of a person. Mental, physical, spiritual, sensory and environmental perceptions are also involved. The relationship between a brand and more factors, brand will also become stronger and more closely related to consumers. But nowadays fashion brands do not operate in a sustainable way, because they only satisfy part of their demands, rather than seek them all.
In 2017, fashion enterprises should benefit from the trend of health and understand consumers in a more comprehensive way, so as to compete with the health industry. Otherwise, consumers will spend large sums of money in their wallets on other products and services that will fulfill these demands. The fashion industry can extend the narrative and value concept to make people feel good and feel at a good level.
7 change the system
In 2017, the fashion industry will hold its breath in the face of the recent fashion cycle of collapse. From the point of purchase, we can see the display of men's dress ensemble, and the fashion cycle was deeply subverted in 2016. Vertical retailers start the acceleration cycle in order to achieve flash buying and open purchase. However, the decision of the industry's high-end sector starts to change the sales display cycle, which has ripple effect on the whole industry. Today's brands need to be adjusted to the most competitive models and product offerings.
Starting from September 2016, the initial performance of the "buy to buy" look series seems to be a viable revolutionary model. In addition to the topic, it has attracted the attention of the media and has become a valuable marketing tool. The brand that first implemented the model did record positive financial data. For example, after the Tommy x Gigi conference, a number of single products priced at $100 have been sold out online. On the following day, several single items in flagship store on Regent Street Burberry were sold out before noon. In the following week, a number of star products sold on the brand's website. Bergdorf Goodman department store said that the second day of the Tom Ford New York conference, the brand recorded its best sales performance in the store. For the supporters of change, the move is the right step forward for the fashion industry. It lets more consumers participate in the press conference and adjusts to the shopping mode that consumers want.
The official financial data will be disclosed in 2017, and the brand will fully demonstrate its annual retail performance. Nowadays, how many products are sold at once, that is, how to sell the products in the selling mode, and how much the brand and retailers have to replenish the products after the show, and how much of the forecast of the merchant's orders. Despite the positive financial data, there are still many doubts about the impact of the new implementation model on production and manufacturing processes and on what investments need to be made. More importantly, for high-end brands, the impact of this mode on creativity will not be known.
The best way is not to go all the way, and the decision to adapt to the new cycle will be based on creative process, brand itself, product category and company channel. Having said that, if consumers finally embrace the status quo, the brand will have to adapt themselves to the new business model.
8 organic growth
2017 is expected to be a year of organic growth. The good days of rapid growth through shops are gone forever. Next year, I will see brands focus on higher revenue, increase internal demand, and achieve growth through value rather than quantity. It is true that the era of "cutting the land and dividing the territory" has long gone. The traditional rapid growth methods, geographic, channel and network expansion, and being applied to the extreme, are still at this stage of the brand will find that their cost will not make ends meet. In addition, the decline in retail space performance and the rise in costs offset the gains from publicity, thereby threatening growth. Therefore, we believe that next year, successful enterprises will be those who focus on organic growth, especially by strengthening brand description and developing local customers.
To achieve organic growth, there are several steps to go. First of all, fashion companies need to focus more on brand building and escape from the trap of gradual commercialization. In order to increase value, brand needs alienation and maintains clear and strong brand value. In the high-end field, the outstanding brands in 2017 will be those focused on investment and innovation. Create a unique product and take care of the brand's USP. In light extravagance, companies need to maintain more advantages through deeper interaction with consumers. A strong brand is also the best weapon against discounts. The higher the general discount, the more negative impression people will have on the brand.
Strengthening relations with local customers will become an effective way to resist regional fluctuations, especially luxury brands, in order to reduce dependence on tourists affected by international economic and geopolitical turbulence. Training local customers can help international fashion brands fight against market turbulence. They can turn their attention to another place when they really do not perform well.
Technology plays a key role between brand and customer. Through the development of upstream technology, especially prediction analysis, fashion companies can collect and analyze more data and adjust their brand strategy. More realistically, this allows them to focus on creating products for customers everywhere, including limited or special products, reducing the risk of excessive inventory and discount.
9 upstream Technology
Companies that invest more in technology in 2017 will enhance their chances of becoming winners in the future. There are two reasons behind technology investment. First, the star market trend, cycle acceleration, full channel and sustainability, and enterprises will be pulled to different directions. Without technology and its full value chain, they can not achieve so many things at the same time. Secondly, technology is considered to be an effective way to solve the cost pressure of raw material procurement and supply chain. The above two add up, these pressures will make automation, robotics and digital supply chain a key part of the fashion industry. The ILO expects that over half of the workers in developing countries will be replaced by automation and advanced technology in the coming decades, and the fabric and clothing industry will become the leading force in the trend.
In 2017, the trend of automatic transfer will appear. Large international enterprises have announced large-scale projects, such as Adidas's "speed factory", and Nike's logistics center based on sustainable supply chain in Belgium. In this year, the core themes of the digital supply chain of the fashion industry will be prototyping, personalization, end-to-end transparency and inventory planning. Digitalized inventory management and forecasting analysis, as well as investment in customer relationship management, will enable fashion companies to link global inventories with every consumer. This makes it possible for a product placed on the shelf to be sold to a consumer at the other end of the globe. But excessive obsession with data is also dangerous. If a brand delivers all the creative processes to data analysis and anticipate the needs of consumers, the homogenization of products will be unavoidable.
Adopting efficient technology will put pressure on the creative process of all segments of the market. New tools such as virtual design to virtual proofing will increase efficiency and control design cost.
For some companies, the natural choice may be to keep looking for new and cheaper raw materials, because the process can not be more refined, or lack of funds to promote automation and use of robots. However, other enterprises will make greater investment in the field of digital change.
10. ownership change
Finally, we believe that the pressure in 2017 will lead to changes in the ownership of the fashion industry. At the end of supply, many fashion giants are facing growing pressure. They may reexamine brand portfolios or peel off non core brands to cope with market pressures. This means that the implementation of the "super brand strategy" will focus on good brand performance. In 2016, the strategy of stripping individual brands rose to the surface, and LVMH stripped Donna Karan. This is the first business divestiture of the group since 2005. This has further opened the door for further adjustment by large groups in the future. The sale of poorly performing businesses will allow organizations to focus on developing star brands better, especially in luxury goods that emphasize high profit margins.
Opportunities for investment in fashion are increasing and demand is growing. The private sector is facing pressure, especially in the deployment of funds. In June 2016, Preqin, a research firm, showed that the $818 billion in the private sector was nowhere to be invested, almost unprecedented. In the past few years, different private companies have gained experience in the fashion industry, including KKR and SMCP, Permira and Valentino, Clessidra and Cavalli, Carlyle and Moncler, Blackstone and Versace. Abundant capital, rich experience and successful cases in the past few years mean that the private sector will further enter the fashion industry and invest more professionally in the brand.
The fashion industry will have a series of interesting investment opportunities in 2017. When the luxury market is controlled by large groups, the luxury market and the middle end market are still full of opportunities. As the McKinsey Global Fashion index shows, the market space is fragmented, and there is a huge gap between the top and bottom competitors. In any case, light luxury and high-end markets are fast growing areas of emerging brands. Therefore, investment or the following two trends. First, buy bad brands and renovate them. Second, invest in new brands that have potential for growth.
More interesting reports, please pay attention to the world clothing shoes and hats net.
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