Textile And Clothing Industry: The Rise Of Domestic Products Is At The Right Time

After the Xinjiang cotton incident, we have repeatedly stressed that this year is the clothing year, and we believe that the rise of domestic products is expected to continue in the next few years. Clothing is only a part of the rise of this round of domestic products, home appliances, mobile phones, cars, cosmetics, baby milk powder brands are in the process of comprehensive rise.

From the perspective of market share, domestic milk powder increased from 41% in 2016 to 54% in 2020, domestic automobile increased from 38.2% to 41.6% from January to April 2020, and domestic color makeup increased from 3.1% in 2011 to 19.5%.

In the process of the rise of domestic products, the growth of leading brands is faster, with a typical growth stock style, and the trend of high-end brand is significant, and the net profit margin of sales is rapidly improved. Among them:

Even if affected by the epidemic situation, Li Ning, bosden and Anta will have an income of 145 / 136 / 35.6 billion yuan in 2020, with a compound growth rate of 18% / 15% / 29% in the past three years; In 2020, the net profit will be 17 / 17 / 5.2 billion yuan, and the compound growth rate in the past three years will be 49% / 41% / 19%.

The revenue scale of high-end milk powder brand Feihe increased from 10.4 billion yuan in 2018 to 18.6 billion yuan in 2020 (compound growth rate of 34%), and net profit increased from 2.2 billion yuan in 2018 to 6 billion yuan in 2020 (after adjustment) (compound growth rate of 65%).

Casati, a high-end household appliance brand, increased its revenue from 1.7 billion yuan in 2014 to 8.7 billion yuan in 2020 (a compound growth rate of 31%).

Behind the rise of this round of domestic products, it can be summed up as follows:

Confidence in national culture has been strengthened. With the strong national strength, the huge gap between China US trade war, Huawei incident, 3.24 Xinjiang cotton incident, the latest Tokyo Olympic Games and 2008 Beijing Olympic Games has further strengthened the cultural confidence of Chinese people. At the same time, young consumer groups have a very high acceptance of new brands and new marketing. Take hongxingerke as an example, the 50 million donation directly drives the sales of tmall flagship store to nearly 11 million and 90 million from the sales volume of hundreds of thousands per day in the past two days of July 22 and July 23.

Domestic products are surpassing foreign brands. In the field of clothing, sports apparel with the strongest technical content is taken as an example. Overseas brands have not launched breakthrough technologies for many years; On the contrary, domestic brands show the trend of specialization, youth and differentiation.

Digitalization brings about an overall improvement in efficiency. In the past, there was a huge gap between the distribution channel model of domestic brands and the retail system accumulated for many years abroad. However, in 2015, the online and offline direct marketing and franchise systems were opened up, and the warehousing and logistics distribution system, as well as suppliers, were opened up, so that the overall retail efficiency was rapidly improved (which was also the basis for inventory control of leading clothing enterprises under the epidemic situation in 2020). In addition, digitization promotes the efficiency of human resource assessment and other management links. Anta and Feihe are successful examples.

New traffic accelerates the rise of domestic products. In the past, most of the media resources dominated by CCTV were in the hands of more powerful foreign brands. In recent years, the rapid rise of new media, live broadcasting, private domain and other new traffic resources are gathering places for young people, which is very conducive to the dissemination of domestic products.

We believe that domestic brands have a better understanding of Chinese people in terms of products and marketing. They are rapidly penetrating from the original main position of the third, fourth and fifth line to the mainstream consumers of the first and second tier. The higher market share of overseas brands in China just provides a large space for the growth of domestic products, and the rise of domestic products is at the right time!

Risk tips: the short-term consumption data caused by epidemic situation and flood is lower than expected; The recovery of automotive chips was lower than expected; The price of raw materials is higher than expected; The demand for automobiles is lower than expected; The opening speed was lower than expected; Exchange rate fluctuation; High end demand is lower than expected; The competition intensifies the risk; The risk of regulatory policy adjustment in cosmetics industry; Risks such as entrusted processing and quality control of products.