Industry Analysis: A Brief Analysis Of The Economic Operation Of China'S Clothing Industry From January To October

Since 2022, affected by the severe and complex macro situation at home and abroad and multiple unexpected factors, the supply and demand sides of China's clothing industry have been under serious pressure, and the economic operation has continued to slow down. With the implementation of a package of national policies and follow-up policies and measures to stabilize the economy, the operating environment of the industry tends to be stable, enterprises actively carry out marketing, market activity gradually improves, and the domestic clothing market continues to recover. However, the recent domestic epidemic situation has spread frequently, the risk of world economic recession has intensified, and industry enterprises still face greater pressure to maintain stable operation. The apparel industry will continue to promote the transformation, upgrading and innovative development of enterprises, constantly improve the core competitiveness of the industry, steadily release the development resilience and risk resistance, and strive to promote the high-quality development of the industry to achieve new results.

1： Economic operation of clothing industry Production growth continued to slow down

From January to October, the production growth of the clothing industry continued to slow down and the decline of clothing production deepened due to the adverse factors such as frequent outbreaks of domestic epidemics, weak market demand, and declining export growth. According to the data of the National Bureau of Statistics, from January to October, the industrial added value of enterprises above designated size in the clothing industry increased by 0.6% year on year, 3.8 percentage points slower than that in the first half of the year, and 8.5 percentage points slower than that in the same period of 2021. Since July, the decline of industrial added value of enterprises above designated size in the clothing industry has continued to deepen, falling by 0.2%, 1.3%, 3.7% and 10% year on year respectively. In the same period, the clothing output of enterprises above designated size was 19.319 billion pieces, down 2.05% year on year, 0.57 percentage points more than that of the first half of the year, and 10.93 percentage points less than that of the same period in 2021. Among them, the output of woven clothing was 7.266 billion pieces, down 3.50% year on year, and the output of knitted clothing was 12.053 billion pieces, down 1.15% year on year, with the growth rate down 6.51 and 14.25 percentage points respectively compared with the same period in 2021.

Figure 1 Production Growth of Clothing Industry from January to October 2022

Data source: National Bureau of Statistics

The domestic market keeps recovering

Since 2022, affected by the spread of domestic epidemic in many places, the domestic clothing market in China has declined significantly. Since June, thanks to the efficient coordination of epidemic prevention and control and economic and social development by governments at all levels, as well as the remarkable effectiveness of consumption promotion policies, the domestic sales of clothing have shown a trend of improvement and recovery, and the decline has narrowed. In October, due to the large number of local epidemic spots, wide coverage and frequent occurrence, residents' shopping and social activities were reduced, and the domestic clothing market was hit to some extent. According to the data of the National Bureau of Statistics, the retail sales of clothing commodities of units above the designated size in October fell by 9.2% year on year; From January to October, the retail sales of clothing commodities of units above designated size in China totaled 739.12 billion yuan, down 5.5% year on year, 2.5 percentage points lower than the first half of the year, and 24.8 percentage points lower than the same period in 2021. The growth rate of online clothing retail has accelerated. From January to October, the online retail sales of clothing products increased by 5.3% year-on-year, 2.9 percentage points faster than the first half of the year, and 8.8 percentage points slower than the same period in 2021.

Figure 2 Clothing sales in the domestic market from January to October 2022

Data source: National Bureau of Statistics

Increased downward pressure at the outlet

Since 2022, driven by the recovery of international market demand, rising costs and other factors, China's clothing exports have continued to grow. However, since August, as the global economy, especially the recession in the euro area, has increased, leading to a weakening of consumption demand in the international market, combined with the impact of multiple factors such as the recovery of overseas supply chains and Sino US trade frictions, the growth of clothing exports has slowed down significantly. In September, clothing exports turned to negative growth, and in October, the decline in exports significantly deepened, further intensifying the downward pressure on clothing exports. According to Chinese customs data, from January to October, China's clothing and clothing accessories exports totaled US $147.586 billion, up 6.4% year on year, 5.6 percentage points slower than the first half of the year; The export of clothing and clothing accessories in October was 13.655 billion dollars, down 16.8% year on year, 12.4 percentage points deeper than that in September.

Figure 3 Exports of China's clothing and clothing accessories from January to October 2022

Data source: China Customs

The driving force of clothing export prices has increased significantly, and the decline of cotton clothing exports has continued to expand. According to Chinese customs data, from January to October, the number of clothing exports was 26.41 billion, the same as the same period last year, and the average unit price of clothing exports was 4.62 US dollars, an increase of 11.2% year on year. Among them, the export volume and export unit price of knitted garments increased by 1.1% and 7.9% respectively year on year; The export volume of woven clothing decreased by 2.4% year on year, and the export unit price increased by 16.4% year on year. From the perspective of export categories, the export of commuting, cold proof and sportswear with high added value maintained a rapid growth. The export of suits, casual suits and shirts increased by 66.9%, 30.6% and 32.4% respectively year on year. The export of cold proof clothing such as overcoats and down increased by 25.3% year on year, and the export of sportswear increased by 19.9% year on year. The decline of cotton clothing exports continued to expand. In October, China's cotton clothing exports fell 26.2% year on year, 10.6 percentage points more than that of the previous month; Among them, China's export of cotton clothing to the United States fell 48.7% year on year, 6.9 percentage points more than that of last month, and China's export of cotton clothing to the European Union fell 34.2% year on year, 10 percentage points more than that of last month.

From the perspective of major export markets, from January to October, China's clothing exports to the United States and the EU slowed down significantly, and its clothing exports to ASEAN maintained a rapid growth. According to Chinese customs data, from January to October, China's clothing exports to the United States amounted to $33.1 billion, up 0.5% year on year, 14.1 percentage points slower than the first half of the year. In October, China's clothing exports to the United States fell 35.6% year on year, down 16.5% month on month; China's clothing exports to the EU amounted to US $28.82 billion, up 9.2% year on year, 10.3 percentage points slower than the first half of the year. In October, China's clothing exports to the EU continued to deepen, down 33% year on year and 14.4% month on month. Over the same period, China's clothing exports to ASEAN amounted to 13.18 billion US dollars, up 29.3% year on year, 1.8 percentage points faster than that in the first half of the year; China's clothing exports to Japan increased by 1.8% year-on-year, 7.0 percentage points higher than the first half of the year. From the perspective of export regions, China's clothing exports to countries and regions along the Belt and Road, Latin America and Oceania continued to maintain rapid growth, with growth rates of 15.6%, 24% and 16.6% respectively, driving China's clothing exports up 5.4 percentage points in total. In addition, China's clothing exports to the UK fell 7.8% year on year, while those to Russia and Canada fell 20.7% and 14.4% year on year respectively.

The clothing exports of Guangdong and Fujian declined further, while the clothing exports of Xinjiang grew against the trend. From January to October, China's top five garment export provinces, Zhejiang, Guangdong, Jiangsu, Shandong and Fujian, completed a total of $104.54 billion in garment exports, up 3.4% year on year, accounting for 70.8% of China's total garment exports, down 2.0 percentage points from the same period in 2021. Among them, the export value of Zhejiang clothing reached US $29.83 billion, up 17.3% year on year, while that of Jiangsu Province and Shandong Province increased 3.3% and 8.1% year on year respectively; Guangdong clothing exports fell 6.9% year on year, 3.3 percentage points deeper than that in the first half of the year. Fujian clothing exports fell 7.2% year on year, and the growth rate fell 14.4 percentage points compared with that in the first half of the year. Among the central and western provinces, Xinjiang's clothing export has maintained a rapid growth rate of 82.4%, surpassing Shanghai as the sixth largest province in China's clothing export. The clothing exports of Jiangxi, Hunan, Liaoning and Sichuan increased by 33.2%, 50.2%, 17.2% and 33% respectively year on year, while the clothing exports of Anhui, Hebei, Hubei and Guangxi decreased by 4.8%, 43.5%, 9.8% and 2.8% respectively year on year. It is worth noting that in October, the major garment export provinces declined significantly, while the garment exports of Xinjiang and Guangxi grew strongly against the trend. The clothing exports of Zhejiang, Guangdong, Jiangsu, Shandong and Fujian decreased by 17.9%, 12.7%, 29.2%, 13.8% and 36.7% year on year respectively, while those of Shanghai decreased by 32.1% year on year; The growth rate of clothing exports of Xinjiang and Guangxi reached 66.1% and 103.7%, while that of Hunan and Liaoning increased 17.8% and 5.1% respectively year on year.

Enterprise benefits are under serious pressure

Since 2022, the growth rate of major benefit indicators of China's clothing industry has continued to slow down due to factors such as epidemic disturbance, weak demand, high fluctuations in raw material prices, etc. The cumulative growth rate of business income and total amount of * * * in October has turned negative, and the economic operation of the industry is under serious pressure. According to the data of the National Bureau of Statistics, from January to October, there were 13168 enterprises above the designated size (annual main business income of 20 million yuan and above) in the clothing industry of China, achieving an operating income of 1194.95 billion yuan, down 0.4% year on year, with a growth rate of 4.9 percentage points lower than that in the first half of the year and 8.7 percentage points lower than that in the same period of 2021*** The total amount was 56.32 billion yuan, down 1.4% year on year, 5.4 percentage points lower than the first half of the year, and 6.0 percentage points lower than the same period in 2021. The expansion of industry losses and high costs make it difficult for enterprises to improve. From January to October, the losses of enterprises above designated size in the clothing industry reached 21.24%, 0.21 percentage points higher than that of the same period last year; Operating costs increased by 0.2% year on year, 0.6 percentage points higher than the growth rate of operating revenue. Operating revenue per hundred yuan includes costs of 85.9 yuan, an increase of 0.5 yuan over the same period in 2021; The operating revenue * * * rate was 4.71%, down 0.05 percentage points from the same period in 2021.

Figure 4 Main benefit indicators of the clothing industry from January to October 2022

Data source: National Bureau of Statistics

Investment maintained rapid growth

Since 2022, fixed asset investment in China's clothing industry has maintained a rapid growth trend, but the growth rate has slowed down. According to the data of the National Bureau of Statistics, from January to October, the completed investment in fixed assets in China's clothing industry grew by 28.4% year on year, 5.4 percentage points slower than the first half of the year, 26.2 percentage points higher than the same period in 2021, and 22.4 and 18.7 percentage points higher than the overall level of the textile and manufacturing industries.

Figure 5 Fixed Assets of Clothing Industry from January to October 2022

Investment growth 　　

Data source: National Bureau of Statistics

2： Operation characteristics of clothing industry

1. The enterprise actively carries out marketing, and the market activity gradually recovers

With the precise implementation and gradual liberalization of epidemic prevention policies, people's scientific understanding of the epidemic situation is constantly updated, and market activity is gradually recovering, especially under the effect of the "Double 11" promotion and the concentrated driving of consumption demand in Christmas, New Year's Day, Spring Festival and other festivals and holidays, the domestic clothing market is expected to rebound. In this context, in order to meet the last sales season of this year, clothing retail enterprises actively increase marketing efforts, expand the market through multiple channels, and seize the last opportunity window to impact the annual performance. According to the data report of the "Double 11 Festival of Good Things" released by Diaoyin E-commerce, from October 31 to November 11, the number of merchants participating in the "Double 11" activities on the Diaoyin E-commerce platform increased by 86% year on year. The total duration of live broadcast with goods reached 38.21 million hours, and the sales of 7667 live broadcast rooms exceeded one million yuan. Near the end of the year, clothing retail enterprises will try various promotions and preferential activities to boost the performance of the last quarter, which will further stimulate consumer demand and help the steady recovery of market confidence.

2. The consumption channels are increasingly diversified, and the layout of platform enterprises is accelerated

The domestic consumer market channels are becoming increasingly diversified, with the rise of social e-commerce, interest e-commerce, live broadcast e-commerce and other channels, which have scattered the sales originally concentrated on traditional e-commerce platforms. In the "Double 11" shopping carnival in 2022, Tmall and JD platforms have not announced the total transaction amount. Compared with previous years, the dithering and fast hand short video platforms have become the main force of the "Double 11" shopping carnival, and instant retail businesses such as Meituan flash purchase and JD to home have also made outstanding performance. At the same time, platform e-commerce is also accelerating its overseas layout. The world's first physical store "SHEIN Tokyo" of China's fast fashion cross-border e-commerce business Shein was officially opened in Tokyo, Japan on November 13; In September, Pinduoduo launched Temu, a cross-border e-commerce platform in the United States. This American version of Pinduoduo became the number one download of free shopping programs in Google App Store in just half a month. In the overseas promotion "Black Friday", which is comparable to the domestic "Double 11", Temu is even more "killing the whole world" with discounts. In addition, Alibaba also announced that it will launch a new shipping platform Miravia in Spain at the end of the year. The target audience will be high purchasing power consumers seeking to buy high-quality products. The platform category includes men's clothing, women's clothing, beauty and health, home and gardening and other goods.

3. The niche market has a brilliant performance, and consumers attach importance to emotional identity

At present, the lifestyle of consumers is changing. More and more consumers want to get an emotional identity. People's pursuit of clothing has developed from seeking public value in the past to meeting the stage of personalized self-expression. In this situation, the demand of minority markets such as Hanfu and Guochao has developed rapidly. In this year's "Double 11", the total GMV of more than 13 domestic top brands of Hanfu in all channels exceeded 45 million yuan, ranking first in the category of Hanfu in Taobao and Tmall for four consecutive years, and the GMV of Tmall channel increased by 55% year on year. According to the White Paper on the Development of China's New Hanfu Industry in 2022 jointly issued by China National Garment Association and iResearch, the number of Hanfu consumers will reach 10.21 million in 2021, up 14.4% year on year. In 2021, the corresponding market size of Chinese Hanfu is 10.5 billion yuan, and Hanfu has grown into a large-scale consumer branch. With the growing consumption capacity of young people who pursue new things, have strong social needs, and have increasingly prominent cultural self-confidence, the clothing consumption demand that pays more attention to "please yourself" will become an important force to guide the market. Content source: www.cnga. org. cn