China’s industrial transition
Since 2015, China’s apparel manufacturing industry has undergone a profound transition. The rising labor costs have shifted the sector towards a less labor-intensive and highly automated direction. Geographically, many apparel enterprises have relocated to lower-labor cost labor regions, such as Western and Middle China. Technologically, apparel enterprises upped their research and development spending. In 2020, more than 26,000 R&D projects were carried out in the textile and clothing sector in China. Nevertheless, an increasing number of apparel enterprises exited the market during the industrial upgrade and structural transformation.Apart from manufacturing, China’s apparel export industry also faced significant challenges resulting from recent international trade disputes and increasing production costs. China’s clothing export value and global share have continuously dropped between 2014 and 2020. In the meantime, several rising apparel manufacturing counties in Southeast Asia started to threaten China’s leading position.
Nevertheless, China’s garment exports saw an upsurge amid the Coronavirus pandemic in 2021. In contrast to many countries that shut down clothing manufacturing during lockdowns, Chinese clothes makers benefited from the country’s effective pandemic control.
The rise of the domestic market
Giving consideration to the competitive international market, China’s garment enterprises sought new opportunities from the domestic market. Owing to the growing disposable income, the average expenditure on clothes and shoes in China surged over the past two decades. Also, Chinese consumer’s willingness to buy domestic brands increased substantially. According to a survey conducted in 2021, around 60 percent of Chinese consumers had bought fashion items from domestic clothing brands.Adding to the ever-increasing demand for fashion, the prevalence of online shopping also boosted China’s apparel retailing sector. In 2020, more than one-third of the apparel sold in China was via online retail platforms. To improve consumers’ online shopping experience, Chinese apparel retailers have invested in innovative technologies. In spring 2020, China’s online retail leader Alibaba rolled out its first virtual dressing room. Consumers could virtually try on more than 600 pieces of luxury items. According to Statista’s Digital Market Outlook on the apparel industry, by the end of 2025, nearly 60 percent of China’s apparel market revenue will be generated through online sales, well ahead of the global average of 43 percent.
