Briefing On Economic Operation Of China'S Clothing Industry In The First Half Of The Year

Since 2023, China's macro-economy has recovered well, the income of residents has grown steadily, and market demand and production supply have gradually recovered. At the same time, the international environment is complex and changeable, the growth of the world economy continues to slow, unstable and uncertain factors increase, and the problem of insufficient demand in the international market is still obvious. In this context, China's clothing industry as a whole is in a period of pressure repair. Only domestic sales, supported by the recovery of consumer demand, have turned to positive growth, and the main operating indicators of industry production, export, efficiency, investment and so on have declined by varying degrees. Looking forward to the whole year, in the face of severe and complex development situation, China's clothing industry is still under great pressure for sustained, stable and restorative growth, and the foundation for the industry to stabilize and improve remains to be consolidated.

　　 01 Economic operation of clothing industry

　　 The growth rate of production continued to fall, and the negative growth of clothing output

In the first half of the year, due to the sluggish recovery of market demand, the orders in the traditional peak season in spring were lower than expected, and the shortage of orders in the second quarter was more prominent. The growth rate of industrial production continued to fall, and the industrial added value and clothing output of enterprises above designated size both showed negative growth, with a further decline than in 2022.

According to the data of the National Bureau of Statistics, from January to June, the industrial added value of enterprises above designated size in the clothing industry dropped 8.2% year on year, and the growth rate dropped 12.6 percentage points compared with the same period in 2022. In June, the industrial added value of enterprises above designated size fell 6.9% year on year, 0.6 percentage points deeper than that in May. From January to June, enterprises above designated size completed 9.63 billion pieces of clothing production, a year-on-year decrease of 7.84%, 6.36 percentage points deeper than that of the same period in 2022, and 5.93 percentage points deeper than that of January to May (see Figure 1). From the perspective of category breakdown, the output of woven clothing of enterprises above designated size in the clothing industry was 3.429 billion pieces, down 9.92% year on year, down 6.95 percentage points compared with the same period in 2022, of which the output of down clothing, suits and shirts decreased 28.76%, 8.23% and 8.73% year on year, down 38.42%, 16.04% and 9.98 percentage points compared with the same period in 2022; The output of knitted clothing was 6.202 billion pieces, down 6.65% year on year, 6.09 percentage points lower than that of the same period in 2022.

Figure 1 Production Growth of Clothing Industry from January to June 2023

Data source: National Bureau of Statistics

　　 The domestic market accelerates the recovery and online retail grows steadily

In the first half of the year, the domestic social economy returned to normal operation in an all-round way, the residents' income grew faster than the national economy, the employment situation was generally stable, and a series of domestic demand expansion policies were superimposed to promote the implementation of consumption policies, providing security for consumption recovery. The domestic clothing market in China has changed from decline to increase. The retail sales of clothing above the designated size have returned to positive growth, the market vitality has continued to increase, and consumer demand has gradually released.

According to the data of the National Bureau of Statistics, from January to June, China's total retail sales of consumer goods reached 22758.76 billion yuan, up 8.2% year on year, 2.4 percentage points faster than that from January to March. Among them, the retail sales of clothing commodities of units above the designated size totaled 501.67 billion yuan, up 15.5% year on year, 4.1 percentage points faster than that from January to March. The recovery of consumption superimposed on the low base factor. The growth rate of retail sales of clothing commodities above the designated size in March, April and May this year maintained a high growth rate of more than 20% for three consecutive months. The growth rate in June declined, but still grew 7.2% year-on-year (see Figure 2).

Under the support of favorable factors such as the accelerated transformation of consumption mode, the rapid recovery of logistics, and the continuous sinking of the market, the growth of online retail of clothing has significantly accelerated. From January to June, the online retail sales of clothing products increased by 13.3% year on year, 9.8 percentage points faster than that of 2022 and 4.7 percentage points faster than that of January to March. At the same time, the growth rate of online retail sales of clothing goods was significantly faster than that of food and consumer goods. The growth rate of online retail sales of food and consumer goods was 8.9% and 10.3% respectively.

Figure 2 Clothing sales in the domestic market from January to June 2023

Data source: National Bureau of Statistics

　　 Downward pressure on the international market intensifies the decline of clothing export volume and price

Since 2023, the situation of foreign trade in the industry has been severe, the macro-economy of developed economies has been sluggish, the growth of residents' income has slowed down, the consumption demand in the international market has weakened, and China's clothing export scale has declined slightly due to the influence of international politics, the inventory pressure of purchasers has not eased, order transfer and other factors.

According to Chinese customs data, from January to June, China's clothing and clothing accessories exports totaled US $74.98 billion, down 5.9% year on year. In June, clothing exports fell 13.9% year on year. Although the year-on-year growth rate showed a downward trend, clothing exports in June grew by 15.9% month on month, and exports remained resilient. From a monthly perspective, exports fluctuated significantly. In January and February, due to the epidemic and the slowdown of foreign economic growth, plus the backlog of orders during the Spring Festival, the export fell by 10.5% and 21.6% respectively; In March and April, with the recovery of the domestic supply chain and the accelerated delivery of orders after the Spring Festival, the growth rate reached 32.3% and 14.3%. Since May, clothing exports have turned negative, falling 12.3% and 13.9% year on year in May and June respectively. From the perspective of volume price relationship, the volume and price of clothing exports fell together. From January to June, the number of clothing exports decreased by 6.0% year on year, and the average export unit price decreased by 0.4% year on year. Among them, the export volume of knitted clothing decreased by 7.7% year on year, and the export unit price decreased by 2.2% year on year; The export volume of woven clothing decreased by 2.3% year on year, and the export unit price decreased by 0.4% year on year (see Figure 3).

Figure 3 Exports of clothing and clothing accessories from January to June 2023

Data source: China Customs

From the perspective of export categories, from January to June, the export of commuting and social clothing such as suits, casual wear, skirts and trouser skirts with high added value and sports clothing such as skiing continued to grow, of which the export amount of suits and casual wear suits increased by 30.1% and 24.8% year on year, while the export amount of sports clothing such as skiing, pants and trouser skirts increased by 18.3% and 5.9% year on year respectively. In addition, the export of cold proof clothing such as overcoats and down jackets, and household clothing such as pajamas turned to a small negative growth, with the export value falling 8.9% and 11.4% year on year respectively; The export value of knitted T-shirts and sweaters decreased by 4.5% and 12.7% respectively year on year. It has been a whole year since the implementation of the "Xinjiang related Act", which has not only seriously affected China's export of cotton products to the United States, but also had a negative chain effect on other major markets. From January to June, China's export of cotton clothing was 24.28 billion US dollars, down 11.8% year on year; Among them, the export of cotton knitted clothing was 13.97 billion US dollars, down 15.3% year on year; The export of cotton tatting clothing was US $10.31 billion, down 6.7% year on year. In addition, China's export of cotton clothing to the United States was 5.54 billion US dollars, down 39.3% year on year; Exports of cotton garments to the EU reached 4.47 billion US dollars, down 32.2% year on year; The export of cotton clothing to Japan was 2.09 billion US dollars, down 15.9% year on year.

From the perspective of major markets, in the first half of the year, China's clothing exports to the three traditional markets of the United States, the European Union and Japan continued to decline, while its exports to Russia, Africa and countries and regions along the Belt and Road maintained rapid growth. According to Chinese customs data, from January to June, China's clothing exports to the three traditional markets of the United States, the European Union and Japan totaled US $34.17 billion, down 17.9% year on year, accounting for 45.5% of China's total clothing exports, down 6.4 percentage points from the same period in 2022. Among them, China's clothing exports to the United States fell 19.5% year on year, 17.3 percentage points deeper than that of 2022; Clothing exports to the EU fell by 19.6% year on year, 22.6 percentage points more than that in 2022; Clothing exports to Japan fell 9.1% year on year, 8.8 percentage points deeper than that of 2022. Over the same period, China's clothing exports to emerging markets such as ASEAN, countries and regions along the Belt and Road increased 9.6% year on year, driving the growth of clothing exports by 4.8 percentage points. Among them, China's clothing exports to ASEAN amounted to 7.86 billion US dollars, up 9.4% year on year, driving the growth of China's clothing exports by 0.8 percentage points; Clothing exports to Africa and countries and regions along the Belt and Road increased by 24.1% and 12.1% year on year, respectively, driving the growth of China's clothing exports by 1.1 and 2.9 percentage points; However, clothing exports to Latin America and Oceania declined by 4.4% and 1.6% year on year. In addition, China's clothing exports to Russia increased by 42.7% year on year, while those to Britain, Chile and Canada decreased by 22.9%, 24.4% and 19.8% year on year respectively.

From the perspective of export provinces, the eastern region is still the main concentration of China's clothing exports, while the clothing exports of the central and western regions declined slightly. According to Chinese customs data, from January to June, Zhejiang, Guangdong, Jiangsu, Shandong and Fujian, China's top five garment export provinces, accounted for 69.3% of the total garment export, 3.9 percentage points less than the same period in 2022. Among them, Zhejiang clothing exports fell 4.6% year on year, accounting for 0.4 percentage points higher in the proportion of national clothing exports. The clothing exports of Guangdong, Jiangsu, Shandong and Fujian decreased by 13.2%, 19.1%, 9.8% and 13.6% year on year, respectively, accounting for 1.3, 1.9, 0.4 and 0.8 percentage points of the national clothing exports. Over the same period, clothing exports in the central and western regions decreased by 27.9% year on year, accounting for 21.3% of the total national clothing exports, 6.3 percentage points less than the same period last year. In addition, the clothing export situation in the central and western provinces is obviously differentiated. The clothing exports of Guangxi, Sichuan and Xinjiang have grown rapidly, with growth rates of 139.3%, 56.1% and 49.4%, while the clothing exports of Jiangxi, Hunan and Anhui have declined by 13.9%, 5.6% and 8.3% respectively.

　　 The decline of enterprise benefits has narrowed slightly, and the operation is still under serious pressure

Since 2023, the weak market demand has led to intensified supply side competition, and the overall product price is in a weak position. In order to alleviate the pressure of inventory accumulation and cash flow tightening, enterprises have increased the phenomenon of low price shipments, and the transmission of high raw material costs along the industrial chain to the consumer side has been blocked. The economic operation of China's clothing industry is under serious pressure.

According to the data of the National Bureau of Statistics, from January to June, there were 13640 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 561.67 billion yuan, a year-on-year decrease of 8.1%, 0.58 percentage points deeper than that from January to May, but 1.01 percentage points narrower than that from January to March; The total profit was 24.48 billion yuan, down 3.11% year on year, 5.09 percentage points lower than that from January to May, and 10.43 percentage points lower than that from January to March (see Figure 4).

The cost increases, making it more difficult for enterprises to make profits. The loss of enterprises above the industrial scale reached 30.38%, 12.44 percentage points higher than the same period last year; The operating profit margin was 4.36%, a year-on-year increase of 5.43%, 0.58 percentage points higher than that from January to May, but 0.55 percentage points lower than that from January to March.

The operating efficiency has declined. The turnover rate of finished products, accounts receivable and total assets were 19.83 times/year, 12.81 times/year and 2.14 times/year, down 5.22%, 7.85% and 6.08% year on year respectively.

Figure 4 Main benefit indicators of clothing industry from January to June 2023

Data source: National Bureau of Statistics

　　 The investment showed a slight decline, and the investment confidence was slightly insufficient

Under the influence of such restrictive factors as the decline of enterprise efficiency, the increase of operating pressure, the overall weakness of demand, the instability of market expectations and the high base in the same period of last year, the investment scale of China's clothing industry has declined slightly, and the investment confidence is slightly insufficient.

According to the data of the National Bureau of Statistics, from January to June, the amount of fixed asset investment in China's clothing industry fell 5.3% year on year, with the growth rate falling 39.1 percentage points compared with the same period in 2022, 2 percentage points lower than that from January to March, and 1.1 percentage points lower than that from January to June (see Figure 5).

Influenced by multiple factors, global foreign direct investment is still facing downward pressure this year. Superimposed by the high base factor in the same period of 2022, China's actual use of foreign investment in the first half of the year decreased by 2.7% year on year, but the overall scale remained stable.

Figure 5 Growth rate of fixed asset investment in clothing industry from January to June 2023

Data source: National Bureau of Statistics

Development characteristics of clothing industry in the first half of 2002

Digital progress promotes industrial transformation and upgrading

In the face of the current complex development situation, since this year, enterprises have taken intelligent and digital transformation as an important starting point for transformation and upgrading. Through the application and extension of digital technology, network technology and automation technology in the industry, they have improved the level of industrial flexible manufacturing. Many garment enterprises have made great progress in digital R&D and design, greatly improved the level of automation and digital production, and steadily improved the comprehensive application level of deep integration of industrialization and industrialization. Taking customers as the center, Yaying has built a comprehensive digital capability, strengthened the new retail battlefield of private and public domains at the retail end, and continued to promote the construction of "five online" capabilities with digital empowerment. Ducks and ducks start from three key links, namely raw materials, production capacity and warehouse distribution at the origin, and build a head capacity+quick reaction supply chain system driven by digitalization, realizing digital collaboration from the raw material end to production performance. At the same time, Jack Co., Ltd. launched a complete set of Zhilian solutions to truly realize digital small order quick reaction by integrating the whole software and hardware; Lingdi Style 3D launched the Style3D technology solution under the new technology paradigm to deconstruct the digital twin and digital original long-term vision of fashion brands.

The rise of national style brand promotes the high-quality development of industry

At present, Chinese clothing brands are narrowing the distance with consumers by various new marketing methods, emerging the characteristics of brand model diversification, enterprise channel diversification and innovation, especially the rise of national style culture, which makes consumers' sense of value identity of local clothing brands greatly improved. On the one hand, based on the modern lifestyle, starting from the brand positioning, the enterprise focuses on exploring the elements of Chinese traditional fashion culture and the fashion spirit behind it, and actively builds modern fashion aesthetic expression suitable for brand development. A large number of national style brands that carry Chinese culture and lead fashion consumption continue to grow. At the same time, as the content platform forms a business closed loop with social e-commerce, interest e-commerce, live streaming e-commerce and other consumption channels, new models and new ways such as grass planting on the video platform and social platform sharing are integrated into Guofeng Clothing, which has gradually evolved from tourism, photography and photography to cultural and creative fairs. Wearing scenes are constantly enriched and extended, and the scope of cultural influence is further expanded. Returning to the Han and Tang Dynasties, more than 13 years old, Han Shanghualian, Minghuatang, Lan Ruoting and other national style brands have formed scale, and the surrounding industries and related industrial chains are also expanding. The prevalence of "national style" and "national fashion" is a sign of cultural self-confidence and self-consciousness. Activities such as the "Summit Forum of the First China Great Wall Fashion Culture Festival for Chinese Consumers" were successfully held, and clothing was used as a cultural carrier to convey Chinese elements, Chinese fashion and Chinese culture to the world. The industry deeply explores the outstanding cultural value of China, endows brand and products with new spirit and emotional resonance through cultural creativity, and promotes the deep integration of fashion culture and industry.

Green innovation promotes industrial sustainable development

In the post epidemic era, many garment enterprises actively adapt to the rapid improvement of health, environmental protection and green consumption awareness, strengthen the young, personalized and ecological fashion design, expand and optimize the product structure around the functions of clothing, natural health and other aspects, and enrich the fashion supply. On this basis, the concept of green and low carbon is integrated into each link of production management through biodegradable additives and other ways, green management of the whole life cycle of products is carried out, systematic, quantitative and standardized green evaluation and environmental management of the whole industrial chain are strengthened, and a closed-loop system of design, manufacturing, use, recycling to remanufacturing guided by resource conservation and environmental friendliness is gradually explored and established, The new industrial ecology characterized by clean production and green development is accelerating to take shape. In the first half of this year, brands such as Red Bean, Sima, Golis and Jiumuwang have actively disclosed ESG reports, clarifying corresponding sustainable development goals, which shows the determination and confidence of enterprises to actively practice green transformation and adhere to green production and low-carbon development.

03 Clothing market research and judgment in the second half of 2023

From the perspective of the global economy, influenced by the tightening of monetary policy, the erosion of real purchasing power by high prices, the end of the recovery cycle of consumption and other factors, the demand for physical goods will remain sluggish, which is difficult to support the manufacturing boom and the obvious improvement of commodity trade, and restricts the global economic recovery. On June 6, the World Bank released the latest Global Economic Outlook Report, which predicted that the global economic growth would decline from 3.1% in 2022 to 2.1% in 2023. The development situation facing the industry is becoming more complex, the unstable factors are increasing, and the pressure for the industry to maintain the restorative growth is further increasing.

From the perspective of the international market, China's clothing export will still face greater external pressure in the next stage under the influence of factors such as the lack of impetus for the recovery of international market demand, the transfer of overseas orders, and the fluctuation of raw material prices. Due to the negative effects of continuous interest rate hikes in developed economies, high inflation, rising risks in the financial system, declining efficiency of international supply chain cooperation and other uncertain factors, the risk of world economic recession is increased, which restricts the improvement of market consumption ability and willingness. It takes time for market supply and demand to recover and balance, and for inventory to be digested. It is difficult for consumer demand to recover quickly in the short term, and the external environment is still severe and complex. At the same time, the proportion of international clothing supply chain procurement in China has decreased, and the trend of decentralized and near local layout is becoming increasingly obvious. It is a difficult task to reasonably build the supply chain layout system. On the basis of efforts to stabilize and win orders from traditional developed economies, China's garment foreign trade enterprises can actively explore the markets of countries along the "Belt and Road", seize the opportunity to implement RCEP, deeply tap the trade growth potential of diversified markets, promote the industry to improve the industrial chain, integrate the supply chain, enhance the value chain, create core competitive advantages, and enhance the innovation momentum of foreign trade, Strive to achieve high-quality development of China's textile and garment foreign trade.

From the perspective of the domestic market, with the overall recovery of China's social economy, the macro-economy has steadily improved, creating good conditions and foundation for the recovery of the domestic clothing market. In the first half of the year, the GDP grew 5.5% year on year and the per capita disposable income grew 6.5% year on year. Economic growth has led to the expansion of employment and the increase of residents' income. Residents' consumption ability and willingness have been constantly strengthened, and consumption demand has been released at an accelerated pace. In addition, the country has introduced a series of policies and measures in areas such as protecting people's livelihood, promoting consumption, and supporting the development and growth of private economy, which has provided an important guarantee for the improvement and optimization of the market demand and business environment of the clothing industry. Against the background of a better domestic environment, clothing enterprises will continue to consolidate their operations, innovate their ideas, increase online channel construction, content transformation and other marketing efforts, constantly tap market potential, stimulate operational vitality, continue to promote the vigorous development of new business types, new scenes, new products and new brands, and help the domestic clothing market recover smoothly.

Data source: China Customs, National Bureau of Statistics

(Source: China Garment Association)