The sudden outbreak of the coronavirus has disrupted the usual pace and order of the clothing industry. Problems such as weak consumption, closed physical stores and logistics have created immense pressure and challenged the development of the industry.
With the effective control of the epidemic in China, the market is gradually recovering. More than 90 percent of garment enterprises have maintained the level of their production and the supply chains have generally recovered. However, foreign trade is severely affected due to the contraction of international markets and especially export-oriented enterprises are facing difficult times.
Due to the outbreak of the novel coronavirus, major apparel export markets such as the US, the European Union and other markets had to shut down, and consumer demand has fallen sharply internationally. This has led to a sudden increase in the cancellation or delay of orders by European and American clients since mid-March. Apparel export orders and the number of new orders dropped significantly, leading to an unprecedented impact on Chinese exporters. According to the statistics by China’s customs office, from January to May 2020, exports of clothing and accessories totaled 38.21 billion US dollars, down 22.8 percent year-on-year. With the sharp reduction of international orders, most of China’s garment export enterprises ran into a significant decline in workload, and some enterprises had to compensate with breaks and rotation; some smaller export enterprises are facing tremendous pressure to survive.
Facing an entirely new environment, the Chinese apparel industry has increasingly turned its focus to the product in recent years. Efforts have been made to improve the adaptability of products according to changes in consumer demand – from various aspects such as technological, design, management and service innovation. The companies are actively taking fashion aesthetics, functionality, and ecological and environmental protection into consideration to meet consumer demand.
While continuously optimizing the product, they’re also paying particular attention to a new generation of information technology. In this process, companies are adopting mass customization models and smart manufacturing factories, and the level of lean, flexible and service-oriented manufacturing in the supply chain is constantly improving. The industry isn’t only overcoming current difficulties, it is also laying a solid foundation for the next transformation and upgrade.
The current crisis has a far-reaching impact on global procurement. More importance will be given to geographical proximity, diversification and flexibility, which will certainly accelerate the pace of structural reconstruction of the production chain and even boost global relocation and transfer of some production capacity. However, the change will not be that radical and the scope will not be very wide in the short term. The global supply chain follows the logic of industrial development and business, and its evolution under market conditions will also take time. It is not as simple for some countries to relocate enterprises from China. The advantages of China’s overall apparel industry are still obvious, and its position will not change in the short term.
In the era of the Internet, consumers are playing a more active role in consumption. They don’t only pursue more diversification and personalization, but also have higher demands for the flexibility and agility of products and services. Therefore, geographic proximity is a natural advantage and the importance of trade regionalization is rising. I think this is an important feature and direction of development in the new era of globalization.
China has a huge clothing market, and Chinese garment companies have always been focusing on the domestic market. Two-thirds of total production capacity is used to meet domestic demand. The advance of China’s economy and society, especially the consumption upgrade (note: a term for rising consumption of higher quality goods in China) – stimulated by a new generation, has brought broad room for development and business opportunities for the clothing brands and enterprises all over the world.
During the epidemic outbreak, new marketing models like live streaming and community marketing effectively made up for the gap caused by offline channel loss. This is the power of continuous innovation of China’s fashion e-commerce sector. In fact, with the advancement of technology and the new requirements for industrial development, the digital development of China’s clothing industry is moving from consumer internet to industrial internet. The new era of the digitalization of the clothing industry has begun: with smart equipment and industrial internet as the core, from R&D to design, textile dyeing and processing to final product manufacturing, all parts in the supply chain are shifting towards digitalization, networks and artificial intelligence.
Like other markets in the world, the epidemic impacted China’s clothing market massively. With the improvement of domestic epidemic prevention and control, clothing consumption started to recover in the second quarter. We believe that as long as the epidemic could be effectively controlled, the recovery of clothing consumption will accelerate in the third quarter, and even more in the fourth quarter.