Brief Report on the Operation of China's Apparel Industry from January to June
In the first half of the year, the Chinese apparel industry was significantly impacted by the combined pressures of contracting demand, supply shocks, and weakening expectations, coupled with unexpected factors such as sporadic domestic outbreaks and the international geopolitical crisis. Only exports maintained steady growth, supported by the recovery of international market demand; other major economic indicators slowed considerably. With the improvement of the domestic epidemic prevention and control situation and the effectiveness of policies to stabilize growth and promote consumption, the industrial chain and supply chain have significantly recovered, and the consumer market has gradually warmed up. In June, major economic indicators such as production, domestic sales, and profits returned to positive growth, and the overall economic operation of the apparel industry showed signs of stabilization and recovery. However, the current domestic and international situation is becoming more severe and complex, with more unstable and uncertain factors, insufficient market demand, and rising business costs. Sustained and stable recovery of the apparel industry still faces significant pressure.
From the cumulative data, in the first half of the year (January-June), the added value of the apparel industry above designated size increased by 4.4% year-on-year, a slowdown of 4.3 percentage points compared to the first quarter (January-March). During the same period, the output of apparel by enterprises above designated size reached 11.269 billion pieces, down 1.48% year-on-year, a decrease of 4.87 percentage points compared to the first quarter. Among them, the output of woven apparel has fallen significantly due to the decrease in export volume. From January to June, the output of woven apparel was 4.253 billion pieces, down 2.97% year-on-year; the output of knitted apparel was 7.016 billion pieces, down 0.56% year-on-year.
Domestic market gradually recovers
In the first half of the year, the apparel consumption market was significantly impacted by factors such as sporadic domestic outbreaks. Apparel sales experienced negative growth for three consecutive months, starting in March, and the market size continued to decline. With the improvement of the national epidemic prevention and control situation and the effectiveness of consumer stimulus policies, the growth rate of domestic apparel sales turned positive in June, and online retail returned to positive growth, showing an overall acceleration in recovery. According to the National Bureau of Statistics, the retail sales of apparel goods by above-designated-size units in June increased by 2.5% year-on-year, turning to positive growth after a double-digit decline for three consecutive months. From January to June, the cumulative retail sales of apparel goods by above-designated-size units in China reached 446.26 billion yuan, down 8.0% year-on-year, a decrease of 2.1 percentage points compared to the first five months. Benefiting from the recovery of logistics capacity and the 6.18 shopping festival promotion activities, online retail sales returned to positive growth after slight fluctuations. From January to June, the online retail sales of clothing and accessories increased by 2.4% year-on-year, an increase of 4.0 percentage points compared to the first five months.
Exports maintain steady growth
In the first half of the year, driven by positive factors such as stable recovery of international market demand, strong industrial chain advantages, rapid resumption of work and production by enterprises, and the effectiveness of foreign trade stabilization policies, China's apparel exports continued to maintain steady growth on the high base of 2021. According to data from the General Administration of Customs of China, from January to June, China's total exports of apparel and clothing accessories reached US$80.17 billion, up 12% year-on-year, an increase of 1.8 percentage points compared to the first five months. In June, exports of apparel and clothing accessories reached US$18.04 billion, up 19.1% year-on-year.
The export volume of woven apparel decreased while the price increased, and the export of protective materials continued to decline. According to data from the General Administration of Customs of China, from January to June, the export volume of apparel increased by 3.9% year-on-year, and the average export price increased by 16.3% year-on-year. Among them, the export volume and export price of knitted apparel both increased by 10.5% year-on-year; the export volume of woven apparel decreased by 8.4% year-on-year, while the export price increased by 30.2% year-on-year. In the subcategories of woven apparel, the export volume of women's suits, men's down jackets, men's underwear, pajamas, and protective clothing decreased by 1.1%, 11.5%, 14.0%, 9.3%, and 49.0%, respectively year-on-year. Among them, chemical fiber protective clothing experienced a decline in both volume and price, with export volume and value decreasing by 49.1% and 60.2% year-on-year, respectively. During the same period, China's exports of plastic and vulcanized rubber gloves decreased by 69.5% year-on-year.
China's apparel exports to the United States and the European Union showed strong growth, while the decline in exports to Japan continued to narrow. According to data from the General Administration of Customs of China, from January to June, China's apparel exports to the United States and the European Union amounted to US$19.29 billion and US$15.9 billion, respectively, up 14.5% and 19.5% year-on-year. Together, they accounted for 43.9% of China's total apparel exports, driving the growth of China's apparel exports by 7.0 percentage points. ASEAN became China's third-largest apparel export market, with exports of US$7.18 billion, up 27.5% year-on-year. The decline in China's apparel exports to Japan narrowed significantly, down 5.2% year-on-year, a decrease of 1.7 percentage points compared to the first quarter. During the same period, China's apparel exports to countries and regions along the Belt and Road and Latin America maintained rapid growth, with increases of 14.9% and 36.2%, respectively, driving the growth of China's apparel exports by 3.5 and 1.7 percentage points, respectively. Exports to Africa and Oceania increased by 2.5% and 15.1%, respectively. In addition, China's apparel exports to the United Kingdom, Canada, and Russia decreased by 5.1%, 4.7%, and 33.3% year-on-year, respectively.
Zhejiang, Jiangsu, and Shandong maintained high-speed growth in apparel exports, while Guangdong's export growth rate declined significantly. From January to June, the top five provinces in China's apparel exports, Zhejiang, Guangdong, Jiangsu, Shandong, and Fujian, together completed apparel exports of US$58.72 billion, up 12.2% year-on-year, accounting for 73.2% of China's total apparel exports, an increase of 0.2 percentage points compared to the same period last year. Among them, Zhejiang's apparel exports amounted to US$16.41 billion, up 29.1% year-on-year, while Jiangsu and Shandong's apparel exports increased by 13.4% and 17.9% year-on-year, respectively. Guangdong's apparel exports decreased by 3.6% year-on-year, a significant drop of 32.7 percentage points compared to the whole year of 2021. The situation of apparel exports in the central and western provinces showed a clear divergence, with Xinjiang, Jiangxi, and Hunan experiencing continued rapid growth in apparel exports, with increases as high as 86.7%, 48.9%, and 80.8%, respectively, while Hebei and Hubei's apparel exports decreased by 53.0% and 26.2%, respectively.
The industry as a whole is under pressure, and companies show a clear desire for stability
Since the beginning of the year, the consumption market has been sluggish, and the apparel industry as a whole has been under pressure. Operators of various types of enterprises have unclear expectations for the future, and the scale of production and operation generally shows a state of contraction.
Taking women's apparel brand enterprises in Hangzhou as an example, due to the decline in market consumption caused by repeated epidemics and factors such as the warmer-than-usual winter and abnormal spring weather, sales in winter and spring were sluggish and inventories were high, resulting in poor capital recovery for franchisees and distributors, directly affecting autumn and winter ordering meetings. According to incompletely statistically feedback, the winter clothing orders placed at the concluded ordering meetings of women's clothing brand enterprises in Hangzhou have generally decreased by 20% compared to previous years. On the manufacturing side, manufacturing enterprises are also facing the triple pressure of contracting demand, supply shocks, and weakening expectations. Henan Province, as a region in inland China that earlier undertook the transfer of the apparel industry, has seen overall slowdown in the apparel industry in the first half of the year under the impact of the COVID-19 epidemic. According to the survey, more than half of the enterprises saw a decrease in both self-produced and outsourced processing volumes in the first half of 2022 compared with 2021. Enterprises reported that due to epidemic lockdowns, orders could not be fulfilled on time, customers were very concerned about order delivery times, and subsequent orders were also affected. At the same time, consumer demand decreased, the domestic market was sluggish, leading to a decrease in export and domestic sales orders and lower production in most enterprises.
Currently, facing unfavorable factors such as sluggish market demand, fluctuating raw materials, and the impact of the US ban on Xinjiang cotton on enterprise exports, apparel brands and related supply chain enterprises are under pressure both internally and externally. While eagerly expecting increased business volume in the second half of the year, they also show a clearer awareness of the importance of stable development.
Acceleration of digital upgrades and regional layout adjustments
Although China's clothing industry faces some instability and uncertainty in both domestic and foreign trade development, under the implementation and effectiveness of the national economic stabilization package, the entire industry is still steadily progressing. Investment in digital upgrades and regional layout adjustments is rapidly increasing. From January to June, the industry's fixed asset investment growth rate was 33.8%, with Fujian, Shandong, Anhui, Jiangxi, Guangxi, and Xinjiang all exceeding 20%, demonstrating the resilience of industry development.
In the face of complex development situations, enterprises are using intelligent and digital transformation as important tools for upgrading, improving production efficiency, changing concepts, modifying processes, promoting digitalization, and improving order response speed and product quality rate. At the same time, some industrial clusters are continuously strengthening their guidance and support for the digital upgrading and transformation of local enterprises. In May of this year, Gongqing City, Jiangxi Province, proposed to provide subsidies to enterprises that invest more than 500,000 yuan in the purchase of new equipment for building digital workshops and smart factories, with a maximum subsidy of 5 million yuan per enterprise.
In addition, more and more clothing companies are developing headquarters economies, releasing production capacity to the central and western regions of China and Southeast Asian countries. By building their own factories overseas or establishing cooperative factories in the central and western regions, they are outsourcing orders and some production capacity to improve business operations and risk resistance. Since the beginning of this year, Pinghu has not lacked foreign trade orders for clothing, but due to the lack of industrial workers and the generally low processing prices for international clothing orders, most companies choose to use their own inland factories or outsource production to cooperative factories in Jiangxi, Anhui, Shandong, and Henan.
Forecast of the Development Trend of the Clothing Industry in the Second Half of the Year
Looking ahead to the second half of the year, the domestic and international market environments are becoming more severe and complex. Under the intertwined difficulties of the impact of the epidemic, weakening demand, rising costs, and high inventories, the pressure on China's clothing industry to maintain recovery growth will further increase. Clothing companies need to seize the development window period and strategic opportunities, continuously deepen transformation and upgrading, adhere to innovation-driven collaborative development, actively expand diversified sales channels and emerging markets, strive to improve supply chain resilience and risk resistance, give full play to the competitive advantages of China's complete, stable, and controllable clothing industry chain system, and strive to promote the industry's continued and stable recovery.
In terms of the international market, affected by complex factors such as the epidemic, the escalation of the Russia-Ukraine situation, and persistent upward pressure on inflation, the global economic recovery process has slowed down, and the uncertainty of the international trade environment has increased. The World Bank, IMF, and WTO have all lowered their expectations for global economic and trade growth in 2022. China's clothing exports will face many pressures and risks, including declining international market demand, the recovery of overseas supply chains, adjustments to multinational procurement strategies, increased trade friction, and US restrictions on imports of Xinjiang products. It is expected that the growth rate of clothing exports will decline in the second half of the year. In terms of the domestic market, China's macroeconomic economy is stabilizing and recovering, but downward pressure is increasing. In particular, affected by the epidemic, the employment pressure on young people is prominent, and consumer willingness and expectations are low. Under the constraints of slowing income growth and limited consumption scenarios, the support for the stable recovery of the domestic clothing market has weakened. It is expected that in the second half of the year, the domestic clothing market will continue to recover under the impetus of positive factors such as increased efforts in employment and consumption policies, continuous innovation in consumption models, rising consumer confidence, and emerging consumption hotspots, but the room for growth recovery is limited. At the same time, factors such as fluctuations in raw material prices, high freight costs, limited market expansion, and exchange rate risks will still put pressure on industry development.
Leaders from Xiamen C&D Group visited Tongzhou for investigation and guidance
On March 3, Wang Yongqing, Vice President of Xiamen CNOOC Group, visited Tongzhou Group for investigation and guidance. Wei Gangmin, Chairman of our company; Huang Hongyu, President; Li Tao, Vice President; and Zhang Zhiyan, Director of the General Office, met with and participated in a symposium.
Tongzhou Cotton Market Brief, Week 1 of March 2025
1) This week's National People's Congress and the Chinese People's Political Consultative Conference (NPC & CPPCC) in China boosted market expectations for steady growth. In February, the Purchasing Managers' Index (PMI) for manufacturing stood at 50.2%, up 1.1 percentage points from the previous month, indicating a significant improvement in the manufacturing sector.
In 2024, China's dyeing industry saw rapid export growth to ASEAN and RCEP member countries, exceeding the overall export growth rate. However, this growth was accompanied by a decline in prices. From January to December, China's exports of eight major dyeing products to ASEAN totaled 7.908 billion meters, a year-on-year increase of 12.14%, 4.61 percentage points higher than the overall export growth rate, accounting for 23.58% of total exports. The average export price was US\$1.19 per meter, a year-on-year decrease of 2.75%, 0.64 percentage points lower than the overall decline. Exports to RCEP member countries totaled 8.431 billion meters, a year-on-year increase of 11.35%, 3.82 percentage points higher than the overall export growth rate. The average export price was US\$1.17 per meter, a year-on-year decrease of 2.79%, 0.60 percentage points lower than the overall decline.
On February 28, Mr. Huang Hongyu, President of our company, was invited to attend the 2025 Zhangjiagang Cotton Industry Development Conference and, as a guest speaker at the "Xiangshan Roundtable," shared his views on the cotton market and trading opportunities.
Henan Tongzhou Cotton Industry Co., Ltd.
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