Brief Report on the Economic Operation of China's Apparel Industry from January to September 2022
In the first three quarters of 2022, faced with a complex and severe domestic and international situation and the impact of multiple unexpected factors, China's apparel industry actively overcame the difficulties in production and operation such as high costs, weak demand, and high inventory. The growth rate of production and sales generally slowed down, and the pressure on corporate profits was prominent. Looking forward to the fourth quarter, various uncertainties still exist. The contraction of international market demand and increased competition will pose even greater challenges to China's apparel exports. However, with the implementation and effectiveness of various national policies and measures, the promotion of the "three products" strategy, and the arrival of traditional consumption peak seasons such as National Day and "Double Eleven," the economic operation of the apparel industry is expected to remain basically stable under the support of domestic large-scale circulation.
I. Economic Operation of the Apparel Industry
Slowdown in Apparel Production Growth
In the first three quarters, affected by factors such as sporadic outbreaks of the epidemic, insufficient domestic and international market demand, and accelerated outflow of orders, the growth rate of apparel production slowed down, and apparel output continued to decline. The added value of industrial enterprises above designated size in the apparel industry experienced two significant declines this year. The first was in April, when sporadic outbreaks in Shanghai and other places led to limited logistics and weakened consumer demand, resulting in a year-on-year decrease of 0.3% in the added value of industrial enterprises above designated size in the apparel industry. The second was from July, when the pressure of high inventory, weak demand, and high-temperature power restrictions in some areas led to a continuous deepening of the decline in the added value of industrial enterprises above designated size in the apparel industry in each month of the third quarter. According to data from the National Bureau of Statistics, from January to September, the added value of industrial enterprises above designated size in the apparel industry increased by 2.0% year-on-year, a slowdown of 2.4 percentage points compared to the first half of the year and 7.2 percentage points compared to the same period in 2021. In July, August, and September, the added value of industrial enterprises above designated size in the apparel industry decreased by 0.2%, 1.3%, and 3.7% year-on-year, respectively. During the same period, enterprises above designated size completed an apparel output of 17.323 billion pieces, a year-on-year decrease of 1.66%, an expansion of 0.18 percentage points compared to the first half of the year, and a decrease of 10.95 percentage points compared to the same period in 2021. Among them, the output of woven apparel was 6.523 billion pieces, down 2.49% year-on-year, and the output of knitted apparel was 10.8 billion pieces, down 1.15% year-on-year, down 4.92 and 15.42 percentage points respectively compared to the same period in 2021.
Domestic Market Rebound and Improvement
Since 2022, affected by sporadic outbreaks of the epidemic in many parts of China, China's domestic apparel market has declined significantly. Since June, benefiting from the efficient coordination of epidemic prevention and control and economic and social development by governments at all levels, and the effectiveness of pro-consumption policies, domestic apparel sales have shown an improving and recovering trend, with the decline continuously narrowing. According to data from the National Bureau of Statistics, from January to September, the cumulative retail sales of apparel goods in units above designated size in China reached 656.21 billion yuan, down 5.0% year-on-year, a narrowing of 3.0 percentage points compared to the first half of the year. Online apparel retail maintained stable growth, with online retail sales of clothing and related products increasing by 4.7% year-on-year from January to September, an increase of 2.3 percentage points compared to the first half of the year. With the continuous expansion and improvement of consumption scenarios and consumption experience, the operation of physical stores has continued to improve. According to statistics from the China Chain Store & Franchise Association, from January to September, the retail sales of apparel goods in key large retail enterprises nationwide decreased by 9.5% year-on-year, a narrowing of 3.1 percentage points compared to the first half of the year.
Increased Downward Pressure on Exports
In the first three quarters, driven by the recovery of international market demand and the increase in costs pushing up export prices, China's apparel exports continued to maintain good growth on the basis of a high base in 2021, and the export value reached a new historical high. However, affected by the formal implementation of the US "Uyghur Forced Labor Prevention Act," the growth rate of apparel exports slowed down significantly in August, and apparel exports turned negative in September, especially the continuous double-digit decline in exports of cotton apparel to the United States. Coupled with multiple factors such as the pessimistic expectation of global economic recession and persistent inflation leading to weakening international market consumer demand and the recovery of overseas supply chains leading to accelerated order transfer, the downward pressure on apparel exports will further intensify in the fourth quarter. According to data from the General Administration of Customs of China, apparel and clothing accessories exports in September amounted to US$15.982 billion, down 4.4% year-on-year. From January to September, China's cumulative apparel and clothing accessories exports reached US$159.82 billion, up 9.4% year-on-year, a slowdown of 2.6 percentage points compared to the first half of the year.
Apparel exports increased in both volume and price, and the decline in cotton apparel exports widened. According to data from the General Administration of Customs of China, from January to September, China's apparel export volume and average export unit price increased by 2.4% and 12.4% year-on-year, respectively. Among them, the export volume and unit price of knitted apparel increased by 4.3% and 8.8% year-on-year, respectively; the export volume of woven apparel decreased by 1.7% year-on-year, and the export unit price increased by 18.9% year-on-year. Affected by Sino-US trade friction and accelerated order transfer, in September, China's cotton apparel exports decreased by 15.6% year-on-year, an expansion of 9.1 percentage points compared to August; among them, China's cotton apparel exports to the United States decreased by 41.8% year-on-year, an expansion of 18.3 percentage points compared to August.
From the perspective of major export markets, in the first three quarters, the growth rate of China's apparel exports to the United States and the European Union continued to slow down, while exports to ASEAN increased rapidly, and exports to Japan improved significantly. According to data from the General Administration of Customs of China, from January to September, China's apparel exports to the United States amounted to US$30.72 billion, up 5.0% year-on-year, a slowdown of 9.5 percentage points compared to the first half of the year; in September, China's apparel exports to the United States decreased by 31.4% year-on-year and 25.4% month-on-month. China's apparel exports to the European Union amounted to US$26.76 billion, up 14.9% year-on-year, a slowdown of 4.7 percentage points compared to the first half of the year; in September, China's apparel exports to the European Union turned negative, down 14.7% year-on-year and 33.9% month-on-month. During the same period, China's apparel exports to ASEAN amounted to US$11.46 billion, up 31.2% year-on-year, an increase of 3.7 percentage points compared to the first half of the year; China's apparel exports to Japan increased by 1.9% year-on-year, an increase of 7.1 percentage points compared to the first half of the year. From the perspective of export regions, China's apparel exports to countries and regions along the Belt and Road, Latin America, and Oceania continued to maintain rapid growth, with increases of 16.8%, 28.8%, and 20.5%, respectively, contributing 6.0 percentage points to the growth of China's apparel exports. In addition, China's apparel exports to the UK decreased by 2.8% year-on-year, and exports to Russia and Canada decreased by 21.3% and 13.3% year-on-year, respectively.
The growth rate of major apparel exporting provinces and cities continued to slow down, and apparel exports from Guangdong and Fujian decreased. From January to September, the top five apparel exporting provinces in China, Zhejiang, Guangdong, Jiangsu, Shandong, and Fujian, together completed apparel exports of US$95.07 billion, up 6.6% year-on-year, accounting for 70.9% of China's total apparel exports, down 1.9 percentage points compared to the same period in 2021. Among them, Zhejiang's apparel exports amounted to US$27.42 billion, up 22% year-on-year, a slowdown of 7.0 percentage points compared to the first half of the year; Jiangsu and Shandong's apparel exports increased by 7.5% and 11.5% year-on-year, respectively, down 6.0 and 6.4 percentage points compared to the first half of the year, respectively; Guangdong's apparel exports decreased by 6.1% year-on-year, an expansion of 2.5 percentage points compared to the first half of the year, and Fujian's apparel exports decreased by 3.3% year-on-year, a decline of 10.5 percentage points compared to the first half of the year. In addition, Shanghai's apparel exports recovered significantly, up 8.3% year-on-year, an increase of 2.0 percentage points compared to the first half of the year. Among the central and western provinces, Xinjiang's apparel exports maintained rapid growth, with an increase of 84.3%; Jiangxi, Hunan, Liaoning, and Sichuan's apparel exports increased by 42.8%, 53.7%, 18.8%, and 54.4% year-on-year, respectively, while Hebei and Guangxi's apparel exports decreased by 44.6% and 17.9% year-on-year, respectively.
Continued Pressure on Corporate Profits
Since 2022, affected by factors such as the pandemic, insufficient demand, and high volatility in raw material prices, China's apparel industry has seen a slight positive growth in its major performance indicators. However, the growth rate has continued to slow down, and the economy is under severe pressure. According to data from the National Bureau of Statistics, from January to September, there were 13,155 large-scale enterprises (with annual main business income of 20 million yuan or more) in China's apparel industry, achieving an operating income of 1081.422 billion yuan, a year-on-year increase of 2.17%. The growth rate slowed by 2.28 percentage points compared to the first half of the year and by 6.82 percentage points compared to the same period in 2021; the total profit was 49.545 billion yuan, a year-on-year increase of 1.79%, the growth rate slowed by 2.21 percentage points compared to the first half of the year and by 4.02 percentage points compared to the same period in 2021. The efficiency of the industry's operation has slowed down compared to the same period last year, and high costs have made it difficult for enterprises to improve their profitability. From January to September, the finished product turnover rate of large-scale enterprises in the apparel industry was 11.89 times/year, a year-on-year decrease of 3.09%; operating costs increased by 2.69% year-on-year, 0.52 percentage points higher than the growth rate of operating income, with a cost of 85.99 yuan per 100 yuan of operating income, an increase of 0.44 yuan compared to the same period in 2021; the operating income profit margin was 4.58%, a decrease of 0.02 percentage points compared to the same period in 2021.
Investment has seen relatively rapid and stable growth.
In the first three quarters, fixed-asset investment in China's apparel industry showed a rapid and stable growth trend, with the growth rate remaining above 30%. According to data from the National Bureau of Statistics, from January to September, the completed amount of fixed-asset investment in China's apparel industry increased by 30.8% year-on-year, 27.7 percentage points higher than the same period in 2021, and 24.5 and 20.7 percentage points higher than the overall level of the textile and manufacturing industries.
II. Main Factors Affecting Industry Operation
1. Slow recovery of the domestic market
Since 2022, the domestic consumer market has been generally sluggish. Repeated outbreaks of the epidemic have led to rising unemployment, slower growth in residents' income, insufficient consumer confidence, and a significant decline in consumer ability and level. As optional and improved consumption, the recovery of the apparel market demand has been relatively slow and weak. According to data from the National Bureau of Statistics, in September, the national surveyed unemployment rate in urban areas was 5.5%, and the surveyed unemployment rate in 31 major cities was 5.8%, 0.6 and 0.8 percentage points higher than the same period in 2021, respectively; in September, the consumer confidence index was 87.2, down 28.05% year-on-year. In the first three quarters, China's per capita disposable income and per capita consumption expenditure increased by 3.2% and 1.5% year-on-year, respectively, 6.5 and 13.6 percentage points lower than the same period in 2021, respectively; per capita clothing consumption expenditure was 991 yuan, down 1.1% year-on-year, and the growth rate was 19.3 percentage points lower than the same period in 2021. Among them, per capita clothing consumption expenditure of urban residents decreased by 3.3% year-on-year, and that of rural residents increased by 3.5% year-on-year, 18.6 and 21.7 percentage points lower than the same period in 2021, respectively.
2. Weakening trend of international market demand is obvious
Under the circumstances where the world's political situation is complex and evolving, and the risk of global economic recession is increasing, the prospect of recovery in the international market is highly uncertain. Consumer expectations in developed countries such as Europe and the United States are declining, apparel retailers are facing high inventory pressure, and the downward trend of market demand is obviously strengthening, which will have a significant impact on China's apparel exports. In September, the year-on-year growth of the US apparel CPI was 5.6%, and the increase continued to expand compared to last month; the inventory-to-sales ratio of clothing and apparel stores continued to rise, reaching 2.22 in August; from January to September, retail sales of clothing and accessories increased by 8.2% year-on-year, 42.8 percentage points lower than the same period last year. In September, the EU inflation rate was as high as 10.9%, and the consumer confidence index continued to fall to -29.6, the lowest level since 1985; under the double blow of high inflation and the energy crisis, the purchasing power of European consumers has sharply declined, and apparel retail is under obvious pressure. In August, the retail sales of textile and apparel products in France, Germany, and the Netherlands decreased by 2.9%, 7.9%, and 6.4% year-on-year, respectively. Domestic consumption in Japan is sluggish, and the consumer confidence index in September fell to 30.8; from January to August, retail sales of textiles, clothing, and accessories in Japan increased by 2.7% year-on-year, but still decreased by about 23.5% compared to the same period before the epidemic.
3. Intensified international competition
The recovery of the apparel industry in countries such as Vietnam and Bangladesh, as well as the acceleration of the "de-Chinaization" strategy of overseas procurement, has accelerated a new round of changes in the global apparel supply chain pattern. Intensified international market competition and increased risks in the foreign trade environment will put considerable pressure on China's apparel exports. Judging from the relevant apparel export statistics from Vietnam, Bangladesh, and Turkey, from January to July, Vietnam's exports of textile and garment products reached US$22.24 billion, a year-on-year increase of 20.5%; from January to August, apparel exports from Bangladesh and Turkey increased by 44.8% and 11.7% year-on-year, respectively. In addition, judging from the apparel import data of major markets in the United States, the EU, and Japan, China's market share in the United States, the EU, and Japan has shown a downward trend, while the market share of countries such as Bangladesh, India, Turkey, and Cambodia has increased, and the growth rate of imports is higher than that of China. From January to September, China's market share in the US market decreased by 0.99 percentage points, while the market share of Bangladesh, India, Indonesia, and Cambodia increased by 1.04, 0.72, 0.73, and 0.36 percentage points, respectively; from January to July, China's market share in the EU market decreased by 0.35 percentage points, while the market share of Bangladesh, India, Pakistan, and Cambodia increased by 4.21, 0.43, 0.32, and 0.60 percentage points, respectively; from January to September, China's market share in the Japanese market decreased by 0.26 percentage points, while the market share of Vietnam, Bangladesh, Cambodia, and Myanmar increased by 1.17, 0.58, 0.49, and 1.32 percentage points, respectively.
III. Forecast of Industry Operation Trend
In the first three quarters, China's apparel industry has been moving forward under pressure, demonstrating strong development resilience and risk resistance. Looking forward to the fourth quarter, the external environment is becoming more complex and severe, and the industry's development still faces significant challenges. However, with China's efficient coordination of epidemic prevention and control and economic and social development, and the continued release of the effects of the comprehensive economic stabilization policies and follow-up measures, the operation of the industry is expected to remain generally stable.
From an international perspective, the International Monetary Fund predicted in October that the global economy would grow by 3.2% in 2022 and that the global economic growth rate would slow to 2.7% in 2023, a downward revision of 0.2 percentage points from the July forecast. The World Trade Organization also predicted in October that global trade would lose growth momentum in the second half of 2022 and lowered its forecast for global merchandise trade growth in 2023 to 1.0%, far below its previous forecast of 3.4%. The downward pressure and risks and challenges to the world economy are increasing, and the situation is becoming more complex and severe. Inflationary pressures are intensifying in developed economies such as Europe and the United States and in some emerging market countries, and consumer demand continues to weaken. At the same time, factors such as the US restrictions on imports of Xinjiang cotton products and the transfer of overseas orders have further increased the downward pressure on China's apparel exports.
From a domestic perspective, while the overall operation of the industry still faces considerable difficulties and pressures under the influence of multiple factors, since the third quarter, the domestic clothing market has shown a gradual recovery trend, supported by a series of national "steady growth" policies and measures. With the in-depth implementation of the spirit of the 20th National Congress of the Communist Party of China, and the continuous release of the effects of macroeconomic policies, the trend of steady and positive economic recovery in China will be further consolidated, creating good conditions and a foundation for the steady operation of China's clothing industry. In October, the Ministry of Industry and Information Technology officially launched the 2022 Textile and Apparel "Superior Supply and Promotion of Upgrading" activity, promoting the implementation of the "three-product" strategy for the textile and apparel industry, accelerating the high-end, green, and digital transformation and upgrading of the industry. This will play a positive role in boosting industry confidence, promoting the stable operation and high-quality development of the textile and apparel industry. At the same time, the fourth quarter is the traditional peak consumption season. Major clothing brands have seized key nodes such as National Day and "Double Eleven" to launch various discount promotions, which will further stimulate the release of residents' consumption demand, and the domestic clothing market is expected to continue to warm up.
Looking ahead, the overall trend of the transformation and upgrading of China's clothing industry in the digital economy era and its achievement of high-quality development will not change. Faced with the complex and ever-changing domestic and international development environment, the clothing industry will fully implement the spirit of the 20th National Congress of the Communist Party of China and the decisions and deployments of the State Council, vigorously promote enterprise transformation and upgrading and innovative development, accelerate the deep integration of science and technology and industry, focus on the industrial development positioning of "technology, fashion, and green," drive development through innovation, vigorously implement the "three-product" strategy of the consumer goods industry, continuously improve industrial competitiveness, and effectively promote the high-quality development of the industry.
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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