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Since 2019, world economic growth and international trade growth have shown a slowing trend, external uncertainties have increased, and the domestic economy has been generally stable, but it is still under pressure, and some structural problems need to be resolved urgently. In the face of many risks and uncertainties, China's garment industry is actively carrying out structural adjustment and pragmatic innovation, and accelerating the transformation of growth momentum. Although the domestic and foreign market pressure is increasing and the operation quality and efficiency are slightly fluctuating, the industry has maintained a basically stable development trend and entered a new round of strategic reconstruction and accumulation development period.

Operation of 1. industry

(I) clothing production is basically stable

The industrial added value of the garment industry maintained a low growth rate and the growth rate slowed down. According to the National Bureau of Statistics, the growth rate of industrial added value in the clothing industry from January to June was 3.0, down 1.5 percentage points from the same period in 2018, 1.1 percentage points higher than the growth rate of the textile industry and 3 percentage points lower than the industrial growth rate.

Clothing production fell slightly. According to data from the National Bureau of Statistics, from January to June 2019, enterprises above designated size in the apparel industry completed a total of 10.413 billion pieces of apparel production, a year-on-year decrease of 1.09 percent, and the rate of decline narrowed by 6.14 percentage points from the same period last year. In terms of clothing production by category, knitted clothing production was significantly better than woven clothing, with 5.539 billion pieces of knitted clothing, up 1.02 percent year-on-year, 4.865 billion pieces of woven clothing, down 3.38 percent year-on-year, of which down clothing, suits and shirts production fell 0.40 percent, 3.57 percent and 6.01 percent year-on-year, respectively.

Garment production of enterprises above designated size from January to June 2019

Source: National Bureau of Statistics

　(II) export negative growth

Since 2019, the lack of demand power in the international market, the intensification of trade protectionism, the increasingly fierce competition in the global market, as well as the weakening of the traditional advantages of China's garment industry, the new competitive advantages have not yet been established, resulting in a significant increase in export pressure. According to the customs confirmed statistics, from January to June 2019, China's cumulative export volume of clothing and clothing accessories fell, with the export amount of US $66.574 billion, down 4.68 percent from the same period last year, the number of clothing exports was 14.132 billion, down 1.03 percent from the same period last year, and the average unit price of clothing exports was US $3.64 per piece, down 4.71 percent from the same period last year.

Overview of clothing exports in January-June 2019

Data source: China Customs

　　1. Exports to the U.S. grew weakly, while other major markets fell significantly.

According to Chinese customs statistics, from January to June 2019, my country's clothing exports to the United States amounted to US $15.328 billion billion, an increase of 0.11 percent year-on-year; clothing exports to the European Union, Japan, and ASEAN decreased by 6.56 percent, 6.11 percent, and 6.73 percent year-on-year, respectively. The total export value of the above four major markets was US $41.216 billion billion, a year-on-year decrease of 4.13 percent, accounting for 61.91 percent of total clothing exports.

China's clothing exports to major countries from January to June 2019

Data source: China Customs

　　2. The clothing exports of some countries along the Belt and Road show bright spots.

From January to June 2019, China's total garment exports to 65 countries (regions) along the Belt and Road were 15.494 billion billion US dollars, down 5.26 percent from the same period last year, accounting for 23.27 percent of China's total garment exports. China's garment exports to the Philippines, Saudi Arabia, Greece, Kazakhstan and other six countries have maintained different growth rates. Among them, the year-on-year growth rates to Saudi Arabia, Greece and Kazakhstan are as high as 54.22, 150.28 and 28.49. The export amount of the above six countries has formed a positive pull of 2.03 percentage points on the overall export of the garment industry.

　　3, Guangdong fell significantly, the central provinces against the trend of growth.

From January to June 2019, China's top five provinces and cities completed garment exports of $50.757 billion billion, down 5.08 percent from the same period last year, accounting for 76.24 percent of total exports. Among them, the decline in Guangdong Province was obvious; Zhejiang and Jiangsu declined slightly, while Fujian and Shandong clothing exports continued to grow at a low speed. In the central provinces and cities, Anhui, Hunan, Hubei, Henan clothing exports showed double-digit growth, Hunan Province, the fastest growth rate, an increase of 67.96.

Garment exports in the top 15 provinces and cities from January to June 2019

Data source: China Customs

　　The growth rate of domestic sales in (III) is stable and slowing down.

Since 2019, domestic sales of clothing have maintained growth due to factors such as consumer confidence, consumption philosophy, consumption classification and supply matching, but the growth rate has fallen sharply. According to the National Bureau of Statistics, from January to June 2019, my country's total retail sales of consumer goods reached 19521 billion billion yuan, an increase of 8.4 percent year-on-year, and the growth rate was 1.0 percentage points lower than the same period last year. Among them, the retail sales of clothing products per unit above designated size totaled 475 billion yuan, a year-on-year increase of 2.7 percent, and a decrease of 7.4 percentage points from the same period last year.

Cumulative growth rate of total retail sales of consumer goods and clothing

Source: National Bureau of Statistics

Apparel online retail sales maintained a double-digit rapid growth. Among them, clothing goods increased by 21.4 year-on-year, and the growth rate was 2.7 percentage points lower than the same period last year.

Growth of Online Retail Sales of Physical and Wear Goods

Source: National Bureau of Statistics

In the traditional channel, the sales volume of clothing of large retail enterprises rose and fell, and the growth rate of sales turned negative. According to the statistics of the all-China Business Information Center, the retail sales of clothing goods of key large retail enterprises in the country fell 6.64 percent from January to May 2019 compared with the same period last year, down 13.08 percentage points from the same period last year, and the retail sales of all kinds of clothing increased by 1.37 percent compared with the same period last year, an increase of 0.06 percentage points over the same period last year.

The cumulative growth rate of clothing retail of key large retail enterprises in China

Data source: China National Business Information Center

　　Slight growth in (IV) investment

According to data from the National Bureau of Statistics, from January to June 2019, the actual completed investment in my country's apparel industry increased by 0.8 year-on-year, and the growth rate was 6.5 percentage points higher than the same period last year, but it was 10.6 percentage points lower than the first quarter. The growth rate of asset investment continued to decline. In the new stage of the development of the industry, the direction of enterprise investment has changed, and the investment in the clothing industry presents the characteristics of a single project investment scale reduction. At the same time, due to the transfer of orders, more enterprises have increased their overseas investment.

　　Slight fluctuation in the quality and efficiency of (V) operation

The efficiency of the industry has declined, and the quality of operation is basically stable. From January to June, the growth rate of efficiency indicators in the clothing industry showed a significant slowdown, with operating income maintaining a small growth, while total profits were negative. According to the data of the National Bureau of Statistics, from January to June 2019, there were 13636 enterprises above the scale of the clothing industry (annual main business income of 20 million yuan and above), with a cumulative operating income of 761.583 billion billion yuan, an increase of 2.15 percent over the same period last year, and a total profit of 38.245 billion billion yuan, down 0.78 percent from the same period last year. Operating income profit margin was 5.02, down 0.15 percentage points from the same period last year; the turnover rate of finished products and the turnover rate of total assets decreased by 3.89 and 0.05, respectively, while the proportion of three fees was 9.22, an increase of 0.04 percentage points over the same period last year.

Completion of Main Economic Indicators of Enterprises above Designment in China's Garment Industry

Source: National Bureau of Statistics

Main factors influencing the development of 2. industry

(I) international market demand growth momentum is insufficient

Affected by factors such as weak global economic growth, financial market fluctuations, and tightening monetary policies in developed countries, global trade growth continues to slow down. According to the WTO report, global trade grew by 3.0 per cent in 2018, down 1.6 percentage points from 2017, while global trade is forecast to grow by only 2.6 per cent in 2019, the slowest pace since the 2008 global financial crisis. From the perspective of the three major clothing export markets of the United States, the European Union, and Japan, the economic growth rate has slowed down and the consumer confidence index has fallen, which has a negative impact on clothing sales.

　　(II) international market competition intensifies

Since 2019, total clothing imports from the EU and the United States have maintained a small increase, while Japanese clothing imports have declined slightly, while the growth rate of clothing imports from China in the three major markets has been significantly lower than the average growth rate of imports from the world. According to the latest data on clothing imports released by Eurostat, the US Department of Commerce and the Japanese Ministry of Finance, clothing imports from the EU, the United States and Japan were 8.50, 5.91 and -0.68 respectively compared with the same period last year, of which clothing imports from China were 4.03, 0.68 and -5.95 respectively compared with the same period last year, which were 4.47, 5.23 and 5.27 percentage points lower than the average growth rate of global imports.

At the same time, the share of Southeast Asian countries such as Vietnam, Bangladesh, Cambodia and Myanmar in the three major markets of the European Union, the United States and Japan has continued to grow, especially since 2018, the escalating trade friction between China and the United States has intensified the transfer of orders to Southeast Asian countries with more labor costs and tariff advantages. Since 2010, China's market share in the EU, the United States and Japan has continued to decline. According to the latest data on clothing imports released by Eurostat, the US Department of Commerce and the Ministry of Finance of Japan, the proportion of clothing imported from China by the EU, the United States and Japan has decreased by 1.15, 1.46 and 3.11 percentage points respectively in the past year. At the same time, clothing imports from Vietnam and Bangladesh have shown double-digit growth, the market share increased by 1.53, 1.41 and 1.63 percentage points respectively.

Changes in the main import market share of clothing in China and Southeast Asian countries

Source: Eurostat, US Department of Commerce, Ministry of Finance of Japan

　　The growth rate of per capita clothing consumption expenditure in (III) fell.

In the first half of 2019, China's disposable income and per capita consumption expenditure basically kept pace with economic growth, and the growth rate of per capita clothing consumption expenditure dropped significantly, far lower than the growth rate of expenditure related to personal development and enjoyment, and the proportion of clothing consumption expenditure in per capita consumption expenditure also decreased. According to data from the National Bureau of Statistics, in the second quarter of 2019, the per capita clothing consumption expenditure of residents nationwide was 731 billion yuan, an increase of 3.0 percent year-on-year, and the growth rate was 3.3 percentage points lower than the same period last year; clothing consumption expenditure accounted for 7.08 percent of per capita consumption expenditure. A decrease of 0.32 percentage points over the same period last year. Over the same period, per capita expenditure on housing, education, culture and recreation, health care and other goods and services increased by 10.8 per cent, 10.9 per cent, 9.5 per cent and 9.8 per cent, respectively, all at a faster rate than expenditure on clothing.

　　The comprehensive cost of (IV) enterprises remains high.

Due to the continuous growth of labor, financing, taxation, raw materials, energy and other costs, the comprehensive operating costs of enterprises continue to rise. According to data from the National Bureau of Statistics, from January to June 2019, the cumulative cost of clothing enterprises above designated size in my country increased by 2.04 year-on-year, and the growth rate was only slightly 0.11 percentage points lower than the growth rate of operating income. From the perspective of the change in the proportion of costs and expenses in the main business income, the average level of industrial enterprises above the national scale has declined year by year, while the proportion of the clothing industry has shown a rising trend, and the rapid rise in costs and expenses has further squeezed the profit margins of clothing enterprises.

Changes in costs and expenses in the apparel industry

Source: National Bureau of Statistics

3. industry development characteristics

In the first half of 2019, in the face of a series of cyclical and structural problems, China's garment industry actively promoted industrial reform and development, built a new picture of industrial development in the new era, and stepped into a new track of high-quality development.

The pace of structural adjustment has been accelerated. In order to find depressions in the global value chain and adapt to the changes in order demand in the international market, China's apparel industry is striding forward to promote the global strategic layout, investing and setting up factories in Southeast Asia and other countries with a new attitude of organizers and managers, and accelerating the global capacity layout of production capacity. At the same time, from the changes in clothing exports and investment in various provinces and cities, exports and investment in coastal provinces such as Guangdong, Zhejiang, Jiangsu, and Shanghai have both declined, while the rapid growth of the central provinces indicates that the transfer of the clothing industry in the Yangtze River Delta and the Pearl River Delta has accelerated.

Product upgrading efforts to increase. Enterprises and brands based on consumer lifestyle and work style scenes have increased product research and development and design efforts, paid more attention to wearing comfort and adaptability, and met the requirements of consumers for self-expression and self-pleasure, and became adaptable to consumption upgrades and stable industrial development An important starting point.

Manufacturing brand quality promotion. As the value center of the industry, manufacturing enterprises are further differentiated, and small and medium-sized enterprises are facing the survival pressure of being eliminated due to the reduction of orders; medium and large enterprises also have the severe test of product quality and cost balance; large-scale manufacturing enterprises and even manufacturing brands, relying on their strong advanced manufacturing advantages, are ushering in a huge opportunity for the integration and promotion of manufacturing resources.

Terminal brand market influence increased. Men's brand quality development, custom products into the industry highlights. Women's clothing brand to increase multi-brand, multi-category, multi-business and multi-channel layout, comprehensive fashion industry group construction efforts to increase. Casual brand products fashion, cost-effective level continues to improve, the line line synchronous development trend is obvious. Children's clothing has increased the development of product lines, the market capacity continues to expand, and the market ecosystem is increasingly optimized.

Smart manufacturing continues to advance. Since the beginning of this year, enterprises have increased the construction of intelligent production lines, intelligent logistics and other related infrastructure, as well as the application of intelligent Internet of things solutions for production, warehousing and sales systems, so as to accumulate new energy for industrial development.

　　4. trend prediction

In its latest World Economic Outlook released in July this year, the International Monetary Fund once again lowered its forecast for world economic growth in 2019 and 2020 to 3.2 per cent and 3.5 per cent, down 0.1 percentage points from its April forecast, and lowered its forecast for the growth of global trade in goods and services in 2019 by 0.9 percentage points to 2.5 per cent. At the same time, both the World Bank and the WTO predict that global economic growth will slow to 2.6 per cent in 2019, with weak trade and domestic sales dragging down growth in developed economies, while growth in emerging and developing economies will be constrained by weak investment.

Looking ahead to 2019, the global economy and international trade are showing a slowdown in growth, and multiple uncertainties and destabilizing factors such as Brexit, the European refugee crisis and growing international trade tensions remain. China's main clothing export market demand growth momentum is insufficient, consumer confidence index continues to decline, coupled with September 1, China's exports to the United States $300 billion billion plus 10% tariff list includes all clothing products, will directly affect the second half of the clothing exports. At the same time, the uncertainty of Sino-US trade friction further aggravates the speed of international buyers' substantial adjustment of procurement strategy and supply chain layout, clothing exports will face the dual pressure of weakening market demand and order transfer, the international market will be under long-term pressure, it is difficult to improve significantly in the short term.

From the perspective of the domestic market, my country's national economy maintained a steady growth of 6.3 in the first half of the year, and the economic operation was within a reasonable range. The growth rate of per capita disposable income of residents was 0.6 percentage points faster than the growth rate of per capita gross domestic product (GDP). The index continued to grow at a high level, and the supply-side structural reforms were steadily advanced, providing strong support for the continued improvement of the domestic demand market. At the same time, in the second half of the year, a series of policies to "stabilize employment and promotion fees" will be gradually implemented, and tax and fee reduction measures will enter the dividend release period, which will help stimulate consumption and enhance the vitality of the domestic market. Thanks to the stable macroeconomic environment and consumption base, the domestic clothing market will maintain steady development and the growth rate will slow down.

In the face of the complex and severe external development environment, China's garment industry will continue to further promote the supply side structural reform, strive to promote the effective implementation of the "three products" strategy, comprehensively and pragmatically innovate and develop, and strive to enhance the endogenous power and anti risk ability of enterprises, so as to promote the overall stable and benign operation of the industry.