Industry Observation: The Economic Operation Data Of The Clothing Industry In The First Three Quarters Of The Weak Consumer Market Is Weak

Since 2024, China's clothing industry has made great efforts to overcome difficulties and problems such as weak market expectations and intensified supply chain competition. Supported by positive factors such as the successive implementation of various policies and measures and the gradual recovery of domestic and foreign market demand, the industry's economic operation has remained generally stable, and the main operating indicators have improved over the same period last year. Looking forward to the fourth quarter, the national series of stock increment policies will continue to work, and the superposition of the year-end consumption peak season will stimulate the release of effective demand, creating good conditions and foundation for the industrial economic recovery. But at the same time, the external environment is becoming more complex and severe, the overall market consumption power is weak, the uncertainty of the trade environment is rising and other risk challenges still need to be resolved, and the high-quality development of the industry still faces great challenges.

　　 Economic operation of clothing industry in the first three quarters of 2001

Keep the overall production stable

From January to September, driven by positive factors such as the gradual recovery of major international consumer markets and the increase in domestic demand for sportswear, the production of China's clothing industry remained generally stable. According to the data of the National Bureau of Statistics, from January to September, the industrial added value of enterprises above designated size in the clothing industry increased by 0.4% year on year, 9.2 percentage points higher than that of the same period in 2023, turning to positive growth from August. From the perspective of monthly changes, the monthly growth rate of industrial added value of enterprises above designated size in the clothing industry fluctuated and recovered in the first half of the year. After entering the third quarter, the monthly growth rate showed a marginal decline. In July, August and September, the industrial added value of enterprises above designated size in the clothing industry increased by 3.3%, 1.5% and 1.3% year on year respectively.

Garment production keeps growing. According to the data of the National Bureau of Statistics, from January to September, the clothing output of enterprises above designated size reached 15.146 billion pieces, a year-on-year increase of 4.41%, 13.80 percentage points higher than that of the same period in 2023. From the perspective of subdivided categories, while the output of woven clothing declined, the output of knitted clothing maintained a rapid growth, and its proportion in the total output of clothing continued to rise. From January to September, the output of knitted clothing was 10.423 billion pieces, up 7.45% year on year, accounting for 68.82% of the total clothing output, 2.47 percentage points higher than that of the same period in 2023. The output of woven clothing was 4.722 billion pieces, down 1.73% year on year, of which the output of down clothing, suits and shirts decreased 2.12%, 1.81% and 7.23% year on year respectively.

Figure 1 Production Growth of Clothing Industry from January to September 2024

Data source: National Bureau of Statistics

Slow growth of domestic market

Since this year, the growth rate of China's clothing domestic market has continued to slow down. In addition to the higher base factor last year, it reflects the lack of endogenous power of terminal consumption to some extent. In the third quarter, driven by the emerging effect of a new round of policies and measures to stabilize growth and the summer economy, the domestic sales of clothing improved, and the monthly decline gradually narrowed. According to the data of the National Bureau of Statistics, from January to September, the retail sales of clothing commodities above designated size in China totaled 739.09 billion yuan, a year-on-year decrease of 0.2%, and the growth rate was 13.0 percentage points lower than that of the same period in 2023. Among them, July, August and September decreased by 5.6%, 1.9% and 0.3% respectively year on year. The new consumption modes such as live broadcast e-commerce, short video e-commerce and instant retail have played a significant role in driving the growth. From January to September, the online retail sales of clothing products increased by 4.1% year-on-year, 5.5 percentage points slower than the same period in 2023.

Figure 2 Clothing sales in the domestic market from January to September 2024

Data source: National Bureau of Statistics

The pressure of clothing outlet increases

In the first three quarters, the scale of China's clothing export was relatively stable, but due to the adverse factors such as the falling demand in some emerging markets, the continuous decline in export prices and the appreciation of the RMB, the pressure on the industry's export continued to increase. According to Chinese customs data, from January to September, China's clothing and clothing accessories exports totaled US $118.11 billion, down 1.6% year on year. From a monthly perspective, clothing exports started steadily and rose, but the pressure increased in the later period. Since June, it has continued to grow negatively. In September, the export decline deepened to 5.1%. From the perspective of volume price relationship, the export volume of clothing rose and fell, with the export volume of 25.25 billion pieces, up 11.3% year on year; The average export unit price was 3.8 US dollars/piece, down 11.8% year on year. Among them, the export amount of knitted clothing was 52.84 billion US dollars, up 2.1% year on year, the export volume increased 11.4% year on year, and the export unit price decreased 8.3% year on year; The export value of woven clothing was 44.38 billion US dollars, down 6.3% year on year, the export volume increased 11.0% year on year, and the export unit price decreased 15.6% year on year. The main reasons for the increase in volume and the decrease in price include that consumers are more inclined to purchase low-cost goods, and the proportion of cross-border e-commerce exports with lower unit prices has increased significantly.

Figure 3 China's clothing and clothing accessories exports from January to September 2024

Data source: China Customs

From the perspective of export categories, most of the categories showed a trend of rising in quantity and falling in price. Only the export volume and price of jackets and overcoats/winter clothing fell at the same time. Among them, the export volume of down jackets fell in price, the export volume fell by 41.6% year on year, and the export unit price increased by 14.6% year on year. Although the export unit prices of casual suits, skirts, culottes and T-shirts decreased by different degrees, the export amount still maintained a rapid growth, with growth rates of 15.5%, 10.8% and 25.0%, driven by the substantial growth of export volume. Over the same period, on the basis of last year's low base, China's cotton clothing exports to the United States and the European Union turned to positive growth. According to Chinese customs data, from January to September, China's export of cotton clothing was 37.55 billion US dollars, down 0.5% year on year; Among them, China's export of cotton clothing to the United States was 7.01 billion US dollars, up 11.4% year on year; Exports of cotton garments to the EU reached US $5.05 billion, up 2.1% year on year.

From the perspective of major markets, the diversification trend of clothing export market is obvious. China's clothing exports to the traditional market showed resilience, the clothing exports to the United States, the European Union and the United Kingdom achieved growth, and the decline in clothing exports to Japan narrowed. According to Chinese customs data, from January to September, China's clothing exports to the United States amounted to 26.8 billion US dollars, up 4.7% year on year, 20.5 percentage points higher than the same period in 2023; China's clothing exports to the EU amounted to 20.84 billion US dollars, up 0.9% year on year, 23.0 percentage points higher than the same period in 2023; China's clothing exports to the UK amounted to US $3.94 billion, up 6.2% year on year, 27.3 percentage points higher than the same period in 2023; China's clothing exports to Japan amounted to US $8.77 billion, down 10.2% year on year, 1.0 percentage point lower than the same period in 2023. In the same period, due to the limited market space and the high base factor of last year, China's exports to ASEAN, countries and regions along the Belt and Road turned to negative growth, but its exports to Kazakhstan and Latin America were more impressive. According to Chinese customs data, from January to September, China's clothing exports to ASEAN amounted to US $10.96 billion, down 1.8% year on year, 7.2 percentage points lower than that from January to June; Clothing exports to countries and regions along the Belt and Road totaled US $33.23 billion, down 3.5% year on year, and the growth rate dropped 8.0 percentage points from January to June. In addition, China's clothing exports to Kazakhstan increased by 23.5% year on year and to Latin America by 6.3% year on year.

From the perspective of export provinces, the eastern region is still the main concentration of China's clothing exports, while the export performance of provinces in the central and western regions varies greatly, and the growth rate of Xinjiang's clothing exports has slowed down significantly. According to Chinese customs data, from January to September, clothing exports in the eastern region reached US $95.3 billion, down 0.2% year on year, accounting for 80.7% of China's total clothing exports. Among the top five garment export provinces, Zhejiang and Jiangsu saw year-on-year growth of 4.7% and 1.5% respectively; The clothing exports of Guangdong, Shandong and Fujian decreased by 6.4%, 0.8% and 1.9% year on year respectively. In the same period, clothing exports from central and western China reached US $22.81 billion, down 6.9% year on year, and the growth rate dropped 8.5 percentage points from January to June. Among them, Xinjiang's clothing exports reached US $10.13 billion, up 7.5% year on year, 26.2 percentage points slower than that from January to June; The clothing exports of Hubei and Guangxi increased by 7.4% and 25.0% year on year respectively; The clothing exports of Hunan, Jiangxi and Sichuan decreased by 59.5%, 37.6% and 5.0% year on year respectively.

Recovery of enterprise benefit under pressure

In the first three quarters, the operation quality and efficiency of China's garment enterprises continued to recover under pressure, and the operating revenue achieved a restorative growth. Although affected by factors such as insufficient effective market demand and intensified industrial competition, the total profit still did not reverse the negative growth trend, but the profitability and main operating indicators of enterprises tended to improve. According to the data of the National Bureau of Statistics, from January to September, 13674 enterprises above the designated size (annual main business income of 20 million yuan and above) in China's clothing industry achieved an operating income of 900 billion yuan, a year-on-year increase of 1.02%, up 9.15 percentage points from the same period in 2023; The total profit was 38.130 billion yuan, down 2.62% year on year, 4.58 percentage points lower than the same period in 2023; The operating income profit margin was 4.24%, 0.14 percentage points lower than that in the same period of 2023, but 0.71 percentage points higher than that in the first quarter, showing a gradual recovery trend in the year.

The loss area of the industry narrowed, and the operating efficiency was basically stable. From January to September, the losses of enterprises above designated size in the clothing industry reached 25.31%, 0.11 percentage points lower than the same period in 2023; The proportion of three fees is 9.77%, 0.10 percentage points lower than that of the same period in 2023; One hundred yuan of operating income including costs is 85.04 yuan, down 0.05% from the same period in 2023; The turnover rate of finished products, accounts receivable and total assets were 9.72 times/year, 5.79 times/year and 1.12 times/year, respectively, down 4.43%, 4.46% and 1.92% year on year.

Figure 4 Main benefit indicators of the clothing industry from January to September 2024

Data source: National Bureau of Statistics

Investment maintained rapid growth

Since 2024, garment enterprises have continued to deepen transformation and upgrading, actively expanded investment in intelligent production, business model innovation, brand building, channel layout and other fields, and maintained a rapid growth in fixed asset investment in the industry. According to the data of the National Bureau of Statistics, from January to September, the completed investment in fixed assets in China's clothing industry increased by 16.3% year on year, 21.0 percentage points higher than the same period in 2023, 1.7 and 7.1 percentage points higher than the overall level of the textile and manufacturing industries.

Figure 5 Growth rate of fixed asset investment in clothing industry from January to September 2024

Data source: National Bureau of Statistics

　　 Major influencing factors of clothing industry operation in the first three quarters of 2002

Inadequate recovery power of domestic market

In the first three quarters, the domestic consumer market was weak as a whole, the growth rate of residents' income slowed down, consumer confidence was insufficient, and the demand recovery of the clothing market was relatively slow and weak. According to the National Bureau of Statistics, the consumer confidence index in September was 85.7, down 1.72% year on year. From January to September, China's total retail sales of consumer goods reached 35356.4 billion yuan, up 3.3% year on year, 3.5 percentage points slower than the same period in 2023; China's per capita disposable income and per capita consumption expenditure increased by 4.9% and 5.3% respectively year on year, and the growth slowed by 1.0 and 3.5 percentage points respectively compared with the same period in 2023; The per capita expenditure on clothing consumption was 1109 yuan, with a year-on-year growth of 5.1%, 1.4 percentage points slower than that of the same period in 2023, and the growth rate was significantly lower than that of improved consumption expenditure such as transportation, communication, education, culture and entertainment. In the per capita consumption expenditure, the clothing consumption expenditure accounts for 5.4% of the per capita consumption expenditure, which is the same as the same period in 2023.

The main international markets differ in temperature

Since 2024, with the decline of inflation rates in some major economies in the United States and Europe, macroeconomic and consumer markets have shown signs of improvement. However, under the situation of insufficient momentum for sustained global economic growth, continued geopolitical tensions and other constraints, the consumption power of the international market is weak as a whole. The US unemployment rate fell for the second consecutive month in September, the CPI index slowed down, the retail market was better than expected, the sales of clothing stores increased by 1% year on year, and the sales of general stores (including department stores) increased by 2.1% year on year. EU inflation fell more than expected, and retail sales were basically stable. In September, the inflation rate in the euro area fell to a three-year low, and the EU retail trade volume increased by 2.8% year on year. Affected by the reduction of inbound tourists, weak exports and high inflation dragging down demand, Japan's economic recovery is weak. In September, real wages and household spending fell by 0.1% and 1.1% year on year respectively; From January to September, Japan's textile and clothing retail sales increased by 0.4% year on year.

Increased international competition pressure

With the increasingly obvious trend of nearshore, alliance and regionalization of the global industrial chain, the apparel industry chain of Vietnam, Bangladesh and other countries has gradually improved, and the pressure on China's apparel industry to participate in the international market competition has intensified. China's share in the traditional markets such as the EU and Japan has continued to decline. The growth rate of U.S. apparel imports from China is far lower than that of Vietnam and India. According to the Eurostat data, from January to August, EU clothing imports from China fell by 5.6% year on year, China's market share decreased by 0.4 percentage points, and Bangladesh and Vietnam's market shares increased by 0.1 percentage points respectively; According to Japanese customs data, from January to September, Japan's clothing imports from China fell by 2.1% year on year, China's market share decreased by 2.6 percentage points, and Vietnam's and India's market shares increased by 1.3 and 0.1 percentage points respectively; According to the data of the U.S. Textile and Clothing Office, China's share of the U.S. market increased slightly by 0.1 percentage points from January to September, but the growth rate declined by 2.3% year on year. The U.S. clothing imports from Vietnam and India increased by 1.2% and 0.5% year on year respectively. Meanwhile, from January to September, Vietnam exported 27.34 billion dollars of clothing, up 9.0% year on year; From January to August, India exported US $11.34 billion of clothing, up 4.3% year on year. From January to July, Cambodia exported 5.38 billion dollars of clothing, up 18.7% year on year.

Prediction of the operation trend of the clothing industry in the fourth quarter of 2003

Looking forward to the fourth quarter, there are still many unstable and uncertain factors facing the development of China's clothing industry, and there are still many risks and challenges to maintain a stable and positive trend. The international environment has become more complex. The economic growth momentum of major developed economies is insufficient. In September, the Federal Reserve and the European Central Bank both lowered their economic growth expectations; Disadvantageous factors such as continued geopolitical conflicts, increased trade friction risks, and unstable demand in emerging markets have all caused greater pressure on clothing enterprises' exports and profits. China's macro-economy continues to pick up. The implementation of the stock policy and the introduction of a package of incremental policies have created good conditions and foundation for the smooth operation of the clothing industry. The year-end peak consumption season will also promote the effective release of clothing consumption demand. However, the structural contradiction of employment in China is quite prominent, the income and consumption capacity of residents need to be further improved, the pressure on enterprises to operate continues to be high, and the high-quality development of the industry still faces great challenges.

(Source: China Garment Association)