Economic Operation Of China'S Clothing Industry From January To June

With the overall improvement of epidemic prevention and control situation and the implementation of various policies and measures, the repair of industrial chain supply chain accelerated, and the growth rate of industrial added value of clothing industry accelerated for two consecutive months, showing obvious marginal improvement characteristics. However, from the cumulative growth rate in the first half of the year, the industrial added value of the clothing industry and the growth rate of the clothing output showed a continuous downward trend, and the clothing output turned to negative growth. According to the data of the National Bureau of statistics, from the monthly situation in the second quarter, the added value of the garment industry above the designated size realized a downward trend, with a year-on-year decrease of 0.3% in April, a year-on-year increase of 1.2% in May, and an acceleration of growth to 1.5% in June. From the cumulative data, from January to June, the added value of garment industry above designated size increased by 4.4% year-on-year, and the growth rate was 4.3 percentage points slower than that from January to March; Over the same period, the garment output of Enterprises above designated size was 11.269 billion, a year-on-year decrease of 1.48%, 4.87 percentage points lower than that of January March. Among them, due to the decline in the number of exports, the decline in the output of woven clothing is more obvious. From January to June, the output of woven clothing was 4.253 billion pieces, a year-on-year decrease of 2.97%; The output of knitted garments was 7.016 billion pieces, down 0.56% year on year.

Figure 1 production growth of clothing industry from January to June 2022

Source: National Bureau of statistics

In the first half of the year, affected by factors such as the multi-point spread of the domestic epidemic, the clothing consumer market was greatly impacted. Since March, clothing sales have been negative growth for three consecutive months, and the market scale has continued to decline. With the improvement of the epidemic prevention and control situation and the effect of promoting consumption policies, the growth rate of clothing sales in the domestic market turned positive in June, and the online retail sales returned to positive growth, showing an overall trend of accelerating recovery. According to the data of the National Bureau of statistics, the retail sales of clothing goods of units above the quota in June increased by 2.5% year-on-year, and the growth rate turned to positive growth after three consecutive months of double-digit decline; From January to June, the total retail sales of clothing goods of units above the quota in China totaled 446.26 billion yuan, a year-on-year decrease of 8.0%, 2.1 percentage points lower than that of January may. Thanks to the recovery of logistics capacity and the promotion of 6.18 Shopping Festival, online retail sales returned to positive growth after a small fluctuation. From January to June, online retail sales of wearing goods increased by 2.4% year-on-year, 4.0 percentage points higher than that from January to May.

Figure 2 growth rate of clothing sales in the domestic market from January to June 2022

Source: National Bureau of statistics

In the second half of 2021, China's garment industry will continue to maintain stable growth in the international market. According to the data of China Customs, from January to June, China's total exports of clothing and accessories reached US $80.17 billion, a year-on-year increase of 12%, 1.8 percentage points higher than that of January may; In June, the export of clothing and accessories reached US $18.04 billion, up 19.1% year-on-year.

Figure 3 export of China's clothing and accessories from January to June 2022

Source: China Customs

The export volume of woven clothing decreased and the price increased, while the export of protective materials continued to decline. According to China Customs data, from January to June, the number of clothing exports increased by 3.9% year-on-year, and the average export unit price increased by 16.3% year-on-year. Among them, the export volume and export unit price of knitted apparel increased by 10.5% year on year; The export volume of woven clothing decreased by 8.4% year on year, and the export unit price increased by 30.2% year on year. In the breakdown category of woven clothing, the export volume of women's suit, men's down jacket, men's underwear, pajamas, pajamas and protective clothing decreased by 1.1%, 11.5%, 14.0%, 9.3% and 49.0% respectively over the same period of last year. Among them, the quantity and value of chemical fiber protective clothing decreased by 49.1% and 60.2% respectively. Over the same period, China's exports of plastic and vulcanized rubber gloves decreased by 69.5% year-on-year.

China's clothing exports to the United States and the European Union are growing strongly, while the decline of China's exports to Japan continues to narrow. According to the data of China Customs, from January to June, China's clothing exports to the United States and the European Union amounted to 19.29 billion US dollars and 15.9 billion US dollars, respectively, increasing by 14.5% and 19.5% year-on-year, accounting for 43.9% of China's total clothing exports, driving the growth of China's clothing exports by 7.0%; ASEAN has become the third largest clothing export market in China, with an export value of 7.18 billion US dollars, an increase of 27.5% year on year; The decline rate of China's clothing export to Japan was significantly narrowed, with a year-on-year decrease of 5.2%, 1.7 percentage points lower than that of January March. Over the same period, China's clothing exports to countries and regions along the belt and road and Latin America maintained a rapid growth, with growth rates of 14.9% and 36.2%, respectively, driving the growth of China's clothing exports by 3.5% and 1.7%, and the clothing exports to Africa and Oceania increased by 2.5% and 15.1% respectively. In addition, China's clothing exports to the UK, Canada and Russia decreased by 5.1%, 4.7% and 33.3% respectively.

Zhejiang, Jiangsu, Shandong clothing exports maintained a high growth rate, while Guangdong's export growth rate dropped sharply. From January to June, Zhejiang, Guangdong, Jiangsu, Shandong and Fujian, the top five provinces of China's clothing exports, totaled 58.72 billion US dollars, a year-on-year increase of 12.2%, accounting for 73.2% of China's total clothing exports, an increase of 0.2% over the same period of last year. Among them, Zhejiang's clothing exports amounted to 16.41 billion US dollars, with a year-on-year increase of 29.1%, and that of Jiangsu and Shandong provinces increased by 13.4% and 17.9% respectively; Guangdong's clothing export decreased by 3.6% year-on-year, and the growth rate dropped by 32.7% compared with the whole year of 2021. The situation of clothing export in central and western provinces is obviously divided. The clothing export of Xinjiang, Jiangxi and Hunan has continued to grow rapidly, with the growth rate of 86.7%, 48.9% and 80.8%, while that of Hebei and Hubei Province is 53.0% and 26.2% respectively.

In June, with the obvious repair of the industrial chain and supply chain, and the solid promotion of enterprises' resumption of work and production, the profits of China's garment enterprises changed from decline to increase. However, in the first half of the year, in the complex situation of the impact of the epidemic, weakening demand, rising costs and other business pressures, the economic operation of China's clothing industry is under serious pressure, and the growth rate of the main benefit indicators is gradually slowing down. According to the data of the National Bureau of statistics, from January to June, there were 13067 Enterprises above the designated size (annual main business income of 20 million yuan and above) in China's clothing industry, with an operating revenue of 688.475 billion yuan, a year-on-year increase of 4.45%, and a growth rate of 4.87 percentage points slower than that of January March; The total profit was 30.733 billion yuan, a year-on-year increase of 4.0%, and the growth rate was 6.86 percentage points slower than that of January March. The operating efficiency of the industry has slowed down, and the rising cost has weakened the profitability. From January to June, the turnover rate of finished products of Enterprises above Designated Size in the clothing industry was 11.77 times / year, down 7.30% year-on-year; The operating cost increased by 5.29% on a year-on-year basis, 0.84 percentage points higher than the growth rate of operating revenue. The operating cost per 100 yuan of operating income included the cost of 86.03 yuan, an increase of 0.69 yuan over the same period in 2021; The profit margin of operating revenue was 4.46%, 0.02 percentage points lower than that of the same period in 2021.

Table 1 main benefit indexes of clothing industry from January to June 2022

Source: National Bureau of statistics

In the first half of the year, under the promotion of various tax incentives and financing support policies, such as the steady growth of the country, helping enterprises to relieve the financial difficulties, clothing enterprises continued to deepen the transformation and upgrading, actively expanded the effective investment in automation equipment application, intelligent manufacturing, business model innovation, regional layout adjustment and other fields, and made efforts to cope with the repeated epidemic situation, industrial employment, industrial employment, and so on Due to the normalization problems such as rising cost and consumption change, the investment in clothing industry has achieved rapid growth. According to the data of the National Bureau of statistics, from January to June, the investment in fixed assets of China's clothing industry increased by 33.8% year-on-year, 28% higher than the same period in 2021, and 3.5% lower than that in January March.

Figure 4 fixed assets investment of clothing industry from January to June 2022

Growth rate

Source: National Bureau of statistics

Since the beginning of the year, the consumer market is weak, the overall operation of the clothing industry is under pressure, all kinds of business operators' expectations for the future are uncertain, and the production and operation scale is generally in a tight state.

Due to the abnormal weather in spring and winter, the sales channel of Hangzhou women's clothing manufacturers is not smooth, which is caused by the abnormal market situation of winter and spring. According to the information feedback of incomplete statistics at present, Hangzhou women's clothing brand enterprises have finished the winter clothing ordering meeting, and the order quantity generally drops by 20% compared with that in previous years. On the manufacturing side, production-oriented enterprises are also faced with the pressure of demand contraction, supply shock and weakening expectation. Henan Province as an inland province of China to undertake the earlier transfer of clothing industry, in the context of the new crown epidemic, the overall growth of the clothing industry slowed down in the first half of the year. According to the survey, more than half of the enterprises in the first half of 2022 have a decrease in self output and outward processing compared with 2021. Enterprises reported that due to the epidemic situation, orders could not be fulfilled on time. Customers were very worried about the delivery time of orders, and subsequent orders were also affected. At the same time, the consumption demand was reduced and the domestic market was depressed. As a result, the export and domestic sales orders were reduced, and the output of most enterprises was reduced.

At present, in the face of weak market demand, raw material fluctuations and the entry into force of the US "Xinjiang cotton" ban restricting the export of enterprises, clothing brands and related supply chain enterprises are under internal and external pressure. While they are eager to increase business volume in the second half of the year, they have a more obvious sense of stable development.

Although the domestic and foreign trade development of China's clothing industry is facing some unstable and uncertain factors, under the implementation of the national economic stabilization package, the whole industry is still making steady progress, and the investment in the fields of digital upgrading and regional layout adjustment is growing rapidly. From January to June, the growth rate of fixed assets investment in the industry is 33.8%, including Fujian, Shandong, Anhui, Jiangxi, Fujian, Shandong, Anhui, Jiangxi and other fields The growth rate of textile and clothing investment in Guangxi and Xinjiang exceeded 20%, showing the tenacity of industry development.

In the complex development situation, enterprises take intelligent transformation and digital transformation as important starting points for transformation and upgrading, improve production efficiency, and improve order response speed and good product rate by changing ideas, changing process and implementing digitization. At the same time, some industrial clusters have also continuously strengthened the guidance and support for the digital upgrading and transformation of local enterprises. In May this year, Gongqing city of Jiangxi Province proposed to give subsidies to enterprises that invest more than 500000 yuan in building digital workshops and intelligent factories to purchase new equipment, with a maximum subsidy of 5 million yuan for a single enterprise.

In addition, more and more garment enterprises build headquarters economy, release production capacity to the central and western regions of China and Southeast Asian countries. Through self built factories or cooperative factories in the central and western regions, they will release orders and part of their production capacity, so as to improve their operation and anti risk ability. Since this year, there is no shortage of foreign trade orders in Pinghu area. However, due to the lack of local industrial workers and the low processing price of international garment orders, most enterprises choose their own inland factories or cooperative factories in Jiangxi, Anhui, Shandong and Henan. Under the background of industrial transfer, Jiangxi and Hunan's clothing export increased rapidly, with 48.9% and 80.3% respectively year-on-year.

At present, variables and opportunities coexist in the domestic clothing retail market. Under the background of market consumption downturn, the function and fashion of clothing are linked, and the scene marketing tends to be hot, which is mainly manifested in the rapid growth of the market scale of sports and outdoor. Especially under the influence of epidemic prevention and control measures and entry-exit restrictions, people's worry about long-distance travel at home is increasing and overseas travel is limited, which has driven the sales of camping activities and related outdoor products in the suburbs of the city, and the growth space of new track is expected.

In a survey of nearly 100 enterprises, the main categories of enterprises whose business income increased by more than 20% in the first half of 2022 include sportswear, outdoor clothing, sweaters and professional wear. According to the results of the first half of the year released by clothing listed companies, sports enterprises have a good market sales in the first half of the year. Among them, Tebu predicts that the growth rate of net profit of enterprises in the first half of the year will not be less than 35%, and that of 361 degree is not less than 30%; Anta brand and other brands achieved positive growth in sales in the first half of the year. From the perspective of the growth rate of the clothing industry, it is expected that the continuous improvement of the clothing industry's health awareness and the long-term pursuit of healthy clothing industry will benefit from the sustained improvement of the clothing industry's health awareness.

Looking forward to the second half of the year, the domestic and foreign market environment will become more severe and complex. Under the complex situation of multiple difficulties, such as the impact of epidemic situation, weakening demand, rising cost and high inventory, the pressure of maintaining the restorative growth of China's clothing industry will be further increased. Clothing enterprises should grasp the development window period and strategic opportunity period, continue to deepen transformation and upgrading, adhere to innovation driven collaborative development, actively expand multiple sales channels and emerging markets, strive to improve the supply chain toughness and risk resistance ability, give full play to the competitive advantages of China's clothing industry chain system, stability and controllability, and strive to promote the sustainable and stable recovery of the industry.

In terms of the international market, affected by the epidemic situation, the escalation of the situation in Russia and Ukraine, and the continuous rise of inflation pressure, the process of global economic recovery slows down and the uncertainty of international trade environment increases. The world bank, IMF, WTO and others have lowered their expectations of global economic and trade growth in 2022. China's clothing export will face the decline of international market demand, the recovery of overseas supply chain, and The adjustment of cross-border purchasing strategy, the aggravation of trade friction, and the United States restricting the import of Xinjiang products and many other pressures and risks, it is expected that the downward probability of clothing export growth in the second half of the year will increase. In terms of domestic market, China's macro-economy has stabilized and rebounded, but the downward pressure has increased. Especially affected by the epidemic situation, the employment pressure of young people is highlighted, and their consumption willingness and consumption expectation are low. Under the restriction of factors such as the slowing growth of residents' income and the limited consumption scenario, the support for the stable recovery of the domestic clothing market has been weakened. It is expected that in the second half of the year, the domestic clothing market is expected to continue to recover under the positive factors such as the policy of stabilizing employment and promoting consumption, the continuous innovation of consumption mode, the recovery of consumer confidence and the emerging consumer hot spots, but there is limited room for growth. At the same time, the fluctuation of raw material price, high freight cost, limited market expansion and exchange rate risk will still exert pressure on the development of the industry.