Industry Data: Brief Report On The Economic Operation Of China'S Clothing Industry From January To December 2023

In 2023, the external environment faced by China's clothing industry will become more complex and severe, the global economic growth will slow down, the international market demand will shrink, and the clothing industry will move forward under pressure. With the recovery and improvement of China's macro-economy and the remarkable implementation of a series of policies and measures to expand domestic demand and promote consumption, the domestic market continues to recover, and the transformation, upgrading and innovative development of China's garment enterprises continue to advance. The industry economy presents a trend of "overall slow operation, marginal improvement at the end of the year". Looking forward to 2024, the development situation facing the clothing industry is still complex and severe. Clothing enterprises need to continue to accelerate the pace of innovative development, strengthen the construction of modern industrial system, and promote the high-end, intelligent, green and integrated development of the clothing industry.

01 Economic operation of clothing industry

Apparel production declined significantly

In 2023, due to the contraction of external demand, sluggish growth of domestic demand, rising costs and other factors, the production scale of China's clothing industry will decline, and the industrial added value will continue to grow negatively. According to the data of the National Bureau of Statistics, from January to December 2023, the industrial added value of enterprises above designated size in the clothing industry decreased by 7.6% year on year, 1.2 percentage points narrower than that in the first three quarters, and 5.7 percentage points deeper than that in the same period of 2022; The clothing output of enterprises above designated size reached 19.39 billion pieces, a year-on-year decrease of 8.69%, 0.7 percentage points narrower than that of the first three quarters, and 5.33 percentage points deeper than that of the same period in 2022. From the perspective of the output of major categories of clothing, from January to December 2023, the output of woven clothing of enterprises above designated size in the clothing industry will be 6.556 billion, a year-on-year decrease of 15.01%, and the output of knitted clothing will be 12.833 billion, a year-on-year decrease of 5.08%, 9.86 and 2.84 percentage points higher than that of the same period in 2022 respectively. Among the woven garments, the output of down garments, suits and shirts decreased by 23.78%, 9.37% and 9.86% year on year respectively.

Figure 1 Production Growth of Clothing Industry from January to December 2023

Data source: National Bureau of Statistics

　　 The domestic market continues to recover

In 2023, the domestic social economy will recover in an all-round way, the residents' income will grow faster than the national economy, and the employment situation will be generally stable, providing guarantee for the recovery of consumption. Superimposed by factors such as the continuous optimization of industrial supply, the stimulation of potential consumption demand by new business types and new models, and the expansion of domestic demand to promote the implementation of consumption policies, China's clothing domestic market has achieved rapid growth, the market vitality continues to rise, and consumer demand is gradually released. According to the data of the National Bureau of Statistics, from January to December 2023, the retail sales of clothing commodities above designated size in China totaled 1035.29 billion yuan, up 15.4% year on year, 23.1 percentage points higher than the same period in 2022. In the fourth quarter, driven by the "Double 11" shopping festival, the hot sales of autumn and winter clothing, the concentrated release of holiday demand and the low base effect, the retail sales of clothing products above the designated size increased by 25.9% and 30.5% in November and December, and the annual retail sales of clothing products and online retail sales of clothing products above the designated size increased by 2.6 and 1.2 percentage points respectively compared with the previous three quarters.

Figure 2 Clothing sales in the domestic market from January to December 2023

Data source: National Bureau of Statistics

　　 Negative growth of clothing exports

In 2023, influenced by factors such as shrinking demand in the international market and the intensification of the trend of "de Chinesization", China's clothing exports continued the trend of slowing down in the fourth quarter of last year, with increasing downward pressure on exports and a significant decline in export scale. According to Chinese customs data, from January to December 2023, China's clothing and clothing accessories exports totaled US $159.14 billion, a year-on-year decrease of 7.8%, and the growth rate slowed by 11 percentage points compared with the same period in 2022. Under the influence of such factors as the increase of consumption demand in Christmas, New Year and other festivals and the remarkable effect of American destocking, clothing exports at the end of the year and two months were significantly better, and the decline narrowed to 2.8% in November. In December, clothing exports recovered positive growth, with a year-on-year growth of 1.9%. The decline of clothing exports in the whole year was 1.0 percentage points lower than that in the previous three quarters. From the perspective of volume price relationship, the volume and price of clothing exports fell at the same time. The export volume was 30.4 billion pieces, down 1.0% year on year. The average export unit price was 4.32 dollars/piece, down 6.9% year on year. Among them, the export value of knitted clothing and clothing accessories was 82.57 billion US dollars, down 7.8% year on year, the export volume was 0.8% down year on year, and the export unit price was 7.5% down year on year; The export value of woven clothing and clothing accessories was 70.42 billion US dollars, down 6.8% year on year, the export volume was down 1.4% year on year, and the export unit price was down 6.0% year on year.

Figure 3 China's clothing and clothing accessories exports from January to December 2023

Data source: China Customs

The "Xinjiang related Act" has been implemented for more than a year, which not only seriously affects China's export of cotton products to the United States, but also has a negative chain effect on other major markets. According to Chinese customs data, from January to December 2023, China's export of cotton clothing reached 50.67 billion US dollars, down 10.8% year on year; Among them, the export of cotton knitwear reached US $29.24 billion, down 14.3% year on year; The export of cotton tatting clothing was 21.42 billion US dollars, down 5.6% year on year. In addition, China's export of cotton clothing to the United States was 8.5 billion US dollars, down 18.1% year on year; The export of cotton clothing to the EU was 6.7 billion US dollars, down 23.0% year on year; The export of cotton clothing to Japan was 3.05 billion US dollars, down 23.0% year on year. From the perspective of category breakdown, the export of commuting and social clothing such as suits and casual wear with high added value and sports clothing such as skiing continued to grow. Among them, the export value of suits and casual wear increased by 7.2% and 26.3% respectively year on year, and the export value of sports clothing such as skiing increased by 0.2% year on year. In addition, the export value of cold proof clothing such as overcoats and down jackets and household clothing such as pajamas decreased by 18.2% and 7.4% year on year respectively; The export value of knitted T-shirts and sweaters decreased by 1.6% and 10.3% respectively year on year.

From the perspective of major markets, China's clothing exports to the United States, the European Union and Japan continued to decline, while its clothing exports to ASEAN increased first and then decreased, and clothing exports to Africa and countries and regions along the Belt and Road grew against the trend. According to Chinese customs data, from January to December 2023, China's clothing exports to the three traditional markets of the United States, Europe and Japan totaled $72.78 billion, down 15.1% year on year, accounting for 45.7% of China's total clothing exports, 3.9 percentage points less than the same period in 2022. Among them, China's clothing exports to the United States amounted to US $33.59 billion, down 12.0% year on year, 9.8 percentage points deeper than that in 2022; China's clothing exports to the EU amounted to 26.55 billion US dollars, down 19.5% year on year, and the growth rate was 22.5 percentage points slower than that in 2022; China's clothing exports to Japan amounted to US $12.65 billion, down 13.2% year on year, 12.9 percentage points deeper than that in 2022. Over the same period, China's clothing exports to ASEAN fell 4.3% year on year. Since July, China's clothing exports to ASEAN in a single month have turned to negative growth, with declines of 30.7% and 17.2% in October and November, respectively, and 4.5% in December. From January to December, China's clothing exports to countries and regions along the Belt and Road increased by 1.4% year on year, driving the growth of China's clothing exports by 0.4 percentage points, including a year-on-year growth of 72.5% to Kazakhstan; The clothing export to Africa increased by 15.0% year on year, driving the growth of China's clothing export by 0.7 percentage points; However, clothing exports to Latin America and Oceania declined 7.9% and 5.7% year on year. In addition, China's clothing exports to South Korea and Russia increased by 1.1% and 12.8% year on year, while those to Britain, Chile and Canada decreased by 15.7%, 22.5% and 20.5% year on year respectively.

The eastern region still occupies the leading position in China's clothing export, while the clothing export in the central and western regions has maintained a small growth, especially in Sichuan, Xinjiang, Guangxi and other western provinces, where the clothing export momentum is strong, showing that the pace of gradient transfer of the clothing industry continues to accelerate. According to Chinese customs data, from January to December 2023, China's top five garment export provinces, Zhejiang, Guangdong, Jiangsu, Shandong and Fujian, completed a total of $109.49 billion in garment exports, a year-on-year decrease of 10.1%, accounting for 68.8% of China's total garment exports, 1.8 percentage points less than that in 2022. Among them, the clothing exports of Zhejiang and Shandong decreased by 2.1% and 2.7% year on year, and their proportion in the national clothing exports increased by 1.3 and 0.6 percentage points respectively; The clothing exports of Guangdong, Jiangsu and Fujian decreased by 16.8%, 16.0% and 15.6% year on year, respectively, accounting for 1.6, 1.2 and 0.8 percentage points of the national clothing exports. Over the same period, the total amount of clothing exports in central and western China increased by 4.9% year on year, accounting for 21.7% of the total national clothing exports, 2.6 percentage points higher than the same period last year. The export growth of Sichuan reached 58.7%; The export amount of Hubei, Xinjiang and Guangxi increased by 31.3%, 23.0% and 12.6% year on year respectively; At the same time, the clothing export amount of Hunan, Jiangxi and Anhui decreased by 31.8%, 27.7% and 8.4% year on year respectively.

　　 Investment declined slightly

Under the influence of factors such as overall weak domestic and international market demand, increased pressure on enterprise operation, unstable market expectations and high base number, China's clothing industry investment confidence is slightly insufficient, and the scale of fixed asset investment has declined slightly, but the decline has gradually narrowed. According to the data of the National Bureau of Statistics, from January to December 2023, the completed investment in fixed assets of China's clothing industry decreased by 2.2% year on year, 27.5 percentage points lower than that in 2022, but the decrease was 3.1 percentage points lower than that in the first half of the year and 2.5 percentage points lower than that in the first three quarters. The transformation and upgrading of industry digitalization and intellectualization have been significantly accelerated. In the new fixed asset investment projects, capacity upgrading and transformation are the main focus, involving the development and application of intelligent equipment, intelligent factory construction, supply chain optimization, brand marketing, channel expansion, warehousing and logistics and other fields.

Figure 4 Growth of Fixed Assets Investment in Clothing Industry from January to December 2023

Data source: National Bureau of Statistics

　　 Serious pressure on operation quality and efficiency

In 2023, the shrinking trend of China's clothing industry's operating income and total profit will continue, the efficiency of enterprise operation will slow down, the difficulty of profitability will increase, and the industry's economic operation will be under serious pressure. According to the data of the National Bureau of Statistics, from January to December 2023, 13625 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 1210466 million yuan, a year-on-year decrease of 5.40%, 0.84 percentage points deeper than that in 2022; The total profit was 61.382 billion yuan, down 3.39% year on year, 2.95 percentage points lower than that in 2022; The operating income profit margin is 5.07%, 0.11 percentage points higher than that in 2022. Benefiting from the upswing performance of clothing exports and domestic sales at the end of the year, the industry benefit indicators improved significantly. The annual decline in operating income and total profit was 2.73 and 3.81 percentage points lower than those in the first three quarters, respectively, and the operating income profit margin was 0.69 percentage points higher than those in the first three quarters.

The scope of industry losses has expanded, and the operating efficiency has declined. According to the data of the National Bureau of Statistics, from January to December, the loss area of enterprises above designated size in the clothing industry reached 20.8%, 2.07 percentage points higher than the same period in 2022, and the loss amount of loss making enterprises increased by 4.49% year on year; The proportion of three fees is 10.07%, 0.54 percentage points higher than that in 2022; The turnover rate of finished products, the turnover rate of accounts receivable and the turnover rate of total assets were 10.71 times/year, 6.40 times/year and 1.11 times/year respectively, down 3.64%, 7.65% and 5.00% year on year, respectively. The slowdown in the turnover rate shows that the industry is under greater operational pressure.

Figure 5 Main benefit indicators of clothing industry from January to December 2023

Data source: National Bureau of Statistics

　　 02 2024 China's garment industry trend outlook

From the perspective of the international market, there are both upward and downward factors in clothing exports. Although the export pressure will not ease in the short term, it is expected that China's clothing export will tend to be stable in 2024, with the rise of inventory replenishment demand in developed countries, the acceleration of the expansion of emerging markets, cross-border e-commerce and other new modes of rapid development, The market structure continued to be optimized and adjusted. At the same time, the downward pressure on China's clothing exports is difficult to ease in the short term. The main influencing factors include: first, trade protectionism and geopolitical risk factors lead to increased uncertainty in the international environment. The spillover effects of the Ukrainian crisis, the Palestinian Israeli conflict and other spillover effects may continue. Political elections in major economies of the world have begun in succession, and the international situation will still be in a period of turbulence and change, It is not conducive to the stability and development of global trade. Second, the lag effect of tightening monetary policy in developed economies in Europe and the United States will continue to appear. Although the cycle of interest rate increases in Europe and the United States has come to an end, inflation and interest rates are still at a historical high range, which restricts the improvement of residents' real purchasing power and consumption confidence, and is not conducive to the recovery of global growth dynamics and the recovery of international demand. Third, due to the gradual recovery of garment industries in Southeast and South Asian countries, the end of epidemic dividends and the de sinicization adjustment of international procurement strategies will further accelerate the transfer of overseas orders, and the intensification of global supply chain competition will increase the downward pressure on China's garment exports. In addition, the probability of appreciation of the RMB against the US dollar will increase. Exchange rate fluctuations will weaken the international competitiveness of export products, increase the exchange risk of enterprises, and have a certain impact on China's clothing exports.

From the perspective of the domestic market, the steady and sound development of China's economy has created good conditions and foundation for the recovery of consumption. It is expected that the domestic clothing market in China will continue to recover in 2024, but because the confidence and expectation of market players still need to be improved, the growth rate of the domestic clothing market may slow down due to the high base in 2023. Multiple favorable factors will support the continuous improvement of the domestic clothing market: First, the policy of optimizing and overlapping the policies to promote stable consumption growth is effective, the employment situation is generally stable, and the residents' income keeps growing, which helps to improve the consumption ability and willingness, and promote the quality and expansion of the domestic demand market. Second, as the construction of urban agglomeration and the strategy of new urbanization and rural revitalization continue to advance, e-commerce platforms and brand enterprises accelerate their layout and sink into the market, driving the further release of clothing consumption demand. The third is the rise of new consumer groups represented by Generation Z, new middle class, silver haired people and young people in small towns. New consumer growth points such as sports, national trend and green continue to stimulate market vitality in combination with the new retail model of online and offline integrated development, promote the development and expansion of new business types and new scenarios. Clothing enterprises strengthen the creation of product and brand value through research and innovation, cultural empowerment, scientific and technological support, etc, From the supply and demand sides, it helps the domestic clothing market to continue to recover.

In general, in 2024, the improvement of domestic and foreign market demand will be conducive to the recovery of the market, further promote the recovery of industry revenue and profits, gradually relieve the pressure of market entities and stimulate the endogenous power of enterprises, form a virtuous circle of mutual promotion between supply and demand, and promote the steady improvement of the industry economy. The clothing industry needs to adhere to the new industrial orientation of "technology, fashion, and green", adhere to the work policy of seeking progress while maintaining stability, promoting stability through progress, and establishing first before breaking, accelerate the construction of a modern industrial system, continue to promote the upgrading of the industrial foundation and the modernization of the industrial chain, and effectively promote the high-quality development of the industry.

Data source: China Customs, National Bureau of Statistics

(Source: China Garment Association)