Page 302 - 2020 White Paper on the Business Environment in China
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0 White Paper on the Business Environment in China
of hundreds of thousands of dollars per day; to China have all gone up by more than 20 percent
smaller businesses have long closed production. in the first five months of 2019 year on year, the
According to state media CCTV, hundreds of textile report said. Despite the lingering tariff issues,
enterprises in Shengze, Wujiang, a major textile China will remain a dominant textile and apparel
town in Jiangsu Province, stopped production. The supplier for the US market in the foreseeable future,
number of small and medium-sized enterprises because China does not have a strong competitor
that stopped production accounted for about one- in the variety of products it can make. Although
third of the total number of small and medium- facing uncertainties over US-China trade tensions,
sized enterprises, causing a stir across the province. most US companies are still looking for cooperation
Henan business owners expressed that the impact opportunities with Chinese businesses (Xinhua,
of the Sino-US trade war on the cotton spinning Chinese US Textile).
industry chain has far surpassed industry estimates.
US imports of Chinese clothing have stagnated, Luxury Items
and the proportion of many categories of Chinese
clothing have declined by double digits. Imports China is expected to overtake the United States
from other countries have increased. Yet after the as the largest fashion market by 2020. The wealth
tariffs increase, it is expected that the rate of decline of China’s nearly 1.4 billion people saw rapid
will further increase, and exports to the United increase, creating new consumer groups who have
States may decline precipitously. A report by Capital capacity to spend on sports, entertainment, clothes
Futures, a China-based research firm, pointed out and shoes—and it’s shaping the way the fashion
that a pessimistic atmosphere is permeating in industry operates. For example, many luxury brands
the Chinese textile industry, and end consumption now look to China, instead of the US, as the place for
continues to weaken. The report also said that testing new products, before deciding whether to
domestic textile and apparel market consumption promote them globally. Many of these same brands
continues to be weak. Due to the decline in demand, already depend heavily on Chinese customers,
the passive storage of finished products is a serious who have for some time been the world’s biggest
problem. Inventory of most textile enterprises buyers of luxury goods. Thanks to the ascendance
increased by more than 50 percent compared of China’s younger shoppers, as well as policies
with the same period in 2018. The inventory of unveiled by the government to encourage domestic
individual enterprises increased by 10–15 days’ consumption, much of that spending is moving back
sales compared with the same period in 2018, with inside the country. Meanwhile, more Chinese are
some even exceeding 40 days. The daily increase in now embracing homegrown brands as international
cotton and yarn storage has created difficulties for brands established in the market look to be cooling
the capital flow of some textile mills to the point of off (CD, China to Overtake).
being unable to collect money to buy lint cotton.
Some small factories have stopped production, and Chinese consumers are expected to contribute 41
many have reduced production time for work shifts. percent to the global luxury goods market by 2025,
Most companies are pessimistic about the overall up 8 percentage points from 2018 as more young
prospects of the textile market in the second half of consumers are willing to pay for exclusive products
the year (Yi). amid the country’s consumption upgrading and
digital marketing boom. The Chinese luxury goods
US industry executives are deeply concerned market grew by 6 percent to surpass US$122 billion in
about the negative impact of US-China trade tensions 2018. About 48 percent of consumers were younger
and uncertainties on their businesses, according to than 30. Young Chinese consumers, who have
the 2019 Fashion Industry Benchmarking Study. entered the job market and are seeing incomes rise,
As many as 63 percent of respondents said the US have shown a strong preference for commodities
tariff action against China “increased my companies’ that can help them establish their identity in society.
sourcing cost” in 2019, according to the report. And many customized and fashionable designs
As companies are moving sourcing orders to of luxury goods meet their requirements. Digital
Bangladesh, Vietnam and India, the average price strategies adopted by companies are also creating
of US apparel imports from these main alternatives
302
of hundreds of thousands of dollars per day; to China have all gone up by more than 20 percent
smaller businesses have long closed production. in the first five months of 2019 year on year, the
According to state media CCTV, hundreds of textile report said. Despite the lingering tariff issues,
enterprises in Shengze, Wujiang, a major textile China will remain a dominant textile and apparel
town in Jiangsu Province, stopped production. The supplier for the US market in the foreseeable future,
number of small and medium-sized enterprises because China does not have a strong competitor
that stopped production accounted for about one- in the variety of products it can make. Although
third of the total number of small and medium- facing uncertainties over US-China trade tensions,
sized enterprises, causing a stir across the province. most US companies are still looking for cooperation
Henan business owners expressed that the impact opportunities with Chinese businesses (Xinhua,
of the Sino-US trade war on the cotton spinning Chinese US Textile).
industry chain has far surpassed industry estimates.
US imports of Chinese clothing have stagnated, Luxury Items
and the proportion of many categories of Chinese
clothing have declined by double digits. Imports China is expected to overtake the United States
from other countries have increased. Yet after the as the largest fashion market by 2020. The wealth
tariffs increase, it is expected that the rate of decline of China’s nearly 1.4 billion people saw rapid
will further increase, and exports to the United increase, creating new consumer groups who have
States may decline precipitously. A report by Capital capacity to spend on sports, entertainment, clothes
Futures, a China-based research firm, pointed out and shoes—and it’s shaping the way the fashion
that a pessimistic atmosphere is permeating in industry operates. For example, many luxury brands
the Chinese textile industry, and end consumption now look to China, instead of the US, as the place for
continues to weaken. The report also said that testing new products, before deciding whether to
domestic textile and apparel market consumption promote them globally. Many of these same brands
continues to be weak. Due to the decline in demand, already depend heavily on Chinese customers,
the passive storage of finished products is a serious who have for some time been the world’s biggest
problem. Inventory of most textile enterprises buyers of luxury goods. Thanks to the ascendance
increased by more than 50 percent compared of China’s younger shoppers, as well as policies
with the same period in 2018. The inventory of unveiled by the government to encourage domestic
individual enterprises increased by 10–15 days’ consumption, much of that spending is moving back
sales compared with the same period in 2018, with inside the country. Meanwhile, more Chinese are
some even exceeding 40 days. The daily increase in now embracing homegrown brands as international
cotton and yarn storage has created difficulties for brands established in the market look to be cooling
the capital flow of some textile mills to the point of off (CD, China to Overtake).
being unable to collect money to buy lint cotton.
Some small factories have stopped production, and Chinese consumers are expected to contribute 41
many have reduced production time for work shifts. percent to the global luxury goods market by 2025,
Most companies are pessimistic about the overall up 8 percentage points from 2018 as more young
prospects of the textile market in the second half of consumers are willing to pay for exclusive products
the year (Yi). amid the country’s consumption upgrading and
digital marketing boom. The Chinese luxury goods
US industry executives are deeply concerned market grew by 6 percent to surpass US$122 billion in
about the negative impact of US-China trade tensions 2018. About 48 percent of consumers were younger
and uncertainties on their businesses, according to than 30. Young Chinese consumers, who have
the 2019 Fashion Industry Benchmarking Study. entered the job market and are seeing incomes rise,
As many as 63 percent of respondents said the US have shown a strong preference for commodities
tariff action against China “increased my companies’ that can help them establish their identity in society.
sourcing cost” in 2019, according to the report. And many customized and fashionable designs
As companies are moving sourcing orders to of luxury goods meet their requirements. Digital
Bangladesh, Vietnam and India, the average price strategies adopted by companies are also creating
of US apparel imports from these main alternatives
302
