Clothing stores bullish in China

As the Chinese economy develops and living standards improve, demand for fashion products is growing.

Growth in the clothing store industry in China was strong in the past decade due to the opening of the market in accordance with China’s World Trade Organisation commitments. After 2001, foreign capital streamed in, bringing with it experienced management and systems.

The industry is expected to generate US$18.26 billion in revenue in 2012, says IBISWorld. Over the past five years, revenue has been growing much faster than China’s overall GDP, at an annualised rate of 14.1 per cent.

Competition among retailers is increasing due to the entry of more foreign players like Inditex, Esprit and H&M and a large increase in the number of domestic firms.

Prominent foreign retailers with experienced management teams have distinct market advantages, which compels domestic players to streamline their operational processes and improve their own brand names with original designs and promotional activities. The key bases of competition over the next five years will be store environment and product quality, says IBISWorld.

External competition also comes from online clothing retailers, such as VANCL, which have lower intermediate costs and are able to offer lower final prices.

Market share concentration within the clothing store industry is low but increasing, as major players like Metersbonwe and Bestseller Fashion, which owns Jack & Jones, Vero Moda, and Selected stores, are focusing on branded franchising to expand sales coverage and market share.

IBISWorld anticipates that small retailers will lose customers or be forced to join franchised chains to stay in the industry.

The clothing store industry includes retail clothing for men, women, and children, as well as clothing accessories such as scarves, socks, belts and ties. 

GB

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