Clothing industry actively develops high value-added services

The transformation and upgrading of garment enterprises have seen various developments. In addition to strengthening technical and quality management in production, many apparel companies have advanced to the upstream business and started to work on product design, R&D and application of new materials, hoping to increase product value. Many of the original manufacturers engaged in production also started to develop their distribution business. Some of them even more successfully entered the retail market, established cross-provincial and even retail networks covering the whole country, and at the same time developed their own brands.

Many apparel companies are gradually strengthening their outsourcing and fading production in order to focus on transformation and upgrading. Yau Liping, deputy chief economist of the Hong Kong Trade Development Council, said: "In the process, not only foreign companies and Hong Kong brands are competing in the Mainland market, but they also have different service requirements from the production business to the expansion of upstream and downstream businesses. With regard to service providers providing opportunities, Hong Kong companies wishing to concentrate on production can pay attention to the opportunities for mainland enterprises to gradually increase their outsourcing opportunities as they transition."

In order to further understand the brand development status of mainland apparel companies and their demand for outsourced production and business services, the HKTDC conducted in-depth telephone enquiries from approximately 2,000 mainland apparel companies with their own brands from last December to March this year. The surveyed enterprises are distributed across different provinces and cities across the country, of which more than 70% of the current annual sales are more than US$1 million. According to the survey, the vast majority (89%) of the apparel companies interviewed with their own brands are targeting the development of national brands. However, in the face of strong competition from imported high-end brands, 90% of the companies have positioned their brands in the mid-range or popular market, with the second and third-tier cities as the main sales targets.

Eighty-five percent of the companies surveyed explore the market through direct retail stores or counters, and only 37% are commissioned distributors. However, with the increasingly mature and popular business model of franchising and online sales, 64% of the companies surveyed have franchise operations and 56% have sold products online.

The sales volume of enterprises is increasing. For example, 34% of the respondents have annual sales of more than US$10 million. To cope with brand development, companies tend to allocate more time and human resources to product R&D, design, and marketing with higher added value. In other areas, it gradually outsourced production to other manufacturers. Of the companies that accepted the inquiry, 38% said that they had already outsourced production, while the other 9% said that they would consider it although they did not have outsourced production.

Qiu Liping pointed out that it is worth noting that from 2005 to 2010, Chinese clothing exports increased by an average of 12.9% annually, but the production of clothing, footwear and hats increased by an average of 21.4% each year. This shows that Chinese apparel companies (especially with their own brands in the mainland market sales Enterprises) The scale of production continues to increase. Hong Kong manufacturers can pay attention to mainland enterprises to gradually increase the opportunities for outsourcing production.

She also said that Mainland consumers have become more and more aware of their brands, and the HKTDC's mainland consumer surveys on different consumer products, including clothing, jewelry, watches and other personal wear products, have shown that the product brands and the image quality they display. All are important considerations when consumers purchase products. In other words, "brand" is an inevitable way to open up the mainland market and it should not be neglected.

She said that in order to effectively establish a brand, companies must select the appropriate positioning based on the characteristics, preferences, and acceptance capabilities of their target consumer groups, and design products and brand image, including product packaging, shop atmosphere, and advertising design. Among the apparel companies that were interviewed this time, the services that most companies are using or planning to use are logistics and distribution services, followed by advertising and marketing.

In terms of brand strategy, many companies now and in the future tend to be dealt with internally, but there are also some companies that will use/refer to external professional advice, and more obviously will use external concepts and product design, architecture and interior design services. At the same time, in order to enhance the internal management of the company to meet the overall development needs of the company, many companies have indicated that they will use enterprise management and training services. In terms of improving technology and product quality, companies will also purchase production technology and environmental protection technology.

Qiu Liping expects that in the process of the gradual development of the clothing industry in the Mainland from the production to the brand marketing, there will be an increase in various commercial and ancillary services, providing opportunities for relevant service providers.

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