We don’t want to miss the opportunity to reopen China’s economy. By the end of 2022, a new phase of recovery has begun as most COVID-19 restrictions are lifted and the Chinese economy, including the fashion industry, hopes to bottom out. However, consumer psychology and market demands are changing dramatically. When will business return to normal and the ongoing Lunar New Year trip will generate strong spending? Can the fashion market bounce back?
“Reconstruction” is a word that has been repeatedly used over the past three years. However, the full recovery from consumption to supply he chain could actually take another three years. What stage will the fashion consumer market, represented by luxury goods, reach a full-fledged recovery? Is China’s footwear supply chain ready for recovery, a major footwear manufacturer? What situation are China’s local fashion companies facing?
The Chinese New Year will significantly boost luxury spending in many parts of the country. In fact, the 2022 pandemic did minimal damage to the luxury goods industry, even as it weakened consumer markets. Despite price increases, out-of-stocks and queues, the domestic second and third tier markets saw a wave of luxury store openings and an accelerating entry of fashion brands.
China’s luxury market may recover sooner than expected, according to analysis released by Barclays Bank. The bank estimates that the second quarter of 2023 will see strong growth, with an annual growth rate of 15%, potentially above the global luxury market average of 9%.
Global textile and apparel demand is also expected to increase in the second quarter. According to his 2022 Trade Development Report released by the United Nations, global economic growth is expected to slow further to 2.2% in 2023. However, the current situation presents a significant opportunity for textile companies to clear excess inventories. As a result, downstream demand growth is expected to begin in the second quarter of 2023.
But what about the first quarter? How can a company quickly stabilize before it regains growth? This is a must-have question for all fashion companies deeply involved in the Chinese market.
Can fashion retail bounce back during Chinese New Year?
Policy adjustments and consumer revitalization have seen a ‘recovery’ in nearly every business center in China, with people bustling and bustling, and nearly every city regaining its former vigor. At the end of last year, festive themed events such as his Pixar-themed Christmas tree at Grand Gateway 66 in Shanghai and his fantastic trip to the woods and new beauty collection at his IFS in Chengdu. The art exhibition also attracted a large crowd. The atmosphere is like a winter fairy tale.
Suzhou, once called the “workshop of the world,” is quietly changing. A new commercial facility debuts. Dong Jianfeng, General Manager of Suzhou Renheng Commercial Center, told WWD China: of development. ”
Still, the challenges are not over. According to Xu Wenjun, Director of TX Huaihai/Youth Power Center Mall, Shanghai He said: But the challenges that come with it are just as different. ”
Market confidence has taken a huge hit and many brands are facing economic pressure. Most companies are still in the wait-and-see and adjust stages. So instead of focusing on recovery, businesses should focus more on adjustment.
A spokesperson for Yintai Commercial, which operates more than 100 department stores and shopping centers across China, shared a similar view. Elimination and reorganization leading to the birth of a “new breed”. ”
In fact, almost all retailers in China have made continuous adjustments over the past three years. They are always under pressure and are very attentive to market and consumer sentiment. Take TX Huaihai as an example. As China’s first curated retail commercial space, the rejuvenating mall initiative revolves around the multicultural lifestyle sought by young consumers.
How can China’s supply chain, including footwear companies, achieve new growth?
China is a very important market for footwear producers and distributors around the world. The shutdown of supply chains and distribution networks during the pandemic has severely affected international brands. With the rapid development of emerging markets in the Asia-Pacific region, part of his chain of supply has moved.
But it’s undeniable that the turmoil of the past three years has created a relatively large opportunity for small and medium-sized footwear brands. Will there be new momentum in the Chinese supply chain, represented by footwear, in a market that the entire industry is waiting for a recovery?
A spokesperson for Chinese independent footwear designer brand Ab Poetique told WWD China that it is important to remain objective in the face of possible recovery. He believes the footwear market in China will see a wave of increased consumption after the New Year or early April.
Maximus Lu, owner of Tsubo, another high-end lifestyle and fashion footwear brand, believes China has one of the most complete supply chain systems in the world. Production is entirely local. Having a consistent and stable supply chain system in the same country, from design to manufacturing and sales, is an irreplaceable strength.
But he also provided a more important insight. Many brands focus on the “Chinese market”, but China has many markets in the southeast, northwest, etc. Each market has its own climate and culture. Brands need to find the right geography, the right customer, the right climate, and expand incrementally. ”
In the process of expansion, brands need to pay special attention to the sustainability of their supply chains, from raw materials to production models, especially wastewater treatment and waste recycling, and the constant quest for sustainable innovation. Like long-term development, a healthy recovery must be built on environmental protection and transparent and equal consumer interaction.
Are Chinese local brands well positioned to seize the opportunity?
So far, the Chinese community has been relatively cautious about global economic trends and the growth rate that the Chinese economy will achieve in 2023.How to find certainty in the midst of uncertainty?
Private enterprises are regarded as the “roots of the Chinese economy”. It is believed that “in terms of quantity, quantity and quality, the private economy has grown into a pillar of China’s national economy and is thriving, and should be called the ‘basic economy’.” Most of China’s local fashion enterprises are private enterprises, pillars of the industry and “the backbone of the Chinese economy”. As the whole world races for the reopening dividend, will they have a chance to stay ahead?
At the end of 2022, the Chinese government released the “Overview of the Domestic Demand Expansion Strategic Plan (2022-2034)”, emphasizing the need to implement the domestic demand expansion strategy steadily and develop a complete domestic demand system. A shift in policies on pandemic prevention and control will gradually accelerate the recovery. In addition, a certain recovery in consumption is expected in large-scale consumer markets.
With a history of 43 years, Chinese jacket brand K-Boxing has made its positioning and advantages more clear, and prepared a comprehensive development path based on this background. High-end brand values are further reflected in the exclusive experience of quality products. Service than price or channel. Despite the growth of online retail, K-Boxing has created a model that meets its unique characteristics, mainly offline retail with high-end service experience. By promoting online retail with seasonal store openings on Tmall and TikTok and emotional communication with consumers, K-boxing realizes the link between online and offline sales. While this proportion will remain essentially unchanged, we shared with WWD China that the structure will continue to be optimized in 2023 and will continue to improve, explore and innovate.
While many Chinese brands target the domestic market, they strive to show their determination to open up the international market by participating in international events such as the Winter Olympics and the Tokyo Olympics. I participated in the Tokyo Olympics and Paralympics right after the Beijing Winter Olympics.
The resilience of the fashion industry increases its ability to break through in the face of crisis. But it cannot be denied that the landscape of the world has changed dramatically. 2023 marks the beginning of an era of greater uncertainty, even as all parties agree that China’s economy could recover rapidly and the industry could recover gradually. there is another voice.
Editor’s note: China Insight analyzes this important market trend in its monthly column for WWD’s sister publication, WWD China.