China’s apparel market, 2012...4 *“Clothing, shoes, hats and textiles” replaced the previous “clothing” category in the NBS announcement in 1-3Q09 Source: National Bureau

China’s apparel market, 2012

December 2012

Li & Fung Research Centre

2

I. Market overview p. 3

II. Competitive landscape p.10

III. Latest developments p.17

IV. Snapshots of sub-sector performance p. 31

In this issue:

I. Market overview

3

4

*“Clothing, shoes, hats and textiles” replaced the previous “clothing” category in the NBS announcement in 1-3Q09

Source: National Bureau of Statistics of China (NBS)

** Enterprises above designated size refer to enterprises with annual sales of 5 million yuan or above and with an employment of

or over 60.

• According to the National Bureau of Statistics of China (NBS), the total

retail sales of clothing, shoes, hats and textiles* by enterprises above

designated size** in 2011 rose nominally by 24.2% year-on-year (yoy) to

reach 795.5 billion yuan (Exhibit 1).

• The growth in 1-3Q11 was 17.8% yoy, reaching 666.5 billion yuan.

Apparel sales grew by 24.2% yoy in 2011, reaching 795.5

billion yuan

Exhibit 1: Growth in total retail sales of clothing, shoes, hats and textiles by

enterprises above designated size*, 2007 – 1-3Q 2012

Year 2007 2008 2009 2010 2011 1-3Q 2012 yoy % change 28.7 25.9 18.8 24.8 24.2 17.8


5

Urban and rural households on average spent 11% and 7.2%

of their annual expenditure on clothing respectively

Exhibit 2: Per capita annual expenditure on clothing* of urban and rural households, 2007-2011

*“Clothing” here includes garments, clothing materials, footwear, hats, and other clothing, tailoring and laundering service fees. Source: National Bureau of Statistics of China (NBS)

• The annual per capita disposable income of urban households grew by

8.4% yoy to 21,810 yuan in real terms in 2011. The annual per capita net

income of rural residents reached 6,977 yuan in 2011, posting double digit

yoy growth of 11.4%.

• Urban households on average spent 1,674.7 yuan on clothing, accounting

for 11% of their total annual expenditure in 2011; while rural households

spent 341.1 yuan, which was 7.2% of the total annual expenditure on

clothing in the same year (Exhibit 2).

10.4 10.4 10.5 10.7

11.0

6.0 6.7 6.6 6.8

7.2

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0

200

400

600

800

1000

1200

1400

1600

1800

2007 2008 2009 2010 2011

% Yuan

Per capita urban annual expenditure on clothing

Per capita rural annual expenditure on clothing

Share of clothing in per capita urban annual expenditure

Share of clothing in per capita rural annual expenditure

6

• Chinese consumers register a noticeable level of self-control in their

apparel purchase habits. The Hong Kong Trade Development Council

(HKTDC)’s survey results suggest that 90% of the surveyed respondents*

purchased new clothing for practical reasons such as replacement or

seasonal change; 50% of the respondents attributed their apparel

shopping to promotions or discounts.

Exhibit 3: Motivators for purchasing new clothing , 2011-2012

Many Chinese consumers purchase new clothing for need-

based reasons

0 20 40 60 80 100

For gift purposes

For cloth matching

Influenced by impulsive buying behavior

To pursue fashion/ trend

Influenced by promotions/ discounts

For seasonal change/ replacement

respondents (%)

Note: The data comes from the Hong Kong Trade Development Council (HKTDC) Why Chinese Mainland Consumers in 13 Cities

Buy Their Clothes Research Survey 2012; *the respondents are urban consumers who must have resided in the surveyed cities

(Nanjing, Shanghai, Hangzhou, Harbin, Shenyang, Beijing, Tianjin, Dalian, Wuhan, Chengdu, Chongqing, Guangzhou and Xi’an) for

at least two years and have purchased garment items of any type in the 12 months prior to the survey. Respondents who are

students must be aged 15-25; for those who are not students must be employees or housewives aged 18-60.

Source: Hong Kong Trade Development Council (HKTDC)

Respondents can choose more than one answers

Department stores and specialty stores are the major

distribution channels for branded apparel

7

• Department stores and specialty stores are major distribution channels for branded

apparel in China. Meanwhile, wholesale markets and hypermarkets are popular retailing

channels for lower-priced apparel; many of which are with poor brand recognition or

unbranded.

• Around 38% of the total apparel sales were realized in department stores; while clothing

& footwear and leisure & personal goods specialist retailers accounted for around 39%

of the total in 2011 (Exhibit 4).

Source: Euromonitor

Exhibit 4: Sales of Apparel by Distribution Format: %, 2006-2011

% retail value rsp 2006 2007 2008 2009 2010 2011

Grocery retailers 14.8 15.9 17.1 17.1 17.2 17.3

Department stores 33.1 34.1 35.9 36.2 36.9 37.5

Clothing & footwear specialist

retailers 22.8 23.4 25.1 25.6 27.3 27.6

Leisure & personal goods

specialist retailers 11.4 11.5 11.6 11.7 11.7 11.7

Other non-grocery retailers 17.8 15 10.2 9.3 6.1 4.2

Non-store retailing 0.1 0.2 0.2 0.2 0.8 1.7

Total 100 100 100 100 100 100

8

• Consumers are generally cautious with spending. According to the China

National Commercial Information Centre (CNCIC), sales growth of apparel

category in high-end retailing locations such as department stores and

shopping malls was 10% yoy, below the national average of 21.5% yoy

(Exhibit 5).

Source: China National Commercial Information Centre (CNCIC)

Exhibit 5 : Sales growth of apparel category in high-end department stores,

2007-2011

High-end department stores saw weak sales growth in

2011

23.25 18.29

15.58

21.2

21.5

30.76

16.9

16.1

31.2

10

0

5

10

15

20

25

30

35

2007 2008 2009 2010 2011

yo

y g

row

th (

%)

Overall

High-end

Climbing costs pose challenges to apparel enterprises

9

• Rising costs of raw materials, labor and rental are posing an increasing challenge to

apparel enterprises. − China’s cotton price indices were in a downward trend during late March to early July of 2012,

yet the indices rebounded in mid-July of 2012 and has ridden on an ascending trend since

then.

− During 1-3Q12, the minimum wage increase was around 13% for most cities, including

Shenzhen, Sichuan, Guangdong and Shanghai. Currently, the minimum wage level is highest

in Shenzhen, subsequently followed by Shanghai.

• According to the NBS, the clothing price index has declined for four consecutive years

since 2007. Yet it increased by 2.1% in 2011 and 3.4% in 1-3Q12 (Exhibit 6). While

some branded apparel companies are able to raise their price tags, many smaller

companies continue to face squeezing margins.


Exhibit 6: Clothing price index, 2007 – 1-3Q 2012 (Same month of preceding year=100)

2007 2008 2009 2010 2011 1-3Q 2012

yoy % change of clothing prices -0.6 -1.5 -2.0 -1.0 2.1 3.4

II. Competitive landscape

10

Domestic apparel enterprises dominate the mass market

11

Ranking Company Headquarter/

Base 1 Youngor Group Co., Ltd 雅戈爾集團股份有

限公司 Ningbo

(Zhejiang) 2 Hongdou Group Co., Ltd 紅豆集團有限公

司 Wuxi

(Jiangsu) 3 Heilan Group 海瀾集團有限公司 Wuxi

(Jiangsu) 4 ShanShan Enterprise 杉杉投資控股有限公

司 Shanghai

5 Bosideng Co., Ltd 波司登股份有限公司 Suzhou

(Jiangsu)

6 Jiangsu Sunshine Group 江蘇陽光集團有限公司

Jiangsu

7 Shandong Ruyi Science & Technology

Group 山東如意科技集團有限公司 Jining

(Shandong) 8 Anta (China) Co., Ltd. 安踏(中國)有限公司 Jinjiang

(Fujian) 9 Qingdao Jifa Group 青島即發集團 Qingdao

(Shandong) 10 Shandong Sinoer Group Co., Ltd. 新郎希

努爾集團股份有限公司 Weifang

(Shandong)

Exhibit 7: Top 10 domestic apparel enterprises by sales

revenue, 2011

Source: China National Garment Association (CNGA), Li & Fung Research Centre

Ranking Company Headquarter/

Base 1 Youngor Group Co., Ltd 雅戈爾集團股份

有限公司 Ningbo

(Zhejiang) 2 Anta (China) Co., Ltd. 安踏(中國)有限公

司 Jinjiang

(Fujian) 3 Heilan Group 海瀾集團有限公司 Wuxi (Jiangsu)

4 Bosideng Co., Ltd 波司登股份有限公司 Suzhou

(Jiangsu) 5 Jiangsu Sunshine Group 江蘇陽光集團有

限公司 Jiangsu

6 Semir Group Co., Ltd. 浙江森馬集團有限公司

Shanghai

7 Hongdou Industrial Co., Ltd. 紅豆集團有限公司

Wuxi (Jiangsu)

8 Yenian (Shanghai) Apparel Trading Ltd.

夜念(上海)時裝貿易有限公司

Shanghai

9 Luthai Textile Co., Ltd. 魯泰紡織股份有限公司

Zibo

(Shandong) 10 Shandong Sinoer Group Co., Ltd. 新郎希

努爾集團股份有限公司 Weifang

(Shandong)

Exhibit 8: Top 10 domestic apparel enterprises by profits,

2011

• In China, domestic brands dominate the mass market, especially the lower-tier cities and rural market.

They generally have more extensive sales channels than their foreign counterparts.

• Exhibits 7 and 8 show the top 10 domestic apparel enterprises by sales revenue and profits in 2011.

Most of these enterprises are from Jiangsu, Shandong and Shanghai.

Established domestic players spend more resources on

brand-building

12

• Nowadays, more and more domestic

players are eager to build brand equity;

they are willing to put more resources on

brand-building.

• Metersbonwe remained the most valuable

Chinese apparel brand in 2012; its brand

value amounted to 7.8 billion yuan in

2012.

• Joeone and Romon are new entrants in

the 2012 ranking.

• Most of the brands in the list are

specialized in the menswear and

sportswear sector.

• Apparel companies in Fujian and Zhejiang

are very strong in branding; 6 out of the

top 17 most valuable apparel brands are

based in Fujian while 5 are from Zhejiang.

• Exhibit 9 shows China’s most valuable

apparel brands in the Hurun Most

Valuable Chinese Brands 2012 list. The

number of apparel brands decreased

from 18 in 2011 to 17 in 2012.

Exhibit 9: Most Valuable Apparel Brands in China, 2012

Rank Rank in

2011 Brand

Brand Value

(billion yuan)

% of

Market

Value

Product catogory Headquarter

1 1 Metersbonwe 美特

斯邦威 7.8 33% Casual wear Shanghai

2 2 Semir 森馬 6.2 26%

Casual

wear/Children

wear

Shanghai

3 3 Anta 安踏 5.7 35% Sportswear Xiamen

(Fujian)

4 5 Bosideng 波司登 4.1 26% Down wear Suzhou

(Jiangsu)

5 7 Septwolves 七匹狼 3.7 35% Menswear Xiamen

(Fujian)

6 NA Joeone 九牧王 3.3 25% Menswear Quanzhou

(Fujian)

7 6 Heilan 海瀾之家

2.7 26% Menswear Wuxi (Jiangsu)

8 4 Lining 李寧 2.4 36% Sportswear Beijing

9 9 Youngor 雅戈爾 2.0 28% Menswear Ningbo

(Zhejiang)

10 15 Red Dragonfly 红

蜻蜓 1.8 30% Shoes

Wenzhou

(Zhejiang)

11 7 Xtep 特步 1.7 28% Sportswear Quanzhou

(Fujian)

12 NA Romon 罗蒙 1.6 16% Menswear Ningbo

(Zhejiang)

13 16 Erdos 鄂尔多斯 1.5 30% Cashmere Inner Mongolia

14 12 Lilang 利郎 1.4 17% Menswear Quanzhou

(Fujian)

15 16 Baoxiniao 报喜鸟 1.3 18% Menswear Wenzhou

(Zhejiang)

15 16 Aokang 奧康 1.3 25% Leather shoes Wenzhou

(Zhejiang)

17 12 361degrees 361度 1.2 30% Sportswear Xiamen

(Fujian)

Source: Hurun Research Institute,


Some well-established foreign apparel players accelerate

expansion in China

13

• In recent years, many foreign apparel brands are keen to have a stronger presence in China.

While some well-established players are seeking to penetrate into the lower-tier cities, those

which are not yet present in China are working hard to enter the lucrative China market.

• Below is the expansion of selected well-established foreign apparel brands in China

Name of apparel company Retail stores in China

Zara Opened 29 new stores in China in 2011, with a total of 92

stores in 30 cities by the end of 2011

Uniqlo Proposed to open up to 100 new stores in China each

year starting from 2011

H&M Added 32 new stores in China in 2011, with a total of 78

stores in China by the end of 2011

C&A Opened its third stores in Shengyang in January 2012

and planned to increase the total number of retail stores

in China to 150 by the end of 2015

Gap Aimed to add 20 more new stores in China and Hong

Kong by mid 2013, raising its total number of stores in

China to 45

Mark & Spencer Announced to double its number of retail stores in China

during 2013, adding 8 more new stores in the country.

Some well-established foreign apparel players accelerate

expansion in China (cont’d)

14

• New entrants are working hard to enter the lucrative China market.

− In May 2011, American Eagle Outfitters opened its first store in Shanghai, marking its first

foray into China.

− US fashion retailer Forever 21 unveiled its first store in Wangfujing, Beijing in August

2012.

− In October 2012, UK fashion brand Karen Millen made its debut in China, opening its first

retail stores in Chaoyang, Beijing.

− Meanwhile, Ted Baker from the UK also opened its first retail store in Parkview Green,

Beijing.

• Some apparel enterprises see Hong Kong as the springboard for China’s entry

− Leading Japanese fashion brand Double Standard Clothing opened its first concept store

in the prime location of Hong Kong in September 2012; the company sees Hong Kong as

a significant platform for gaining access to the China market.

• Foreign players still dominate China’s luxury apparel market. According to Hurun

Research Institute, French luxury brands Louis Vuitton, Cartier, Hermes and Chanel

are the most popular brands among Chinese millionaires, reflecting foreign luxury

brands still have a stronghold in the China market.

• Meanwhile, domestic brands are virtually absent in China’s luxury apparel scene.

However, some domestic players have strived to move up the value ladder and hope

to get a place in the premium market.

− NE·TIGER (東北虎), which claimed itself to be China’s first luxury apparel brand,

has set up studios in the U.S., France, Italy and Russia in the past few years.

− Trands (創世) is another domestic brand that has gained recognition overseas.

• Having said that, we should admit that these domestic brands only have minimal

presence in the luxury segment. There is still a long way to go for domestic players to

rival their foreign counterparts.

15

Foreign brands still dominate the luxury apparel market in

China

• Recently, more and more domestic apparel enterprises are eager to

expand overseas.

• Some apparel retailers have been making use of the online retailing

channel to enter the overseas markets. − Luxury online operator Xiu.com launched a new eBay style website in

partnership with eBay in November 2012. The new website features up to 5,000

apparel, shoe, accessories, health and beauty brands currently being sold on

eBay.com.

• Besides the online channel, some apparel retailers have opened offline

stores in overseas markets. − In August 2012, Chinese retailer Bosideng opened its first overseas flagship

store in a prominent location in London. The company has also announced to

open another store in Manhattan, New York.

16

Some domestic players embark on overseas expansion

III. Latest developments

17

High inventory remains a concern for many apparel

enterprises

18

• Many domestic apparel enterprises are grappling with overstock

problems. As stated by the China National Garment Association

(CNGA), the inventory of many apparel enterprises in China has

gone beyond the warning level; the present stocks in the apparel

market are enough to satisfy the demand in domestic apparel market

for three years even if all domestic apparel makers halt production.

• According to China Scope Financial, 90% of the listed apparel

companies reported an increase in their inventory value for 3Q12; of

which the inventory value for Shanghai Metersbonwe Fashion &

Accessories Co. (上海美特斯邦威服飾), Zhejiang Semir Garment

(浙江森馬服飾), Youngor Group Co.(雅戈爾) and Jiangsu Hongdou

Industry Co.(江蘇紅豆實業) all exceeded 1 billion yuan.

Apparel enterprises are expanding into lower tier cities

19

• Competition has intensified in the first-tier cities; to avoid toe-to-toe

competition in big cities, many domestic and foreign enterprises

look to further strengthen their expansion in the lower-tier cities.

Moreover, nowadays, people in the lower-tier cities are getting

wealthier and having stronger spending power.

• Hence, the lower-tier cities remain the major battlefields for many

apparel players.

− Foreign luxury brands like Gucci and Louis Vuitton, which used to

expand in tier 1 cities like Beijing, Shanghai, Shenzhen etc., are

veering toward lower tier cities like Wuhan, Wuxi, Changsha, Fuzhou,

Xiamen; international sportswear giants such as Nike and Adidas

have also announced their penetration into lower tier cities.

− In face of fiere competition led by foreign players, domestic players,

such as Youngor (雅戈爾), Fuguiniao (富貴鳥), Joeone (九牧王),

Septwolves (七匹狼) also strive to expedite their penetration in lower

tier cities and meanwhile, consolidate their footholds in tier 1 cities.

• In recent years, fast fashion retailers such as Zara, H&M, C&A, Uniqlo, etc., have

successfully won Chinese consumers’ hearts with their fast, trendy and affordable

apparel products. According to the CNGA, by the end of 2011, Zara, H&M, C&A,

Gap and Uniqlo already operated 92, 77, 36, 13 and 113 retail stores in China

respectively.

• In 2011, Zara, H&M, C&A, Gap and Uniqlo respectively opened 29, 31, 11, 5, and 43

new stores in China; of which more than 80% of the new stores set up by Zara and

H&M were situated in tier 2 and 3 cities.

Apparel enterprises are expanding into lower tier cities

(cont’d)

20

Exhibit 10 : Store count of fast fashion brands in China, 2010-2011

0

20

40

60

80

100

120

Zara H&M C&A Gap Uniqlo

Total number of retail stores in 2010

Total number of retail stores in 2011

• Thanks to the rising disposable income levels of urban and rural households, the country’s one-

child policy and the increasing number of newborn babies, China’s consumer expenditure on

children’s wear per household turned solidly higher from 166 yuan in 2006 to 237 yuan in 2011,

ahead by 43% in just five years.

• Seeing the promising outlook of the children’s wear market, numbers of existing adult-focused

apparel retailers have flocked to the lucrative segment in recent years with the intention to

consolidate their sales share in apparel as a whole.

• Domestic players in men’s and women’s apparel such as Septwolves (七匹狼), Metersbonwe (美邦) and Semir (森馬) have already set in the children’s wear market by offering children’s wear

lines. Sportswear retailers Kappa also introduced a sub-brand Kappa Kids in June 2012, while

361 Degrees (361度) has announced plans to open 600 more new stores specializing in

children’s wear in 2012.

• Multinational luxury brands D&G, Armani and Burberry all launched childrenswear series in China

in 2011 following Dior’s successful rollout of its Baby Dior series in the country in April 2010.

Existing adult-focused apparel retailers are flocking to the

children’s wear market

21

22

• With the unprecedented growth of Internet users and online buyers in China, online

retailing is certainly an important sales channel for apparel. According to iResearch,

the transaction value of China’s online retailing market was 766.6 billion yuan in

2011, of which online apparel sales accounted for 26.7%, suggesting apparel was

still among the major categories sold online.

• As shown in Exhibit 10, online apparel sales kept turning higher from 15 billion yuan

in 2007 to 204.9 billion yuan in 2011, which accounted for 14.3% of China’s total

apparel sales.

Exhibit 10: Growth of Online Apparel Sales, 2007-2011

Source: iResearch, WIND, SWS Research

15 32.5 64 162 204.9

800

1000 1100

1255 1437

1.9% 3.3%

5.8%

12.9% 14.3%

0

2

4

6

8

10

12

14

16

0

200

400

600

800

1000

1200

1400

1600

2007 2008 2009 2010 2011

%

yu

an

(b

n) Online apparel sales (bn)

Total apparel sales (bn)

Percentage of online apparel sales (%)

• According to iResearch, scale of online retailing market refers to the total transaction value of consumer-to-consumer (C2C) and

business-to-consumer (B2C) online businesses. Scale of C2C online retailing market is calculated by the total value of purchases,

excluding that on the B2C arm of C2C platforms. Scale of B2C online retailing market has excluded payments of travel expense, air

tickets and online bill payment services.

Online platform becomes an important sales channel for

apparel players

• Developing online retail channel is becoming popular among traditional apparel retailers;

B2C online platforms can be categorized into three major types: − Pure-clicks apparel retailers (e.g. Vancl 凡客誠品, Mecox Lane 麥考林, Moonbasa 夢芭莎)

− Multi-channel B2C apparel retailers (e.g LOVO, Banggo 邦購, Luthai 魯泰)

− Apparel retailers selling on B2C platforms (e.g. Joeone九牧王, Peace Bird太平鳥, Shishangqiyi時尚起義 )

• On the other hand, many C2C individual sellers are expanding fast on Taobao

Marketplace, the largest player in the C2C market. Some of them developed their own

brands and later shifted to sell in B2C Tmall (天貓) as “Tao-brands” (淘品牌). − Examples of “Tao-brands” include Hstyle (韓都衣舍), Liebo (裂帛), Inman (茵曼), Justyle, Eptison

(衣品天成) , Mr Zero (零號男) etc.

• Venture capital firms are keen to invest in the “Tao-brands”. With sufficient financial

support, the Tao-brands are able to launch shopping websites in other B2C platforms

such as 360 Buy, V+ etc, or build offline storefronts. − Selected Tao-brands that attracted investments from venture capital firms in 2011 include Liebo

(裂帛), Hstyle (韓都衣舍), Sportica (斯波帝卡),etc.

23

Online platform becomes an important sales channel for

apparel players (cont’d)

24

• To improve differentiation, some department store operators in

China has begun to develop their own private apparel labels and

proprietary brands, etc.

• Private labels or proprietary brands may also increase profit

margins and strengthen customers’ loyalty.

• Recent examples of private labels or proprietary brands

launched by selected department store operators include:

− Intime Department Store (銀泰) launched another proprietary brand

“Mangano” in West Lake Intime Department Store in September 2012

after successfully introducing “Justin Intime” in 2009.

− Meanwhile, Tee Mall (天河城) also unveiled its private label “Teem

Quality” , primarily selling women’s woolen sweaters .

Increasing number of department store operators launch

their own private apparel labels or proprietary brands

Apparel enterprises seek to diversify their portfolio; category

expansion and adoption of multi-brand strategy are common

25

• Some brands seek to diversify their portfolio by carrying out category expansion:

− Red Dragonfly (紅蜻蜓), which used to produce leather shoes, starts manufacturing

clothes recently. Red Dragonfly Fashion Group unveiled its men’s wear collection for the

first time in the 2012 China International Fashion Week, suggesting the acceleration of the

"one brand with multiple products" development strategy by the Group.

− Domestic sportswear brands Kappa, Li Ning (李寧), Anta (安踏), 361 Degrees (361度) and

casual wear brands Septwolves (七匹狼), Metersbonwe (美邦), Semir (森馬), etc. have

expanded their product category by introducing children’s wear.

− Fuguiniao (富貴鳥) , which used to produce men’s and women’s footwear, recently sets in

the wedding suit market by launching its “China’s first brand of wedding suits” in Xiamen

following its introduction of sportswear brand “Any Walk” in 2010.

• Multi-brands strategy is also commonly adopted by many players to further expand their product

category:

- Selected examples include Baby2 and Dr. Frog by Boshiwa(博士蛙); Balabala by Semir;

ME&CITY, Tagline, MooMoo by Metersbonwe; SWKIDS by Septwolves; CHILARO and

Ferrante by Raidy Boer (雷迪波爾) etc.

26

• In order to win consumers and stand out in the competitive apparel

industry in China, companies are investing more in product

development.

• For example:

• Fuguiniao (富貴鳥), which set in the wedding suit market in 2012,

has made more investment into the R&D of wedding suits and

devoted more attention to the details of cuff, collar, hem and

placket, indicating its emphasis on wedding suits and its

determination to conquer consumers’ mind with high-quality

products.

Companies invest heavily in R&D and focus on product

excellence

Marketing and branding are gaining importance

27

• To enhance competitiveness and to win consumers, apparel companies are now

spending more resources on marketing and branding.

• Event sponsorship is a popular marketing strategy adopted by apparel companies

to extend media coverage − Anta (安踏) designed the “Champion Dragon Outfit” for the Chinese Sports Delegation

(“CSD”) of the London Olympics 2012.

− 361° has become the sponsor for Haiyang 2012 Asian Beach Games.

• Micro-film marketing is also used by marketers to promote/market their products.

Nowadays, apparel enterprises also make use of micro-films to spread their

promotion message. − Semir (森馬) produced a micro file “Your Moment My Moment” (http://www.semir.com/#/szl)

starring Korean Artist Li Min Ho (李敏鎬) to attract young consumers and establish its brand

image.

Source: Anta Source: 361° Degrees

http://www.semir.com/







28

• Participating in charitable activities to help the needy in society is another way to

enhance the communication of brand image with consumers − In January 2012, Aokang (奧康) made a donation of 10 million yuan to Wenzhou Charity

Federation to provide financial aids for impoverished students all over China. The

company has been helping impoverished students in China under a program known as

“Lover Relay Plan” since 2007.

• Companies build flagship stores to enhance brand image − Hangzhou MWML Fashion (沒完沒了) opened a flagship store in Zhengzhou in January

2012 to promote its overall image and brand effect in the Henan market.

− Meanwhile, La Nouvelle Famille (新世家族), a leading brand in the home wear industry,

also set up its lifestyle flagship store in Hangzhou Tower Shopping City.

Marketing and branding are gaining importance (cont’d)

Product safely is still a major concern

29

• Product safety is still a major issue in China. In July 2012, the General

Administration of Quality supervision, Inspection and Quarantine of China (AQSIQ)

conducted random sample checks on children’s wear and found that 13% of the

samples failed the checks and of which, 5 types of children’s wear were found to

contain cancer-causing substances.

• As Chinese consumers become more discerning, product safety is expected to

gain more attention in the near future.

Source: China Quality News, www.cqn.com.cn

http://www.cqn.com.cn/

Going green is also gaining more attention

30

• As consumers’ awareness on environment protection climbs, “going green” is

grasping the attention of apparel companies.

− Saint Angelo (報喜鳥) has put a great deal of effort in carrying out R&D for

eco-friendly laundry services. The company has strived to minimize pollution

done to the environment by adopting different eco-friendly washing techiques

and reducing the use of chemical detergents in laundry processes.

Source: Clean Me, www.cleanme.us/eco-friendly-

cleaning-tips/

http://www.cleanme.us/eco-friendly-cleaning-tips/







31

IV. Snapshots of sub-sector

performance

32

Background

• The China National Commercial Information Centre (CNCIC)

conducts monthly survey to around 200 major department stores* in

China to study the performance of different cosmetics sub-sectors.

• In this newsletter, performance of the following product sectors is

examined:

• Menswear (men’s suits and men’s shirts),

• Ladies’ wear

• Children’s wear

• Casual wear (jackets, T-shirts, denim wear)

• Sportswear

• Ladies’ underwear

*Note: It is noteworthy that the CNCIC data covers sales in major department stores only.

Retailers of other formats such as specialty stores are growing in popularity. The actual overall

market share of apparel brands may deviate from the CNCIC data.

33 Source: China National Commercial Information Centre (CNCIC)

• As shown in Exhibit 11, growth in apparel sales volume in major department

stores in 2011 was 4.4% yoy, falling from 10.2% in 2010.

• Market share of ladies’ wear was still the largest in 2011 and 1H12.

• Growth of men’s suit was the fastest in 2011, achieving 9.7% yoy; it was

followed by denim wear, which posted a growth rate of 8.4% yoy.

Exhibit 11: Retail sales volume of various apparel categories in major department

stores, 2010-1H 2012

1H12 2011 2010

Million pieces yoy % growth Million pieces yoy % growth Million pieces yoy % growth

Overall 249.1 -0.1 458.2 4.4 455.1 10.2

Ladies’ wear 71.3 2.4 136.8 6.5 131.0 12.1

Knitted underwear 30.0 1.5 57.6 0.8 57.1 6.5

Children’s wear 17.6 2.3 33.1 3.4 32.3 7.3

Woolen wear 11.0 -13.3 23.4 -2.8 23.5 -4.1

T-shirts 6.5 0.1 13.6 0.3 14.1 -2.4

Thermal clothing 4.2 -5.1 10.1 -2.1 9.7 -3.6

Trousers 5.5 -2.8 10.7 -3.6 11.1 1.4

Men’s suit 6.6 5.0 13.2 9.7 11.8 13.1

Men’s shirt 5.2 -4.0 10.2 7.1 9.8 1.5

Jackets 3.4 -5.2 8.2 3.6 7.1 8.4

Denim wear 2.5 -6.6 5.3 8.4 5.0 4.8

Leather wear 0.5 -0.1 1.1 -6.5 1.0 2.1

Growth in apparel sales volume in major department stores

declined in 2011

34


1H12 2011 2010 2009 2008 2007 2006 2005 2004

Ladies’ wear 28.6 29.9 28.8 28.1 28.5 28.3 28.9 28.6 26.6

Knitted underwear 12.0 12.6 12.5 13.6 15.4 16.8 16.3 16.6 18.6

Children’s wear 7.1 7.2 7.1 7.3 7.5 7.6 7.7 8.0 8.1

Casual wear 5.0 5.9 5.8 6.0 6.5 7.3 7.5 7.4 8.4

of which: T-shirts 2.6 3.0 3.1 3.4 3.6 4.2 4.2 3.7 4.1

Jackets 1.4 1.8 1.6 1.5 1.7 1.9 1.9 2.0 2.2

Denim wear 1.0 1.2 1.1 1.1 1.2 1.2 1.5 1.7 2.1

Woolen wear 4.4 5.1 5.2 6.0 5.8 6.6 7.1 6.9 7.2

Menswear 4.7 5.1 4.8 4.9 5.2 5.6 5.2 5.8 6.6

of which: Men’s shirt 2.1 2.2 2.2 2.4 2.7 3.1 2.9 3.1 3.5

Men’s suit 2.6 2.9 2.6 2.5 2.5 2.6 2.3 2.7 3.1

Thermal clothing 1.7 2.2 2.1 2.4 3.3 3.9 4.2 4.3 3.6

Trousers 2.2 2.3 2.4 2.6 3.0 3.4 3.6 3.5 3.6

Leather wear 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2

Others 34.0 29.4 31.1 29.1 24.7 20.2 19.3 18.7 17.1

Total 100 100 100 100 100 100 .0 100 100 100

• Ladies’ wear was the major contributor to total apparel sales, accounting for 29.9% of

the total sales volume in 2011, followed by knitted underwear of 12.6% and children’s

wear of 7.2%. In 1H12, sales share of ladies’ wear reached 28.6%, followed by knitted

underwear of 12% and children’s wear of 7.1%. Exhibit 12 demonstrates the share of

sales volume of different sub-sectors.

Exhibit 12: Share of sales volume of different product sectors, 2004-1H 2012 (%)

Ladies’ wear was the major contributor to total apparel sales

Market concentration of most sub-sectors is generally low

35

• Most of the sub-sectors are highly fragmented, the top 10 players in the sub-

sectors such as jackets and T-shirts accounted for less than half of the total

market share in 2011. Exhibit 13 shows the market share of the top brands of

selected sub-sectors.

• However, the maternity wear and sportswear market remain highly concentrated;

the top 10 players in the maternity wear sub-sector accounted for more than 93%

of the market share in 2011, while the sportswear sub-sector accounted for 82% of

the market share.


Exhibit 13: Market share of top 10 brands of selected sectors, 2010 & 2011

0.0

20.0

40.0

60.0

80.0

100.0

120.0

%

2010

2011

Performance of selected product sectors

36

Exhibit 14: Men’s suits - share of total sales value,

2010 & 2011

Exhibit 15: Men’s shirts - share of total sales

value, 2010 & 2011

Source: China National Commercial Information Centre (CNCIC) Source: China National Commercial Information Centre (CNCIC)

• Exhibits 14-23 show the performance of the top 5 players in selected sub-sectors,

including menswear (men’s suit and men’s shirt), ladies’ wear, children’s wear, casual

wear (jackets, T-shirts and denim wear), sportswear, ladies’ underwear and maternity

wear.

12.5

2.4 2.9 3.1 2.6

13.4

3.5 3.5 2.9 2.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Youngor 雅

戈爾

Saint Angelo 報喜

鳥

Goldlion 金

利來

Romon 羅

蒙

Jonone 九

牧王

%

2010 2011

13.2

4.2 4.7 4.3 4.0

13.2

4.8 4.5 4.2 3.6

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Youngor 雅

戈爾

Pierre Cardin 皮

爾卡丹

Qinman 琴

曼

Rouse 洛

茲

Goldlion 金

利來

%

2010 2011

37

Exhibit 16: Ladies’ wear - share of total sales

value, 2010 & 2011

Exhibit 17: Children’s wear - share of total sales

value, 2010 & 2011

Performance of selected product sectors (cont’d)


8.2 9.3

5.5

2.8 2.2

10.9 9.9

5.8

3 2.6

0.0

2.0

4.0

6.0

8.0

10.0

12.0

VERO MODA

ONLY Girdear 哥

弟

Ochirly 歐

時力

Marisfrolg 瑪絲菲爾

%

2010 2011

5.5

3.9

5.1 5.5

3.8

5.9 5.5

4.4 4.2 4.1

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Paclantic 派

克蘭帝

巴拉巴拉 Dadida 嗒嘀

嗒

adidas 阿迪

達斯

Souhait 水

孩兒

%

2010 2011

38

Exhibit 18: T-shirt - share of total sales value, 2010

& 2011

Exhibit 19: Denim wear - Men’s suits: share of total

sales value, 2010 & 2011



5.0

3.8

N/A 2.4 2.9

4.5 4.0

2.5 2.1 2.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Montagut 夢特嬌

Goldlion 金利來

Playboy 花

花公子

JOE|ONE 九牧王

Jeanswest 真維斯

%

2010 2011

7.5

11.8

7.1

11.4 10.1 10.6

9.0

7.0 7.1 6.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Boton 波頓 Levi's Weipeng 威鵬

LEE Kipone 旗

牌王

%

2010 2011

39

Exhibit 20: Jackets - share of total sales value,

2010 & 2011

Exhibit 21: Sportswear - share of total sales

value, 2010 & 2011



3.3

N/A

2.8

2.3 2.0

2.7 2.7 2.6 2.4

2.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

JOE|ONE 九牧王

Polo Santa Barbara 聖

大保羅

Septwolves 七匹狼

"Jin Ba" 勁

霸

Goldlion 金

利來

%

2010 2011

30.7 27.3

8.8 8.1

3.9

29.0 27.0

8.0 5.6 4.8

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Nike 耐克 adidas 阿

迪達斯

Li Ning 李

寧

Kappa 背

靠背

NIKE360 耐克360度

%

2010 2011

40

Exhibit 22: Ladies’ underwear - share of total sales

value, 2010 & 2011

Exhibit 23: Maternity wear - share of total sales

value, 2010 & 2011



12.6

10.2 10.9 10.7 10.3

11.9

10.5 10.4 10.4 9.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Aimer 愛慕 Maniform 曼妮芬

Gujin 古今 Embryform 安莉芳

Triumph 黛

安芬

%

2010 2011

32.7

16.7

20.9

6.2

N/A

31.9

20.2

11.8

7.5 7.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

O.C.T. mami 十月

媽咪

Tianxiang 添香

Hui bao 惠

葆

Amery 孕美 Kenlavonne 肯勒芳

2010 2011


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China’s apparel market, 2012...4 *“Clothing, shoes, hats and textiles” replaced the previous “clothing” category in the NBS announcement in 1-3Q09 Source: National Bureau