The transformation and upgrading of garment companies

Most of China's garment enterprises started from foreign trade. Although many companies began to build their own brands and open up the domestic market, they were not difficult in this process and needed to break through the bottleneck.

If it is said that OEM sales have been a shortcut to the rapid development of China's garment enterprises, then this path has not been so good today when raw material prices have fluctuated sharply, labor costs have risen, and international competition has become fierce. From "doing a wedding dress" to creating a brand, relying on exports to develop domestic sales, the crisis has accelerated the transformation of Chinese garment companies.

Xinhua News Agency reporters went deep into China's garment industry clusters to understand the problems and dilemmas faced by the garment industry under the crisis and explore the road to transformation and upgrading.

The crisis has accelerated the industrial transformation and upgrading. “Over the financial tsunami, we have encountered the debt crisis in Europe, and many companies are dying.” Ye Yaolin, chairman of Dongguan Tianrun Garment Co., Ltd., said with emotion. Tianrun Garment Co., Ltd. is a clothing company that mainly exports swimsuits and underwear. Affected by the export situation, this year's orders fell by 20% to 30%.

Like Tianrun, the textile industry in the coastal areas with developed countries as the main export market also feels that the pressure of survival is greater than that of previous years due to the shrinking of external demand. The growth of foreign trade has slowed down, and corporate profitability space has been squeezed. “In Dongguan alone, manpower costs rose by 30%, raw materials exceeded 20%, and many small and medium-sized enterprises were hard to bear.” said Liu Jinxi, deputy director of the SME Bureau of Dongguan City, Guangdong Province.

China Textile Industry Federation data show that, excluding price factors, China's textile and apparel exports in 2011 only increased by 0.5% year-on-year, of which the number of garment exports fell by 0.2% year-on-year. The industry’s profit growth continued to decelerate. The growth rate in January-November 2011 was 27% lower than that in the first quarter. In November, the profit growth rate was only 11.6%, down 46% from the beginning of the year. “At present, some middle and low-end products have already been transferred to neighboring countries. This trend will become more apparent in the coming years.” Wang Tiankai, president of the China National Textile and Apparel Industry Federation, said that from a year-round perspective, China will face a more complex foreign trade situation. Demand growth in the international market will remain weak, and the lack of demand, competitive pressures and trade frictions faced by export companies will also become more prominent. Tighter external environment will form a market forcing mechanism, bringing a new round of industry reshuffling, and the transformation and upgrading of enterprises is imminent. "It is urgent for us to take advantage of the sluggish external demand and the stability of the domestic economic growth rate in order to change the development mode of textile and garment enterprises," said Liu Junxing, deputy inspector of the Guangdong Provincial Economic and Information Commission.

While struggling to work hard to break through the crisis at the high end of the "smile curve," many companies are actively looking for the road to self-salvation. Difficult, they have also explored new directions for development. "On behalf of processing and creating a brand, walking on two legs should be much more stable." Wen Xiaoyan, chairman of Dongguan City Bainawei Industrial Co., Ltd. said.

Bai Nawei Industrial Co., Ltd. is a children's wear enterprise that deals with infant apparel brands in the United States. In 2010, it seized the opportunity of not having a larger children's wear brand in China and started to create its own children's wear brand master cat.

Wen Xiaoyan told reporters that currently, Master Cat has more than 100 stores in China, and its profits are higher than in the past. After a few days, she will also be ready to visit Cambodia and expand her production base.

More and more companies are realizing that relying on exports can often only take advantage of the economic prosperity cycle to get temporary development. Once the economic downturn or deteriorating business environment will be eliminated by the market, core competitiveness is the key to sustainable development of the company.

In addition to brand building, the enhancement of core competitiveness is also reflected in the improvement of innovation capabilities. Including the upgrading of manufacturing technology, research and development capabilities, and so on.

Yichun Group, which was unwilling to “make a wedding dress” for others, recently established its own R&D center and opened up a series of businesses, children's wear, and more. Guo Donglin, chairman of pure group, told the reporter that he will continue to explore ways to fight against the wind. This year, he will continue to increase R&D and design efforts and lay out the end consumer market.

“In the past, cheap competition has ceased to exist. In the high-cost era, companies need to think about how to go their own way in the promotion of the industry chain, seize the two commanding heights of brand building and design and R&D to form a mature and complete technological capability. Industrial system." Liu Junxing said.

The person in charge of the Ministry of Industry and Information Technology stated that during the “12th Five-Year Plan” period, China will use advanced technologies to transform the traditional textile industry and expand the application of textile products in strategic emerging industries such as new materials, new energy, and energy conservation and environmental protection. Enterprises increase investment in R&D. The proportion of internal expenditures of R&D expenditures of some textile enterprises in the core business to the proportion of main business income has increased to more than 3%.

To improve the core competitiveness still need to support many of our country's garment enterprises to start from foreign trade. Although many companies started to build their own brands and open up the domestic market, they are not difficult in this process and need to break through the bottleneck. "Now Zhongshan's garment companies want to become brands. There are many brands emerging at one stage, but they have stagnated at a certain level." Guan Tianji, chairman of Zhongshan Textile and Apparel Industry Association, said that foreign brands influx into China. With more fierce competition, how do domestic apparel companies develop?

Integrating resources and warming groups is the first choice for many companies to cope with the crisis. “A leading company can drive hundreds of small and medium-sized enterprises in the entire supply chain industry chain.” Wang Tiankai suggested that SMEs can integrate the supply chain by providing domestic brands with the method of processing and making local brands bigger and stronger together.

At the same time, many experts recommend the introduction of relevant measures to improve the apparel industry supporting services. Chen Dapeng, executive vice president of the China Garment Association, said: "Someone used rice to cook and not to burn," to describe the current clothing brand and R&D and construction. The important point is the lack of ancillary services, such as the difficulties and technology of SMEs. There is no clear financial subsidy for upgrades, and the threshold for entry of private brands into malls is too high."

He suggested that the government should help companies speed up brand building, and introduce further support policies in terms of cotton quotas, export tax rebates, and reduction of corporate taxes and fees, so as to create a good environment for enterprises and help them solve practical difficulties.