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China Set to Retain Long-term Dominance of European Clothing Market

While mainland manufacturers will not lose their share of the EU garment market any time soon, they will still need to bolster their efforts to meet the needs of local buyers, according to exhibitors at the Apparel Sourcing show.

Photo: Apparel Sourcing: A multinational manufacturers of garments gathering.
Apparel Sourcing: A multinational manufacturers of garments gathering.
Photo: Apparel Sourcing: A multinational manufacturers of garments gathering.
Apparel Sourcing: A multinational manufacturers of garments gathering.

China will continue to be the dominant supplier of garments to the European Union, the world's biggest market for clothing. This was the view of Jean-François Limantour, CEO of Evalliance – which promotes trade between Europe and Southeast Asia – in his presentation to the most recent Apparel Sourcing fair in Paris.

He said the EU clothing market was worth about €230 billion in 2014, led by Germany (€63 billion) and the UK (€60 billion), followed by Italy, France and Spain. Consumer spending is practically at a standstill, except in the smaller Scandinavian markets.

However, imported goods are gaining ground, and Eurostat figures in September 2015 showed a year-on-year increase of 11.9%. Asia claims the lion's share (76.8%), with almost 35% of that from China alone.

While China's exports to Europe have risen by 11% this year, those from second-placed Bangladesh and smaller players such as Pakistan, Cambodia and Vietnam have grown much faster (at between 25% and 35%), and those from Myanmar nearly 70%.

Interestingly, exports from Hong Kong were up 33.4%. Limantour said Hong Kong's convenience and efficiency were again underpinning its role as a commercial platform for the garment business in China, especially for exports to Europe. He said: "It's more reassuring to go through Hong Kong when there are doubts about China."

Currently, the biggest categories of clothing imported by Europe are trousers (including jeans), knitwear and T-shirts (including polo shirts). Imports of casual items increased markedly in 2014, and Limantour suggested that dresses were also making a resurgence.

Friendly Neighbours

What Eurostat's figures don't show is that Chinese companies operate many of the garment factories in Vietnam and Cambodia – about two-thirds of those in Cambodia, according to Limantour. He said: "The workshops produce at very attractive prices and re-export either to China or to the final markets." Cambodia, like Myanmar and Bangladesh, benefits from cheap labour and free access to the EU market.

Swimwear and activewear producer Huzhou Skydressing has about a dozen joint ventures in Cambodia (plus others in Bangladesh and Vietnam), all using Chinese fabrics. Its choice of production site tends to be dictated by the level of skill required.

CEO Chris Bortolotti said: "For simple cut-and-sew we use Bangladesh, for less labour-intensive items Cambodia, but for machine-made or more technical production China is still better." He added that customers expect ever-more technically advanced swimwear, incorporating, for example, UPF or dry-wet technology.

Vietnam recently negotiated a free trade deal with the EU, but it contains a 'rules of origin' clause. To remedy the lack of locally produced fabric, large textile projects driven by Turkish, Taiwanese and Hong Kong companies are now in the pipeline.

Value-added Manufacturing

In addition to low-cost production, Vietnamese circular-knit garment manufacturer Thai Son offers a full service from trend sourcing to fabric printing, for which Marketing Communications Manager Chris Walker said customers were willing to pay a premium. He said sales of activewear were especially buoyant.

This year the company employed a Russian designer to refine its collection. Walker said: "In the past, you could put out anything and it would sell. Now, consumers have options." Thai Son already sells dresses to brands such as Fever London, and Walker reported interest from Esprit, which was considering transferring production from Bulgaria.

In China, the government's 10-year strategic plan, 'Made in China 2025', also encourages companies to add value to manufacturing activities through enhanced services, innovation and raising quality.

To this end, Springtex International, of Ningbo, in Zhejiang province, has expanded from outerwear into high-end womenswear, which is less price-sensitive. CEO Devy Lu said: "We don't do anything cheap, we focus on quality." He added that his customers are also prepared to pay more for the convenience of one-stop sourcing.

Lu said in-house printing and CM enabled Springtex to be very competitive. The company has invested in a state-of-the-art Italian digital-printing machine, which is non-polluting so it meets the Chinese government's stricter requirements on environmental protection.

The new technology is also driving innovation. Revolutionary double-sided digital printing improves fabric washability and eliminates sewing imperfections. Richard Rosenbluth, VP of Sales/Sourcing for Springtex said: "You won't see this anywhere else. It's the next generation of printing." He expected the technology to boost sales of separates, and said Springtex had already secured an order from Nordstrom.

Design Services

Italian shirt-making specialist B-Style complements its manufacturing with market research into trends across Italy, London and Paris, a service which Commercial Co-ordinator Giulia Zini said was appreciated by French and Italian retailers. Sales were up 50% in 2014.

B-Style uses Chinese fabrics but manufactures in Bangladesh, enabling customers to tap into lower costs. Zini said: "In Bangladesh you have to make a big quantity, but if customers choose from our collection, they can take smaller quantities."

Limantour observed that China is promoting better design by channelling efforts into training and opening high-level fashion schools. He said: "China's increasingly [high] quality creators are very [much] appreciated by the West."

Employing more graduates from professional colleges is one way in which children's clothing manufacturer Changzhou Orient Sunshine is improving its quality and service, aside from upgrading materials and implementing more computerised design and digital pattern-making. General Manager Pan Jin-feng said sales of girls' dresses were strong, and reported interest from Greece, the UK, Denmark and France.

Robin Xin, General Manager of outerwear manufacturer Ningbo Beautex, said the company's in-house design team helped to attract big buyers who "like to see new ideas and fabrics and are prepared to pay more because it saves them work". For example, Beautex has created a functional interpretation of the capes that were prevalent on the catwalks.

Taking the next logical step, Springtex has launched its own brand, Love The Me, and was looking for a Paris agent to sell its apparel to small retailers in Europe. CEO Lu said: "We need an agent who knows the market and can select 20 or 30 designs from the 200 we create every month."

Photo: Scarves: An ever in-demand accessory.
Scarves: An ever in-demand accessory.
Photo: Scarves: An ever in-demand accessory.
Scarves: An ever in-demand accessory.
Photo: Less in-demand: A Welsh Onesy.
Less in-demand: A Welsh Onesy.
Photo: Less in-demand: A Welsh Onesy.
Less in-demand: A Welsh Onesy.

Creativity and Craftsmanship

Suzhou Leads Apparel Co, which produces mainly eveningwear, employs 10 designers on its collections. CEO Lana Lai said: "Our selling point is the design. Every season we develop our own stories, from fabric pickup to colouring and so on." She said this year's key fabrics included lace, embossing and prints, especially on organza.

The company's design and tailoring skills are complemented by handiwork such as beading, tapework and laser cutting. One French designer, whose client list includes celebrities, uses the firm's development ideas for custom-made items. Lai said: "We develop five to 10 pieces for each order. It's very labour-intensive but it's good exposure."

Beautiful bags made from handwoven cotton were luring crowds of buyers to the stand of Enkay Exports of India. The company's Operational Head, Ashish Jain, said: "They can use our designs or we can mix and match if they want to change the colour or patterns." The flexible concept has garnered interest from brands such as Accessorize and Gerry Weber.

Jain said handcrafting techniques – such as hand knotting, hand embroidery, painting and stitching – are the strength of the Enkay collection. However, with the 67% sales growth recorded in 2014 expected to continue, the company is mechanising part of its production to increase capacity – and also to cut labour costs, "because customers are a little bit price-conscious".

Fabulous Fabrics

Tweed with hand-worked details and lurex featured in the beautifully tailored jackets presented by Hangzhou womenswear brand Sendi. Manager David Chen said Sendi either develops fabrics from patterns bought in New York, or sources high-quality and creative fabrics from South Korea and Taiwan. He said: "They are more expensive than Chinese fabrics but some customers can accept this."

Other highlights at Sendi included textured, digitally printed skirts, and reversible fabrics used for contrast, for example in black-and-white dresses. The company also recently introduced dresses in embroidered soyabean fabric. Chen said: "Being a natural fibre is an important selling point." An impressed Norwegian buyer had offered to become the brand's agent.

Triple Force Garment Co of Hong Kong is also using fabrics to elevate its collection of tops and blouses. Managing Director Coase Yeung said: "The market has polarised into low and high prices and the middle segment has really shrunk." His answer is to target higher-end customers who care about quality materials and workmanship.

Accordingly, he has turned to premium fabric suppliers in Japan and Korea for silk, and others in Turkey and Egypt for cotton. For quality accessories, such as buttons and trims, he said Hong Kong had an excellent supply network. Yeung reported interest in his silk blouses from an Italian high-end retailer.

Popular Parkas

Chinese companies supplied about 78% of the EU's imported parkas and anoraks in 2014. Toppo Clothing Co of Ningbo stands out with finishes such as garment-dyed and dirty-dyed. Managing Director Jason Xu said: "Not many companies do this kind of special treatment after sewing." Existing customers include G-Star and Hollister, while White Stuff was among numerous new contacts made at the Apparel Sourcing show.

Xu said the "secondhand look" was very on-trend, and that military styles especially sell well in Germany. He expected the 2014 sales growth of over 20% to be sustained, and was confident the exchange rate would not affect sales to Europe in the long term. He said: "We do not want to compete on price; we always focus on quality and punctual delivery."

Ningbo Beautex's Xin expressed the same view. He said the key to his company's good lead times was its excellent relationship with quality technical fabric suppliers in Korea, Japan and Italy.

He identified three main design directions in Beautex's new collection: vintage, with washed effects and attention to detailing; 'fashion', which includes camouflage fabrics; and 'elegant', for older customers. He said fashion items appealed to large retail chains like Mango, that the elegant line targetted Italy, and vintage did well in Germany and northern Europe.

Xi added that the company's marketing strategy was to try and work more directly with retailers, to improve communication and profit margins.

Savvy Marketing

Limantour suggested that "more savvy marketing and communications" would help Chinese companies to stay competitive. One route being explored is collaboration with Western experts who understand European tastes.

Menswear producer Ningbo Mondiland Fashions uses locally based, outsourcing professional Tobias Geertsma to help it navigate the European markets. Geertsma said: "It is difficult for a Chinese company to understand foreign customers and their needs. Direct sales and communications are difficult because of the huge culture barrier."

Similarly, Greek menswear company New York Tailors and its supplier Yingbo No Limit Garment Co have entered into a joint venture "to develop business for both of us and take advantage of each other's strengths, with their customers and my collection," according to CEO Andreas Papapanagiotou. His company has also developed a modular retail display concept for its medium-priced, high-quality collection, which targets mid-sized retailers.

Singing the Blues

Apparel Sourcing was awash with blue, in everything from denim to jacquard. Vivian Zhou, Sales Manager of casualwear manufacturer Ningbo Vityake Garments Co, said the strong trend for indigo was ongoing, especially with regard to lighter, washed effects. MS International Co of Jiangsu said customers were also looking for indigo in children's clothing.

B-Style highlighted indigo along with micro-designs and floral prints. Other shirt manufacturers, such as Ningbo Bingbing, were also using paisley in trims, self-patterned white fabrics and more colourful prints.

Master Mission International of Hong Kong reported interest from French and German department stores for its classic navy-blue coats. At Mondiland, Geertsma said blue was still favoured for suiting, that stripes are coming back slowly, and there was evidence of some subtle checks, mainly for the UK.

Geertsma said: "People are looking for texture and synthetic fabric with some structure and a bit of shine – but rich-looking, not cheap shine." Printed wool continues to be popular, while different production techniques are being used for jersey.

In line with the casual trend, jackets were selling more than suits, except in the UK where the City demands more formality. Suits for Italy tend to have softer, less constructed styles than those for the UK. Made-to-measure for large companies is also a growing activity for Mondiland. Geertsma said: "It's interesting for the factory, because it upgrades standards and the profit margin is much higher."

Photo: Hong Kong: Out in force for the Apparel Sourcing event.
Hong Kong: Out in force for the Apparel Sourcing event.
Photo: Hong Kong: Out in force for the Apparel Sourcing event.
Hong Kong: Out in force for the Apparel Sourcing event.

The ninth edition of Apparel Sourcing took place at Le Bourget in Paris, from 14-17 September 2015. It featured nearly 400 exhibitors and, together with Texworld and Avantex, attracted over 15,000 visitors.

Linda Watkins, Special Correspondent, Paris

Content provided by Picture: HKTDC Research
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