Brief Analysis of China Garment International Market in the First Half of 2016

Major export markets fell across the board

According to customs statistics, from January to June 2016, China’s apparel exports to the EU, the United States, Japan, and the ASEAN’s four major markets totaled US$42.922 billion, a year-on-year decrease of 7.94%. The four major markets fell across the board. Among them, China’s clothing exports to the United States have fallen sharply since May, resulting in an increase in China’s clothing exports to the United States from January to June. The export value was US$14.617 billion, a year-on-year decrease of 4.75%. China’s exports to the EU, Japan, and ASEAN continue to fall in both volume and price. The EU’s garment exports amounted to US$12.286 billion, a year-on-year decrease of 6.9%, and the US apparel exports amounted to US$6.221 billion, a year-on-year decrease of 6.72%. The amount was US$3.980 billion, a year-on-year decrease of 17.11%.

U.S.: Economic Growth Imperfectly Lower than Demand Ratio

According to data from the US Department of Labor, the United States’ adjusted unemployment rate rose to 4.9% in June, and wage growth slowed. In addition, the lack of confidence of enterprises in improving the economy and the uncertainties in the prospects of the United States general election have led to many unknown U.S. economic trends and the impetus for economic growth is still insufficient. Despite the slight increase in monthly sales of U.S. clothing since March of this year, it did not change the current status of clothing inventory. According to the data of the US Department of Commerce, the inventory and sales ratio of US apparel and apparel products continued to hover at a high level. In May 2016, the figures were 2.55, which was significantly higher than the overall retail sales ratio of retailers of 1.50. The increase in the pressure on US apparel and apparel merchandise has inhibited the enthusiasm of retailers in purchasing and has adversely affected the export of apparel to the US market. From January to June 2016, China’s garment exports to the United States increased from the previous year to the same period of last year, and the value of exports fell by 4.75% year-on-year.

EU: A slight improvement in the consumer market

Thanks to the previous monetary easing policy, the EU consumer market improved slightly in the second quarter of 2016. The depreciation of the euro and lower oil prices prompted consumers to increase their purchasing power and the sales of apparel products improved. According to Eurostat data, since the beginning of April, the turnover indices of major EU countries such as Germany, Italy, textiles, and footwear have risen significantly, of which the UK has gained the most momentum. The favorable factors mentioned above have prompted China to narrow its decline in apparel exports to the EU market. From January to June 2016, China’s clothing exports to the EU fell by 7.95% year-on-year. The decrease was 7.05 percentage points lower than that in January. In the EU market, China’s clothing exports to the United Kingdom account for almost 30% of the total, and the growth rate is relatively good, indicating that the UK’s position in the EU’s clothing import market is very important. After the British "Brexit" referendum, the market instability has increased, and the trend of China's apparel exports to the UK and the EU market is worthy of attention.

Japan: Domestic demand remains weak, apparel sales continue to decline

This year, the economic downturn in Japan has not changed. The reduction of the labor force, the acceleration of aging, the widening of the gap between the rich and the poor, the increase in costs, the hollowing out of industries, and the sluggish domestic demand are still important reasons for restricting Japan’s economic recovery.

According to data from the Japan Ministry of Finance, since November 2015, the sales of apparel products in Japan's retail industry have been negative year-on-year, and the decline has narrowed to -3.3% in January 2016. Since then, it has successively expanded to -3.4%, -6.6%, -5.3%. In May 2016, sales of apparel products in Japan's retail industry were 351.959 billion yen, a year-on-year decrease of 7.1%. Due to the continuous decline in sales of apparel products, there has been no significant improvement in the negative growth of Chinese clothing exports to Japan. From January to June 2016, China’s clothing exports to Japan amounted to US$7.259 billion, a year-on-year decrease of 6.16%.

Exports of countries along the “One Belt and One Road” rapid growth

From January to June 2016, China’s garments are frequently spotlighted by emerging market exports represented by countries along the “One Belt and One Road”. Among them, China’s clothing export to Russia, Saudi Arabia, the Philippines, Kyrgyzstan, and Kazakhstan increased by 11.68%, 20.5%, 52.8%, 65.42%, and 35.3% year-on-year, respectively. The total exports of the above five countries amounted to US$6.385 billion, accounting for China’s exports. The 8.83% of the total amount was positively driven by a 1.80 percentage point overall export.

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