China’s textile industry seeks balance between domestic and international markets

Along with luxury goods, Chinese sportswear production would appear to be the latest sector to escape the slowdown in the textile-clothing sector. But at a time when both exports and domestic consumption are falling, Chinese manufacturers are facing increased internal competition, while the rise of Shein and the controversies surrounding Xinjiang are interfering with the image that the industry would like to project.

The Intertextile materials trade fair and the Yarn Expo yarn and fibre event were held in Shanghai from March 6 to 8, at the same time as the Chic clothing fair and the PH Value knitwear event. These events were held just over a year after the reopening of borders and, as previously reported by FashionNetwork.com, in a climate of “cautious optimism”.

Last year, China exported €269.4 billion worth of textiles and clothing. This represents a fall of 8.1% on the textile side and 2.9% on the clothing side, after a year of strong growth in 2022. On the domestic front, 2023 was no more promising, with fashion continuing to suffer from weak consumption. Unsurprisingly, this weakness was the focus of the annual meeting of the Chinese Parliament in Beijing on March 6, as the first visitors ventured to the Shanghai trade fairs.

This is a double jeopardy for a “factory of the world” which, since the early 2010s, has been gradually shifting its textile industry from exports to the domestic market. This strategy was based in particular on strong local growth, prompting a number of clothing manufacturers to launch their own brands. But “a clever rabbit has several exits from its burrow” (the Chinese version of not putting all your eggs in one basket): at a time when business is slowing down both internationally and at home, the Chinese textile-clothing industry is looking more than ever for a balance between its two target markets, in the hope that one of them will compensate for the weaknesses of the other over the long term.

Sportswear, a haven of growth

However, two markets seem to have escaped the slowdown. The first is, unsurprisingly, luxury goods, where the health crisis has had little effect on growth. The second is the more technical offerings. “We’re seeing strong growth in the sportswear markets, which is the other sector that’s currently doing well, along with luxury and high-end,” says Wendy Wen, Executive Director of Messe Frankfurt Hong Kong and head of the Intertextile show. The show’s Functional Outdoor & Sportswear Fabric area has grown in size, with almost 200 manufacturers now exhibiting.

This enthusiasm for sportswear is also evident among clothing manufacturers. “Sportswear is definitely a ‘hot’ topic at the moment,” confirms Chen Dapeng, head of the National Garment Industry Association (CNGA), as well as the Chic trade show. At Chic, the Outdoor Sports area now equals the denim area in terms of surface area.

“Our lives have changed, we wear fewer suits, we dress less formally,” explains the sector representative. It’s a new trend, so we need more companies in this field,” he adds. Before adding: “Obviously, we hope to see Adidas or Nike come and exhibit with us one day.   

Competition between cities

The scarcity of both foreign and domestic orders will, however, have had the expected effect of increasing competition between manufacturers, both in terms of materials and finished products. “This has always been the case,” confides a sales representative from knitted fabric specialist Changshu Xinhui, “but we feel that the atmosphere is no longer the same as it was before Covid.

Competition is now sometimes between provinces and cities, with investment driven by local political and economic issues. Jiangsu, Changzhou, Anhui, Zhejiang, Ouhai… Certain regions are omnipresent on the list of Intertextile exhibitors, sometimes taking the form of massive pavilions at Chic. Several exhibitors, thousands of kilometres apart, report that they share the same view of a race for industrial development between major metropolises.

Chen Dapeng puts this into perspective. “We certainly have a lot of industrial clusters,” says the sector leader. But you have to bear in mind that many of them specialise in certain products. Among buyers, Zheijiang is largely associated with silk, and Jiangsu with technical textiles. Or, among other examples, cotton and wool for Shangdong and sports shoes for Fujian. “So there’s competition, but there’s also coordination across our industry.”

Shein, the unexpected ambassador

This year’s edition of China’s major trade fairs is the first spring session to mark the long-awaited return of visitors from the West, after four years of closed borders. European and American customers whose markets are worried about the growing market share captured by Shein’s low-cost fashion. This concern was not lost on the exhibitors at Intertextile and Chic, none of whom could confirm working for the brand, which has since become a marketplace. 

“We’ve been approached, but the way they work with small and medium-sized runs is very different from the way a traditional manufacturer works. That’s why they rely originally on small units,” says an exhibitor from Guangdong, who does not hide his concern. “The people from whom Shein is taking market share in the West are potentially our customers. So we must not let it crush the market.”

In 2019, the CCPIT-tex (China Textile Sub-Council, co-organiser of Intertextile) and CNGMA announced their intention to make “Made in China” a quality label. This raises the question of their perception of the Chinese ambassador, associated in the West with low prices and low quality. “In reality, in terms of improving our image, Shein is a master, because quality and designs improve greatly over time,” says Chen Dapeng. “But it is still a company, and it cannot and should not represent China or its industry.” 

Cotton from Xinjiang

Since the beginning of the decade, this industry has been going through its worst international controversy since that of child labour at Nike suppliers in 1997. What is referred to as the labour integration of the Uyghur minority in Xinjiang has been described as forced labour and a possible crime against humanity by the United Nations. Behind the human and image issues, the controversy raises questions about supply.

“Almost all Chinese cotton comes from Xinjiang (which produces 20% of the world’s cotton, including the best seeds, editor’s note), and we are no longer allowed to export it to the United States. What has happened is that this cotton has been redirected to the domestic market,” says a fabric specialist, pointing out that China is also the world’s biggest importer of cotton.

“At the moment, we’re keeping an eye on what Europe is going to do on the subject,” confided a spinner at the Yarn Expo show, noting that it would be up to the EU to prove that a product was compromised. “If the burden of proof were to fall on us, Chinese exporters, it would add an enormous amount of red tape to an already administratively nightmarish market”.

The Shanghai shows ended on the evening of March 8, and will now return in August. Shanghai Fashion Week opens on March 25. Faced with the vagaries of the market, the Chinese fashion industry is not forgetting to bank on its creativity.