THE DEVELOPMENT OF THE CHINA APPAREL INDUSTRY

A Report Presented Jointly by China Textile University & Harvard Center of Textile and Apparel Research

November 1999

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Table of Contents

FORWARD....................................................................................................................................... 3

PREFACE ........................................................................................................................................ 4

1. INDUSTRY INDICATORS......................................................................................................... 6 1.1 FACTORY OUTPUT VOLUME ............................................................................................. 6 1.2 TEXTILE AND APPAREL EXPORTS ................................................................................... 6 1.3 CHINA'S APPAREL IMPORTS............................................................................................... 9 2. CHINA'S APPAREL WHOLESALE AND RETAIL INDUSTRY.......................................... 12 2.1 DOMESTIC MARKET......................................................................................................... 12 2.2 CONSUMER EXPENDITURES AND BUYING POWER..................................................... 13 3. INDUSTRY STRUCTURE ....................................................................................................... 18 3.1 OWNERSHIP STRUCTURE ................................................................................................. 18 3.2 THE GEOGRAPHIC DISTRIBUTION OF CHINA’S APPAREL INDUSTRY ...................... 19 3.3 THE DISTRIBUTION OF SIZES OF CHINESE APPAREL ESTABLISHMENTS................ 20 3.4 THE EVOLUTION OF APPAREL INDUSTRY ADMINISTRATION................................... 21 4. THE PERFORMANCE OF CHINA’S APPAREL INDUSTRY .............................................. 22 4.1 PROFIT AND COST STRUCTURE ..................................................................................... 22 4.1.1 Cost Structure ................................................................................................................ 22 4.1.2 The Influence of Government Tax Policy ......................................................................... 23 4.1.3 Working Capital .............................................................................................................. 23 4.1.4 Investment and Financing............................................................................................... 24 4.1.5 Profit ............................................................................................................................. 24 4.2 THE ORGANIZATION OF CHINA’S APPAREL INDUSTRY ............................................. 25 4.2.1 Labor Sources ................................................................................................................. 25 4.2.2 Labor Turnover .............................................................................................................. 25

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4.2.3 Labor - Management Relations....................................................................................... 26 4.2.4 Worker Training ............................................................................................................. 26 4.2.5 Wages ............................................................................................................................. 26 4.2.6 Organizational Structure ................................................................................................ 27 4.3 TECHNOLOGY & FACILITIES ........................................................................................... 29 4.3.1 Types of Production Systems Employed.......................................................................... 29 4.3.2 Equipment and Facilities................................................................................................ 29 4.3.3 Technology Adoption ...................................................................................................... 31 4.3.4 Product Mix ................................................................................................................. 323 4.3.5 Order Size ...................................................................................................................... 34 4.3.6 Lead Times..................................................................................................................... 34 4.3.7 Comparison of Apparel Sourcing Options ....................................................................... 36 4.4 THE RETAIL-APAREL-TEXTILE PIPELINE ..................................................................... 37 4.4.1 Domestic Channel .......................................................................................................... 37 4.4.2 Export Channel .............................................................................................................. 37 4.4.3 Quota............................................................................................................................. 38 SUMMARY.................................................................................................................................... 39

APPENDIX A TABLES................................................................................................................ 40

APPENDIX B ORDER SIZE AND LEAD TIME IN SAMPLE .................................................. 45

APPENDIX C EXPLANATORY NOTES FOR MAJOR TERMS.............................................. 50

PROJECT TEAM .......................................................................................................................... 52

REFERENCES............................................................................................................................... 53

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Foreword
The Harvard Center for Textile and Apparel Research (HCTAR) is pleased to make available this report, researched and written by Professor Gu Qingliang and his associates of the China Textile University, on the development of the Chinese apparel industry. In order to help understand the global apparel and textile sectors and imports and exports to and from the United States, HCTAR has sponsored research and reports on developments in China and Western Europe (France and England). The U.S. Department of Commerce Merchandise Trade Statistics reported that in 1997 U.S. apparel imports, valued at $48.4 billion, were received from more than 175 countries. The U.S. imported $7.4 billion dollars of apparel from the People’s Republic of China (P.R.C.), more than from any other country. Imports from Mexico ranked second at $5.3 billion. In the period 1991-97, imports of apparel from China rose at the annual rate of 12 percent compared to the 34 percent annual rate of increase from Mexico and the 11 percent a year annual rate of increase in all apparel imports. The specification of points of origin of trade and valuation issues has resulted in unusually large discrepancies in reports of trade statistics by China and the U.S. The U.S. Department of Commerce, Commerce News, April 29, 1996, reported: “Each country’s import statistics are consistently greater than the other’s exports.” HCTAR is concerned that Western audiences better understand the operations of the apparel industry of China, including its size, structure, management, performance, technology, human resources, and organization for exports. It is also vital to appreciate the wholesale and retail distribution of apparel within China and the potential for growth of China’s domestic market as economic development occurs. There are doubtless complexities in data and concepts that make translations to Western audiences difficult. We are well aware of these complications from our meetings over the draft manuscript with Professor Gu and his associates and from our earlier visits to apparel plants in China. Despite such questions, it is vital that Western audiences be better informed as to the developments in this sector in China. We acknowledge the assistance of Professor Gary Jefferson of Brandeis University and Professor Tom Rawski of the University of Pittsburgh. This report is the work of Professor Gu and his associates.

Frederick H. Abernathy John T. Dunlop Janice H. Hammond David Weil Cambridge, Massachusetts November 1999

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Preface
Since the initiation of economic reforms and open policies in the late 1970s, China’s economy has been among the fastest growing in the world. Dramatic changes caused by these reforms have touched virtually every aspect of China’s economy and society. The introduction of a market system in China has fundamentally changed industry structure, firm ownership, and the nature of relationships between supply channel partners. China’s textile and apparel industries provide an excellent example of those changes. China has the largest apparel industry in the world with more than 3.9 million workers employed in an estimated 47,000 establishments in 1995.1 In that year, Chinese apparel factories produced 9.685 billion garments (in units).2 China’s total apparel exports were valued at approximately US$24 billion.3 The majority of China’s apparel exports are designed by foreign customers and made from imported fabrics. Most of these garments are intended for mass markets, with moderate or low prices. A few factories produce high quality clothing for high-fashion foreign brands. In 1995, official figures indicate that the largest importer of Chinese apparel products was Japan, followed by Hong Kong and the United States.4 However, it is important to note that these official figures do not reflect the fact that a big part of Hong Kong’s apparel imports from China were then transshipped to other countries, most notably the U.S. and Japan.5 About 80% of U.S. imports from China travel via intermediaries, with Hong Kong accounting for all but 3-4 percent of intermediary trade.6 Such transshipments have made the accurate assessment of the ultimate destination of China’s apparel exports nearly impossible. China’s sewing industry has long been concentrated in its coastal region. Coastal concentration continued after the introduction of market reforms due to the region’s experience managing apparel production, its relatively convenient transportation and communication, good infrastructure, and “external economies of scale,”7 such as easy access to financial institutions, trading companies, and export agents. However, rising labor costs and the instability of raw materials supply8 along the coast have driven the apparel industry from coastal areas to inland locations, forming a more geographically dispersed industry. Coastal firms have been compelled to move inland to achieve lower labor costs as firms in other Asian countries (as well as inland Chinese firms) become more competitive in the apparel industry. Furthermore, the coastal areas have been among the earliest regions in China to implement economic reforms, resulting in increased competition from Chinese private investors and

1 2 3 4 5 6

Almanac of China’s Textile Industry, 1996, p. 24. Ibid., p. 207. Ibid., p. 25. Ibid. See Appendix A, Table 3 for detailed information on transshipments.

“Comparison of the 1992-1993 Merchandise Trade Statistics of the United States and the People’s Republic of China,” CB-96-56, US Department of Commerce News, Economics and Statistics Administration, Bureau of the Census, Washington, DC 20230.
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The Global Economy in Transition, second edition, by Brian J. L. Berry, Edgar C. Conkling, D. Michael Ray, Prentice-Hall International, Inc., 1996, p p. 242, 262, 466.
8

Historically, China’s government policies dictated that the apparel industry be concentrated in the coastal areas, with the textile industry located in inland locations as well as in the coastal areas. In the mid-1980’s, changing government policies led to the migration of textile firms to inland and western locations under local control. This has led to decreased stability in textile supply to the coastal regions.

U. Reforms were expanded in previously untouched areas -. to being export-driven (to bring foreign currency into the country) in the 1980s and early 1990s. 2. foreign retailers were allowed entry into China for the first time.5 foreign investors in the apparel industry in that area. incentive systems. in part because different data sources have somewhat different industry coverage and use different statistical methods. the Chinese figure is reported in this report. major changes were introduced in the structure and role of financial institutions. Economics and Statistics Administration. These reforms improved the flexibility and responsiveness of the Chinese apparel industry. 9 The low barriers to entry in the apparel industry (especially the low capital investment required) led to early entry into this industry by private investors with limited capital as well as by foreign investors interested in “testing the waters” in China without incurring substantial risk. with their modern equipment and greater flexibility in product type. which covered township level and above with independent accounting system enterprises and village. private. The difference in statistical coverage has made the figures in the 1996 Almanac on the high side relative to those in previous years’ editions of the Almanac of China’s Textile Industry. Some research has been done by both sides to reveal the causes of these differences. Notes 1. and individual enterprises with an annual sales revenue above 1 million RMB. We have tried to note these discrepancies as they arise in the report. China initiated efforts to establish a market economy. and government policies that disallowed forward and backward integration in the fiber-textile-apparel-retail channel were removed. Responsiveness to market needs is further enhanced by the direct sourcing of apparel products by foreign brands and the sophisticated marketing skills of joint-venture (JV) partners.S. for example.9 Privately-owned enterprises. Bureau of the Census. and raw materials. jointly-operated. Washington. to being more consumeroriented in order to survive and prosper in the late 1990s. The 1996 Almanac of China’s Textile Industry derived its statistical figures from the third industry census. and channels of distribution. A few State-Owned Enterprises (SOEs) with strong support from local government perform well by taking advantage of easy access to funds. in “CB-96-56.S. distribution channels.for example. DC 20230. 3. although the majority of SOE’s performance has lagged that of private firms. the Chinese apparel industry has progressed from being largely volume-driven (to meet domestic demand which far exceeded supply) in the 1960s and 1970s. Department of Commerce News. and types of incentive systems. . Over time. are particularly fierce competitors. Whenever the data reported by Chinese sources differ from those reported by U. Private firms compete through better market intelligence and more flexibility in their production systems. sources. This report contains some inconsistent data. In 1992. as reported. advanced equipment.

2% higher than the previous year of 7.5% in 1995.911 3.6 1. The Information of Textile Foreign Trade.744 0.673 0. 207.267 NA 11% 27% 7% -2% 2% 10% 15% NA Annual Growth Rate Year 1987 1988 1989 1990 1991 1992 1993 1994 1995 Output 2. 24.266 6. China Textile News Publishing House. 25th.13 Although textile and apparel exports as a percent of total Chinese exports declined to 25. Industry Indicators 1. and accessories. 1978-1995. p. 10 11 12 13 14 15 Almanac of China’s Textile Industry. .175 3. representing.685 Annual Growth Rate NA 29% 3% 6% 7% 26% 49% 23% 24% NA = Not Available Compound Annual Growth Rate (CAGR) = 17% 1.1 Factory Output Volume China is the largest apparel producer in the world with factory output of about 9.15 but together were the leading net currency earners among Chinese exports. Xi Yujun. 1996. January. 29.945 1.003 3. This category includes machinery. video-recorders.008 0.14 the textile and apparel industries continue to be important in bringing foreign currency into China. 25th January.985 1.8 billion pieces.1-1 Growth of Apparel Factory Output. for example.38% of the value of total Chinese exports in 1994. China Textile News Publishing House. In 1995 these industries ranked second in export value.004 1.685 billion pieces in 1995. 1996. 207.106 1. Data Source: Almanac of China’s Textile Industry. Mechanical and electronic industries ranked first among Chinese exports.368 7. recorders. in billions of pieces11 Year 1978 1979 1980 1981 1982 1983 1984 1985 1986 Notes: Output 0.816 9.10 Table 1. The textile category includes fiber. 1996.384 4. Xi Yujun. 1996. The Information of Textile Foreign Trade. p.260 2. electric equipment and accessories.2 Textile and Apparel Exports Textile and Apparel Exports Apparel and textiles12 have been important Chinese exports since the introduction of economic reforms in the 1970s.

8 billion. China Textile News Publishing House. It is worth comparing these numbers to those of the US Department of Commerce.6% 5. . As shown in Table 1. 25 January.748 18. April. reaching US$23.19 Table 1.049 25.3 billion and textile imports of US$1. 1995.4 and textile imports of US$1. for a total of $8.3 billion and US apparel imports from China of US$7. 1996.848 8.7% 31.75 billion in 1994.9% of the total China’s apparel exports.748 49.6% 54.7% 1. Sources: 1978-1994 data from Cheng Zhenghua. since JVEs were not allowed in China.7% 42.0% 25. In 1994. 19961997 data from China Fashion Weekly. These 21 countries or regions represented over 80% of China’s total apparel exports. apparel represented roughly two-thirds of China’s combined textile and apparel exports in value.060 2.4% 14.721 24.to late-1990s. apparel exports grew at a compound annual growth rate of 22. 1978-199720 Year Apparel Exports (in US$ billions) 0.0% 27.4% 86.2% during the 19-year period from 1978 to 1997.130 6. for a total of $7.2-1 Chinese Apparel Exports.653 2.949 2.059 1.754 Annual Growth Rate 30. in 1994.915 3. China replaced Hong Kong as the leading apparel exporter in the world. Most Chinese apparel exports were basic. or 36.2-2.7% 28.050 2. Towards the Garment Market of 2000. inexpensive items.6% Annual Growth Rate Year Apparel Exports (in US$ billions) 4. 21 countries or regions each imported more than US$100 million worth of apparel from China.872 6.8% -22. representing US$8.0% 28.000 31.4% 4.16 As shown in Table 1.7 Apparel Exports During the mid. April.18 Apparel exports by Joint Venture Enterprises (JVEs) have been booming. which imported over 30% of China’s total apparel exports. Towards the Garment Market of 2000. 1995. 1998. the largest importer of Chinese apparel among these was Hong Kong.864 1.998 16.4 billion.635 1.722 billion.2-1.428 23.2% 16 17 See Table1. See “Comparison of the 1992-1993 Merchandise Trade Statistics of the United States and the People’s Republic of China. which reports apparel imports from China of US$6.8% 11.7% of the global apparel export market.708 1.17 and accounting for 16.2% 28.0% 4.0 billion.2-3.0% 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Compound Annual Growth Rate (CAGR) = 22. May 8. this number was 0. Prior to 1978.1% 10. 18 19 20 Cheng Zhenghua. 1995 data from The Information of Textile Foreign Trade.

which reports apparel imports from China of US$6. DOC is adding some of the transshipment volume reported above as exports to Hong Kong. Department of Commerce (DOC).722 Share (%) 0.23 2.00 Table 1.8 Table 1. April.7 63.3 billion in 1994.1 31.3 67. 199421 (Value is given in US$ Million) Rank 1 2 3 4 5 6 7 8 9 10 11 Country/ Region Hong Kong Japan USA Germany Australia Russia S.51 0.159 5.62 0.5 53.47 17. . Or.652 2. Towards the Garment Market of 2000.0 46.70 0.64 1.S. 1985-1995.94 0. whereas the U. it may be that Chinese figures consider only the value-added from “processing contractors.91 1.85 0.2-3 China’s Apparel Industry Exports as a Percent of Total Textile & Apparel Exports.45 1.7 49.5 41. Korea UK Sweden Canada Italy Value 7.8 66.71 0. Shanghai Fashion & Accessories Society.S.83 1.0 43.3 Year 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Share (%) 43.” which use imported fabric provided by the customer.89 Rank 12 13 14 15 16 17 18 19 20 21 22 Country/ Region Taiwan U.87 10.54 0. Arab France Macao Malaysia Netherlands Switzerland Singapore Poland Others Total Total Value 201 188 186 168 166 149 148 128 120 112 4.5 41. 1995. Arab S. It could be that the U.7 37.9 39.18 23.4 69.8 38.78 0.085 23.S.427 691 435 388 344 304 239 222 210 22 Share (%) 30.2-2 Value of China Apparel Exports by Country or Region of Destination.28 1. 23 Source: China Customs. 22 This is different from the U. DOC considers total value of garments imported (unless US textiles were used). 1978-199723 Year 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 Share (%) 29. A Collection of Treatises on Clothing and Accessories in China.7 21 Source: Cheng Zhenghua.63 0.9 66.7 40. 1985-1995.1 57.22 100.00 0.79 0.8 41.

23% in 1992.49% in 1996. See Table 1.3-1. 29 28 Sources: 1978-1994 data from Research Center of Textile & Apparel Economy. In 1994. 1978-1996 (in Millions of US$)29 Year 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 Imports 1 5 21 15 7 3 6 15 14 17 400% 320% -29% -53% -57% 100% 150% -7% 21% Annual Growth Rate Year 1988 1989 1990 1991 1992 1993 1994 1995 1996 Imports 28 38 48 61 402 510 572 970 1044 Annual Growth Rate 65% 36% 26% 27% 559% 27% 12% 70% 8% CAGR = Compound Annual Growth Rate = 47. 1996 data from Fashion Times. from 33.3-2. 1996. to 17. Research Centre of China Textile Economy & Information Centre of China Textile Council. Chinese apparel imports of knitwear have steadily declined during the 1990s. 1996. an estimated 80% of imported garments were made of woven fabric.28 Table 1. April. 1995 data from Almanac of China’s Textile Industry. A collection of Treatises on Clothing and Accessories in China. whereas 20% were knitwear. with 33. The Information of Textile Economy. 1995.24 In 1994 there were six countries or regions that individually exported more than US$10 million of apparel products to China. May 29 1998. The table indicates a sharp increase in China’s apparel imports in 1992. 1985-1995.1% from 1978 to 1996. Towards the Garment Market of 2000.26 As shown in Table 1. May 29 1998. China’s total apparel imports were US$1044.3-1 Growth of China’s Apparel Imports.1% 24 25 26 27 Fashion Times. p. China’s apparel imports have grown rapidly since 1978.48 million. See Table 1. 5. . Japan has surpassed Hong Kong as the largest source of apparel imports into China. which can be attributed by economic reforms that first allowed foreign retailers access to China’s market. In 1996. 12th Feb. with a compound annual growth rate of 47.27 In 1995.3-3. Source: Cheng Zhenghua. 1995. Shanghai Fashion & Accessories Society. p.4% of China’s total apparel imports. Hong Kong ranked first. garments made of woven fabric comprised 72% and knitwear 28% of all apparel imports.3 China’s Apparel Imports As shown in Table 1.3-4. 1985-1995.25 By 1996.9 1. 5.

199631 Countries & Countries Japan Hong Kong South Korea Taiwan USA Australia Italy Germany Brazil France All others Total Value (million US$) 440.U. May 29.9 1. Others Total Value ( million US$) 191 165 48 30 11 10 117 572 Percent of Total Imports (%) 33.7 20.3-2 Chinese Apparel Imports from Countries or Regions. 199430 Country &Region Hong Kong Japan Taiwan S.10 0. p.06 10.4 5. 5.044.71 0.58 112.76 100.8 8.4 28.925 1.879 1.18 0. Korea USA E.10 Table 1.20 29.475 1. 1998.643 4.55 4.5 100.54 0.00 30 31 Source: China Customs. Data source: Fashion Times.75 0.3-3 Chinese Apparel Imports from Countries or Regions.2 1.47 0.477 Percent of Total Imports (%) 42.034 0.059 110.00 Table 1.210 49.69 10.791 310. .858 5.174 7.

91 1.74 100. 199632 Year Knitwear and accessories Garments made woven and other non-knitted fabrics and accessories Leatherwear and accessories Fur wear and accessories Total Note: NA = Not Available 1992 33.49 77.63 2.45 1. p.3-4 Composition of China’s Apparel Imports in 1992.00% 32 Source: Fashion Times.11 Table 1.10 77. 5.23% 63. May 29 1998. .27 NA NA 100. 1995.00% 1995 19.00% 1996 17.41 100.53 0.

See Table 2. The industry growth is reflected in the growth in wholesalers. Open wholesale “marts”—which are wholesalers run by local governments that also sell to individual consumers—have played an important role in the distribution of Chinese apparel. the market potential in China is immense. Because mart sales include both wholesale sales to retailers and consumer sales.018.795. this volume is not strictly a subset of the total retail sales of 244.1 Domestic Market In 1954.809 765. the sales of the top 20 specialized textile and apparel trade markets totaled 129. Given the significant opportunities for further increase in per capita consumption of consumer products.1-1.2 billion people and the sharp increase in consumption by Chinese citizens. 1995. China Statistical Yearbook. In 1994 the total sales of apparel amounted to 260. shoes and hats are included.030. as shown in the table below. severe supply shortages in the apparel industry drove the Chinese government to establish a “coupon” system to ration garments to Chinese citizens.888 As shown in Table 2.2 billion RMB.831 205. China has become one of the largest markets in the world. apparel expenditures as a percent of total retail purchase of consumer goods has halved during this period.446. retailers.136 Employees in Retail Establishments 2. Textile products.306 2.385 Employees in Wholesale Establishments 607.81 billion RMB. this system was phased out in 1983. 1997.1-1.1-1.1-1. 1995. .669 Number of Retail Establishments 1.2 billion RMB. With the development of the domestic apparel and textile industries. China Statistical Yearbook.33 In 1996. China’s Apparel Wholesale And Retail Industry 2.37 (This topic is detailed in Appendix A Table 1).815 4.12 2. China Statistical Yearbook. See Table 2. and their employees. the total sales of clothing jumped to 287.34 With a population exceeding 1.8 billion RMB in 1995 reported in Table 2. 33 34 35 36 37 China Statistical Yearbook. In 1995. Number of Wholesale Establishments 199435 199636 117. 1997. although the value of apparel sold has increased tenfold since 1978. garments.

6% Apparel Products (in Billions of RMB)39 27. the annual consumption per capita increased from 184 RMB to 2.40 up 20. Because of a change in reporting method.477 billion RMB. p.4 725. With the growth of income. From 1978 to 1996.2 244.03 71.23 110.5 1246 1627 2062 2477 19.1 437.2 118. the apparel figures were computed based on the following weighted average: Total Consumers’ consumption on clothing = per capita consumption of non-farmer households * population of non-farmer households + per capita consumption of farmer households * population of farmer households. consumer goods sales totaled 2.13 Table 2.677 (in 1996 currency).2 203. in 1996.9 380.37 57. As shown in Table 2.2 14.4 289.9% from 1990 through 1996. the Chinese have spent more money on consumer products than ever before.1-1 Total Retail Sales Growth of Consumer Goods38 Year All Consumer Goods (in Billions of RMB) 126.8 287.5 179.2-2.4% Apparel Products as a Percent of Total Consumer Goods Sales 22% 23% 20% 19% 18% 17% 17% 16% 16% 16% 16% 16% 16% 12% 12% 1978 1980 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 CAGR (84 – 96) 2.6 158. 41 See Table 2. the consumer goods market has flourished.2 Consumer Expenditures and Buying Power With the development of the Chinese economy brought about by economic reforms.1-1.41 Urban 38 39 Source: China Statistical Yearbook. 1997.74 77.85 41. with an average annual growth rate of 38.1 260.5 970.4 511.4 707.0 824. 1992-1997.1% from 1995.2 135. 551. 40 China Statistical Yearbook. These data were reported directly in the China Statistical Yearbook prior to 1995.26 88.5 653. .9 115.

6 191. 293.14 residents spent more than the rural residents because of their higher income.6 784 921. 4-3.2-2. Stefanell (France. 23rd 1993). . even less than the per capita consumption data in Table 2. Jeanswest (Hong Kong. China first allowed foreign retailers to compete in China.3 397. p. December 28th 1992).S.46 the number of people who can afford to by these items is still limited.S..6 601. See Table2.S. 1997. Nike (U. and Benetton (Italy. Jan.6 1221 1578 1926 In 1992. 1992). Liz Claiborne (U.5 686. October 1994). 42 43 44 45 China Statistical Yearbook..42 Prices have been growing in this process. May 1993). Adidas (U.. Esprit (U. 4-2. 4-4.2-1 Growth of Annual Per Capita Chinese Income (in RMB)44 Year 1978 1980 1985 1989 1990 1991 1992 1993 1994 1995 1996 Urban Residents45 316 439 685 1261 1387 1544 1826 2337 3179 3893 4377 Rural Residents 133. 1997.2-3.3 708. some overseas retailers established department stores in China. Data in this column come from the data collected by the sample survey on the urban households. 1992). Sincere (Hong Kong). including Printemps (France). The pioneers were primarily name brands that provided licenses or franchises for specialty stores in China. Also. June 1992). Shuihing (Hong Kong) and Isetan (Japan). Mexx (Holland. These included Giordano (Hong Kong. 46 See Appendix A. Data source: China Statistical Yearbook. Although name brand apparel is sold at a relatively lower price in China than out of China. The possibility of the subjects concealing their real income may cause these data on the low side.. April 8th 1994).S.43 Table 2. 1993). Table 4-1.

.9% Non-Agricultural Residents 405 496 802 920 1089 1431 1568 1686 1925 2424 3027 3956 5044 5620 19. 1997.9% Agricultural Residents 138 178 347 376 417 508 553 571 621 718 855 1087 1479 1756 15.4% 47 Source: China Statistical Yearbook.2-2 Annual Per Capita Consumption of Consumer Goods (in RMB) 47 Year 1978 1980 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 CAGR (85 – 96) All Residents 184 236 437 485 550 683 762 803 896 1070 1331 1737 2311 2677 17.15 Table 2.

99 30. General Consumer Price Index 100.06 162.3 9.73 2110.42 584.2 527.5% Clothing/ Living Exp. NA NA 673.0% 13.33 70. 14.44 51.51 55. 116.4% 13.6 300.2% 48 49 Source: China Statistical Yearbook.7% 7.8 160.04 170. RURAL HOUSEHOLDS Living Exp.81 1671.74 19.9 Table 2.6% 13.63 619.34 3537.2 170.79 659.8 327.8% 7.7 12.86 45.8% 8.32 88.2% 6.0% 7. Table 5 for percent of urban and rural population in the total population of China.4% 14.3 135.8 181. .7 Clothing/ Living Exp.2 1278.2% 14.65 1016.64 240.21 317.08 Clothing Exp.16 Table 2. 12. 1997. p.01 769.5% 13. 267 Source: China Statistical Yearbook 1992-1997.6 302.0 106.2-4 Growth of Chinese Per Capita Annual Living Expenditures and Clothing Expenditures (in RMB)49 URBAN HOUSEHOLDS Year 1978 1980 1985 1990 1991 1992 1993 1994 1995 1996 Living Exp.89 1453.7% 14.2% 8.07 52.7 208.95 14.2 165. 1985 –199648 Year 1985* 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 *Note: Take the price in 1985 as 100.66 112.5 114.61 399 479.57 3919.36 1572.81 2851. See Appendix A. NA NA 98.47 Clothing Exp.9% 6.4 258.9 199.2-3 General Consumer Price Index.81 1310.

92 2.17 Table 2.2-7 Consumption Pattern of Rural vs.38 1.36 1. These data show per capita purchases of garments intended for men.06 5.19 0.83 2.56 3.45 3.81 2.77 Table 2. These data are not available after 1991.11 1.21 1993 1.32 1.10 1.16 0.20 0.30 0.09 1. 51 Source: China Statistical Yearbook.96 2.51 1988 0.47 1991 0.99 5.37 1996 1.18 0.47 1. women and children.62 0.65 3.28 1.37 0.40 0.10 1.84 2. These data are not available before 1992.76 1987 0.31 1.49 3.38 0. respectively.50 0.17 0.21 0. 1994.2-6 Annual Per Capita Garments Bought by Urban Households (in pieces)51 Year Men’s Women’s Children’s Total 1992 1.28 0.33 0.95 5.2-5 Annual Per Capita Garments Bought by Urban Households (in pieces)50 Year Cotton Synthetic Wool Silk Knit Total 1985 0.32 1.6% 70%-75% 25% 50 Source: China Statistical Yearbook 1992. women and children.10 1.39 3.12 5.22 0.10 1. .07 1.24 1990 0.51 3. It is not the average number of garments bought by men. City Market52 Levels High-grade softgoods Middle-grade softgoods Low-grade softgoods Rural Market NA 26% 60% City Market 0.56 3.55 1989 0.29 1.18 0.66 0.44 1.95 5. 1993-1997.40 1986 0.22 1994 1. These data show per capita purchases of garments of different types of material. 52 Almanac of China’s Textile Industry.20 1995 1.53 Table 2.

respectively.53 In 1996. Sometimes. Thus we use the term “pure RT” in the following text when it is important to indicate an RT that is not part of a joint venture. collective. JVEs exported US$7. There were 12. 143. SOE and joint-venture enterprises (JVEs). RTs are collectives owned by small villages and towns. except that the former private owners retained some control over the enterprises (typically receiving some portion of the profits and participating in the management of the company). a JVE is formed by breaking off part of a firm to become a new enterprise – other times an entire firm is transformed into a JVE when a foreign investment is made. . RT output was estimated to be 80% of total apparel output.1 Ownership Structure Before the 1950s.54 SOEs comprised the second largest number of apparel establishments.98% of China’s total apparel exports. p. for example by a district government. the volume of product produced. rural township (RT). Other collectives are owned by communities within urban environments. SOEs Collectives RT Urban Collectives Privately owned Foreign Owned JVE Inconveniently. JVE exports comprised 31. the term SOE designates only “pure” SOEs (that is not SOEs in joint ventures). There are several ways to characterize apparel firms in China. The output volume of RTs comprised 76. RTs (pure RTs or JVEs formed from RTs) are the largest apparel producers in China on almost every dimension – the number of enterprises. up 16. Industry Structure 3. By 1978. almost all of China’s apparel enterprises were collective & state-owned.55 In 1995.1956). they cut and sewed garments made of fabric provided 53 54 55 Almanac of China’s Textile Industry. Conversely. SOEs. and privately owned refers to only “pure” privately owned firms. or an SOE. In some ways. Tan-an. Privately-owned firms are owned by Chinese individuals. even though roughly 90 percent of the JVEs’ exports were “processing only” enterprises (i. or any other group of individuals. the term RT is used to designate both pure rural townships and JVEs formed with RTs.59 billion. this campaign was similar to nationalization.21% of the national apparel output in 1992 and 1993.e. The number of JVEs in the apparel industry grew rapidly in the early 1990s. those factories were converted into collective and state-owned enterprises (SOEs). a university. June 12. during the Campaign of Joint State-Private (from 1952 . a province. Collectives can be further subdivided into rural township (RT) and other (typical urban) collectives. 4.194 apparel JVEs in existence in 1995. a privately-owned firm.18 3.44% and 91. Dec. 1997. 1994. collective. or a county. or JVEs. most of the China’s garment factories were privately owned. Some foreign partners participate in the management of the JVE. Xinmin Night News.5% from 1994 of US$6. foreign owned. All firms are privately-owned.68 billion apparel products. SOEs are owned by the central government. A JVE may be formed between a foreign partner and a collective. 1995/ Jan. ‘China’s Ever Shining Industry: Apparel’. As a result of the economic reforms and open policies initiated in 1978. Foreign-owned firms are fully owned by foreign investors. Wu Qi-liang. China Textile & Apparel.7 points higher than the previous year. Then. In 1995. 1996. the ownership structure of China’s apparel industry has evolved into a co-existence of private. whereas others have only a financial investment in the enterprise. and exports.

West area includes Gansu.59 This geographic distribution of China’s apparel industry has been driven by the following factors: 1.465 5. having their own names. thereby leading to better market potential. there are more qualified workers in the coastal areas than the rest. Ningxia. China Industrial Economic Statistical Yearbook. Shenzhen. Xizang and Xinjiang (8 provinces in total).475 6. and the smallest number in the western provinces. Financially independent and compile their own statement of assets and liabilities. have authority to sign contract with other units. Shandong.56 Table 3. China Textile News Publishing House. . organization. Haikou. 1988-1994. Chinese Sewing Industry)58 Year SOE Total Collective Ownership NA 17. Tianjin and Zhejiang (12 provinces and municipalities in the total). Dalian. Midlands includes Anhui.612 NA 15. 58 Sources: China Economic Statistical Yearbook. Established legally.897 16.648 1987 1988 1989 1990 1991 1992 1993 1994 NA 613 642 681 729 NA 892 918 3. Zhuhai. location. able to take civil responsibility. Qinghai. The coastal area is China’s traditional location for its apparel industry as well as for upstream industries such as the textile industry and synthetic fiber industry. The legal units of Independent accounting refer to enterprises engaging in industrial production activities. Xiamen are all located in coastal areas.318 6. 59 Coastal area includes Beijing. Sichuan. 3. take liability.791 15. which meet the following requirements: 1.1-1 The Ownership Structure of Independent Accounting Units57 (Number of Establishments.408 6. 1988-1994. 1996. Shanxi. Heilongjiang. 2.008 16. Hebei.19 by the foreign customer) which has low value-added. Hubei. Qingdao. Hainan. Shanghai. Fujian.2 The Geographic Distribution of China’s Apparel Industry The majority of Chinese apparel factories are located in coastal areas. Liaoning. 3. Jiangxi.971 6. The next largest number of firms is located in the midland provinces.146 5. Henan. 2. In addition. Jiangsu.091 15. Guangdong. Guizhou. February 29. Shanghai.212 RT ownership (included in Total Collective Ownership) 7. The open door policy was first applied in the coastal areas and the main Economic Development Zones. Hunan. 56 57 The Information of China’s Textile Foreign Trade. Inn Mongolia.226 6. This area is of high population density and the people there with higher income and better education are more conscious of fashion than in other areas. Jilin. Process and use their assets independently. Ningbo. Guangxi. Shannxi and Yunnan (10 provinces in total).

making it attractive to foreign investors. p. The survey focused on the type of equipment and technology employed by each plant.3 The Distribution of Sizes of Chinese Apparel Establishments We have been unable to attain government data on the distribution of sizes of Chinese garment factories. Jiangsu. This wage gap puts coastal apparel factories under pressure to cut down their production. Zhejiang.04%). has increased the wage gap among the coastal. Zhejiang. Hebei. and about 30% are of small size (less than 200 employees). In 1995. There are relatively well-equipped infrastructures in the area. Meanwhile four provinces grew more than 25% in 1995: Anhui (53. Shanghai. and western provinces. 1996. or employ workers from the inland provinces. there were 12 provinces and municipalities with output of more than 100 million pieces. On average. Guangxi (32. and Yunnan (28. Liaoning. Henan. Sichuan. 60 Almanac of China’s Textile Industry. Shandong. although their location had shifted somewhat. Beijing and Tianjin. Fortunately. middle. . The sharp increase in labor cost. Shanghai. Jiangsu. The survey indicated that: 1. about 20% of the factories are middle-sized (200 to 500 employees). move the plants to the middle or west. Hubei.05%). Fujian. Shandong and Hebei continue to be the main sources of China’s apparel industry. In 1994. the Shanghai Meixu Fashion Company.0%). 2. In order of largest to smallest output. For example. Half of the China’s apparel factories are relatively large (over 500 employees per plant). apparel establishments in the coastal area are larger than those of the midlands and western areas. Shanghai. employs mostly workers from Hubei Province (a province west of Shanghai). Hubei and Tianjin. Liaoning. Hebei. Shandong. especially in the coastal areas. a Sino-Japanese JVE.60 The above data illustrated that the coastal provinces Guangdong. they were Guangdong.20 4.21%). 24. there were 11 provinces and municipalities whose apparel output exceeded 100 million pieces. 3. The company saves about half of its labor cost by employing non-Shanghai workers. Fujian. Anhui. the provinces were Guangdong. Guangdong (30. Jiangsu. In order of largest to smallest output. Sichuan. we conducted a survey of apparel establishments in July and August of 1995. Zhejiang. the value of their collective output comprised 90% of that of China’s total apparel output.

7 40 25. Shandong. 2.5 28. the majority of clothing Chinese people wore were made at home or in a tailor’s shop. at the establishment (i. and Zhejiang. In the survey. 62 61 Almanac of China’s Textile Industry. 3. In 1994.8 21 20 21. Percentages should be read across rows rather than columns.5 7. So provinces with a large output of agricultural products – which implies an abundant labor force in China – were chosen. such as Shandong. since their apparel industry are relatively welldeveloped. On June 21. Hubei and Jiangxi.1 79 38 20 137 Notes: NOE stands for the number of establishments in the category indicated.4 10 27 % 22. taking the place of CNTC as the administrative overseer of the apparel and textile industries.500 NOE 50 .9 % 22. the National Textile Industry Bureau was founded. . 1993.3-1 The Size of Chinese Sewing Establishments61 Size Region Coastal Midlands West Total >1.000 NOE 500 -1000 NOE 200 . apparel manufacturers were administrated by various central government ministries. Liaoning. Sichuan. Coastal areas and the three municipalities were chosen.5 % 100 100 100 100 13 11 4 28 28 7 2 37 18 8 4 30 18 9 8 35 2 3 2 7 2. p. Provinces that produce large quantities of cotton were also chosen. Jiangxi and Shanxi.8 23. 3. Xinjiang and Sichuan. Anhui.) On December 1st. Source: These figures are from a survey we conducted in July and August of 1995.4 18. which requires labor-intensive work.4 % 35. 1998.9 10 5.200 NOE <50 NOE Subtotal % NOE % 16. (Apparel enterprises owned by retailers were overseen by the Commercial Department. 1986. 24. firms administered by the CNTC represented approximately 40% of all apparel firms in China in number. 1996. From the 1950s to the mid-1980s. Tianjin.4 The Evolution of Apparel Industry Administration China’s ready-to-wear industry has developed gradually since the 1950s. they indicate the percent of all enterprises in the stated region in the designated size range. Before that time. Guangdong. the Central Government began an effort to transfer those apparel firms under The Light Industry Ministry to the China Textile Ministry to facilitate vertical integration across the textile and apparel industries as well as to increase the coordination between the two industries. Provinces with an abundant labor force provide enough labor resources to the apparel industry. such as Hubei. midland.62 On April 16. but produced approximately 60% of apparel output. Henan. including the Light Industry Ministry.21 Table 3. The sampling establishments in the coastal areas were drawn from Beijing. 137 enterprises from the coastal. individual factory) level. and western regions of China were sampled. The sampling enterprises in the midlands were drawn from Anhui. Henan. and Xinjiang. Liaoning.e. the China National Textile Council (CNTC) replaced the China Textile Ministry. These provinces were chosen because: 1. Hebei. The sampling enterprises in the west areas were drawn from Shanxi.9 20 20. Shanghai.

22 4. All manufacturing overheads are included. medical insurance.6 1. needles.63 5. etc.) is approximately 2/3. 1994 and 1996.) was recently established in China. and in 1995 it rose 35. A social security system (including endowment insurance. For example. Border) 70% 15% 0.1-1 Country Comparison: Production Costs (China & Selected Countries)65 Clothing & Footwear Productivity Absenteeism Avg. labor costs typically account for 30-40% of total costs.44 10.49 17.4% over the previous year.75 Notes: Exchange rates as of October 1995. Source: Kurt Salmon’s Associates (KSA) – 46 Country Cost Comparison Report.82 0.92 South Korea 65% 8% 0. RTs and JVEs didn’t have this responsibility.64 Table 4.1 Cost Structure For apparel firms that purchase their own fabric. Hourly Wages (including incentives) (in US$/hr) Wages Plus Social Costs (in US$/hr) Overhead costs per attended hr (in US$/hr) Cost per SAH66 Produced (in US$/ SAH) China 75% 7% 0. escalating wages. and thread. in 1994 it rose 54. so the overhead costs in an SOE are larger than in JVEs and RT enterprises.1 Profit and Cost Structure 4.54 Mexico (U. operating costs in both of the above cases have increased due to inflation.48 Germany 100% 10% 12. Sales.14 13.79 0.37%.54 8. etc. The Performance of China’s Apparel Industry 4. In recent years.22 31. . SAH stands for Standard Allowed Hour.49 1. administrative. SOEs are older organizations that traditionally had a responsibility to pay retirees.64 7. and corporate overhead costs are not included.47 0.48 0. buttons. electrical power and gas). in 1993 the price of cotton rose 12. 64 65 66 63 Almanac of China’s Textile Industry. rising utility costs (including water. For example. Thus. the cost of materials (including thread.81 2. the overhead expenses are just above 1/6. firms will pay into a social security fund rather than making direct payments to retirees in the future. labor costs are relatively low compared to material costs and overhead expenses. buttons. zippers and other supplies comprise the remaining 10%.43 Hong Kong 90% 6% 4. for a man’s suit.64 22. overhead expenses are 40-50%.18 Thailand 65% 10% 0.99 4.67 7.5%.00 0.06 0.1.04 USA 90% 5% 6. 1995.62 0. Cost per SAH is defined as the manufacturing conversion cost (not including materials) to produce a Standard Allowed Hour of direct labor. and labor costs are just below 1/6 of total costs SOEs have to pay retirees.S.51 UK 100% 9% 6. general.68 14. and increases in the price of raw materials.70 1.83 8.77 2.63 For apparel firms that use fabric supplied by their customers.

67 JTN Monthly.23 4.000 RMB. the government removed JVEs from this preferential treatment. For example. annual sales of 400 million.1. Ltd.000 to 300. JVEs have fewer taxes. The company had an annual output of 300.1-2 Tax Rates of Enterprises Enterprise Type SOEs ( large and middle scale) SOE s(small scale) and Collective Enterprises Private enterprises JVEs Tax Rate 55% 10%-55% (Progressive taxation) 35% 33% Note: The tax reported above is the central government tax of earnings.3 Working Capital Manufacturers for domestic market Apparel manufacturers face a relatively high-risk domestic market and need funds for working capital. Table 4. In August 1994. Value Added Tax A value-added tax (17%) was introduced at the beginning of 1994. Business tax This tax rate is 3% and is applied only to retailers. 4. which produces apparel mainly for the Japanese market. working capital requirements typically are lower. Manufactures mainly for exports For manufacturers who mainly do assembly for export.2 The Influence of Government Tax Policy Income tax Preferential tax treatments have been given to JVEs... lower tax rates and more preferential tax policies. For example. this preferential tax policy was cancelled for the JVEs that registered after January 1st. For example. February 1995.1. 1996. (in Zhejiang Province) had 36 million RMB of fixed assets..000 pieces in 1995. The government promised that enterprises procuring raw materials within China and converting them into products for exports would receive tax refunds. in 1995. Compared to enterprises with other forms of ownership. and required 80 million in working capital. . a JVE could be exempt from tax in its first two years of operation and need to pay only half tax in the next three years. However.67 The value-added tax refund rate dropped from 17% in 1994 to 14% in 1995. required working capital of 200. Shanghai Xinye Garment Co. Yixiu Children’s Wear Co. Ltd.

03 1990 5.4 Investment and Financing Manufacturers have few choices for financing their business. 1994 . 5% in 1980s.995 9.87 1989 6.010 8.204 37.241 17.17 1993 3. 1995-1997.96 1995 1. Table 4.239 14. leasing buildings and land is acceptable. Almanac of China’s Textile Industry.1-4 Investment in the Garment Industry (in Millions of RMB)69 Year Value 1986 20 1987 180 1988 290 1989 260 1990 270 1991 440 1992 720 1993 540 1994 503 1995 569 1996 721 Note: The data are for enterprises overseen by the CNTC.123 27.921 18.1.671 54.031 17.1-3 Capital Structure of the Sewing Industry (in Billions of RMB)68 Year 1988 1989 1990 1991 1992 1993 1994 Number of Enterprises 18.1. Source: Almanac of China’s Textile Industry.835 End of Year Working Capital 14.538 11. and less than 2% in 1995.017 17.239 Net Value of Fixed Assets 5.043 16.45 1994 2.886 35.170 4. 1989-1995. Sources: 1988-1993 data from China Industrial Economic Statistical Yearbook.871 7.499 16. 1994-1996 data from China Statistical Yearbook.5 Profit In recent years.216 21.667 11. The average profit rate of China’s apparel industry was 7-8% in 1970s.63 1992 3.656 26. For some manufacturers. 1995-1997.159 26. 4. the profit rate was negative. .439 Original Value of Fixed Assets 7. the profits of export oriented apparel manufacturers have dropped significantly. 1989-1994.706 17. Table 4.95 68 69 70 71 Source: China Industrial Economic Statistical Yearbook.650 41.561 15.03 1991 3.967 20.1-5 Average Profits per 100 RMB Sales in China Sewing Industry (in RMB)71 Year Average profits per 100 RMB Sales 1988 5.81 1996 -0.70 In 1996.24 Table 4.190 19. Bank loans are a common practice.

a private apparel company located in Shanghai. Feb. In recent years. SOEs have recruited non-local workers to fill their vacancies. Ltd. SOEs hired only local workers. 1996.2. of whom 104 are from rural inland areas (76. Table 4. For example. Enterprises of other ownership Enterprises of other forms of ownership typically hire more workers from rural inland areas than SOEs. labor turnover peaks around the Spring Festival. Shanghai Xinye Garment Co.25 4.8%).5 Garment Factory employs 314 workers... For example..2%. almost half of the workers of the Shanghai Xinye Garment Co. (a private enterprise) left the factory after the 1996 Spring Festival. Shanghai No.2-1 Labor Sources for Shanghai Xinye Garment Co. of which 72 workers (23% of the total) come from rural inland areas. The High Woolen Sweater Co..1 Labor Sources The average wages of China’s apparel industry are lower than those of other manufacturing industries in China.2 Labor Turnover Labor Turnover Generally. Province Local Anhui Hunan Shanxi Hubei Jiangsu Shandong Sichuan Number of Employees 28 19 9 4 48 11 9 4 4. In recent years. Local workers constitute 21. Ltd. For example.2 The Organization of China’s Apparel Industry 4. .2. Ltd. High Woolen Sweater.. 72 Report of Shanghai People’s Political Consultative Conference. Ltd. established four years ago. now has only 2 of its original 70 workers remaining in the factory. an estimated 60 million workers from rural inland areas have flooded the cities in coastal areas. also illustrates high labor turnover in private enterprises. Labor turnover is relatively low in SOEs compared to private enterprises. (a JVE) has 132 workers.72 State-Owned Enterprises In the past.

representing more than 80% of the workers in the industry.2. Contract workers By the end of 1993. approximately 38% of total. SOEs in the apparel industry started to set up contract relationships with their workers. . up 15% from 1996. Private enterprises Other than a few large firms.4 Worker Training State-Owned Enterprises In State-Owned Enterprises. an employee signs a contract with the company under mutual consent. private enterprises have no special training programs for new employees. almost all employees work on a contract basis. Ibid. the average wage of an employee in a State-Owned apparel enterprise in Shanghai was about 800-950 RMB per month in Shanghai. additional workers are hired. apparel manufacturers paid their workers an hourly wage. there were 2. In the early 1990s. 4.26 4. The contract period in SOEs typically is longer than that in enterprises with other forms of ownership. and paid pensions to workers after they retired. 1994. Private enterprises In private enterprises.73 By 1995.75 73 74 75 Almanac of China’s Textile Industry.5 Wages State-Owned Enterprises Before the economic reforms. An employee’s wage was based on the number of years he or she had worked in the factory and on the employee’s absenteeism record. The contract period is usually between one to three years. After more than three months of probation.Management Relations State-Owned Enterprises SOE used to offer their workers lifetime employment.3 Labor .74 4. most apparel enterprises employ piece-rate compensation systems. 1996. the number of contract workers had grown to 9.944 million. sewing workers are paid a basic wage plus a piece-rate. Almanac of China’s Textile Industry. In 1997. Now. After a standard production quantity is produced.7 million contract workers in China’s textile industry. new workers must be given a three-month training program upon hiring.2. During the training period they are provided a basic salary. During busy seasons.2. but was not dependent on a worker’s productivity.

a piece-rate system is used. at least in the Shanghai area.2-2 Organizational Structure of Shanghai Xinye Garment Co. (SinoJapan JVE) Chairman of the Board General Manager Sales Dept. 15% higher than 1996. Note that in 1996. in part because of the heavy historical and social burdens (such as support of retired workers) they bear.27 Private enterprises In private enterprises. the average annual wage across all manufacturing industries in Shanghai was 10.6 Organizational Structure SOEs typically have more complicated organization structures than JVEs and RT enterprises of the same size.. Table 4.051. Production Dept. wages in the apparel sector are roughly in the average range for manufacturing wages. General Affairs Warehouse 76 Ibid. . Ltd. During busy seasons. Technical Dept.2-3 shows the organizational structure of an SOE. the average wage of a sewing worker in a private enterprise was 700-800 RMB per month on average in 1997.2. Financial Dept. Thus.76 The average annual wages of manufacturing industries in China are showed in the Appendix A. Table 2. or about 838 RMB per month. the workers can get 950-1350 RMB per month because of extra shifts and hours. 4. Table 4. In Shanghai.2-2 shows the organizational structure of a JVE. Table 4.

. (SOE) Head-quater of Industry City General Designer Image Planning Department General Engineer Intel. Planning Dept Garment Producing Enterprises ffiaris Supervision Office Finance Settlement Center Marketing Subsidiaries . Personnel Department President Office Information Dept. Management Center Supply Dept.28 Table 4. Marketing Dept.3 The Organization Structure of Shanshan Group Co. Commercial Affairs Department Other Industry Subsidiaries Stock & Security Office Garment Designing Center General Accountant President Investment & Development Affa Department ris Legal Adviser Office President Assistant Audit Department Finance Department Limited Shanshan Liability Company Vice President Development Dept. Ltd.2.

2 Equipment and Facilities Sources of equipment and facilities Most Chinese garment factories are equipped with domestic machines.3. and the ETON2001 and ETON2000 models from Switzerland. 77 78 Shanghai Apparel Association. and estimated 20 sets of the Unit Production Systems (UPSs) were in use. which produces hotel uniforms. whereas domestic machines dominate more than 80% of apparel factories in the middle and western regions. a few plants organize their production processing using some of the concepts of a modular system.1 Types of Production Systems Employed Progressive Bundle System In China. The majority of these were imported from USA. By June of 1998. 1998.78 Our survey of 137 apparel manufacturers showed that 50% of apparel plants in the coastal areas use mainly imported machines. Table 4. Ltd. However. For example. 4. 1998. . The domestic models are F1001 and F1002. about 50 sets of UPS were used in China. imports of industrial sewing machinery declined 53% and of computer embroider machinery declined 41%. In recent years the amount of imported machinery has declined.. in 1997. China Sewing Machinery Industry.2 billion of sewing machines and accessories were imported. the United States. modular production systems have not been applied in the China’s apparel industry. 41% lower than 1996. US$3. and Germany. while imports of family-used multi-function sewing machine increased 82%. Japan and Spain – examples include Gerber’s GM001 and GM300 models.3. a group of six or seven workers using basic equipment can easily change two to three different styles in one shift. However. imported equipment and more sophisticated technology are widely used in most recently established enterprises – especially by export-oriented firms. Among these imports.29 4.3-1 shows the breakdown of imported versus domestic equipment by region. among which about 20 were imported.3 Technology & Facilities 4. in the Beijing Wanfu Garment Co.. For example.77 Modular Production System To date. the Progressive Bundle System (PBS) remains dominant in apparel assembly. Zhang Chonghe. Switzerland. Unit Production System By the end of 1994. The imported machines are mainly from Japan.

8% 30. . Imp.4% 50.2% 69.9% 43. Chinese Apparel Industry General Corporation.8% 13. Data source: Survey conducted by China Textile University.3-3 shows China’s imports and exports of sewing machine equipment from 1990 to 1995.1% Dom.9% 71.380.1% 65.8% Middle & West 13.6% 34. Dom.467 179 235 186 429 47 337 Percentage 49. July – August 1995.060 2.156 1.2% 56.6% 44.8% 12.9% 20. Imported Machinery79 Machinery Sewing Machine Over-lock Machine Button Attaching Machine Covering Stitch Machine Straight Buttonholing Machine Dom.3-2 Age of Equipment (By Number of Factories)81 Year of Purchase Coastal Middle & West Total Percent of Total 43.1% 12.781 6.Aug.9% 100% 1992 and before 1993 1994 From Jan. Dom. Dom.177 323 522 131 254 133 137 337 Percentage 86. 79 80 81 Data source: Survey conducted by China Textile University. Imp. Dom.8% 21. about 1.586 2.9% 79.1% 55. Imp. Table 4. Imp. Lian Leyin. = Imported machinery Age of equipment From 1980 to 1990. Imp.30 Table 4.000 industrial sewing machines were imported into China.3-1 Quantity of Domestic vs. Coastal 6.932 1. July – August 1995. valued at US$280 million.2% 87.2% 87.4% 10.4% 28.9% 23.80 About half of the enterprises in our sample bought a large number of machines after 1992. in 1997 the sewing machinery industry exported 4 million sets of sewing machines. The Developing Garment Industry in China. Table 4. 1995 Sample Totals: 32 19 20 8 79 28 11 12 7 58 60 30 32 15 137 According to Chinese Customs records. = Domestic (China-made) machinery Imp.

3-4 shows the adoption of different systems through 1994. 1. Major suppliers of the CAD systems used in China are Gerber of USA.3-3 Trade of Clothing Machinery (By Millions of US$)82 Year Imports Exports 1990 190 27 1991 275 34 1992 399 43 1993 480 53 1994 394 81 1995 320 102 4. China Textile Leader. grading. 1. Source: Supplementary Issue of Garment Machinery News. 2 in Beijing. China Textile Leader. 1998 No. . CAD systems will be used by 5% of the Chinese industry by the end of 2000. ‘The Development and Application of Apparel CAD / CAM System in China’. 1997 CAD Customers 3-10 10-70 120-200 200-250 250-400 530 Coverage Rate (%) 0. 1998 No. 85 Ibid. There are 13 ETON 2002 sets in use in China – 3 in Dalian. Wen Lishen. 1 in Guangdong and 1 in Shanghai (the one in Shanghai is used for teaching purposes).3.15 0. 86 Data source: Wen Lishen.3-5 Development & Application of CAD in China’s Apparel Industry86 Time 1981-1985 1986-1990 1991-1992 1993-1994 1995-1996 By Aug. 2 in Hubei. ALEXIS of Switzerland. 1994.3-4 Number of CAD Systems Imported into China (As of 1994)83 Suppliers Gerber Lectra Invesronica Date of First Introduction to China early 1980s the late 1980s 1992 Customers (in 1994) 63 30 23 An estimated 530 sets of CAD systems had been installed by China’s apparel industry by mid-1997. ‘The Development and Application of Apparel CAD / CAM System in China’. Lectra of France. Table 4. 4 in Jiangsu.85 Table 4.94 1.3-5 indicates the rate of adoption of CAD systems in China.02 0.31 Table 4. and marker making rather than for product design.84 Most firms use the CAD systems primarily for pattern making.42 0.53 0. and some domestic companies. Table 4. Table 4. According to one estimate.3 Technology Adoption CAD/CAM Recent years have seen the beginning of the use of Computer-Aided Design (CAD) systems in China’s apparel industry.10 82 83 84 Source: Chinese Customs. Invesronica of Spain.

27. a Hong Kong brand of casual wear. of which price increases represented 19. an American brand. Enterprises that have registered trademarks can apply for a UPC bar code at the China Article Numbering Centre. Customs and MOFTEC. In January 1994.S. and 9. 4.87 Jeanswest. Currently. In total. the China’s Ministry of Foreign Trade and Economic Cooperation (MOFTEC) announced that computer networks should be used to reduce the time required to clear China’s textile exports through U. communicates with every point of sale through its computer network. Its main stores collect daily data stored in floppy disks from each POS. but they do not use them in the manufacturing process.3. Barcodes are popular in supermarkets in China. Table 4. Many enterprises have registered for barcodes. Customs.3% of the 28. quota licenses are checked through computer networks linking U. Electric Data Interchange (EDI) was first introduced in China after the Shekou Shenzhen EDI Conference in January 1990.S. in China in 1995. 87 88 The Shanghai Branch of China Article Numbering Centre.8% of apparel manufacturers produce garments made of woven fabrics only. and volume increases represented 9.4 Product Mix Our survey indicated that 62. and send the data to company headquarters in Hong Kong by e-mail.5% produce garments made of both woven and knit fabrics. Bar-code and Information System. . but are seldom used in department stores.7% increase.4% of the increase. There were more than 100 Apparel Design and Research Centres and 35 Quality Inspection Stations. China’s total apparel exports increased 28. The headquarters of Richini.7% manufacture garments made of knit fabrics only. They mainly use barcodes for exports and supermarkets.710 Research Institute of the Ministry of Aeronautics and Astronautics Industry and was applied in retailing POS in 1993.9. 1995. scans bar codes at the point of sale (POS). No. In Shanghai there were about 17 apparel manufacturers using the UPC bar-code system in 1995. including two State Inspection Centres.88 The Imitative Three-Dimension “magic mirror” system was developed by No.7% in value in 1997.32 Bar-codes The UPC/EAN bar-code system has been used since China joined the International Article Numbering Association.3-6 shows the composition of China’s apparel exports in 1994.

33 Table 4.75% 17.80% 37.7% 6.09% 19.232 1.20% 26.698 1.39 5.48% 14.98% 33.3% 11.020 0.70 16.156 Annual Growth Rate -14.35 5.57 3.789 1.875 0.74% 89 Data Source: China Customs.53% 6.76% 25.736 4.54% 5.53% -0.91 1.966 1.037 -2.01% 8.3-6 Product Mix of Apparel Exports in 199489 Fabric from which apparel was made: Total Woven Cotton Woven Man-made Fibre Woven Silk Woven Wool Woven Total Knits Cotton Knits Man-made Fibre Knits Wool Knits Quantity (in billions of pieces) -2.02 5.862 Annual Growth Rate 30.88% 20.595 6.65% 33.413 0.329 0.47% 10.429 0.07% 29.57% 26.53 Annual Growth Rate 14.322 2.89% Average Unit Price (US$/piece) -2.10% Value (billion US$) 15.13% 52.60% 32.75% 10.86% 8. .15 -0.

while the order sizes of fashion products are much smaller. There are different minimum order sizes for different types of fabrics. In general. Table 4. Ltd..S.3. With the materials supplied by customers The order size of apparel exports depends heavily on the demands of foreign customers.3. in 1995 the minimum order size for the Shanghai Xinye Garment Co. 4. The average minimum order size in our sample was 200 to 300 pieces. The range of order sizes provided by any one firm is large. Order size depends on the demands of the customer and on minimum fabric order quantities. there are trends towards increasing variety and smaller order quantities. Lead times are heavily dependent upon the delivery of the materials supplied by the customer and the factory’s productivity.000 to 4.150 men’s coats.000 yards for woven fabric and 1. it is two months for delivery of fabric from the U. minimum order quantities are 3. Order size depends on the type of garments that the factory is to assemble. The Appendix describes the detailed performance characteristics of these firms. With the materials procured by apparel firm The minimum order size for textile fabrics was 3. Fabric lead times are 20-40 days for closer countries such as Japan.6 Lead Times With the materials supplied by customers Lead times depend on factors such as fabric and accessories delivery.3-7 Standard Lead Times of Xinye Garment Co. and Canadian customers are usually larger than those from Japanese and European customers. The order size ranges from tens of or hundreds of pieces to more than one million (in the case of some T-shirts). For example.S.000 to 4.5 Order Size In the domestic apparel market. 30-40 days Order ----> (Confirm samples) Contract 10-15 days ----> Delivery of materials 20-40 days ----> Bulk Production 10-15 days ----> Delivery of garments to Japanese customers . and seasonal fluctuations. we studied order sizes and lead-times at 16 establishments (five trading companies and 11 apparel manufacturers). Ltd. In 1998.000 pieces.3. In 1996. For example. an order of T-shirts from Wal-Mart was 400.7.34 4.000 pieces for each style of each color. Apparel production quantities are not constrained when the customer supplies the fabric. A set of lead times (from contract signing to delivery) for one firm is shown in Table 4.000 yards in our sample. For example.. order size. Basic products such as shirts have large fabric order sizes (the maximum may be hundreds of thousand yards).. It usually takes 40-60 days for the materials to be delivered to China from oceanic countries. Orders from U. was 283 silk shirts and the maximum order size was 12. we studied these trends in nine establishments.

It usually takes one to two months to finish the fabric (two months for yarn-dyed fabric). There is substantial room to reduce the lead times of apparel to the domestic market by reducing fabric lead times. it takes two to three months for manufacturing with supplied materials and three to four months (no more than half a year) when materials must be procured by the apparel firm. The average lead time for fabrics was 40 to 90 days. the shortest was 25 to 50 days. Fabric lead times are determined by the fabric manufacturer and the type of the fabric.35 With the materials procured by apparel firm The average lead time in our sample when materials had to be procured by the apparel firm was three to six months. In total. it typically takes only one month or so to produce and deliver the product. . After the arrival of the materials.

3 2.1 4.1 3.3 2.0 2.5 2.1 2.0 4.5 4.8 3.2 3.5 2.5 3.S.5 3.0 3. 91 Source: KSA European interviews.5 2.3 3.5 3.0 3.3-8 Qualitative Ranking of Highest Volume Countries and Regions by U.9 2.0 3.0 2.3.0 4.5 4.3 3.0 2.36 4.8 2. 92 Eastern Europe includes all the nearer European countries and the Baltic States.4 3.0 3.8 3.8 3.1 3.0 3.0 4.0 4.8 2.9 2.3 4.6 3. 1995.3-9 Qualitative Ranking of Highest Volume Countries and Regions by European Customers91 Country & Region Malaysia North Africa Singapore China Eastern Europe Hong Kong Taiwan Thailand Bangladesh Russia/Ukraine India Sri Lanka Note: 5=best.0 4.0 2.4 3.0 2.8 Table 4.5 2.7 Comparison of Apparel Sourcing Options The tables below show comparative rankings of service. Results incorporate rankings from 14 leading North American apparel companies.1 2.0 3.5 2.0 Average 3.5 3.3 Cost 3.5 4. 1=worst 92 Service 3.0 2.7 3. Customers90 Country & Region Sri Lanka Singapore Hong Kong Thailand Philippines Taiwan China Caribbean Basin Malaysia Indonesia Note: 5=best.8 3.0 2. .3 3.3 4.5 3.0 4.0 3. 1995.8 3.5 4.5 3.0 4.5 3.0 3.1 3.5 3.7 Average 4.8 3. and European customers.3 2.S.3 3.0 4.0 3.5 3.7 Cost 4.0 4.5 4.3 3.8 2.9 2.5 Delivery 3.8 3.0 Quality 4. Table 4.4 2.0 3.0 4.5 3.3 3.5 4.4 3.0 4.7 Delivery 4. and cost across different regions by U.0 2.0 3.0 3.0 2.3 2.0 1.0 2.3 Quality 4.8 90 Source: KSA North American interviews. quality.3 4. delivery.3 3.5 2. 1=worst Service 4.5 4.5 3.3 4.5 2.

4.<------>Chinese Office <---------> Retailer of Foreign Jobber Textile Mfr.------------------------------------ 4. Apparel Mfr.<-------> Jobber <--------> Retailer Textile Mfr. Department stores.<----> Apparel Mfr.<----------------(Direct Sourcing) Pattern E: Apparel Mfr. and Pattern B is often seen in small and middle cities or towns. Direct Mail). Pattern E is most widely used in China.4 The Retail-Apparel-Textile Pipeline 4. Pattern A: (Typical retail types: Specialty Stores.<----> Wholesaler<-----> Retailer Pattern C: (Typical retail types: Speciality Stores. .2 Export Channel Three export channel models are shown below.4.<----------------------------> Retailer Pattern B: (Typical retail types: Speciality Stores.<-----> Apparel Mfr. <------->Domestic Agency <---->Foreign Jobber<----> Retailer (SOE or JVE) Pattern F: Apparel Mfr. street fashion peddlars). Department stores. Pattern C is seldom adopted in China.…) Textile Mfr. 1994. Retail Chains.37 4.1 Domestic Channel There are dozens of large wholesale markets in China’s domestic apparel pipeline.93 Pattern A is popular in large cities.<-. --------------------------------------------------------------------------------------------------------DOMESTIC OVERSEAS --------------------------------------------------------------------------------------------------------Pattern D: Apparel Mfr. About 70%-80% of garments are sold using channel pattern A shown below.<------------------------------------->Foreign Jobber <--> Retailer (SOE who can export directly or JVE) 93 Almanac of China’ Textile Industry. Textile Mfr.

both domestic and foreign-funded. In a negotiating bid. estimated demand in world markets and estimated quantities available from domestic suppliers. The transfer of quota among enterprises is allowed. August 14. July 1995.95 The 1999 quota for textile and apparel products will be auctioned in two ways: public bid and negotiating bid. a small part of quota was auctioned publicly to promote the export of high value-added garments. Textile Information. 1998 May 10.4.96 94 95 96 Paul Leung. . an enterprise will get the quota if its bidding price and quantity meets the requirements of the Bidding Office that is in charge of the bid. Textile Asia. The public bid will be conducted through a new “Electronic Bid System.3 Quota China’s Ministry of Foreign Trade and Economic Cooperation (MOFTEC) manages the quota. China’s Ministry of Foreign Trade and Economic Cooperation. including five government files. 1998. The quantity of quota offered for auction is decided by MOFTEC based on the actual quantities exported in the previous year. After 1992. 7. International Business.38 4.94 In 1998. MOFTEC announced a new set of regulations for auctioning all apparel quotas by open bids.” in which enterprises are required to send their electronic bidding document before a certain time. In May 1995. new regulations on quota management were issued. Apparel quota is auctioned through freely submitted bids. intending to receive close scrutiny from apparel enterprises. and the computer system will decide who gets the quota based on the bidding price and quantity. No. The Provincial Foreign Trade Department assigns quota to local enterprises that have licenses to export and are required to transfer foreign exchange to the government.

structural. China’s apparel industry is now in the process of institutional. and geographical transition. China is the leading apparel exporter in the world.39 Summary The research conducted by China Textile University has led to the following conclusions: 1. China has played an important role in the global textile and apparel economy. 4. China’s apparel industry is still dominated by the mass-production of basic items. and has influenced significantly international apparel trade. China owns the largest apparel industry in the world. and has made rapid progress in recent years. Facing both overseas competition from newly emerging apparel exporting countries and increasing labor costs (especially in coastal areas). However. with its imports growing dramatically since 1978. With the huge pool of cheap labor and abundant raw materials. China’s apparel industry has been and will continue to be one of the pillar industries in China. 2. manufacturing and merchandising. Driven by consumers’ demand. 3. . the industry has gradually introduced new technologies for designing. China’s apparel industry must evolve towards more variety and smaller order size to meet the changing demands of both domestic and international markets. To maintain a leading role in the apparel market.

60 5.66 4.43 3.30 3.59 3.40 Appendix A Tables Table 1 The Top 20 Textile & Apparel Marts (1995) Name Shaoxing China Light Textiles City (Zhejiang) Haicheng Xi Liu Apparel Wholesale Market (Liaoning) Wujiang China Dongfang Silk Market (Jiangsu) Shenyang Wuai Commodity Wholesale Market (Liaoning) Luqiao Chinese Daily-use Commodity Market (Zhejiang) Luoyang Guanlin Commercial Market (Henan) Ruian Commercial City (Zhejiang) Huzhou Zhili Textiles & Embroidery Market (Zhejiang) Hangzhou Sijiqing Garments Market (Zhejiang) Ji Mo Garments Wholesale Market (Shandong) Luqiao Small Commodity Market (Zhejiang) Zibo Zi Chuan Garments City (Shandong) Ningbo Light Textile Market (Zhejiang) Zibo Zhou Chuan Textile World (Shandong) Nantong Sanxing Embroidery City (Jiangsu) Miaoqiao China Sweater Market (Jiangsu) Wenzhou Commercial City (Zhejiang) Puning Liusha Fabrics Market (Guangdong) Puning Liusha Apparel Market (Guangdong) Jiaxing Tongxiang Puyuan Sweaters Market (Zhejiang) Data source: Almanac of China’s Textile Industry.21 8.97 4.40 5.22 4.50 3.30 3. 1996 Sales (bn.49 3.07 .31 15.98 7.48 3.00 9.00 13.80 4. RMB) 17.50 5.

41 Table 2 Average Annual Wages of Manufacturing Industries in China (Unit: RMB) Province Beijing Tianjin Hebei Shanxi Inn Mongolia Liaoning Jilin Heilongjiang Shanghai Jiangsu Zhejiang Anhui Fujian Jiangxi Shandong Henan Hubei Hunan Guangdong Guangxi 1985 1284 1097 1047 1133 1124 1075 1054 1074 1329 1052 1045 971 1023 1021 1086 1021 1042 1079 1363 1086 1986 1438 1354 1219 1318 1254 1247 1182 1252 1570 1240 123 1134 1201 1152 1269 1165 1178 1238 1487 1277 1987 1742 1620 1408 1501 1343 1465 1350 1403 1864 1504 1465 1300 1357 1273 1454 1305 1348 1499 1765 1498 1988 2094 1942 1688 1763 1565 1797 1626 1641 2247 1851 1798 1534 1642 1504 1840 1522 1614 1727 2329 1760 1989 2369 2264 1871 2096 1767 2008 1772 1838 2624 1977 1990 1737 1926 1641 1999 1711 1759 1915 2766 1892 1990 2701 2429 2058 2318 1945 2199 1894 1903 2877 2180 2177 1940 2170 1792 2250 1938 1937 2099 3023 2099 1991 2985 2734 2220 2503 2117 2396 2042 2129 3374 2378 2391 2105 2461 1934 2405 2071 2163 2247 3511 2312 1992 3518 3116 2539 2727 2357 2704 2270 2326 4317 2883 2827 2360 2856 2167 2653 2374 2430 2551 4178 2699 1993 4621 3979 2882 2756 2580 3092 2565 2389 5612 3654 3741 2716 3568 2393 2909 2542 2819 3043 5482 3509 1994 6242 5022 3870 3348 3339 3972 3324 2898 7020 4660 5054 3483 4714 3091 3800 3191 3785 3824 6838 4457 1995 7570 6020 4514 4087 3681 4523 4132 3628 8890 5674 6059 4246 5931 3939 4729 4034 4479 4536 7913 5311 1996 8821 6828 4822 4509 4095 4766 5140 3611 10051 6062 6644 4751 6666 4586 5038 4550 4859 4665 8570 5511 .

1986-1997 .42 Table 2 The Average Annual Wages of Manufacturing Industries in China – Continued (Unit: RMB) Province Sichuan Guizhou Yunnan Xizang Shaanxi Gansu Qinghai Ningxia Xinjiang 1985 1077 1130 1165 1963 1096 1388 1558 1291 1402 1986 1223 1266 1294 2179 1248 1508 1746 1512 1594 1987 1377 1412 1506 2274 1427 1739 1972 1718 1760 1988 1646 1657 1795 2525 1695 205 2231 1959 2028 1989 1882 1875 2037 2584 1900 2323 2387 2242 2248 1990 2107 2171 2316 3093 2089 2531 2535 2473 2449 1991 2311 2351 2540 3116 2246 2715 2652 2665 2617 1992 2528 2683 2876 3355 2441 2986 2905 2925 2897 1993 3092 3149 3410 3410 2758 3623 3161 3006 3164 1994 4457 3918 4632 4167 3476 4498 4184 3737 4138 1995 4622 4704 5677 4789 4093 5488 4761 4746 5220 1996 5095 5009 6680 5211 4560 5906 5177 5190 5673 Source: China Statistical Yearbook.

class brands of apparel were emphasized.1 *9. Since the survey was aimed at people with medium to high income. Census & Statistics Department.7 3.091.5 15217.500 1. June 1998.0 21319.4 16. those without double asterisk given at the end of 1990.3 12728.5 9894.4 United Kingdom NA NA 161.4 6000.1 9.200 – 2.261.1 1548.5 628.2 7695.1 918.3 7668. Data Source: Hong Kong External Trade.6 4389.7 Japan NA 386.092.005.3 17624.8 8486.6 389.2 754.613.8 **3.4 7643.000 – 17.7 2052.2 *16.2 3090.5 10453.488 – 3.9 *7. those without asterisk given at the end of 1992.9 4813.5 1293.2 4334.2 772.9 7.482.2 1504.9 France NA NA NA NA NA NA Table 4-1 Price Range of Name Brands in Shanghai Market.43 Table 3 Hong Kong Re-exports of Articles of Apparel & Clothing Accessories From China to Selected Major Countries of Destination (1984-1995) Unit: HKD Million Year 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 Notes: * Data given at the end of 1991. Hong Kong.3 24446.7 25829.492.9 China 68. .7 516. 4-3.3 6297.660 2.8 1903.000 –3. ** Data given at the end of 1989.7 587. Dec.8 *2.350.5 268.or high.9 *1.8 963.3 Germany NA 339.2 1770..8 12594.4 1.4 1297.318.1 1511. Trade Statistics Dissemination Section.4 15031.9 1762.700 97 Table 4-1. and 4-4 show the well-accepted price range of certain name brands in the Shanghai market. The source for these data is a market survey conducted by China Textile University.2 488. 1985—1995 USA 2985.000 2.8 1649.1 3330. Men’s Suit97 Brand Name Ferre Balenciage Pierre Cardin Pei luo meng Brand Origin Italy France France China Production Place Italy Hong Kong Tianjin Shanghai Main Price Range (RMB) 15.324.596.2 3829.6 21008.1 2.5 1558.1 NA NA 1277. the medium.2 5684.252.4 8849 8360.1 154. 4-2.

S. U.400 – 1.71 26.500 1. Sportswear Brand Name Nike Adidas Lining Brand Origin U.08 80.S. Casualwear Brand Name C.S.888 1.800 940 – 1. China Production Place Shanghai Shanghai Beijing Main Price Range(RMB) 200 .800 200 – 800 100 – 400 Table 4-4 Price Range of Name Brands in Shanghai Market.488 – 1.44 Table 4-2 Price Range of Name Brands in Shanghai Market.63 72.K Esprit Kangsai Brand Origin U.41 26.86 71.29 73.92 19.63 98 China Statistical Yearbook.S. U. 1997.37 71.63 28.59 73. p.37 27.39 23.250 Table 5 Population Structure: Rural vs.04 29.S.14 28.38 70.500 200 – 350 Ports Mysheros Table 4-3 Price Range of Name Brands in Shanghai Market. Urban Year 1978 1980 1985 1990 1991 1992 1993 1994 1995 1996 Percent Urban Residents 17. 69.96 70.62 29.37 Percent Rural Residents 82.61 76.000 – 17. China Production Place Shanghai Shanghai Hubei 98 Main Price Range (RMB) 700 – 900 200 – 420 80 . Women’s Suits Brand Name D&G Anne Klein Sisley Brand Origin Italy U. . Italy Canada China Taiwan Production Place Italy Japan Guangdong Fujian Shanghai Main Price Range(RMB) 15.

dying. Min.several thousand pieces. 2. sewing. Most frequently -.tens of thousand of dozens (with quota).--Tens of thousand.-. Lead Times and Order Sizes in the Sample Firms in 1996 1. LTD § Main product: knitted garments § Order size: Max. LTD § § § Main product: silk garment with hand painting Order size: Lead time: Most frequently --3.. L/C (letter of credit) should have arrived one and a half month ahead the delivery.more than one million pieces (T-shirt). 4. thread buying. hand drawing. unit cutting. Four months with own materials. Min--60 pieces Two months with materials from USA and three months in general..45 Appendix B Order Sizes and Lead Times in Sample Case studies are critical to gaining a deep understanding of China’s apparel industry. Shanghai Silk I/E Corporation § § Order size: Lead time: Max.--one to two hundred pieces . and delivering) Depending on the delivery of the materials. LTD.000 pieces One and a half-month (with stable supply of 100% silk grey) (Dying.000 pieces / one style in one color § § Lead-time: three months in general (for pattern making. contract signing. 5. high-temperature decanting. Shanghai New Union Textiles I/E Corporation Pudong Company § § Order size: Lead time: Max.—1.. § Order size: Max.-. The Itochu Co. packaging.--ten million pieces (white T-shirt). Shanghai Wellstone Apparel Co. The following research examined the lead times and order sizes of various firms in 1996 and 1998. colour fixed water-cleaning and dry-cleaning. About three months with own materials. sewing) 3. weaving. Shanghai Artwaves Garment & Ornament Co. Min.

10 days § Lead time: .46 6. Shanghai Swell Co. LTD § § Order size: Lead time: Max. Wujiang Tung Ah Feather Products Co.13.. LTD § Order size: Max.one to two thousand pieces Three to six months 7.. 25-45 days for dying fabric while 30-50 days for yarn-dyed fabric For both above. -. -.40 days Min. -.4.000 . LTD § § Order size: Lead time: Min. the sewing time is 25-35 days § 10. LTD § Order size: Max. -.--13..--several hundred pieces Most frequently --several thousand pieces 25 to 50 days on average with material supplied by Japanese customer 8.fourteen thousand pieces Min.two to three hundred pieces Most frequently -.000 pieces Average -. East Grace Corporation Wuxi China § § § Order size:with materials supplied by customer.forty thousand pieces. Min. LTD (Sino-American) § Order size: Max.. -. Shenzhen Inwear Co. Shanghai Xinye Garment Co.000 yards Lead time: with materials supplied by customer. one to two months for fabric delivery with own materials.2.000 dozens Min. min is 50 pieces for each style each colour With own materials.--500-600 dozens Most frequently --1.two to three thousand pieces 30 to 50 days with materials supplied by Japanese customer § Lead time: 9. -. Gurrand Investment (Shanghai) Co.000 dozens. -. min order size of fabric is 3..300-500 pieces Most frequently -.000 dozens 14-45 days § Lead time: 11. Min.

-. 1-2 months on average § Lead time: 15. 3-4 months on average With supplied materials. -.tens of pieces .000 pieces (short pants) Min. LTD § Order size: § Lead time: Max. Business news-.500-1.400. Shanghai Garment Group Co.47 12.--less than 500 pieces Most frequently --2-3 thousand pieces Note: orders from American customers are much bigger With own materials. Shanghai Garment I/E Corporation (Japanese Division) § Order size: Min.. Min. LTD § Order size: § Lead time: § Order size: § Lead time: Max -. Min.--tens of pieces to one or two thousand Most frequently --thousands of pieces to tens of thousands pieces 60-80 days 13.Shanghai Xinwin Attire Factory § Order size: Max--200.-. half a year for large order.. Shanghai High Sweater Design Corporation 14.one to two hundred pieces for women’s shirts Three months for common fabrics Half a year for complicated fabrics (Time for L/C is half and a month at least) 16.000 pieces Min -. Shanghai Worldbest I/E Co.000 pieces Average one to two months.thousands to tens of thousand dozens.

000 pieces depends on the style and specification of the garment 2.000 pieces one month 4. § § § § § Product: knitting casual wear Target consumer: Price level: Order size: Lead time: common 80-250 RMB per piece 2. § § § § Product: women’s fashion Target consumer: Price level: Order size: young and middle age professional women 350-1. § § § § § Product: casual wear Target consumer: Price level: Order size: Lead time: young active persons 150-350 RMB 1200-100. Ltd. Ltd.000 . Beijing White Collar Apparel Co.10. § § § § § Product: women’s fashion Target consumer: Price level: Order size: Lead time: young fashionable women 290-510 RMB per piece 100-3.000 per style 45 days or so 5. Ltd.48 Lead Times and Order Sizes in the Sample Firms in 1998 1.300 RMB / set 600. § § § § § Product: men’s shirt Target consumer: Price level: Order size: Lead time: common men 110-230 RMB per piece 1.000 pieces 45 days . Wuhan Taihe Industry Group Co.000 pieces one year 3. Kangsai Group Co. Shanghai Smart Apparel Co.000-5. Ltd. Guangdong Zhong Shan City Haoli Clothing Co. Ltd.

900 RMB per piece 100-3. Shanghai Oniya Fashion Co. Shanghai St. § § § § § Product: cashmere sweater and coat Target consumer: Price level: Order size: Lead time: high level 800-1.000 or more one to two weeks 9. Shanghai T&A Fashion Co. Ltd. § § § § § Product: hand-knitting wear Target consumer: Price level: Order size: Lead time: fashionable women aged 20-40 100-300 RMB per piece 3-5 piece per style three to five months 7. Edenweiss Cashmere Apparel Trading Co.000 pieces 45 days for an order of 3. Shanghai Li Li Min Knitting Co.49 6. Ltd. § § § § § Product: women’s wear Target consumer: Price level: Order size: Lead time: elegant young women 300-600 RMB per piece 1.000 pieces .000 pieces one to two weeks for an order of 100 pieces 8. Ltd. § § § § § Product: women’s fashion and professional wear Target consumer: Price level: Order size: Lead time: medium to higher level women aged 20-30 400-800 RMB per piece 100-3.

to urban and rural households and institutions. (7) consumer goods purchased and then sold by second-hand shops. Excluded under this heading are: raw materials. tools sold to enterprise. as well as retail sales by firms to non-agricultural households. daily-use articles for cultural life and recreation. books. new and old commemorative stamps. operational income of urban public utilities. and (10) commodities sold by farmers to non-agricultural households and institutions. first-day covers. stamps sold at post offices. and Chinese compatriots in Taiwan. and so on. the purchasing power of consumer goods and the circulation of money. power. . retail. enterprises and institutions.50 Appendix C Explanatory Notes for Major Terms Apparel Industry refers to apparel manufacturing establishments. catering. Consumer Goods include food. medicine and medical instruments and fuels. Illustrating the supply of consumers’ goods through various channels to households and institutions to meet their demands. books. (6) newspapers. newspaper and magazines. schools. (3) grain and non-staple food. (2) food and fuel sold to canteens of institutions. and manufacturing establishments in other industries of different type of ownership. gas production and supply establishments from the supply of their products. stamp albums and other stamp-collection articles sold by stamp companies. commissioned sales at second-hand shops. The retail sales of consumer goods include: (1) commodities and housing (including building materials for the construction or repair of housing) sold to urban and rural households. enterprises. Hong Kong and Macao during their stay in the mainland of China. herbs and medical facilities purchased by households. income of water. magazines directly sold to households and institutions by publishers. (9) commodity housing buildings sold to households by urban construction and real estates management agencies. overseas Chinese. clothing. Total retail sales of consumer goods refers to the sum of retail sales of consumer goods by wholesale. equipment. institutions and state farms for production purpose: commodities sold to trade establishments for re-selling. (5) Chinese and western medicines. fuels. (8) stoves and other heating facilities and liquefied gas sold by gas companies to households and institutions. (4) consumer goods sold to foreigners . institutions or state farms and sold directly to their employees or their canteens. the total retail sales of consumer goods is an important indicator for the study of people’s livelihoods. clothing. and sale of commodities among farmers. and commodities produced by enterprises. special stamps. daily articles and fuels sold to military personnel. military units and to canteens of hotels and hostels that only serve their guests.

Total consumption refers to the total final expenditure of consumption of goods and service by the resident units in a certain period time. Rural population refers to the population of counties excluding those living in towns or cities in the county.500 permanent residents with 85% of non-agricultural population. canteens markets and the peasants classified into nine items: food. City refers to cities established with the approval of the central government.000 with 2. real estates tax. imputed value of consumption of owner-occupied dwellings and consumption goods in the form of physical wages obtained by residents. etc. traffic. i. fuels and other commodities.) and various expense by individual laborers for business purposes. heath care.51 Disposable income refers to the actual income of the surveyed households that is available for daily life. Expenditure on commodities refers to expenses of the sample households for the purchase of commodities from shops. but excluding fines and confiscation. Further adjustment was made in 1984: a town is defined when the area is the location of a countylevel government agency. the number of permanent residents for a town was raised to 3. clothing. including the purchase of various kinds of goods for consumption and outlays of various kinds of services. Through 1963. Public consumption refers to value of total output of government minus receipts from sales. factories. etc. etc.. Resident consumption refers to total final consumption of goods and services during a certain period of time. newspaper and journals. and the percentage of non-agricultural population to 70% or 2.000. of which 50% or more were considered non-agricultural population. daily-life necessities. the value of products which are provided by public service organizations for government. Included are those for own consumption or for gifts to relatives and friends. cultural and recreational articles. Town refers to towns established with the approval of the provincial government. pharmaceutical and medical treatment. small mining area. such as rents.000 permanent residents. mountainous area. catering industries.) Total consumption includes personal consumption and public consumption. tourism area. license tax. excluding outlays for the purchase of building and production. since 1964. including expenditures on various commodities and expenses for non-commodity items such as culture and service. e. or when the area has a population of below 20. a town was defined as consisting of more than 2. or municipality directly under the central government. or when the area has a population of more than 20.000. small harbor. excluding financial support and gifts to others. Urban population refers to the population living in areas under the administration of city or town forms of government.000 nonagricultural population. tax payments (such as income tax. resident units purchase goods and services domestically and abroad in meeting their own demands on physical life. (This excludes non-resident units’ expenditure of consumption within national territory. or border area with non-agricultural population of below 2.000 with 10% or more of non-agricultural population. autonomous region. cultural life and education. Living expenditures refers to total expenditures of the sample households for daily life. e. loss. or when it is a remote area. i. cultural life and mental life. and government paid for the products which are consumed by the public later. . hosing and building materials..

52 Appendix D Project Team This report is asub-project of Harvard Center of Textile & Apparel Research (HCTAR). Professor of Fashion Merchandising. Fashion Institute Members of Project: • Wang Yueping • Wei Yan • Fang Ping Major Contributors: • Hu Ruilin • Chen Xiuhua • Wang Dengming • Tang Li • Chen Zhan • Zhang Mingjie • Gong Chen • Zhou Aiying • Liu Yan . Business School • Yang Yixiong. Professor of Marketing. China Textile University Project Leaders: • Gu Qingliang.

154-160. 1995. . Zhang Zhiming. China Statistical Yearbook. Research On the Developing Strategy of Shanghai Knitting Industry Enterprises. People’s Republic of China. The Development and Application of Apparel CAD/CAM Systems in China. Beijing. Almanac of China’s Light Industry Publishing House. Beijing. p. Textile and apparel Exports of the Three Areas of China to the United States. Journal of China Textile University. 11. p. 1985-1995. Xi Yujun.T. Textile Asia.. Jan. 8.N Monthly. 1998. Wang Yueping. Almanac of China’s Textile Industry. Beijing. Regular News. State Statistical Bureau. 1992-1997. China Textile Press. The Information of Textile Foreign Trade. China Statistical Publishing House. China Textile News Publishing House. People’s Republic of China. Almanac of China’s Economy Publishing House. Wen Lisheng. 6. KSA North American Interviews. Almanac of China’s Light Industry. April. J. No. A Collection of Outstanding Articles Winning Chen Weiji Prize at Fourth Session. Xie Yingan.53 References 1. Structure Adjustment and Technological Innovation. 17. KSA European Interviews. Cheng Zhenghua. July 1995. 1997. Moves in Asia. 3. Feb. No. 1986-1994. Beijing. Apr. 1. 16. 1988-1995. China Industrial Economy. 4. Shanghai Fashion & Accessories Society. A Collection of Treatises on Clothing and Accessories in China. Textile Press of China. Nov. 10. 1995. 3. Towards the Garment Market of 2000. p. 1995. The Editorial Board of the Almanac of China’s Economy. 2. A Selection of Treaties of Textile Academy Symposium. Paul Leung. 5. No. Pan Jingming. 14. 25. China. Beijing. Changing Reobtaining an employment to Restarting an Undertaking.46 Country Comparison Report. 7. Quota to be Auctioned. China Textile Leader. 1995. 1998. The China Industrial Economic Statistical Yearbook. Kurt Salmon’s Associates (KSA) . 74-81. Sun Zhigang. 1988-1997. 1994-1997. 1996. 1997. 41-45. China Statistical Publishing House. 1995. 13. Beijing. 15. The Development Strategy Research Center of Light Industry. 9. The Editorial Board of the Almanac of China’s Textile Industry. 1998. Almanac of China’s Economy. 12. State Statistical Bureau. Shanghai. 5.

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