The Internet reached China in 1994. Over the next two decades, it has gone on to phenomenally innovate the manufacturing and commercial sectors of the country. The vital shifts brought about by the Internet have been integrated into the structures of traditional industrial markets, because of which China’s e-commerce sector has shown.
Chinese tech, retail, food, manufacturing and almost anything one can think of, has established a significant reliance on technology. Today, in China, online commerce is the most mature in the world. Successful Chinese brands have created an ecosystem that mixes web-related sales with physical stores, and key players like AliPay and WeChat Pay have now been fully endorsed by shopkeepers, restaurant owners and customers. In a country where credit cards have never been commonly accepted, businesses switch directly from cash to payment applications. All of this has led to the world’s fastest growing fashion economy.
How Local and Trade Policies Enabled Chinese Clothing Manufacturers
Since 1995 China has been the biggest garment and apparel exporter in the world. In 2005 during the financial crisis bubble, China’s contribution to global clothing and garment export reached 24 per cent, reaching 35% at the moment. The large market share shows growing competitiveness of the garment and apparel industries in China, 95 per cent of whom already hold private properties.
This success is much more remarkable as it arose at a period when whole apparel and textile business was at the verge of collapse due to the global financial crisis.
Grants provided by central government to manufacturers
2006 was the year of Chinese strategic planning. In addition, a number of clothing industry-specific development strategies were drafted among the 5 Years Guideline. The circular was issued on appropriate legislation to make sure that the textile industry step up in the international market and it was intended to provide financial assistance to support clothing industries.
There were three major policy initiatives that are seen as vital factors:
- Improving independent ability of the industry to innovate and establishing brand names on the world market
- Optimization of industrial structure and development of manufacturing technology and equipment
- Restricting inefficient, polluting and power-wasteful production facilities
Trade promotion fund
In all these plans, the highest priority was given to developing technology and innovation ability. The circular on relevant plans to encourage the transformation of clothing industry, and helping the textile trade go global, was approved special funding by the government. Early in 2006, a separate incentive was launched with 560 million RMB granted separately for new technical projects. Along with that, local governments were also had been reported to give loan interest subsidies to support clothing manufacturers.
A number of policies and initiatives have been taken by the state to fund clothing business in the form of special grants and tax forgiveness.
The restructuring portion was conducted at the central level, while the “going global” portion was designated to local bodies that were required to create their own financing projects with assistance from the state.
The state had initiated a handful of brand evaluation and promotion strategies like the “Ten Thousand Miles March for Brand Building” and industries associated with clothing brands were granted with special funds.
Bigger brands of clothing companies are now realigning their export production with local and neighboring regional markets. The Chinese apparel industry’s upgrading success has been facilitated by a huge local textile sector. The state also keeps on playing a significant role in the upgrade of the Chinese apparel and clothing industry. A few factors which includes state, market pressures have ultimately lead to advanced apparel additions in China.
Economics of Cross Border E-Commerce and Chinese Clothing Manufacturers
We said it once and we’ll say it again, China leads the way in the world of e-commerce. About 40 per cent of the total global e-commerce trade is taking place in China today. The rapid expansion of this industry has also driven significant growth via cross-border trading, both domestic and overseas.
There has been widespread acceptance that economic as well as social benefits come from process of how e-commerce encourages business Innovation and economic system development. The productive experience of China with trade has had a positive impact on the transformation of the economy’s consumer goods sectors and on economic reform.
One of which being enabling direct-to-consumer diversity for Chinese suppliers and manufacturers.
With practical growth as well as a constantly updating consumer market, e-commerce has made it easier for medium and small size businesses to compete. In the “two-sided markets” generated by marketplace enterprises, such as Alibaba, “engaged customers” are the most in-demand. The very innovative arm of this sector is usually driven e-commerce-focused clothing firms as e-commerce allows suppliers to be closer to customers, and both customers and suppliers to become more directly involved in creating value.
This connectivity is conveying change to all areas of china’s economic system and inspiring global growth, and this unique environment is vastly accelerating developments in physical and online trade, with China serving as a launching point for new technologies.
Rise of Chinese Clothing Manufacturers in E-Commerce
Currently, e-commerce development in China can be characterized as follows
- Digital payment
- A strong trend of online shopping/e-commerce shopping festivals
- Robust online-to-offline (O2O) model
- Permeability of e-commerce in both rural and urban regions
Clothing was advantaged by being a running, high profile industrial sector. Clothing is the largest consumer category of online retail sales in China and before the coronavirus pandemic, online apparel purchase in china was at its peak, relatively much higher than any other product. As we mentioned before, this trend benefitted small and medium sized businesses of clothing, that have had more notable advantages in online retail selling.
Source: Business of Fashion
Specialized Online Retail Sites
This refers to sites that sell particular items in different categories. Like, Dresslily, an online clothing store for women across borders.
Online-to-Oﬄine E-Commerce (O2O)
Offline retailers reach more buyers via the online marketplace by using O2O websites. Suning, an O2O website, depends on digital platforms online channels to update and then take customers into warehouse/stores. The horizontal platform/online market place establishes strong partnerships with physical retailers to create more touch points for buyers.
Platforms that enable various local firms and vendors to sell their products. JD.com, Taobao, Alibaba and Tmall, focusing on local markets; and global online platforms, like AliExpress & Light In The Box, focus on cross border commerce.