CHINA APPAREL MARKET UPDATE 2019Asia Distribution and RetailJun 2019PART 1: MARKET OVERVIEW AND COMPETITIVE LANDSCAPE ANALYSIS TABLE OF CONTENTSKey Takeaways……………………………………….p1Market Overview…………………………………p2Movement of Local Apparel Brands………..p13 Movement of Foreign Apparel Brands….p27KEY TAKEAWAYS1China’s apparel market faces headwinds•The apparel market continued its uptrend in 2018, posting the highest yoy growth since 2014 •However, mounting economic uncertainty is posing significant challenges for the apparel market•Sales growth of the market is estimated to decelerate to 3.5% and 3.2% in 2019 and 2020 respectivelyWomenswear remains the largest sub-sector ; childrenswear and sportswear show vast growth potential•Both womenswear and menswear sectors have shown some improvements in sales after several years of decline led by growing saturation•Childrenswear has delivered strong growth momentum following the full implementation of two-child policy starting January 2016•Sportswear posts the highest sales growth among all other key apparel sectors •But due to overall macro uncertainty, sales growth of all apparel sub-sectors is expected to decline in 2019. Specialist retailers, department stores take hold in China apparel distribution•Apparel sales at department stores have been falling over the years amid stiffer market competition and challenges from e-commerce players•Internet retailing has kept delivering strong growth in recent years, making it the fastest-growing retailing channel in China’s apparel marketMarket share of top 5 apparel brands, 20181.Adidas, 1.9%2.Nike, 1.9%3.HLA, 1.1%4.Uniqlo, 1.0%5.Anta, 1.0%Local apparel brands accelerate expansion at home and abroad•Diversifying product lines to increase market size to invigorate brand values•Launching flagship stores and concept stores to boost brand image•Entering new markets and expanding store networks overseas to ramp up international presence Foreign apparel brands seek opportunities in China; yet, some struggle to make headway•Foreign players continue to crack the lucrative China market•A number of players have expanded local store networks and launched their first/ largest global flagship store in the country•Yet, some failed to make a profit and finally exited the market2Market OverviewMARKET OVERVIEW- CHINA’S APPAREL MARKET FACES HEADWINDSSales of apparel in China, 2014-2020Source: Euromonitor International; compiled by Fung Business Intelligence 31,622.81,714.11,810.01,927.92,077.42,149.92,217.86.2%5.6%5.6%6.5%7.8%3.5%3.2%0%1%2%3%4%5%6%7%8%9%05001,0001,5002,0002,500201420152016201720182019e2020ebillion yuanyoy growthChina’s apparel sales reached 2,077.4 billion yuanin 2018, increasing at a rate of 7.8% yoy, the highest yoy growth since 2014. Driven in part by the consumption upgrading trend and stable demand among local consumers with improved living standard and higher income growth, the apparel market regained its growth momentum in 2017 and continued the uptrend in 2018. However, mounting economic uncertainty is posing significant challenges for the apparel market. Sales growth of China’s apparel market is estimated to decelerate to 3.5% and 3.2% in 2019 and 2020 respectivelySALES OF KEY SUB-SECTORS By category, womenswear remained the largest sub-sector of China’s apparel market in terms of sales in 2018.Both sportswear and childrenswearsaw double-digit yoy sales growth in 2018, outperforming that of womenswear and menswear. But due to overall macro uncertainty, sales growth of all apparel sub-sectors is expected to drop significantly in 2019. Sales of key sub-sectors of China’s apparel market, 2014-2020Source: Euromonitor International; compiled by Fung Business Intelligence 4783.8828.9873.8928.5999.11025.71048.8470.3491.7512.0537.7572.6583.5592.8127.1140.0157.1180.0209.1234.7261.0148.3166.9190.4221.5264.8286.7310.40%5%10%15%20%25%020040060080010001200201420152016201720182019e2020ebillion yuan Sales of womenswearSales of menswearSales of childrenswearSales of sportswearyoy growth of womenswearyoy growth of menswearyoy growth of childrenswearyoy growth of sportswearSALES OF KEY SUB-SECTORS - WOMENSWEAR: YOY GROWTH PICKS UP IN 20185Sales of womenswear in China’s apparel market, 2014-2019Source: Euromonitor International; compiled by Fung Business Intelligence Market share of womenswear in China’s apparel market, 201848.1%Source: Euromonitor International; compiled by Fung Business Intelligence After several years of decline as a result of growing saturation, the womenswear sector picked up pace in 2017 and 2018 with sales growth rising to 6.3% yoy and 7.6% in 2017 and 2018 respectively. That said, due to the overall market uncertainty, sales growth of womenswear is estimated to drop significantly to 2.7% in 2019. 783.8828.9873.8928.5999.11025.77.4%5.8%5.4%6.3%7.6%2.7%0%5%10%15%20%02004006008001,0001,200201420152016201720182019ebillion yuanSales of womenswearyoy growth of womenswear470.3491.7512.0537.7572.6583.53.8%4.6%2.8%5.0%6.5%1.9%0%...
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