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Customs Statistics: China'S Clothing Export Analysis From January To May 2023

2023/7/3 14:00:00 0

According to Chinese customs statistics, in the first five months of this year, China's clothing (including clothing accessories, the same below) exports totaled US $61.38 billion, a slight decrease of 1.1% year on year, and its overall performance was better than that of textile exports, which declined by 9.4% in the same period. In May, affected by the end of cumulative order shipment release effect and higher base last year, China's clothing exports returned to the decline channel, with a year-on-year decline of 12.2%, resulting in the cumulative exports in the first five months from positive to negative. Faced with the adverse conditions of weak global demand and increasing trade environment challenges, China's garment export industry actively explores hot markets, innovates trade models, stabilizes export scale, and constantly explores new space for survival and development.

China's clothing exports from January to May

Export decline has improved since March

From January to May, China's clothing exports fell by 1.1%, which is better than the abnormal export situation caused by the surge of foreign demand inventory and epidemic from October last year to February this year (exports fell by 13.6% in the fourth quarter of last year and 14.7% in January and February this year). Compared with the conventional state before the epidemic, clothing exports in the first five months still increased by 23.9% compared with the same period in 2019, which is still at a high level from the perspective of the historical trend of the industry (clothing exports in the whole year of last year increased by 19.5% compared with 2019).

The export momentum of woven clothing is stronger than that of knitted clothing

Affected by industry characteristics, costs, preferential trade policies and other factors, China's knitting apparel manufacturing industry has significantly larger scale of relocation than the woven industry, and the order transfer speed has accelerated. From January to May, China's export of knitted apparel reached 26.55 billion US dollars, down 5.4% year on year; The number of exports was 8.03 billion, down 5.8%; Export prices increased slightly by 0.6%. Woven clothing exports reached US $27.02 billion, up 3.5% year on year; The export volume was 5.04 billion pieces, a slight decrease of 0.8%; The export price increased by 4.3%. The export of clothing accessories was 5.9 billion US dollars, up 6.6%.

The export of cotton clothing to the US and Western markets has accelerated to decline

It has been a whole year since the implementation of the US "Xinjiang related Act", which not only seriously affects our export of cotton products to the US, but also has a negative chain effect on other western developed markets. From January to May, China's export of cotton knitted apparel reached US $10.6 billion, down 12.8% year on year; The export of cotton tatting clothing was US $8.64 billion, down 4%. Among them, the export of cotton knitted and woven clothing to the United States decreased by 33.7% and 26%, to the European Union by 27.2% and 27.6%, and to Japan by 24.3% and 18.9%, respectively. In contrast, the export of chemical fiber clothing maintained a steady growth. In the first five months, the export of chemical fiber knitted clothing was 12.7 billion US dollars, unchanged year-on-year; The export of chemical fiber woven clothing was 15.45 billion US dollars, up 10.7%.

The outlets of main categories are different in temperature

From January to May, the main categories of export growth include: the export of suits/casual suits increased by 11.1% year on year; Shirts increased by 2.5%; Knitted T-shirts increased by 1%; Bras increased by 4.7%; Socks increased by 5.1%; Scarves/ties/handkerchiefs increased by 26.7%. The categories with a slight decline in exports include: overcoats/winter clothing with a slight decline of 0.1%; Pants slightly reduced by 1.1%; Skirts slightly decreased by 0.5%. The categories with obvious decline in exports include: underwear/pajamas declined by 6.7%; Sweaters fell 9.7%; Baby clothing decreased by 21.1%; Sportswear/swimwear decreased by 9.2%; Gloves decreased by 4.5%.

Emerging markets grew rapidly, and the proportion of traditional markets dropped significantly

Affected by Sino US economic and trade frictions, weak market consumption, purchase transfer and other factors, China's clothing export flow is undergoing structural changes. In the first five months, the growth rate and market share of exports to traditional markets such as the United States, Europe and Japan declined, while exports to markets such as ASEAN, South Korea, Australia, Russia and Central Asia maintained a rapid growth. The five major markets of the United States, the European Union, Japan, the United Kingdom and Canada accounted for 48.1% of China's clothing exports, a year-on-year decrease of 8.7 percentage points.

From January to May, China's clothing exports to the United States reached US $12.5 billion, down 16.7% year on year; It accounted for 20.4% of China's clothing exports, a year-on-year decrease of 3.8 percentage points. Exports to the EU reached 9.37 billion US dollars, down 19.9%; Accounting for 15.3%, down 3.6 percentage points. The export to Japan was 5.08 billion US dollars, down 7.1%; Accounting for 8.9%, decreasing by 0.5 percentage point. Exports to ASEAN reached US $6.76 billion, up 19%. ASEAN is the only positive growth market among our four major apparel export markets, accounting for 11%, up 1.9 percentage points. Since last year, ASEAN has surpassed Japan as our third largest apparel export market.

From the perspective of major regional markets, from January to May, exports to countries along the "Belt and Road" reached 17.85 billion US dollars, up 23.1%. Exports to RCEP member countries reached US $17.28 billion, up 7.6%. Exports to the six GCC countries in the Middle East reached US $2.24 billion, up 11.8%. Exports to Latin America reached 3.63 billion US dollars, up 0.9%. Exports to Africa reached 4.19 billion US dollars, up 41%. Exports to five Central Asian countries reached 4.32 billion US dollars, a sharp increase of 63%, of which exports to Kazakhstan reached 1.77 billion US dollars, a sharp increase of 260.8%. From the perspective of major single country markets, exports to South Korea, Australia and Russia were 2.77 billion, 2.4 billion and 1.51 billion US dollars, up 15.7%, 7.8% and 48.3% respectively; Exports to the UK and Canada were 1.62 billion and 940 million dollars, down 18.7% and 14.5% respectively.

The export of central and western regions grew rapidly, while the proportion of eastern provinces and cities declined

From January to May, the top five export regions, except Zhejiang, showed a downward trend. Zhejiang's exports reached US $12.73 billion, up 1.3% year on year, while Guangdong, Jiangsu, Shandong and Fujian's exports reached US $10.3 billion, US $7.13 billion, US $6.36 billion and US $5.7 billion, down 10.7%, 17%, 8.4% and 6.7% year on year respectively. The top five export provinces and cities accounted for 68.8% of the country in total, a year-on-year decrease of 4.9 percentage points. The total exports of 20 provinces and cities in the central and western regions increased by 34.9%, accounting for 22% of the total exports, with an increase of 5.9 percentage points. Among them, the exports of Xinjiang, Hunan, Sichuan and Guangxi reached US $42.2 billion, US $1.64 billion, US $1.25 billion and US $1.16 billion respectively, with a sharp increase of 80.4%, 14.9%, 69.6% and 193.1% respectively.

China's market share in developed countries continues to decline

From January to April, China accounted for 19.4% of America's clothing imports, a year-on-year decrease of 2.9 percentage points; Its share in the EU was 24.8%, down 3.1 percentage points; Its share in Japan was 51.4%, down 2.6 percentage points; Its share in the UK was 22%, down 3.2 percentage points; Its share in Australia was 59.6%, down 2.1 percentage points; Its share in Canada was 27.9%, down 2.8 percentage points. Among the developed markets, the market share of South Korea only increased, accounting for 31.1% of South Korea's imports in the first four months, an increase of 1.4 percentage points. China's share in the EU and Japan remained basically stable last year, but has declined significantly since this year, which shows that the "de sinicization" offensive launched by the United States is spreading to other developed markets.

02 International market situation

Europe and the United States import downturn, Japan rebounded

As the engine of global clothing trade, the import demand of the United States is still in a downturn, and the EU is also in a decline. From January to April, the United States imported 27.81 billion dollars of clothing, a year-on-year decline of 22.9%. EU clothing imports reached US $31.44 billion, down 9.8% year on year. UK clothing imports reached US $7.09 billion, down 13.5% year on year. Canada's clothing imports reached US $3.81 billion, down 1.7% year on year. Australia's clothing imports reached US $3.02 billion, down 4.2% year on year.

Among the major developed markets, only Japan and South Korea saw growth. In the first four months, Japan and South Korea imported clothing worth US $8.57 billion and US $4.23 billion respectively, up 3.7% year on year.

Major garment exporting countries slowed down significantly

As global demand weakens, major garment suppliers are facing the difficulty of insufficient orders. Even Vietnam and Bangladesh, which saw brilliant growth last year, are no exception. Their exports have slowed down significantly and the decline rate is much faster than that of China. From January to May, Vietnam exported $12.3 billion of clothing, down 17.8% year on year. From January to April, EU exported US $14.31 billion of clothing, up 1.2%; Bangladesh exported 14.28 billion US dollars, down 8.5%; Turkey's exports reached US $6.46 billion, down 6.3%; India's export was 5.81 billion US dollars, down 14%; Cambodia exported 3.71 billion US dollars, down 15.4%; Pakistan exported 2.67 billion US dollars, down 15.7%; Indonesia exported 2.62 billion US dollars, down 29.1%. In horizontal comparison, China's exports declined slightly by 1.1%, performing well among major garment exporting countries.

The neighboring countries still have a high dependence on Chinese yarn and fabric products. From the perspective of China's fabric exports from January to May, they all showed a sharp decline. Fabric exports to Vietnam declined by 13%, Bangladesh by 24.9%, and Cambodia by 18.5%. The general decline in demand of garment producing countries for China's textile intermediate products also reflects that clothing exports of Southeast Asia and other countries are difficult to improve in the short term.

03 Trend Outlook

The prospects for global economic growth have been widely lowered

On June 6, the World Bank released the latest Global Economic Outlook Report, which predicted that the global economic growth would decline from 3.1% in 2022 to 2.1% in 2023. Among them, the growth rate of developed economies is expected to decline from 2.6% in 2022 to 0.7% in 2023; The growth rate of emerging markets and developing economies other than China is expected to decline from 4.1% in 2022 to 2.9% in 2023. It is estimated that the economic growth of the United States will be 1.1% and 0.8% in 2023 and 2024, respectively. It is estimated that the economic growth of the Eurozone will slow down from 3.5% in 2022 to 0.4% in 2023.

US terminal consumption still shows resilience and inventory pressure remains

In May, the US CPI rose 4.0% year on year, the smallest increase since March 2021. Clothing retail sales remained stable, indicating that the current US consumption is still in a moderate cooling channel, but still has strong resilience. In April, the U.S. clothing inventory/sales ratio continued to decline by 0.8% compared with the previous month, indicating that retailers are still in the inventory reduction cycle. 36% of enterprises expect the inventory level to return to normal in the second half of this year, while 21% expect the inventory problem to continue until the first half of 2024. Data from Descartes Datamyne, an American research company, also showed that in May, the sea container traffic from Asia to the United States decreased by 20% year on year, including 27% for clothing. The excess inventory of the US retail industry has not been eliminated, and the import demand for consumer goods continues to be weak.

Household consumption in the euro area is sluggish, and there is a technical recession

In May, CPI in the euro area increased by 6.1% year on year, falling back quickly from the previous 7.0%. Inflation cooled faster than expected, but still remained high. For two consecutive quarters, the GDP of the Eurozone showed negative growth, and there was a weak "technical recession", which cast a shadow on the economic performance of the EU. Germany, the largest economy in the EU, has had two consecutive quarters of negative GDP growth. Eurostat said that in the first quarter of this year, household consumption fell by 0.3%, dragging down the euro zone economy, while government spending fell by 1.6%, and goods inventories dragged down economic growth. In April, retail sales in the euro area were flat, while high inflation and concerns about economic slowdown continued to depress household spending.

The purchasing power of yen fell to the lowest level in history

Since this year, the exchange rate of the yen against the dollar has fallen by nearly 9%, and the purchasing power of the yen has dropped to the lowest level in nearly 50 years. According to the data of the Ministry of General Affairs of Japan, Japan's CPI rose by 3.2% year-on-year in May, 21 consecutive months of year-on-year growth. In April, the average monthly real consumption expenditure of households fell 4.4% year on year, falling for two consecutive months, and the decline was the largest since February 2021 (6.5%). From January to April, Japan's textile and clothing retail sales totaled 2.8 trillion yen, up 2.5% year on year, still down 22.1% from the same period in 2019.

Looking forward to the export situation in the second half of the year, challenges and opportunities coexist. In terms of opportunities, first, the market inventory pressure is expected to ease, and demand is expected to go out of the trough. Maersk said that import demand will lag behind consumer demand before the surplus inventory squeezed in 2022 is sold. It is expected that if consumption continues to maintain at the current level, the inventory backlog will be reduced, import demand will pick up sometime this year, and the second half will rebound from the first half. Second, emerging markets present growth opportunities, and enterprises can adjust their layout in a timely manner. For example, after the Russian Ukrainian crisis, some brands withdrew from the Russian market, forming a large market gap, which also provided opportunities for our enterprises to develop the Russian and Central Asian markets. Third, since the implementation of RCEP, ASEAN has become the highlight of China's clothing export growth. The clothing export to ASEAN in the first five months has increased by 47.6% over the same period in 2021 (the yarn and fabric export to ASEAN in the same period has only increased by 8.4%).

The RCEP agreement continued to release dividends, combined with strong economic growth in Southeast Asia, and new business forms such as cross-border e-commerce have huge development potential. Even if the trend of industrial transfer is obvious, it is still an important destination for Chinese clothing brands to go to sea. Fourthly, cross-border e-commerce exports still maintained a rapid growth, which made up for the decline of traditional trade exports to some extent. Temu surpassed Shein to become the world's largest download shopping application. In May, American consumers spent 20% more on Temu than on Shein. According to foreign media reports, Shein expects sales to increase by 40% this year. E-commerce launched through Tiktok, Amazon and other platforms also maintained a strong momentum. Fifth, since the beginning of this year, the RMB has depreciated by nearly 4% against the US dollar, giving foreign trade enterprises a certain competitive advantage, which is conducive to improving export profits, stabilizing orders and stabilizing the market. Sixth, the low base effect formed by the downward trend of China's clothing exports since last September will support exports in the second half of this year, especially in the fourth quarter, and form a situation where exports are low before and high after.

In terms of challenges, the first is whether the global economy can stabilize and when demand will rebound, the second is the uncertainty of trade rules between the United States and Europe, and the third is the fluctuation of exchange rate. All these require the industry and enterprises to take precautions, closely track and properly respond.

In the post epidemic era, the global clothing supply chain has undergone profound adjustment, and the international political and economic environment, trade pattern, and market rules have changed significantly. Clothing export enterprises face unprecedented challenges. It is believed that with the support of the national policy of stabilizing foreign trade, China's garment export industry can withstand the pressure, overcome difficulties, stabilize the existing market and open up new development space.