Market Analysis of Fashion and Apparel Industry of China - Coursework Example

Market Analysis of China Market Analysis of China Introduction While considering the emerging markets, it can be said that China is one of the largest emerging markets in this world. It will not be incorrect to state that China is maintaining its rapid growth and level of consumption among people is increasing. As China is a developing country and an emerging market, it is sustaining its growth. There are different industries that consider China as an opportunity to invest their products. Therefore, in this paper market analysis of fashion and apparel industry of China will provide an understanding of key aspects of doing business in China. Detailed analysis of emerging market in China will help to analyse the business environment, trends, risks, industry segments, opportunities and equity markets of China fashion industry. In addition, some of the social, cultural, legal and environmental aspects will provide deep understanding of Chinese fashion and apparel market and their norms, values and customs will also be evaluated in this paper. 1. The local business environment- Key industry segments, opportunities and Trends in the selected market It can be said that China is the largest country that has maximum business opportunities to invest in business because of its large number of population. It is the reason due to which China is known best for the local business environment (Lardy, 2014). There are increasing the number of international brands that are driving the Chinese apparel and fashion industry. However, the private and local, domestic players in the apparel industry are getting involved and adopting new trends. Therefore, it can be said that they are adopting the new trends, and it is providing them to grow more within the local market that includes upper, middle and lower class. In this way, the local business environment is providing more profit and increasing the productivity of the emerging market. It has been observed that there are a number of youngsters who are spending a good amount of their income for their fashion (Zheng & Scase, 2013). Thus, they are adopting new trends but the local brands provide more chances to buy things at an economical price. The inside research of the market is suggesting that the dominated segments are also supporting the market. The segments include ladies wear, sportswear, and men’s wear. The rising economic status is providing Chinese males and females better opportunities to spend their money in new trends (Zhao, 2013). It is said that those countries that are largely populated and economically stable countries have more opportunities to invest and maximize the profits. Similarly, China is one of those countries, and its import and export market is also active. It is the reason due to which China is known as an emerging market because of the great number of opportunities to invest and grow more. Although, the fashion trends are a bit different from any other country because of Chinese norms, values, and culture. However, market trends of the fashion industry are adopting western culture swiftly (Chevalier & Lu, 2011). Thus, the fashion industry of China has emerging trends for the people of China. In clothing unlike their traditional dresses majority of people prefer western dresses and designs. It is because the international brands are coming and seeking opportunities to grow. In order to do that the attractive advertisements on TV, billboards, magazines and social media in China helped to promote the new trends (Montgomery, 2010). Equity markets While considering the equity market of China, it can be said that both primary and secondary market of Chinese fashion industry are different. The primary market of the apparel industry bears production issues in which all production related issues are involved (Shen, 2004). From fabric collection to labour and factories all are concerned with primary market where designing process takes place. Bringing innovation in designs and trend is the responsibility of primary market where new trends and cuts in dresses are introduced. After that, subsequent trading takes place in the secondary market of China. Where, distribution and retailing of clothes are involved. It is the responsibility of secondary market to distribute the clothes to the target market for newly designed apparel (Lardy, 2014). It helps a fashion industry to maximize the profits. 2. Globalization and International Trade: Key trading partners, Trade Agreements, National policies, protected industries It is a well-known fact that China is one of the biggest, and most rapidly emerging economies of the world and China has its base in all major industrial markets around the world. There has been a tremendous growth in international trade over past few decades and were the cause of globalization (Gu, 2006). As per WTO report world trade increased drastically from 296$ billion in 1950 to 8$ trillion in 2007.China holds a very important position is the world trade market and the recent slowdown in its economic growth rate have posted a significant impact on worlds market. Analyst predicted that any long-term slowdown in China’s economic growth rate was a global effect now due to China’s importance in market (Story, 2003). It may result in increased labour cost and thus the manufacturing cost is increased and moved to the more poor countries and other regions of China. China also has the largest reserve of US treasuries and therefore it becomes the most important party to determine the amount of global trade that occurs in the world market. Due to the increase in international trade, markets are now more diversified, and consumers can now enjoy increased selection of products than they could have with their own regional or domestic market. Therefore, it will not be incorrect to state that this trend has also added to more job opportunities, reducing prices, more workers’ earning power and rising profits (Chevalier & Lu, 2011). Fashion industry is like all other industries, which have also benefited from globalization. In addition, this industry has blended different cultures and trends from around the world. Now people have easy access to the latest trends and fashion from different parts of the world. In China, fashion industry has also flourished and evolved where manufacturing is done on a larger scale. Thus, due to the Chinese presence in all major world markets this industry has emerged and grew on a rapid pace (Krott & Williamson, 2003). Through the last three decades, China has now become the largest textile and apparel industry. In the fashion industry, Chinese brands still make up most of the market. Apart from domestic brands many new brands from western world market are entering the market and establishing their grounds. It will not be incorrect to state that due to availability of low labour cost, secure environment, easy access to the foreign and domestic market, cheap raw material and industrial sponsorships China is a very suitable zone for this emerging industry (Gu, 2006). With all these benefits, China offers development of items and goods on a much larger scale with lower cost and thus decreases the overall cost and raising gross profits. Chinese national policy of industrialization and industrial sponsorship also facilitates the cause. There are some bottlenecks as well like the restrictions due to environmental reasons and Yuan instability. There are also many benefits on offer for new and developing industries, and the market is wide open for new and developing industries. Fashion industry is one of the most suitable industries in China, due to its large production of garments and its raw material along with China’s dominant image in the world market for its garment products. In recent times, there has been an immense amount of trade between China and Africa presenting both challenges and opportunities to African people. China has paired itself with Africa as a source of natural resources and as a consumer of Chinese goods. Fashion industry is largely benefited from this due to the availability of cheaper raw materials, low-cost labour and thus increasing the profit ratios. Chinese garments and goods have entered into the European markets and are preferred due to its quality and low price. Many multinational brands including garment franchises, footwear and sports gear companies have moved to China. It is because of their mass production. Where, Chinese industrial paradise enables them to develop their goods more efficiently and on much cheaper cost price than any other part of the world. China also has free trade agreements with numerous neighbouring countries and countries around the world that has increase its trade ratio to remarkable new heights (Krott & Williamson, 2003). These Free trade agreements has opened up new markets within the region and around the world that is beneficial for developing industries to establish and grow without any restriction. Fashion industry has also benefited from this and found new markets to flourish and expand. China is also one of the main trading partners of European Union in trading in textile and clothing products. China is the lone supplier of 39% of the European Union clothing products (Gwilt & Rissanen, 2012). It can be understood easily that how globalization Chinese industrial policies and agreements have benefited its trade and industrial growth. 3. Legal environment- Risks, IP protection, crime, corruption, human rights According to Zhao, the world’s second largest economy, and emerging market is China. It is also measured that the fashion and apparel industry is being involved in exports. It can be said that the after UK, China is one of the fastest-growing export market (Garrick, 2012). In order to deal with the import and export matters, a specific legal environment is set by the Chinese government. Therefore, the Chinese government is focusing towards the emerging market innovation through unique and trendy clothes within the Chinese apparel market. However, many international brands tend to invest in Chinese fashion market (Krott & Williamson, 2003). In order to do this, they mitigate the risks around the intellectual property (IP). It is important for foreign markets to enforce and protect IP in China (Garrick, 2012). The reason behind this is that the IP system of China is different from other countries. It is the governmental rule, and it is the legal environment of the Republic of China that before starting any business in China it is important to register IP at an early stage. It can be said that the IP rights are territorial because if any international brand already contains IP rights it will not be protected and effective in China (Garrick, 2012). It is a perception that local companies enjoy political protection from government and local courts. However, the legal and regulatory system of China can be arbitrary and inconsistent (Reuvid & Yong, 2006). Herein, it should be noted that there are founding and ruling political parties in China that support the business activities and due to this reason fashion and apparel industry is growing. The Chinese government is working on human rights and crime control that is increasing in the fashion industry as well. Fraud and illegal activities within the fashion and apparel industry are dealing by the government of China on a serious note. In factories, there was a time when child labour was applied to stitch clothes. However, the government is now taking serious actions against child labour under the Human rights reserved act. In order to avail the cheap labour, the manufacturing industries prefer child labour. It is the reason due to which much labour is cheap in China. The government and local government are committed to taking strong measures to deal with it (Garrick, 2012). As, in other populous regions of the world China also possess the issue of corruption and increasing crime rate. Corruption is like a case of cancer to a country’s progress. In China business deals often involves participating in corruption. Moreover, this is a very serious threat to the country’s economy and its industrial growth. Industrial business is a complex one where there is always room for corruption, but when it exceeds a certain level it is fatal for the industry survival. Chinese government has taken numerous measures to cope up with the challenges faced and to minimize this issue. Many legislative measures have been taken to protect industrial processes from confronting corruption yet it has not been very fruitful. Fashion industry involves many stages of function from gathering raw material to developing and delivering furnished goods. On all these levels of development, corruption is faced, and Chinese market has largely suffered from gross losses due to this. Chinese crime control authorities are working hard to address the issue, but public perception is on the opposite side. Some industries also benefit from the corrupt system but on the whole there are adverse effects on the overall economy. 4. The Culture and Social Environment of China Fashion of the country usually reflects the cultural, social and traditional environment of the country. The people of China also have their culture that seems to be noticed in their fashion. The clothing that the people of China wear shows their culture and traditional environment. Their essential features of clothing are cross-collar, covering the right reverse over the left, tying with sash and a form of blouse plus a mini skirt or long sarong (Zhao, 2013). Most of the old minded people dresses revealed the culture of China, but in the modern times more Chinese wear modern clothes as seen in the western countries. They often wear traditional clothes on various occasions such as festivals, ceremonies or holy occasions. It has been observed that many of the people living in rural areas use to wear different types of clothes following their tradition (Montgomery, 2010). The fashion of China includes Traditional Han Chinese Clothing, which refers to the clothing of Han people. The name given to that fashion is Han Fu. The fashion became popular in the era of Han Dynasty. A loose broad sleeve without buttons was its chief characteristic. It is a type of clothing that is simple in designing. It also provides different kind of feeling to the people wearing it (Finnane, 2013). Chinese Suit is another commonly clothing of Chinese. It comprises of Manchu male jacket of the Qing Dynasty and western style suit. The collars of the suit are straight; buttons are located at the bottom of the jacket. The colour and design of the suit belong to Chinese tradition particularly, but the style of tailoring belongs to the western culture (Finnane, 2013). The people of China, which came from the Manchu female clothes, also adopt Cheongsam fashion. Its designing consists of merging of western patterns. Western pattern shows the beauty of the female body. The feature of the style of involves straight collars and coiled buttons in front as well as on the back of the dress. Silk, cotton, and linen are the materials that are commonly used in the making of the dress (Finnane, 2013). China has around 54 ethnic minorities who follow their customs. Some of them wear long grown clothes with a hat and wear boat style shoes while other users to have short coat with pants or miniskirts and wrap their heads with clothes and wear ordinary shoes (Finnane, 2013). Above mentioned are the most common fashions of Chinese. There are much other Chinese fashion and styles in the country that prefer to wear modern clothes irrespective of the culture and traditions. China is a wide market for fashion (Krott & Williamson, 2003). The customs and culture of Chinese are necessary analysed by the businessman to get known of the product fit according to their preferences. Ethics of the Chinese should not be ignored while determining what to produce and distribute among the consumers. Different societies formed in various parts of China reflect several culture and traditions of their own (Li, 2010). The capture wide market requires understanding the moral and social factors of that part. Modern fashion can be introduced in the market of China. The introduce fashion would be in a way that it somehow reflects the norms of Chinese. The fashion of the men, women and children are different in China. The fashion should be different for the different type of the people living in the society. There must be the targeted areas where the fashion has to be revealed (Chevalier & Lu, 2011). 5. Environmental Impact of Fashion in China China is one of the most populated and big countries in the world. The Climate in China differs from state to state. The summers in the northeast are hot and dry, and the winter is more than cold. The fashion changes with the climate as the climate plays a substantial part in changing the trend and fashion. Due to the changes in climate of China, the trend changes rapidly with time to time (Slater, 2003). China’s climate is playing a significant role in booming the fashion industry, as well as creating problems polluting the environment in the shape of landfills. With the rapid change in fashion, when the clothes becomes out fashioned and not wearable, these unwanted clothes end up in the trash (Slater, 2003). The report suggests that 16 percent of people confessed of throwing their unwanted clothes in a trash bin. It is now not surprising that the people in China throw their clothes in the trash bin. As the population claimed that it was easier to throw away their clothes in a trash bin rather than take clothes to the donation centre. Only eight of 65 pounds of clothing and textile is properly discarded, and only eight pound of it reaches the charities or donation centres (Gwilt & Rissanen, 2012). The problem begins when the waste of textile ends up hanging in the landfills, polluting the ground and water. Fashion clothes are manufactured using synthetic and inorganic materials, which play a vital role in producing deadly carbon emissions. The textile uses chemical, which require oil, which is harmful to a human and injurious when it reaches water from the landfills (Zheng & Scase, 2013). As the clothing is made from synthetic material and oil, it stays forever polluting the environment. Poisonous dyes and harmful material used in the manufacturing of the clothing wash off in heavy rain finding their way into the other sources of water (Gwilt & Rissanen, 2012). Stewardship in Fashion The management of planning and responsibility of conservation of the natural resources is stewardship. Fashion industry uses plenty of natural resources in producing textile and water is the best example for it. Water is a natural resource needed to produce the clothes and run the function of production effectively and efficiently. The problem starts when water gets dirty, spoiled or short in supply. The fashion industry has an opportunity in water stewardship, but in order to take advantage from it, the industry will need to take action in completely new way (Jonsson, 2013). Fashion industry of China largely depends on water. There is water in every process of the apparel industry from growing of cotton to the final finished cloth. Visibly, depletion of water resources can cause severe damage to the function of the apparel industry. The future of the textile industry, nature, and of all businesses depends on the proper utilization and management of water. We need to start focusing on the proper utilization of our natural resources (Reuvid & Yong, 2006). Great fashion takes a lot of natural resources. Industries are taking too much water for producing textiles. The industries are creating an impact beyond the gates of factories. Another resource is cotton that is used as a raw material, and we rely on it the most (Lardy, 2014). Conclusion: It is evident from the presented information that China is one of the largest economies of the world that has a gigantic industrial structure, which present immense opportunities to the new industrialist. Similarly, the case of the fashion industry is not any different. Chinese trade policies and trading agreements with the other countries have played a vital role to build a nourishing environment for this industry. Globalization and the Chinese policies to spread and making full use of this concept has added remarkably to Chinese current industrial and economic success. Fashion industry had fruitful results due to globalization where Chinese fashion industry could reach out and then dominate other markets around the globe. In order to do business in China, the local environment business contains various opportunities to grow. There are many investors that are opening their apparel brands in China knowing the fact that it is the emerging market that is growing rapidly. Chinese garments and apparel exports are increasing at a rapid pace, and Chinese clothing goods can now enter into European and Asian markets as the market leaders. Chinese secured and crime free environment along with its low-risk industrial market have added to the benefits to all types of businesses, and fashion and garment industries are much benefited from their legal environment. It will not be farfetched, if one predicts that China will be the world leader in fashion and garments market very soon due to its effective policies and industrial environment. 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