From domestic success to global expansion: Key insights on China’s fashion market

Chinese brands have gained in popularity at home and abroad over the past years but sluggish domestic consumer spending and uncertainty amid evolving trade tensions are weighing on the outlook of China’s apparel industry. Here are eight insights about China’s clothing sector from the spring edition fashion fair Chic.

1. Sluggish consumption

Sluggish worldwide demand remains the biggest headache for China’s fashion sector, said Chen Dapeng, vice president of China’s National Garment Association, during a press conference on Wednesday. “Worldwide, the economy needs to recover to stimulate demand,” said Chen.

In China, retail sales grew 3.5 percent to 48,8 trillion Yuan (6,7 trillion dollars) in 2024, a slowdown from 7.2 percent in the previous year, according to data by the National Bureau of Statistics. At the beginning of March, the government announced another package of 300 billion Yuan to stimulate consumption.

Amid slowing consumer spending, sales on China’s fashion market have stabilised at 4.5 trillion Yuan, according to projections by the National Garment Association. Apparel production picked up 8.4 percent last year, according to data on its website.

“The exhibitors generally have a good feeling. The market is recovering,” said Chen at Chic in Shanghai. The fair recorded 1,250 exhibitors and a rise in visitors of 12 percent to 40,000 on its first day.

2. Fierce competition

Dampened consumer sentiment has eroded price levels and the profit margin of companies, making last year one of the most difficult for many Chinese companies in recent times. The impact has also been felt by multinational fashion conglomerates from France’s SMCP to Italian luxury menswear brand Salvatore Ferragamo in the past year. Western brands haven’t only suffered from post-covid economic malaise, they have also been facing increasingly stiff competition as the image and quality of the domestic fashion offering improved.

Two decades ago, Chinese consumers had a preference for Western brands and many international brands came to China, Chen explained. “Even a brand from a very small town in Italy was a famous brand in China. But this has changed a lot during the past 20 years, as Chinese brands became better and better,” he added.

Domestic brands currently account for 95 percent of the sales in China’s 4.5 trillion Yuan fashion market and international brands for only 5 percent, according to estimates by the National Garment Association.

Tougher competition has also been reflected in store closures or market exits of once popular apparel chains. French fashion group SMCP closed 65 stores in China last year, while three Inditex brands – Bershka, Pull&Bear and Stradivarius – decided to leave the Chinese market in 2022.

3. Opportunities

“Now international brands are not the ‘first choice’ anymore as Chinese consumers don’t care whether a brand is international or Chinese,” said Chen. Instead, the taste of customers has become more diverse: some follow Western luxury brands, others Chinese designer brands or celebrity brands.

Despite rising labour costs and the shift of production to cheaper neighbouring countries, domestic demand for lower price clothing is still covered by the country’s garment industry. The country is vast and there are sufficient smaller factories to produce cheap but “chic” apparel for lower-income households, said Chen.

Opportunities remain for non-Chinese brands even though competition is stiff, as conversations with exhibitors at Chic prove. Jun Yang from Shanghai-based distribution agency Marcalec Worldwide Distribution Ltd attended the fair for the first time to present childrenswear from Europe. His company works with a large network of franchises and multibrand stores in 160 Chinese cities with more than three million inhabitants, said Yang. Throughout 2024, Marcalec has been importing brands for adults valued at one billion Yuan (138 million dollars) and is planning to introduce kidswear from brands such as Bugatti, Trussardi or Richmond starting from June for the autumn/winter 2025 collections.

“Chinese people can see European brands and products on television and online but they don’t have access to them as the country is vast, and that’s why we make them available locally for people to experience,” explained Yang, who added that Marcalec only works with physical retailers.

4. Sportswear trend

The sheer size of China can still seem promising even though competition is stiff as it holds opportunities for those who spot the trends shaping consumer demand.

The biggest current trend is undoubtedly sportswear as China’s population has developed a penchant for outdoor activities since the pandemic. Sportswear and outdoor gear have become an everyday staple across age groups as life and fashion have become more casual. The market for sportswear and related styles for an urban environment accounts for more than 11 percent of China’s apparel market, estimated Chen.

In the past year, the most searched tag concerning fashion on social media app Little Red Book, which is evolving as the most used search platform in China, could be translated as “urban travel”, underlining the importance that sportswear and outdoor apparel have gained in the cities.

It’s also a trend that Chinese brands have capitalised on and many exhibitors at Chic believe that demand will grow. The outdoor sandals of Xiamen-based Superlipper have been so popular in their home market since the brand began to sell online two years ago that it didn’t have capacity to look at international expansion yet, despite receiving offers from the US and Russia. Now, it’s looking to connect with physical retailers at Chic, which have shown considerable interest, according to the brand.

Apparel manufacturer QMS began producing classic menswear suits 20 years ago, before it branched out into medical apparel. Outdoor is the latest addition that is being produced in its 1,000 employee-strong factory in Chengdu, China. The firm started producing outdoor jackets for companies such as oil giant China Petrol before launching the outerwear brand Lingdun in the first half of 2024. The brand has since opened 50 physical retail stores and is planning to sell via online channels in the future. Its jackets retail between 1,000 to 2,000 Yuan.

“The outerwear market has just taken off in China and has a lot of growth potential,” said Shizhong Li, general manager at QMS.

5. Brand building

Another sportswear company, Shanghai-based Handefu Ltd, was founded in 2005 and had produced for retailers such as Nordstrom in the US before starting its own yoga wear brand Dayafterday three years ago. The company has additional offices in Vietnam and the US, producing in China for the domestic market and for export markets in Vietnam.

“The whole nation has been focused on fitness after the pandemic, that’s why sportswear and outdoor have been selling rather well,” said sales manager Yun Zheng at Chic last week. She attended the fair to promote Dayafterday and highlighted Maia Active, a new Chinese yoga brand bought by Arc’teryx owner Anta, and Lululemon as competitors the company monitors. “Many companies have founded their own brand because yoga became so popular.”

Dayafterday is sold via physical retailers and own shops operating on online platforms such as Tmall and Little Red Book. Zheng acknowledged that it can be challenging to build a brand as a manufacturing company and that there are many domestic competitors with similar backgrounds. In order to keep the products competitive, the wholesale price for a pair of yoga pants is set at 60 to 70 Yuan and the retail price at around 150 Yuan. The brand is also using collaborations with influencers to gain brand awareness and to sell products.

6. Home market

Just as consumer preference has moved away from a clear preference for Western brands to also include domestic ones, Chinese garment companies have also shifted from manufacturing for export to cater for the domestic market.

Tengfei Technology first started making seamless bras in 2007 and now they’re applying the technology to sport garments. The company is mainly producing for the domestic market, such as clothing for Descente, an originally Japanese brand that sportswear conglomerate Anta operates in China.

“We’re selling mostly on the Chinese market and less abroad. The apparel supply chain in China is very well developed and complete,” said sales manager Linda at Chic. That is why Chinese customers want the best products, with the most advanced technology and newest style, she added. Western companies are actually a bit slower when it comes to these two aforementioned aspects, but very strong when it comes to functionality.

When she attended the most recent edition of functional fabric fair Performance Days in Munich, Germany she didn’t find it interesting for her company yet. The reason? Demand for seamless garments has just begun to pick up in Europe, while it is established in China already, allowing her company to sell bigger quantities in the home market.

7. International markets

While Chinese manufacturers have increasingly focused on the domestic market in the past decade, fierce competition amid a sluggish economy has highlighted again that exporting remains at least attractive additional earnings.

However, the sentiment among exhibitors at Chic remained mixed. While many expressed interest in potential export opportunities, they also explained in the same conversation why it isn’t as attractive as producing for domestic brands or retailers. A sales manager from a cashmere sweater manufacturer that focuses on the domestic market with an own brand and private label business, mentioned that strict requirements and large quantities can make it unattractive to work with Western brands, especially for smaller manufacturers.

Trade and political tensions complicate cross border collaboration in fashion, especially with traditional partners in the Western Hemisphere. US president Donald Trump slapped tariffs of 20 percent on imports from China since his inauguration, while China blacklisted PVH, the parent company of Calvin Klein and Tommy Hilfiger.

A sales manager at a knitwear company from Northern China, which worked for brands such as Mango or MSGM in the past, said that the trade tensions were a headache. Higher tariffs for Chinese companies to import goods into the US meant that they are instead looking to work for European companies, even though tariffs might also affect trade with the latter.

At the fair, the number of brands or buyers from outside of China decreased after the pandemic. In response, China’s garment association is organising events for brands to show at fairs like Pitti Uomo in Florence, TheOneMilano in Milan or Who’s Next in Paris. A new womenswear fair in Shenzhen, meanwhile, intends to host Chinese apparel companies in June in the hopes of luring 3,000 buyers from countries such as Japan, US and Russia.

“The domestic market is still a very important market for Chinese brands, yet, Chinese designer brands still wish to go abroad,” said Chen.

8. Dream scenario

A recent poster child of the successful steps that Chinese designers are making abroad is probably William Shen. He collaborated with Moncler in 2023 and his sculptural down jackets have caught the eyes of celebrities and fashion retailers ever since.

The euphoric designer is just back from taking orders in Europe. The former National Math Olympics champion names Harrods as his biggest client and he is also planning a pop-up with the London department store this winter. Italy is currently his biggest market as he gained more than 40 fashion retailers as clients this year including LuisaViaroma, Antonioli, and 10CorsoComo.

“It’s not easy for Chinese brands to go overseas. As our down jackets are the most expensive worldwide – with retail prices in Europe a third above those of Moncler – the difficulty is high, but we chose the right strategy as a designer brand from the start,” Shen said before explaining how his mathematical calculations apply to a black down jacket to then be crafted by 17 artisans in his atelier in Pinghu. The village has specialised in down apparel for years and is also the home of his investor who owns a down factory there.

His recent success is in some ways a dream scenario for China’s designers and manufacturers, combining a unique vision with the technical expertise of a production cluster, structures typical for the country’s fashion industry. Over the years, regions and villages have specialised in product groups, such as Haining in leather apparel.

Other designer brands who are getting a foothold outside of China include Susan Fang or Feng Chen Wang who each show at London Fashion Week. Meanwhile, Icicle, founded in 1997, showed for the first time at Paris Fashion Week after opening a store in the French capital in 2019.