China National Textile and Apparel Council recently issued its 2005-2006 Annual Report on China's Textile Industry. The report pointed out the total profit of garment companies above designated size grew by up to 33.09 percent in 2005, the fastest-growth-year during the Tenth-Five Year Plan period. Resorting to the advantages of market, resource, brand and technology, some companies or groups with good performance kept their expansion to become the leaders of the industry and speeded up their internationalized steps. Meanwhile, some SMEs, due to their small scales and their dependence on domestic or overseas middlemen to obtain orders, seriously lack the capability in exploring new market and resisting risks.

According to the investigation by China National Garment Association, the total actual output of garments reached 46.5 billion pieces in 2005, up 11.2 percent compared with 2004, among which 17 billion were weaving garments and 29.5 billion were knitting ones. In 2005, the total exported value of garments increased by 19.9 percent and the total exported volume by 8.1 percent, which indicated the increase of the value was 11.8 percentage points higher than that of the volume.

The "White Paper on China's Textile" pointed out, the overall competitiveness of the textile industry has been further strengthened and the added value of exported textile products has been improved that Chinese garment companies have secured a certain place in the international middle and high- end market; a group of renowned brands in the domestic market have emerged; the structure of the textile industry has been readjusted and the concentration for export production has been increased.

Meanwhile, China's textile industry is still faced with such structural contradictions as the lack of innovative ability and self-owned brands. Textile enterprises are generally based on OEM for export and boast a very low proportion of self-owned brands, thus possessing little control over export marketing channels. Currently, China's high-end textile and garment market is mainly dominated by international famous brands. Domestic export enterprises are mainly based on OEM, and the profit made by these enterprises takes up only around 10 percent of the overall market profit. Although the textile industry claims 175 national famous brands, none of them are internationally renowned.

According to the survey by China National Garment Association, while textile enterprises above designated size enjoy sustained growth in terms of their overall performances, 20 percent of SMEs suffer increasing losses. Among all garment companies, shirt manufacturers suffer most serious losses with the loss proportion reaching nearly 50 percent.

While the comparative advantage in labor gives way to that in innovation, which determines the added value in the supply chain, in global textile competition, many strong domestic companies start the attempt to build up international marketing networks, improve the quality and promote the brand, so that they could gradually break away from the competition based on expanding scales at a lower level. Fostering self-owned brand names, investing more in the design and campaign of brand, increasing technology content and controlling marketing channels are now becoming the key for the textile industry to move toward the high-end of the supply chain and improve the added value of its products.

Chinese garment manufacturer Meters Bonwe has attracted more than 250 garment factories and 1,600 chain stores for the production and sales of it products. By the year 2005, the sales volume of the company had totaled RMB3 billion yuan, with its annual sales volume of 30 million pieces (sets). It's been selected as one of the top hundred garment companies in China for successive six years. Meters Bonwe has become the most favorite brand for Chinese young people.

To take the lead in garment fashion, Meters Bonwe attaches great importance to designers. It has not only employed famous talents from both home and abroad but also invited a renowned French designer as the design supervisor. Since its establishment 11 years ago, Meters Bonwe has fostered a team of designers on a par with their international counterparts. It has also co-operated with world famous designers from France and Italy etc. to get first-hand international fashion information, including material, design, style, and so on. To facilitate the collection of local styles around the world, the company has moved its headquarter from Wenzhou to Kangqiao, Shanghai Nanhui District, which is close to Pudong International Airport. Now, Meters Bonwe designs more than thousands of new items of garments annually. 

"In recent years, some overseas agents have initiated contacts with us to try to set up specialty stores in countries and regions like South Korea, Australia and Middle East; however the result is not very desirable." Wu Huijun, director general of Ningbo Boyang Garment Co., Ltd. said, "but we've drawn many lessons from the attempt for international operation." Wu introduced that they didn't have special designing teams for the foreign-based specialty stores since the sales volume there was small. They just delivered products that catered for the local markets in styles and sizes from domestic samples. The biggest problem was that the supply period was too long and they were unable to make rapid reaction to the market. On one hand, when some best-selling products were out of stock, a timely follow-up delivery could not be ensured; on the other hand, the cost for returning goods that didn't sell well was very high.

"When it comes to brand internationalization, there should be a brand development strategy at first. And around the strategy, a complete system of design, development, sales and service should be set up in the target market country as back-up. In addition, the company must integrate into the local culture and understand the needs of local consumers." Wu Huijun said, "previously, we only looked to the price advantage enjoyed by our products in the local market; however once we entered into the market, we realized that brand internationalization was far more complex than mere cost competition."