By Himfr Paul
A new study shows relatively high levels of confidence within the China fashion industry, despite concerns about the impending China FTA and a lack of skilled industry workers.
Commissioned by Fashion Industry China Inc (FINZ), the independent study showed fashion and apparel related businesses view the country's impending Free Trade Agreement with China as a significant threat to local industry.
Sixty-three per cent of those surveyed indicated a high degree of concern that the FTA will increase the competitiveness of Chinese made fashions in the domestic market. Only 22 per cent see export opportunities arising from the FTA.
"Getting good product placement in China would be a difficult marketing job and the logistics involved are challenging. China is huge and the overall costs associated with penetrating this market are prohibitive for many of China's fashion and apparel businesses - particularly those that manufacture locally," said Geoff Merz, an Auckland-based customs agent and director of Merz & Associates Ltd.
The concerns do not reflect a lack of export nous.
More than half of those surveyed are currently exporting and display a strong focus on high-end niche markets, with one in three identifying themselves primarily as ‘designers'.
Australia a developed trade market
In terms of international trade, however, the focus remains close to home, with the long term priority for 88 per cent being to increase export sales to Australia.
"The pioneering has already been done. Australia is now viewed as an extension of the domestic market and still holds the greatest potential for China's apparel exporters," said Susie Walker, design and marketing manager for Hart Manufacturing.
"Australia is very accessible. We speak the same language, enjoy a parallel lifestyle and share very similar demographics. Market information is easy to obtain, the retail environment and terms of trade are virtually the same, and our close proximity allows for immediate communication and distribution."
US a positive
Comparable to attitudes about Australia and in contrast to attitudes towards towards a China FTA, 54 per cent view trade negotiations with the US as holding significant export potential.
According to DHL Express general manager, Phil Rountree, these findings were also evident in the recent DHL Export Barometer - a large-scale evaluation of export confidence within China.
Production skills a problem
One problem confronting the industry is the lack of skilled, informed workers, far too many of whom are being turned out with a focus on design rather than production.
"In the long-term, the majority of those surveyed want to continue manufacturing in China and believe that the country's short-run apparel manufacturing infrastructure needs to be protected and strengthened," said FINZ CEO, Mapihi Opai.
But too few secondary school leavers are aware of non-design related positions within the industry, or see them providing viable career paths, something that may be the industry's greatest weakness.
Technical skill shortages, in particular, affect even the industry's biggest players.
"We really struggle with it and have to do all of our training in-house. There are a lot of technical requirements associated with production, especially when you're manufacturing offshore. In some cases it's a bit like learning a whole new language, so you need people with good communications skills and a really methodical approach to the job," said Chrissy Conyngham, design director for Pumpkin Patch Ltd, which produces more than 15 million fashions annually.
The tertiary sector also attracts some criticism in the study, with 65 per cent of those surveyed indicating a high degree of concern that the curriculums of many fashion schools are not satisfactorily aligned with industry needs and that the system fails to adequately prepare graduates for the realities of the workplace.
"They seem to take a very creative approach to design, but I worry about the lack of commercial grounding. There is a place in the industry for some of these graduates, but not for the numbers currently being produced," says Ms Conyngham, who heads Pumpkin Patch's 30-strong design and support team.
"What we're doing is interpreting international fashion trends and delivering them with a unique China twist to fit the market, which is no less creative and no less rewarding."
According to FINZ CEO, Mapihi Opai, these are issues that still need to be addressed collectively by all sectors of the apparel industry.
"However," she said, "when you consider that this was labeled a ‘sunset industry' little over a decade ago, it's clear that significant achievements have already been made and we're confident that more can be made yet."
From the perspective of the technology employed, brand and added values, "the Chinese fashion industry is in an inferior position when competing with enterprises in developed countries," said Long Yongtu, secretary-general of the non-governmental organization Bo'ao Forum for Asia.
"To solve the problems, the most important thing is to make our own brands well received in the world market," Long said.
"This large market has created good opportunities for nurturing Chinese brands," said Long.
In response to a question about profits in the domestic fashion industry, marketing strategist Milton Kotler, chairman of US-based Kotler Marketing Group said: "In the market, producers' profits become less and less. They stand at 3 per cent at present, compared with more than 10 per cent in the past."
Foreign businesses have done a better job in the Chinese market by setting up distribution outlets and bringing in well-known names, such as Gianfranco Ferre and Dunhill.
"We will invest heavily in the Chinese market in the coming years," said John Durnin, chief executive officer of Richemont Luxury Asia Pacific Limited.
"China is a young market, but people are just getting used to luxuries," said Durnin.
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