making business negotiation a big headache. ... flagship shops, franchise chain stores and specialty shops ... forms suc
China’s Garment Industry and Trade
ICE Beijing March 2013
CHINA’S GARMENT INDUSTRY AND TRADE 1) The industry Through many years of development, China's garment industry has reached great achievements and today plays a very important role in the Chinese economy. China has the largest textile and garment industry in the world. The industry consists of sub-industries including yarn and chemical fiber, fabric as well as garment and accessories with 52,963 sizable enterprises1 employing 10.8 million workers across the country. According to statistics from NBS, from January to December 2011, the over-scale enterprises produced altogether 25.42 billion pieces garment, with a 8.14% increase on a year-on-year basis. The first 10 provinces and cities which have a production of garment of over 100 million pieces annually are: Guangdong, Zhejiang, Jiangsu, Shandong, Fujian, Jiangxi, Shanghai, Hebei, Henan and Liaoning. The total production of this 10 provinces and cities accounts for 90% national garment production. They are the bases of garment production area in China. In 2008 the 4 biggest provinces Guangdong, Zhejiang, Jiangsu and Shandong reached the production of 1.5 billion pieces, accounting for about 74% of the total production. 2)
The exports
The export value of garment and accessory was USD18.43 billion in 1993. In 2008 the export of the garment reached US$113 billion, with an annual increasing rate of 213.2%. The value of the export in 2012 was US$141. The exported garments of China are mainly based on processing deal. The export of woven garments in 2012 was US$ 61 billion, accounting for about 41% of the total garment export in 2012. The knitted garment valued US$87 billion, with a share of 59%. 1
including all state-owned industrial enterprises, as well as non-state-owned industrial enterprisesthe with annual sales income over RMB 5 million, or EURO 0.54 million.
Every year, the exported garments through processing deal accounted for more than 50% of total export value. In 2012 the 10 most important importing countries and regions of garments from China were: United States, Japan, Germany, United Kingdom, Hong Kong, Russia, France, Korea, Italy, Spain.
The following table shows the first 10 importing countries in woven and in knitted sectors from China: Export value of woven garment to main countries and regions In Million of US$
Rank 0 1 2 3 4 5 6 7 8 9 10
Country -- World -United States Japan Germany United Kingdom Hong Kong Russia France Korea, South Spain Italy
2010 54363 11633 8393 3784 2718 2505 1810 2116 1458 1607 1850
2011 63081 12246 10284 4602 3059 2572 2102 2393 1866 1765 2113
2012 -% 12/11 61238 -3 12520 2 10261 0 3695 -20 2875 -6 2596 1 2122 1 2036 -15 1734 -7 1609 -9 1550 -27
Source: China Customs statistics
Export value of knitted garment to main countries and regions Rank 0 1 2 3 4 5 6 7 8 9 10
Country -- World -United States Japan Germany Vietnam United Kingdom United Arab Emirates Russia Malaysia Australia France
Source: China Customs statistics
In Million US$ 2012 -%12/11 87064 9 13670 3 11159 2 3828 -26 3689 141 3284 13
2010 66707 11249 9352 3968 786 2341
2011 80183 13215 10940 5166 1530 2919
1608
2167
2783
28
1658 785 1519 2007
2028 948 1754 2204
2186 2123 1939 1905
8 124 11 -14
3) The imports China's import of garment from abroad in 2007 was only US$ 1812 million. But this figure increased to US$ 2384 million in 2011 and US$ 2665 million in 2012. The import of woven garments and accessory in 2012 was US$2665 million, accounting for 65% of the total import. The value of knitted garment imported was US$ 1344 million, according for 35% of the total. If the import is classified by items, the biggest group in woven sector in 2012 was Suits/Ensembles and Women/Girl Suits, accounting for of 27 % and 23% repetitively in the total import of woven garments and accessories. And the biggest group in knitting sector was Sweater, Pullover and Vest, according for about 30% in the total imports of knitted wears, followed by T-Shirt/Singlet, accounting for 19%.
Import of woven garment by China from main countries and regions In million US$ Country
2010
2011
2012 12/11/change
-- World --
1418
2384
2665
12
Italy
273
443
514
16
Korea, North
161
357
373
5
Vietnam
52
127
154
22
Korea, South
71
109
114
4
Romania
50
95
107
12
Turkey
53
81
105
30
France
48
73
98
34
Bangladesh
24
56
90
61
Japan
76
85
79
-7
Source: China Customs statistics
In the import of woven garment, Italy ranked first, with a value of US$ 443 million in 2011 and US$ 514 millions in 2012, and an increasing rate 16% in comparison with 2011. The market share in the sector is 19%. North Korea ranked second in the sector, which a quick increase in the past a few years. The other suppliers were Vietnam, Romania, South Korea etc.
In knitted garment sector, Italy also ranked the first in the market, with a market share of 17% in 2012. Import of knitted garment from main countries and regions Country
-- World -Italy Turkey Vietnam Korea, North Bangladesh Korea, South Cambodia Japan Portugal
2010
815 114 49 23 26 18 63 16 40 25
In million US$ 2011 2012 +/_% 10/11
1187 189 84 58 58 48 61 38 51 33
1344 231 99 87 67 63 59 58 46 44
13 22 17 51 16 32 -4 55 -10 35
Source: China Customs statistics
In fact, the import from Italy is larger, given that the data only show the direct import. However, the re-export of Italian garment from Hong Kong to China values quiet big amount. Import analysis from the world by items China’s key products Import in the sector is shown in the following table. In Woven sector, the largest category is Suits,Ensembles,Etc, which valued US$ 717 million and accounted for 27% of the total woven garment imported value by China in 2012, followed by women’s suits, which valued US$ 603 million and shared 23%.
Import from the world by items (woven garments) In 1000 US$ HS
Description 62 Woven Apparel
2010 1418,478
2011
2012 -
2384,389 2665,234
12/11 12
6203
Suits,Ensembles,Etc
362,814
649,981
717,448
10
6204
Women/Girl Suits,Etc
327,522
510,099
603,740
18
6202
Ovrcoat,Et,Women/Girl
140,778
265,377
294,828
11
6201
Overcoat,Etc,Men/Boys
140,219
277,036
284,278
3
6205
Men'S/Boys' Shirts
128,050
180,075
207,525
15
6211
Track St,Ski St,Swimw
44,893
94,411
105,738
12
6214
Shawl,Scarf,Mfflr,Etc
49,592
83,436
99,199
19
6217
O Made-Up Clth Access
81,154
97,346
85,552
-12
6206
Wom/Girl Blse,Shrt,Et
42,575
63,858
82,469
29
6210
Grmnt,Flt,Et/Fab Impr
12,778
44,858
65,046
45
6212
Bra,Grdl,Grtr,Et,Kn/N
46,262
64,614
58,129
-10
6215
Tie,Bow Tie,Cravats
12,287
17,298
19,194
11
6209
Baby Garment+Accessor
10,397
12,458
18,125
45
6208
Women/Girl Slips,Etc
7,647
8,081
8,371
4
6207
Men/Boy Undrshirt,Etc
6,129
6,633
7,840
18
6216
Gloves,Mittens,Mitts
4,682
7,695
6,672
-13
6213
Handkerchiefs
696
1,134
1,080
-5
Source: China Customs statistics
In knitted sector, the largest imported category is Sweater, Pullover and Vest valued US$ 398 million, accounting 30% of the total imported value of knitted wears from the world in 2012, followed by T-shirt, valued US$ 255 million and 19% of share. Import from the world by items (knitted garments) In 1000 US$ HS
Description
2010
2011
2012
+/-%10/11
61 Knit Apparel
815,432
1,186,941
1,344,169
13
6110 Sweater,Pullover,Vest
229,220
343,930
398,405
16
6109 T-Shirt,Singlet,Etc
154,150
237,615
255,325
7
99,160
157,645
192,073
22
101,583
105,187
110,110
5
6103 Men/Boy Suit,Ensemble
40,203
66,388
82,792
25
6115 Hosiery
32,846
49,225
57,672
17
6111 Babies'Garmnt+Accessr
25,224
33,204
47,772
44
6117 Other 61
36,511
38,073
38,430
1
6107 M/B Underpant,Pjs,Etc
18,387
30,577
34,717
14
6108 Women/Girl Slip,Pjs
23,322
41,848
30,030
-28
6114 Other Knit Garments
10,934
20,555
22,353
9
6112 Track Suit,Ski-Suit;O
2,789
9,120
20,546
125
6106 Womn/Girl Shirt,Blous
21,002
23,608
18,794
-20
6116 Glove,Mitten,Mitts
9,398
13,030
14,443
11
6102 Women/Girl Overcoats
6,109
8,938
11,844
33
6101 Men/Boy Overcoats
4,222
7,615
8,210
8
371
383
652
70
6104 Women/Girl Suit,Ensem 6105 Men'S/Boys' Shirts
6113 Rubber,Plastic Coated Source: China Customs statistics
Import from Italy Italy has some key products that have a good market share in the sector (shown in following table). In woven sector with a total value of US$513 million imports from Italy, the biggest category is Suits and Ensembles with the value US$189 million, the 26% of the total import of the same item by China from the world (US$717
million) in 2012, followed by women’s suits, valued US$ 118 million, with a market share in China in the same category of 19%. (World total value of women/girl suits US$ 603 million). In Knitted sector, with a total value of US$ 231 million of imports from Italy, the biggest category is Sweater, pullover and vest, with a value US$89 million, accounting 22% of the total import of the same item by China from the world (US$ 398 million) in 2012, followed by T-shirt and singlet, valued US$ 36 million, with market share in China in the same category of 19%. (World total imported value of T-shirt and singlet US$ 255 million) Import from Italy by China (Woven garment) US$1000
HS
Description 62 Woven Apparel
2010
2011
2012
MKT share
+/- %
in 2012
12/11
272,536
443,463 513,928
19%
16
6203
Suits,Ensembles,Etc
99,455
155,087 189,407
26%
22
6204
Women/Girl Suits,Etc
63,982
104,024 117,536
19%
13
6214
Shawl,Scarf,Mfflr,Etc
23,607
42,655
49,533
50%
16
6205
Men'S/Boys' Shirts
26,389
33,745
38,651
19%
15
6202
Ovrcoat,Et,Women/Girl
16,241
33,386
36,033
12%
8
6201
Overcoat,Etc,Men/Boys
14,110
33,884
35,607
13%
5
6215
Tie,Bow Tie,Cravats
9,793
13,605
13,615
71%
0
6211
Track St,Ski St,Swimw
3,968
7,548
10,566
10%
40
6206
Wom/Girl Blse,Shrt,Et
6,197
8,200
9,693
12%
18
5,675
7,537
7,231
8%
-4
6217
O Made-Up Clth Access
6210
Grmnt,Flt,Et/Fab Impr
494
594
2,873
4%
384
6208
Women/Girl Slips,Etc
880
684
777
9%
14
6212
Bra,Grdl,Grtr,Et,Kn/N
557
606
622
1%
3
6207
Men/Boy Undrshirt,Etc
532
703
512
7%
-27
20
340
502
3%
48
6209
Baby Garment+Accessor
6216
Gloves,Mittens,Mitts
371
501
426
6%
-15
6213
Handkerchiefs
264
362
344
32%
-5
Import from Italy by China (knitted garment) US$1000
HS
Description 61 Knit Apparel
MKT share
2010
2011
2012
114,150
189,407
230,939
17%
22
in 2012
-12/11 - %
6110
Sweater,Pullover,Vest
39,087
67,858
88,951
22%
31
6104
Women/Girl Suit,Ensem
15,801
30,074
35,595
19%
18
6105
Men'S/Boys' Shirts
19,055
26,603
33,410
30%
26
6109
T-Shirt,Singlet,Etc
17,405
23,198
27,108
11%
17
6103
Men/Boy Suit,Ensemble
11,846
23,063
25,055
30%
9
6117
Other 61
3,570
5,915
6,340
16%
7
6115
Hosiery
3,733
4,903
5,842
10%
19
6102
Women/Girl Overcoats
641
1,656
2,041
17%
23
6114
Other Knit Garments
675
1,099
1,640
7%
49
6106
Womn/Girl Shirt,Blous
1,322
2,043
1,633
9%
-20
6101
Men/Boy Overcoats
293
1,194
1,388
17%
16
6108
Women/Girl Slip,Pjs
292
384
527
2%
37
6112
Track Suit,Ski-Suit;O
134
246
422
2%
71
6116
Glove,Mitten,Mitts
139
841
347
2%
-59
6111
Babies'Garmnt+Accessr
11
218
336
1%
54
6107
M/B Underpant,Pjs,Etc
134
106
299
1%
183
6113
Rubber,Plastic Coated
15
8
4
1%
-47
SWOT Analysis Strength Italian exporters have demonstrated a strong commitment to penetrating the Chinese market. Italy currently amounts to 19% of China’s total garment and accessories import value, ranking it first worldwide and being remarkably higher than other competing countries. Chinese consumers regard Italian garments and accessories to be of superior design, quality and style. Italian products have top brand images, which show the good taste and status of the people who wear them.
Weakness While Italian garments and accessories enjoy a good reputation in the Chinese market, reservations have been voiced as to purchase price and promptness of customer service. Some sales agents complain that Italian garment companies do not understand the distribution and sales system in China, thus making business negotiation a big headache. It is not clear whether the Italian exporters can claim any distinguishing advantage beyond the abstraction of their quality/brand image, other than to compete on price and distribution with Japanese and Korean competitors. Opportunities China has been the largest garment and accessories market in the world. The market has been growing at an average of over 10% annually and is expected to keep up the momentum in the future. The Chinese garment and accessories industry is over-crowded with numerous small manufacturers, who are competing against one another in the low-end market. While in the high-end market segment, local brands are generally still weak in quality and design, especially in research and development of new styles. The demand for high-end products, on the other hand, is increasingly growing, due to the rising income of Chinese consumers, and an increasingly growing number of white collars and the newly rich who are concerned with quality of life, their own personal image, and western styles of living.
Threats
Producers are geographically scattered throughout China, and competition in China is increasing as China further integrates with the world economy. Italian garment and accessories companies are facing increasingly intense competition from growing local
companies and more and more foreign counterparts in the market. Intense competition and shifting demand are putting pressure on pricing, and Chinese consumers are extremely price sensitive, especially when they have many choices of foreign brands in the market.
.
Market Entry Considerations Distribution and Sales Distribution System The traditional distribution system of the garment industry in China was an extended system, characterized by multiple layers, normally in a three tier form (more for bigger regions). The distributors distribute products from the entire country to provinces and cities, then to local retailers. This extended system increases prices as each layer adds a margin ranging from 5-20%, and suppliers have little control over prices and delivery quality along the extended channel. Since the economic reform starting in 1978, many suppliers have begun to bypass the former three-tier distribution system and sell directly to local wholesalers and retailers, in order to have more direct contact with end-users and to reduce the mark-up added by middlemen. Foreign exporters are also finding more opportunities to establish direct contacts with buyers and sellers in the country. However, determining which Chinese enterprises or institutions that should be dealt with is sometimes difficult. Given the diversity and vastness of China’s territories, national distributors of garment and accessories are rare, if not altogether lacking. Active distributors in this sector are usually regional sales agents, especially in large cities like Beijing, Shanghai, Guangzhou, etc. Only a few large agents can cover business in two or more cities.
Sales Channels In China, garments and accessories are mainly sold in department stores, wholesale markets, and specialty shops. Department store: the prime sales channel for men’s wear. Large department stores are actually almost the only place to sell top men’s wear brands, especially foreign brands, besides flagship shops, franchise chain stores and specialty shops specialized in selling men’s wear. Wholesale market: scattered everywhere in China, even in small towns. Although widely prevalent, these venues generally deal with low-end goods and rarely have much to do with legitimate enterprises seeking to genuinely establish themselves in the greater Chinese marketplace. These garment wholesale markets usually focus on volume sales at low prices, but in most cases they also sell to individuals at a reasonably lower price (i.e. lower than department stores). Specialty shop: refers to shops specialized in selling a specific brand or style of garment. Can be operated in various forms such as a flagship shop, chain store or direct-sale outlet. At present, most domestic garments brands use a combination of direct-sale outlets (owned by the producer) as well as chain stores (by franchising). Such specialty shops are playing increasingly more important roles in garment sales, especially for men’s wear brands, some of which have seen sales through this channel increase by 30% annually. Internet sales: although internet selling takes up only a small part of the total sales value, it is predicted to play a very important role in future competition. In recent years, the growth of the Internet has led to a boom in web-based economy. For some brands, online direct sales have become a breakthrough method of expansion. Two basic forms of online sales are self-operated online direct sales website and large-scale business-to-consumer e-business platforms such as Taobao.com and dangdang.com (the Chinese equivalents of E-bay). Intermediary payment plans, such as through Paypal, are the dominant means of payment, followed by cash payment on delivery.
Choosing a Distribution and Sales Model Sales Agents: The sales agent is an independent, intermediary party contracted by the supplier company and entrusted with the authority to operate and supervise the majority of the duties normally handled by the supplier company, including collecting/managing orders, selling commodities as well as miscellaneous sales and marketing duties such as advertising, after sale services, warehousing, etc. The mode of sales agent is widely popular in the Chinese garment and accessories industry, as well as in overseas Chinese markets such as in Hong Kong and Taiwan. The mode has proven to be an optimal system for imported brands, and many foreign and national clothing manufacturers owe their success in their respective markets to the proficiency of their sales agent partners. For new or foreign brands seeking to initiate their presence in the Chinese market, this method of approach provides a degree of security and comfort, as it relies on the expertise of experienced acting agents, well-versed in national and market policies. In these multi-tiered sales/distribution relations, the final distribution destinations are generally found in department stores, counters and booths and some specialty shop outlets. The most fundamental advantages of implementing the sales agent model relies on the agent’s existing sales channel resources and abundant market expertise. Additionally, many other more specific advantages can be extrapolated from these basic virtues such as low capital investment, quick market entry, faster brand localization, and low operation risk, etc. Of course, with these advantages come some distinct disadvantages for those choosing the mode of sales agent. With the establishment of this additional tier in the sales-distribution scheme, the supplier company stands to lose varying degrees of control, particularly over brand-image and pricing; as per the addition of this sales agent tier, a mark-up in product pricing should reasonably be expected. Most importantly, though excellent sales agents are the prime
components for effective brand development and smooth market entry, good agents are few and far between, and it may be especially difficult for unfamiliar companies to distinguish good sales agents from poor ones. Franchises: A franchise is the official authorization to sell a particular company’s goods or services in a given place, usually sold or rented out by the parent company to a prospective entrepreneur. The franchise system is by now quite familiar in the Chinese marketplace. The practice of franchising a company’s brand name and products shares many of the advantages found in the mode of sales agent. Cost and fiscal risk on the part of the parent company are largely negated, as they are in many ways simply leasing their intellectual property to the franchisee; franchises increase speed of entry and development, which often lends to a similar pace for continued expansion and growth, and successful franchises lead to the positive spread of both brand-image and company name. However, the same sorts of disadvantages as in the sales agent model also prevail. It is difficult to choose appropriate franchisees, especially if the parent company is unfamiliar with the market territory; once initiated, it is difficult for the parent company to enforce the preconditions of the franchise and to ensure the standards of the franchise shops; and it is also easy for franchise shops to have a negative impact on the supply company’s other sales venues, causing internal competition within the company, which may influence brand imagery and lead to price wars. Direct and Overlapping Sales Channels: Most large and well-established brands prefer to go a different route, and establish more direct sales/distribution channels such as specialty shops, direct sale outlets and department store counters. As the market develops, more and more retailers have expressed interest in pursuing direct relations with supply companies, adding accessibility and incentive to this already developing sentiment. The strengths of the direct sales channels include greater customer attention and control by the parent company, accurate brand-image concepts and culture, standardized after-purchase services, as well as more direct and hands-on market experience.
Obstacles for companies trying to achieve a direct sales channel approach, however, are formidable. The necessary market-entry capital is multiplied, often exponentially, and more resources are required of the parent company, many of which they may be ill-suited to fulfill, such as the need for local connections, the ability to hire a quality working staff, and a familiarity with local/central governmental policies. As per the above, the risk involved in a direct sales approach toward market-entry in China is usually correspondingly increased. Taking all this into consideration, the final decision of what approach a company seeking to do business in China’s garment industry should take should be based upon an in-depth assessment of the company’s capital, expendable time and resources and its availability for direct, on the ground management. The projected benefits and advantages for the specific company’s situation must then be weighed against the costs and disadvantages for each sales and distribution model, if an appropriate and effective market-entry strategy is to be achieved.
Special Tips for Italian SMEs An Italian SME has to look at its own goals, resources, strengths and weakness and how much risk it is willing to take in deciding which entry strategy to use for doing business in China. Given the complexity of Chinese business practice, it is more practical for Italian SMEs to partner with local sales agents to enter large department shops in large cities like Beijing, Shanghai and Guangzhou. In the meantime, it is worthwhile to also evaluate the market potentials in some second-tier cities, where consumers have fewer options of foreign brands but relatively higher incomes. Companies with limited resources and international business experience should start with an export strategy such as Italian-based salespersons and local sales agent and progress cautiously in the direction of equity joint ventures, which is more of a long term development strategy. It is the future development trend in China’s garment and fabric industry that Italian SMEs will cooperate firmly with domestic manufacturers to gain a win-win situation. On the one hand, Italian manufacturers possess fashionable designs, advanced equipment and mature manufacturing technology which enables them to make their products more competitive than most domestic products. They have seen the huge opportunity in China, but are struggling in finding out appropriate sales channels to enter the market. On the other hand, Chinese manufacturers have been in the garment and fabric industry for years and have developed stable connections and sales channels to present their products in the market. They have a better understanding of Chinese culture, and are sensitive to any change in market demand. However, after years of development, they have been confronted with some serious issues such as low technology, outdated equipment, lack of innovation and overly similar products. The best way to solve these problems and reverse the disadvantage for both sides is to cooperate, combining the various countries’ advantages to face the fierce competition together. Cooperating with a Chinese partner, either in technology and brand license aspects or in capital and management aspects, is a very good choice for Italian SMEs to enter the Chinese market. It builds mutual trust between the two parties in developing business together by sharing the same profits and
losses. This highly complementary strategy will maximally exhibit the strengths of both sides and ensure competitiveness and mutual benefits.
Focus: Working with shopping centers in international hotel or shopping mall The imported garment is mainly sold in high level shopping centers or high level hotels. But shopping centers generally will not import directly from abroad for the following reasons: The shopping centers are retail stores; they cannot order large quantities of garment from one company. Therefore it is not worth to go through all the procedures related to import only for a small quantity. The import cost is high since China sets high Customs duties. Shopping centers will not take the risk of stock the funds in importing garment. Therefore shopping centers sell imported garment in the following ways: invite foreign company to open their own shops in the shopping center of high quality hotel sales on commission basis; buying from agent of the companies or importers. Sales corner Inviting foreign companies to open a sales corner is their preferred way since shopping malls can avoid all the expenses of importing and stocking of the goods. In fact, with this method, all the risks remain with the foreign companies (Chinese custom duty, value added tax, all the expenses on freight, on sales and others). That is, the center provides the foreign producer with an area requested, the company is responsible for the installation of the rented area. According to the size of total area, the shopping center shall set a minimal sales volume to the company and a share rate on sales volume. Sales on commission base This kind of method is well accepted by domestic producers. With this method, the producers send the products to the shopping centers according to the style chosen by the centers. The account shall be settled on a monthly basis and the sales revenue shall be transferred to the producers after the commission has been deducted. However, most of foreign producers have problems in accepting this kind of proposal. Buying from agent of the companies or importers.
Some shopping centers also buy from agents or trading companies a small quantity of imported garment and resell then in the shops. When they buy, they do not mind through which channels the products have been imported. But this method takes very small proportion of the total volume of the centers. However, regardless the channel of sales in shopping center, having a good agent is important for a foreign company because all the shopping centers prefer to deal with agent since it is convenient for them. The agents operate in this way: they import garment from foreign producers but all the expenses occurred during the import shall be paid by the foreign producer who exports the garments and textiles (including custom duty and value added tax). The agent helps to pass all the procedures during the import and is in charge to find a good or some good shopping centers for the foreign producers at the best commercial terms and follow up the commercial relations with shopping centers. The cost related to the shopping centers is also paid by the producer. The agent shares the profit accordingly.
OEM (original equipment manufacture) In OEM model, foreign companies control the products design and marketing operation and Chinese enterprises act as the processing entities. Chinese companies do not involve in marketing activities. The marketing activities are controlled by foreign companies totally. Guangdong, Jingsu, Zhejiang and Fujian provinces are the most important bases for OEM model operation. Working with this model, Chinese processing companies can only have gross profit that is less than 10%.
OBM
(License for production and for marketing operation)
OBM is the new trend in China. Compared with OEM model, the profit of Chinese partner is much higher. With this model, the Chinese company has the “right of use” of the brand (produce and market management). Generally speaking, the well-known international brands (not the most famous level) operate with this model in China. AT present the OBM model is considered important by many Chinese garment companies. According to China Garment Association, there are many Chinese garment companies request the Association to help them to get contact with foreign companies that are seeking for the agency cooperation. There are even some famous enterprises give up the local brands that have been marketed in China for many years and turn to operate in production and in marketing for foreign brands, or acts as the solo agent of international brands.
Import duty For knitted garment and woven garment, the customs duty in 2009 is 14-17.5%, plus 17% VAT. Items
2013
Knitted garments
14-17.5
Woven garments
14-17.5
Source: China Customs I./E. Tariff of the People’s Republic of China
