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In recent years, many well-known Chinese brands have either gone out of business or closed a large number of stores, and the bankruptcy liquidation application by the leading domestic women’s clothing company La Chapelle has caused much lamentation among netizens.
Chinese people often say “clothing, food, housing, and transportation,” with clothing taking the top spot.
Hardworking Chinese people currently possess the world’s largest and most complete clothing industry system, with clothing production accounting for over half of global output. Not only does it meet domestic demand, but it also ranks at the forefront in global clothing exports.
In terms of clothing expenditure, according to the data from the National Bureau of Statistics of China, the retail sales of clothing, shoes, hats, and knitted textile goods in China amounted to 13 trillion yuan in 2019, which means that Chinese clothing expenditure was around 13 trillion yuan.
However, with the impact of the three-year pandemic, by 2023, it had decreased to around 10 trillion yuan. This nearly one-fourth drop in Chinese clothing expenditure is a staggering figure.
According to Chinese customs statistics, China’s clothing exports in 2023 amounted to 159.14 billion US dollars (around 1.1 trillion yuan), representing an 8.5% increase from the same period in 2019 before the pandemic.
While domestic demand in the clothing industry decreased by 23%, exports increased by nearly 9%. China’s clothing exports have surpassed domestic demand, with much of the industry relying on the international market for survival.
Let’s compare the market value of Chinese clothing listed companies before and after the pandemic.
In April 2020, the total market value of the top 100 listed clothing companies in China was 730 billion yuan, with an average market value of 7.3 billion yuan.
The top ten companies were Anta Sports, Shenzhou International, Li-Ning, Youngor, Heilan Home, China Qin Ge, Yuyuan Group, Bosideng, Semir Clothing, and Saturday.
By the end of 2022, HLA had around 8,200 stores, but during the year of 2023, 2,200 stores were closed.
Recently, the domestically-listed leading women’s clothing company, La Chapelle, applied for bankruptcy liquidation. La Chapelle went public on the Hong Kong Stock Exchange in 2014, listed on the main board of the Shanghai Stock Exchange in 2017, and became the first domestic clothing company to be listed on both the A and H shares market. At its peak, La Chapelle had nearly 10,000 directly operated stores nationwide.
Domestic clothing brand, Shegluowu, recently exposed that “more than 800 offline stores have all been closed.”
Companies like Meters/bonwe and Semir have seen significant declines in performance.
Qiu Jianqiang, who recently succeeded his father Qiu Guang as the chairman of Semir Clothing, handed in the worst performance in the company’s 12 years on the market. In 2023, the company’s revenue was 13 billion yuan, with a drastic 57% decrease in net profit to 600 million yuan. In 2019, before the pandemic, Semir’s revenue was close to 20 billion yuan. Semir Clothing had 6,500 employees in 2019, but by 2022, the number had dropped to 3,200. Compared to other bankrupt companies, Semir Clothing is considered relatively better off.
Looking back at the peak of Meters/bonwe, in 2008, Meters/bonwe went public on the A-share market, becoming the “number one leisure clothing stock,” with a total market value of 38.9 billion yuan on its first day of trading. In the 2008 Forbes China Rich List, the owner, Zhou Chengjian, with a net worth of 13.6 billion, became the richest man in Zhejiang, surpassing Zong Qinghou of Wahaha, Lu Guangqiu of Wanxiang Group, and Guo Guangchang of Fosun International. Yet now, Meters/bonwe is “on the brink of collapse.” Its share price once dropped to 1.01 yuan this year, approaching the delisting line of 1 yuan, with a total market value of only 2.538 billion yuan, currently valued at 4.372 billion yuan. With a series of crises including loss-making performance, store closures, and decreasing brand recognition, Meters/bonwe is being abandoned by the capital markets.
Foreign clothing companies have also been gradually withdrawing from the mainland. Brands like ZARA, H&M, C&A, Old Navy, New Look, and Forever 21 once dominated prime locations in major shopping malls. Now they are either closing down or leaving.
According to the financial report of ZARA’s parent company, Inditex Group, the number of ZARA stores in mainland China was 183 in 2018, but as of January 31, 2024, only 96 stores remained.
In the first half of 2024, the combined net profit of 42 listed clothing companies in China was only 6.7 billion yuan. Currently, half of the listed clothing companies are operating at a loss, with over 10,000 stores being closed.
Both listed companies and foreign brand companies in mainland China are considered the best in the clothing industry. These businesses are experiencing significant losses, making it even more difficult for smaller brands to survive.
There are 13,635 enterprises in China’s clothing industry with annual main business income of over 20 million yuan. From January to June 2024, the losses of these enterprises were nearly 30%.
Official statistics show that from 2020 to 2023, the annual losses were consistently over 20%.
The actual bankruptcy data in China are being masked. It is estimated that at least over 30% of enterprises are running at a loss.
Reports suggest that the clothing industry in China employs around 170 million people. If the industry’s unemployment rate reaches 30% to 50%, the numbers would be astonishing.
In reality, China’s current economic crisis may have already surpassed the Great Depression of the United States from 1929 to 1933 when income levels dropped by 20% to 50%, the unemployment rate reached 25%, and stocks and real estate prices plummeted. People lost confidence in the future.
Currently, Chinese wealth, especially in real estate, has shrunk by at least 30% to 50%, with a large number of properties unable to repay loans. Consumption has drastically decreased, unemployment numbers have surged, youth unemployment rates may reach 40%, companies are closing in large numbers, and the finance industry is facing numerous crises.
It seems that China’s current economic crisis has likely exceeded the Great Depression in the United States.
China’s economy was already weak internally and constantly provoking internationally. Hong Kong has been dismantled, and Taiwan is facing intense harassment. They also continue to attract high-tech talents and technology from other countries, while their “wolf-warriors” frequently criticize the US and Japan. The international community is finding it hard to tolerate such actions.
With the recent election of Trump as US President, promising to impose 60% tariffs on China, the country’s clothing exports could face significant impacts if implemented.
Currently, China’s economy heavily relies on exports, so if exports decline, an economic collapse is inevitable.
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Produced by the Ganjing Finance Team.