1、CHINA APPAREL MARKET UPDATE 2019 Asia Distribution and Retail Jun 2019 PART 1: MARKET OVERVIEW AND COMPETITIVE LANDSCAPE ANALYSIS TABLE OF CONTENTS Key Takeaways.p1 Market Overviewp2 Movement of Local Apparel Brands.p13 Movement of Foreign Apparel Brands.p27 KEY TAKEAWAYS 1 Chinas apparel market fac

2、es headwinds The apparel market continued its uptrend in 2018, posting the highest yoy growth since 2014 However, mounting economic uncertainty is posing significant challenges for the apparel market Sales growth of the market is estimated to decelerate to 3.5% and 3.2% in 2019 and 2020 respectively

3、 Womenswear remains the largest sub-sector ; childrenswear and sportswear show vast growth potential Both womenswear and menswear sectors have shown some improvements in sales after several years of decline led by growing saturation Childrenswear has delivered strong growth momentum following the fu

4、ll implementation of two-child policy starting January 2016 Sportswear posts the highest sales growth among all other key apparel sectors But due to overall macro uncertainty, sales growth of all apparel sub-sectors is expected to decline in 2019. Specialist retailers, department stores take hold in

5、 China apparel distribution Apparel sales at department stores have been falling over the years amid stiffer market competition and challenges from e-commerce players Internet retailing has kept delivering strong growth in recent years, making it the fastest-growing retailing channel in Chinas appar

6、el market Market share of top 5 apparel brands, 2018 1.Adidas, 1.9% 2.Nike, 1.9% 3.HLA, 1.1% 4.Uniqlo, 1.0% 5.Anta, 1.0% Local apparel brands accelerate expansion at home and abroad Diversifying product lines to increase market size to invigorate brand values Launching flagship stores and concept st

7、ores to boost brand image Entering new markets and expanding store networks overseas to ramp up international presence Foreign apparel brands seek opportunities in China; yet, some struggle to make headway Foreign players continue to crack the lucrative China market A number of players have expanded

8、 local store networks and launched their first/ largest global flagship store in the country Yet, some failed to make a profit and finally exited the market 2 Market Overview MARKET OVERVIEW - CHINAS APPAREL MARKET FACES HEADWINDS Sales of apparel in China, 2014-2020 Source: EuromonitorInternational

9、; compiled by Fung Business Intelligence 3 1,622.81,714.11,810.01,927.92,077.42,149.92,217.8 6.2% 5.6%5.6% 6.5% 7.8% 3.5% 3.2% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 0 500 1,000 1,500 2,000 2,500 2001720182019e2020e billion yuanyoy growth Chinas apparel sales reached 2,077.4 billion yuan in 2018,

10、increasing at a rate of 7.8% yoy, the highest yoy growth since 2014. Driven in part by the consumption upgrading trend and stable demand among local consumers with improved living standard and higher income growth, the apparel market regained its growth momentum in 2017 and continued the uptrend in

11、2018. However, mounting economic uncertainty is posing significant challenges for the apparel market. Sales growth of Chinas apparel market is estimated to decelerate to 3.5% and 3.2% in 2019 and 2020 respectively SALES OF KEY SUB-SECTORS By category, womenswear remained the largest sub-sector of Ch

12、inas apparel market in terms of sales in 2018. Both sportswear and childrenswear saw double-digit yoy sales growth in 2018, outperforming that of womenswear and menswear. But due to overall macro uncertainty, sales growth of all apparel sub- sectors is expected to drop significantly in 2019. Sales o

13、f key sub-sectors of Chinas apparel market, 2014-2020 Source: EuromonitorInternational; compiled by Fung Business Intelligence 4 783.8 828.9 873.8 928.5 999.1 1025.7 1048.8 470.3 491.7 512.0 537.7 572.6 583.5 592.8 127.1 140.0 157.1 180.0 209.1 234.7 261.0 148.3 166.9 190.4 221.5 264.8 286.7 310.4 0

14、% 5% 10% 15% 20% 25% 0 200 400 600 800 1000 1200 2001720182019e2020e billion yuan Sales of womenswearSales of menswearSales of childrenswear Sales of sportswearyoy growth of womenswearyoy growth of menswear yoy growth of childrenswearyoy growth of sportswear SALES OF KEY SUB-SECTORS - WOM

15、ENSWEAR: YOY GROWTH PICKS UP IN 2018 5 Sales of womenswear in Chinas apparel market, 2014-2019 Source: EuromonitorInternational; compiled by Fung Business Intelligence Market share of womenswear in Chinas apparel market, 2018 48.1% Source: EuromonitorInternational; compiled by Fung Business Intellig

16、ence After several years of decline as a result of growing saturation, the womenswear sector picked up pace in 2017 and 2018 with sales growth rising to 6.3% yoy and 7.6% in 2017 and 2018 respectively. That said, due to the overall market uncertainty, sales growth of womenswear is estimated to drop

17、significantly to 2.7% in 2019. 783.8 828.9 873.8 928.5 999.1 1025.7 7.4% 5.8% 5.4% 6.3% 7.6% 2.7% 0% 5% 10% 15% 20% 0 200 400 600 800 1,000 1,200 2001720182019e billion yuan Sales of womenswearyoy growth of womenswear 470.3 491.7 512.0 537.7 572.6583.5 3.8% 4.6% 2.8% 5.0% 6.5% 1.9% 0% 5%

18、10% 15% 20% 0 200 400 600 800 1000 2001720182019e billion yuan Sales of menswearyoy growth of menswear SALES OF KEY SUB-SECTORS - MENSWEAR: SHOWS SOME SIGNS OF IMPROVEMENTS IN 2018 6 Sales of menswear in Chinas apparel market, 2014-2019 Source: EuromonitorInternational; compiled by Fung B

19、usiness Intelligence Market share of menswear in Chinas apparel market, 2018 27.6% Source: EuromonitorInternational; compiled by Fung Business Intelligence Menswear has the second largest market share in Chinas apparel market, just behind womenswear. In 2018, sales of menswear represented 27.6% of t

20、he total apparel sales in China. Similar to the womenswear sector, the menswear sector has also become increasingly saturated. It showed some improvements in sales in 2017 and 2018. However, as with the womenswear sector, sales growth is expected to drop significantly this year due to the uncertain

21、market economic environment. SALES OF KEY SUB-SECTORS - CHILDRENSWEAR: TWO-CHILD POLICY SHORES UP GROWTH MOMENTUM 7 Sales of childrenswear in Chinas apparel market, 2014-2019 Source: EuromonitorInternational; compiled by Fung Business Intelligence Market share of childrenswearin Chinas apparel marke

22、t, 2018 10.1% Source: EuromonitorInternational; compiled by Fung Business Intelligence Although childrenswear took up only 10.1% share in Chinas apparel market, the sector has delivered strong growth momentum following the full implementation of two-child policy starting January 2016. The National H

23、ealth and Family Planning Commission predicted that the number of newborns to reach 17.5 21.0 million annually during the 13thFYP period (2016 2020), up from the annual births at around 16 million between 2003 and 2013. Baby and toddler wear is expected to be the main powerhouse for the childrenswea

24、r sector. 127.1 140.0 157.1 180.0 209.1 234.7 9.2% 7.9% 6.0% 14.6% 16.2% 12.2% 0% 5% 10% 15% 20% 0 200 400 600 800 1000 2001720182019e billion yuan Sales of childrenswearyoy growth of childrenswear SALES OF KEY SUB-SECTORS - SPORTSWEAR: STRONGEST SALES GROWTH AMONG OTHER KEY SUB-SECTORS I

25、N 2018 8 Sales of sportswear in Chinas apparel market, 2014-2019 Source: EuromonitorInternational; compiled by Fung Business Intelligence Market share of sportswear in Chinas apparel market, 2018 12.7% Source: EuromonitorInternational; compiled by Fung Business Intelligence Sportswear registered sal

26、es growth of 19.5% yoy in 2018, well above the total apparel sales growth of 7.8% yoy. Sportswear also posted the highest sales growth among all other key apparel sectors, indicating its vast growth potential. 148.3 166.9 190.4 221.5 264.8 286.7 10.1%12.5% 14.1% 16.3% 19.5% 8.3% 0% 5% 10% 15% 20% 0

27、200 400 600 800 1000 2001720182019e billion yuan Sales of sportswearyoy growth of sportswear SALES OF KEY SUB-SECTORS - SPORTSWEAR: STRONGEST SALES GROWTH AMONG OTHER KEY SUB-SECTORS 9 Sportswear (apparel and footwear) sales by category, 2018 Source: EuromonitorInternational; compiled by

28、Fung Business Intelligence By category, sports-inspired footwear and sports- inspired apparel are the two largest segments in Chinas sportswear market. The combined sales of the two segments totaled 144.5 billion yuan in 2018, or around 54.5 % of the total sportswear sales in China. The propelling g

29、rowth in the sportswear sector is mainly driven by the following factors: Rising levels of health and well-being awareness and increased sports participation. Government policies to promote national health and sports participation serve as a boost to the sports industry. Recent policies include the

30、“2016- 2020 National Fitness Plan” released in June 2016; the “13th Five Year Plan for the Development of Sports Industry” released in July 2016; and the “Guiding Opinions of the State Council on Speeding up the Development of the Competitive Sports Industry” released in December 2018. Performance a

31、pparel , 14.8% Outdoor apparel , 7.5% Sports-inspired apparel , 21.5% Performance footwear , 19.3% Outdoor footwear , 3.8% Sports- inspired footwear, 33.0% 264.8 billion yuan, up 19.5% yoy DISTRIBUTION CHANNELS - SPECIALIST RETAILERS, DEPARTMENT STORES TAKE HOLD IN CHINA APPAREL DISTRIBUTION (in %)2

32、00172018 Store-based retailing 87.581.576.271.4 68.1 I.Grocery retailers4.84.03.32.62.1 II.Non-grocery retailers44.142.241.139.839.6 Clothing and footwear specialist retailers20.820.720.520.220.0 Leisure and personal goods specialist retailers 11.811.511.812.112.6 Other non-grocery retail

33、ers 11.510.18.77.57.1 III.Mixed retailers38.635.331.929.026.4 Department stores38.635.331.929.026.4 Non-store retailing 12.518.523.828.6 31.9 IV.Home shopping 0.10.10.10.10.1 V.Internet retailing 12.418.423.728.531.8 Total 0100 Market share (retail sales) by distribution channel for appar

34、el and footwear in China, 2014-2018 Source: EuromonitorInternational; compiled by Fung Business Intelligence Apparel sales at department stores have been falling over the years amid intensifying market competition and challenges from e-commerce players. Internet retailing has kept delivering strong

35、growth over the past few years, making it the fastest-growing retailing channel in Chinas apparel market. The channel is predicted to keep growing at a faster rate in the coming years. 10 COMPETITIVE LANDSCAPE - TOP 10 APPAREL BRANDS IN CHINA 11 Market share Market share (yoy change, ppt) Major cate

36、gory 1.Adidas1.9% 0.3Sportswear 2. Nike1.9% 0.3Sportswear 3. HLA1.1% 0.1Menswear 4. Uniqlo 1.0% 0.1 Womenswear, menswear, childrenswear 5. Anta 1.0% 0.2Sportswear 6. Li Ning 0.6%-Sportswear 7. Skechers 0.6% 0.2Sportswear 8. Balabala0.5% 0.1Childrenswear 9. Jack modified by Fung Business Intelligence

37、 COMPETITIVE LANDSCAPE - TOP 10 APPAREL BRANDS IN CHINA 12 Average market cap in 2018 (billion yuan) Operating income in 2018 (billion yuan) Major category 1.Anta90.4323.41Sportswear 2. HLA47.8119.09Menswear 3. Semir27.7215.75 Menswear, womenswear, childrenswear 4. Li Ning15.4010.51Sportswear 5. Daz

38、zle Fashion12.682.10Womenswear 6. Hongdou Group 12.632.48Menswear 7. Peacebird12.447.71Menswear, womenswear 8. Bosideng9.1611.99Down wear 9. Xtep8.876.20Sportswear 10. Lilanz8.463.60Menswear Top 10 listed apparel companies in China (by market cap), 2018 Source: iiMedia; modified by Fung Business Int

39、elligence Movement of local apparel brands 13 LOCAL BRANDS ACCELELATING EXPANSION IN CHINALOCAL BRANDS ACCELELATING EXPANSION IN CHINA Diversifying product lines to increase market size to invigorate brand values selected cases 14 COMPETITIVE LANDSCAPE - MOVEMENT OF LOCAL APPAREL BRANDS (EXPANSION)

40、15 Source: News, Companies websites; compiled by Fung Business Intelligence In April 2018, JNBY launched SAMO,adesignerfashion brandtargetingprofessional male customers in China. The philosophyofthenew menswear brand is “simplified, butbetter”.SAMOsdesign focuses on elegance, simplicity, charming an

41、d versatility. Diversifying product lines to increase market size to invigorate brand values JNBY unveils new fashion brands starting from April 2018 In June 2018, JNBY announced thelaunchofanew sustainablefashionbrand “REVERB” in China. Targeting youngandfashionable millennials,thebrandputs strongf

42、ocusonsocial responsibility and sustainability. REVERBembraces“circular fashion”asitsbrand philosophy, focusing on the design concepts of “Athleisure, Genderless and Sustainability”. All apparel items from REVERB usesnaturalmaterialswith organic certification and high- techmaterialscertifiedby Swiss

43、 Bluesign Standard. In February 2019, JNBY rolled out a new menswear designer brand “A Personal Note 73” . The brand targets young and aspirationalconsumerswith knowledge about fashion and design. Italian fashion designer Andrea Pompilio,willdesigntwo collections a year for the new brand, with the f

44、irst collection available in fall 2019. JNBY plans to open 10 stores in 2019, with one-third of them in tier-1 cities. SAMOs promotional material COMPETITIVE LANDSCAPE - MOVEMENT OF LOCAL APPAREL BRANDS (EXPANSION) 16 Source: News, Companies websites; compiled by Fung Business Intelligence In Decemb

45、er 2018, JNBY announced to launch a multi-brand store “LA SU MIN SO LA” for designer brands in China, a move to align with the companys multi-brand strategy and expand its businesses though horizontal diversification. LA SU MIN SO LA will serve as a platform for designerbrandstoshowcasetheirproducts

46、. Adopting the concept “Better Design, Better Life”, the store will operate as an incubator for designer brands and help international designer brands adapt to local operation. LA SU MIN SO LAs product lines cover various categories, including clothing, footwear, handbag, accessories and lifestyle p

47、roducts. Diversifying product lines to increase market size to invigorate brand values JNBY to launch multi-brand store “LA SU MIN SO LA” in December 2018 LA SU MIN SO LAs marketing material COMPETITIVE LANDSCAPE - MOVEMENT OF LOCAL APPAREL BRANDS (EXPANSION) 17 Source: News, Companies websites; com

48、piled by Fung Business Intelligence In January 2018, OVV and AEX, womenswear brand and menswear brand under HLA opened its first physical store, which signifies further landing of the Groups multi-brand strategy. Currently, OVV and AEXs target markets are mainly the tier-2 and tier-3 cities. Since 2

49、017, HLA has accelerateditsmulti-brand,multi-categoryand multi-channel investment to build up its youthful image, hoping to widen the customer base of the Group. Diversifying product lines to increase market size to invigorate brand values HLAs womenswear brand OVV and menswear brand AEX open first physical store OVV x AEXs flagship store in Huaihai Road Middle, Shanghai LOCAL BRANDS ACCELELATING EXPANSION IN CHINALOCAL BRANDS ACCELELATING EXPANSION IN CHINA Launching flagship stores selected cases 18 COMPETITIVE