Shanghai Fashion

Chinese fashion

Chinese fashion girl 1

Chinese and Shanghai Silk Fashion Eighteenth-century Europeans of means were the ultimate consumers, and they were particularly captivated by luxurious and exotic goods, including Chinese silks. Both the French and the British began trading with China starting in the late seventeenth century and of all the commodities imported, silk was one of the most desirable and profitable. As textiles were the most expensive of all household items, sure signs of wealth and status were imported silk window curtains for sumptuous interiors, and silk dresses in the latest fashion. The ornamental motifs on Chinese silks, lacquer work, and porcelain were borrowed by textile designers in Europe providing for local consumption in the style now known as chinoiserie.

Chinese silk fashion

Chinese fashion silk

The Philadelphia Museum of Art has drawn on its large and important collection of textiles and costumes for a small exhibition entitled The Bizarre and the Beautiful: Silks of the Eighteenth Century. It examines the development in Europe of what are known as bizarre silks, which are defined by their juxtaposition of various patterns and the use of fantastical imagery. The show, which is on view until the spring of 2007, comprises fifteen examples of these silks, a few of which were fashioned into dresses worn by stylish women in Philadelphia. By the middle of the eighteenth century, bizarre silks were gradually supplanted by those that were ornamented with greater fidelity to nature. This was particularly the case in England, where the picturesque landscape movement introduced by

such figures as Capability Brown influenced textile designers in the use of flowers, plants, and other natural  elements on their fabrics.In France, fashion designers were inclined to exaggerate the actual appearance of fruits and plants, making them much larger and coloring them more boldly. This changed by the 1760s when English designers fell under the sway of French fashions in which patterns incorporating swags, lace, fur, and small floral bouquets were popular. Finally, with the advent of the neoclassical style around the turn of the nineteenth century, more balanced and symmetrical designs incorporated stripes and small patterns, which were woven into silk of a much lighter weight than had previously been popular. Author Allison Eckardt Ledes COPYRIGHT Brant Publications, Inc. and Gale Group

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A Complex Connection: China's Government & Garment Industry Analyzing the relationship between China's Communist government and the country's huge apparel industry can be a rigorous exercise in reading between the lines. But an accurate perspective yields better understanding of this critical sourcing locale. International sewn products executives who have been doing business with China for the past two decades cannot help but notice the changes that the nation's widening ventures into fashion have brought to this global apparel powerhouse. For instance, Westerners visiting China in 1980 found themselves in a nation where all men and women were wearing drab blue tops and baggy blue pants. Today, they see Chinese men in suits and ties, T-shirts and jeans, and women in Shanghai and Guangzhou in silk fashion and styles just a few steps behind those of New York and Los Angeles.

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These changes, evident on the surface of China, are closely linked to the Chinese apparel industry's evolution in the 1980s and 1990s. It transformed from a market segment in which business practices as well as people's personal attires were all dictated by socialist strictures into the largest purveyor of fashion apparel in the world. But how did these changes come about, and what has been the role of the Chinese government in the industry's transition? While many in the sewn products industry keep a close eye on China, both as a competitor and a sourcing ally, few fully understand the answers to these and other important questions, such as: Do recent downturns in Chinese apparel exports foreshadow an irreversible decline of the industry in China, this is not for silk fashion. To provide some perspective on these issues, following is an analysis of some key facts and figures related to today's Chinese apparel industry, and the role of the government in the country's overall sewn products complex.

Few Garments Produced by State-Owned Enterprises

First off, it should be noted that the Chinese government plays a relatively small role in the country's garment industry. This is in sharp contrast to China's textile industry, in which the government controls the buying and selling of cotton, wool and silkworms, and is heavily involved in spinning and weaving.

An independent audit of China's garment industry above the village level at the end of 1997 showed the following breakdown of overall sales:

* 5.4 percent of sales are attributable to state-owned enterprises;

* 61 percent can be traced to township enterprises and urban collectives;

* 28.4 percent are made by enterprises with foreign investments; and

* 5.2 percent are by private enterprises.

This industry structure makes intuitive sense because state-owned enterprises are widely viewed as slow and inefficient -- not characteristics well-suited for the fickle fashion industry. In fact, store-bought garments were not widespread in China until the mid-1980s and China's central planners, oriented toward production goals in terms of tonnage and yardage, never saw much glamour in making clothes.

While there were always tailors and seamstresses and factories for uniforms in China, the fashion apparel industry in China as we know it today was pioneered by Hong Kong garment companies setting up plants across the border in Shenzhen in the early 1980s. These companies from Hong Kong were soon followed by operations established by the Taiwanese, the Japanese and the Koreans.

Meanwhile, township enterprises and other collectives, as well as individual entrepreneurs, saw profit in garment making and set up their own production lines. These primarily targeted China's domestic market, but some were able to compete successfully in the export market. Today, many companies classified as "urban collectives" or "township enterprises" are privately owned, with entrepreneurs paying a fee to local authorities for the use of land or for the comfort of being able to operate under local protection.

Despite the obvious activity of these "private collectives" and foreign-funded firms, data released by the Chinese government's customs department showed that some 63 percent of garment export were produced by state-owned enterprises, and only 16 percent by joint ventures (township enterprises or urban collectives) and 12 percent by foreign-funded enterprises. As is often the case with data from the Chinese government, the numbers do not always mean what they say. In this instance, the government grossly misrepresented the role of state-owned enterprises in the garment industry.

A primary reason for the discrepancy is that until last year, export quotas and licenses were allocated only to state-owned enterprises or foreign-funded enterprises and joint ventures. Other Chinese entities producing garments had to negotiate with state-owned enterprises to export their merchandise under the latter's quotas and export licenses. Beginning in 1998, however, 15 percent of export quotas were allocated directly to the entities actually producing the garments. This proportion is supposed to rise to 20 percent this year. Moreover, an electronic auction system has been initiated for allocating the export quotas most in demand. And on Jan. 4 of this year, private manufacturers were granted export and import rights for the first time.

Lumbering Textile Suppliers: The Industry's Clay Feet

With the exception of a small number of innovative companies, China's heavily state-owned textile industry is simply not up to snuff. Among the contributors to its lack of competitiveness:

* China's domestic fabric prices are often higher than world market prices;

* the printing and dyeing sectors are short on quality control;

* the man-made fiber sector has restrictions on how much it may spend on research and development;

* the industry is weighed down by pension and benefit costs and plagued by huge excess capacities that result in constant price wars; and

This year, China is decontrolling cotton prices, and has allowed prices to float some 30 percent down to world market levels. As a result, the competitiveness of Chinese cotton fabrics has vastly improved. Still, faced with low quality and often high prices, it is no wonder that Chinese firms turn to imported materials to make their garments. It's estimated that some 55 percent of China's exported garments are made of imported materials. (Approximately half of exported garments are made under "export processing" contracts, in which garments are cut and sewn according to the specifications of foreign buyers who usually also provide fabrics from abroad.)

* the bureaucratic structure of these companies gets in the way of efficiency and flexibility, and there is often petty interference from government officials.

The Chinese government is aware of the textile industry's problems, and is tired of subsidizing the industry year after year. In response, it is attacking the problem of industry losses on three fronts.

1 Reducing capacity. The government is forcing the industry to reduce capacity, with targets set for each province. The cotton industry, for instance, must reduce the number of spindles by one-fourth, and government rules specify that retired spindles are to be melted down and not sold to township enterprises.

2 Decreasing imports. The government is making it more difficult to import fabrics, especially manmade fiber fabrics. (China's state-owned enterprises have greatly expanded their capacity to produce man-made fibers in recent years, and the industry is operating well below its capacity.) The government's goal, set in 1998, is to raise the percentage of domestic fabrics used in exported garments from 40 percent to 65 percent.

3 Improving quality. The government is encouraging the industry to upgrade its quality -- an initiative that has been met with mixed success so far.
Concerning the second item, it's important to note that only a limited number of firms in China have licenses to import fabrics, and most of them are prohibited from selling the imported fabrics domestically. Nonetheless, there was an active and highly profitable market for imported fabrics until the government clamped down during the second half of 1998. Tightened foreign currency rules and an anti-smuggling campaign have been successful in restricting the flow of imported fabrics into China, but the measures have also contributed to a drop in China's garment exports.

WTO Accession: China's Future

Joining the WTO. However, this isn't likely to dramatically change the sourcing strategies of the world's apparel firms. Retailers and apparel companies in the West have become much more time-conscious and prefer to source closer to home even if prices are somewhat lower elsewhere. China's labor costs are no longer the lowest -- costs are lower in India, Cambodia, Russia and other places that have become more accessible in  recent years. It is true that the educational and skill levels of

publisher of Pacific Trade Winds (www.pacifictradewinds.com), a monthly newsletter on Asia for the apparel industry, its suppliers and investors. Prior to launching Pacific Trade Winds in July 1998, Egan was a securities analyst covering the industry in the United States and Asia for State Street Bank and the investment firm of Scudder. She is a Chartered Financial Analyst. Her books and articles are published in the United States, China, Taiwan, Hong Kong and the Philippines. She can be reached at tel.: 805-968-2119.
COPYRIGHT Miller Freeman, Inc. and Gale Group