Children's Wear Report — Industry Overview — Sample Pages: Sourcing Children's Wear from China

Industry Overview: Children's Wear

China is the largest and one of the most price-competitive suppliers of children's wear garments in the world, but the industry is in a state of flux, dealing with export restrictions to the US and the EU, a government-imposed export tax, increasing material costs and labor shortages. Exports of newborns' clothing and babywear rose sharply after quotas were partially lifted in 2002, and in the first four months after the last phase of quota removal in January 2005, children's wear exports to the US and the EU increased by 30 percent over the corresponding period a year earlier. China then imposed a levy on more than 100 types of apparel, including children's wear — exported garments taxed at US$0.024 to US$0.060 per piece — and when the tax failed to limit the surge, the US imposed safeguards on categories including cotton and man-made fibre knitted shirts, cotton trousers and cotton and man-made fibre underwear, while the EU agreed with China to limit export volume growth by 10 to 12.5 percent until the end of 2007.

The quota limits apply to men's, women's and children's categories combined, so children's wear makers compete for quota room with adult garment suppliers as well as each other. Many suppliers put capacity expansion plans on hold in a wait-and-see policy, boosted exports to markets such as Japan and the Middle East, or — among large suppliers — moved production to other countries in Asia. At the same time, the cost of cotton, the main material used in these garments, rose 30 percent in 2004 and a further 10 percent in the first half of the following year, yet keen competition prevented makers from raising prices: many large companies lowered prices on basic designs by 10 percent, computerised processes to cut material wastage and rejection rates, and upgraded R&D capability to release value-added models that yield higher profits. Production hubs span Guangdong, Zhejiang, Jiangsu and Fujian, each with its own strengths for a buyer to weigh.

How to Read This Overview as a Buyer

Read the overview for decisions, not background. The cost figures tell you how much room a supplier has to negotiate: a maker absorbing most of a cost increase will either raise prices soon or cut somewhere you cannot see, and both possibilities belong in your order planning. The competition analysis tells you where your enquiry has leverage — crowded, standardised segments compete on price, while design-led segments compete on capability — and the supplier survey turns the industry's own expectations about prices, sales, research focus and capacity into a planning horizon for the year ahead. In this report, Quanzhou is profiled for value-added models at midrange prices, a fact the full overview develops with production and survey detail.

The overview also frames the 82 profiles that follow it. A profile's prices mean little until they are set against the overview's price trends; a factory's expansion plan means more when two-thirds of its competitors are expanding too. Buyers who read the overview first consistently shortlist better, because they know which claims to test when they reach the profiles and the product gallery.

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