Transformation and Change of Employment: Diversified Ventures for Garment Enterprises

In the textile industry, 200 million shirts can be exchanged for a single Boeing airliner. This stark comparison has become a widely recognized truth: China is a major player in clothing production but not yet a global leader in fashion. The transformation of business models has become a critical choice for apparel companies, one that determines their survival and growth. Many domestic garment companies initially achieved rapid expansion through simple competition strategies such as "heavy products, large quantities, wide distribution, and low prices." These methods created an illusion of success, leading many to believe they could continue growing by sticking to traditional models. However, markets are never static, and what worked before may now be the root of current challenges. The recent inspection failure of Shanshan’s underwear serves as a clear warning. Facing a rapidly changing environment, some companies are choosing to evolve. Haopai Group, for example, has successfully navigated economic fluctuations through strong domestic sales. Despite its success, 67-year-old Hongshou decided to take a bold step by entering the e-commerce space. As chairman of Haopai Group for 30 years, Hongxuan has remained focused on the clothing industry since the company's founding in 1979, showing remarkable consistency and dedication. Over the past three decades, the company has experienced steady growth, with no year of losses. In 2010, the sales of Hao brand reached nearly 2 billion yuan, up 30% from the previous year. However, the same year brought significant cost increases—fabric prices rose from 8 yuan to 17 yuan per meter, and labor costs increased by 50-60%. To adapt, Haopai launched an e-commerce project with a budget of 100 million yuan, planning to operate it independently by May. The shift from traditional to digital is not just a trend—it's a necessity. Many "non-professional" clothing companies are either transforming or exiting the sector. Youngor, once a leading name in men’s wear, has diversified into real estate and equity investments. Its chairman, Li Rucheng, has faced criticism for this shift, but the company has found new sources of profit outside of textiles. In 2009, over 86% of Youngor’s net profit came from real estate and investments, not from its core clothing business. Shanshan Group, another industry giant, has also moved away from traditional apparel. Its chairman, Zheng Yonggang, has invested heavily in lithium battery materials and even dipped into the gaming industry. While this diversification has led to financial gains, it has also caused setbacks in the clothing sector, including product recalls and quality issues. Industry experts like Cui Tao highlight the structural challenges in China’s apparel industry. Many companies grew quickly through simple competition, but now face homogenous market conditions. Without innovation and long-term strategies, they risk stagnation. As the industry evolves, e-commerce is becoming a key battleground. While few apparel companies have successfully built independent online platforms, some, like Seven Wolves, have taken small steps on Taobao. However, their online sales remain minimal compared to overall revenue. Looking ahead, the men’s clothing industry is entering a new era dominated by capital rather than brands, pricing, or channels. Companies must find ways to align their resources with emerging opportunities. For those who fail to adapt, the future may not be as promising. In summary, the Chinese apparel industry is at a crossroads. The path forward requires innovation, strategic investment, and a willingness to change. Only those who embrace these shifts will survive and thrive in the coming years.

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