Chapter 4: Findings and Analysis
Results, Findings, and Analysis
In-depth interviews with Chinese factory owners and managers of clothing brands were conducted to get a sense of how the crisis has impacted the day-to-day operations of the textile and garment industries. During discussions with factory owners, it was discovered that only a limited number of customers are now placing orders with major, well-known firms. However, these purchasers have reduced the amount they order, maintained (cheap) costs the same, upped quality criteria, and requested more than one style. Textile and garment producers must invest a significant amount of time and money in developing new goods for fewer orders. This, according to Brydges, Retamal, and Hanlon (2020) contradicts the economic order quantity paradigm and reduces wages and productivity.
Variable demand and unstable patterns have caused buyers to worry a lot more about on-time deliveries and want air delivery a lot more. Costs for shipping and freight have gone up by more than double according to all respondents. Because of this, logistics are at an all-time high, and the price per unit of clothing has gone up as a result. All of these things have an effect on the cash cycle of the manufacturer, which happens when the customer sells the goods and pays back the loan. Since the credit limit has gone up, there will be more money owed to banks. Since the payment cycle is now twice as long, the vendors pay about twice as much interest on any loans they take out. Because of these things, the export industry’s profit margins have gone down a lot, making it hard for many vendors to break even. Millions of people have lost their jobs because of the pandemic. This means that the working population has already lost the most, and more will come. During the interviews, the owners of the plant said that there was no guarantee of business and that they would have to let employees go because there were more and more bad things happening around the country. Because there are so many employees, the workers haven’t gotten much help from the company or the government in terms of money or health care. How hard it is for a country to keep its economy stable during a crisis depends directly on how big it is.
It was clear from the in-depth interviews that although the garment industry had made considerable technical advances, few of them had been implemented. According to studies, not even the most technologically proficient businesses that have digitized their processes and workflows are prepared for all of the challenges that accompany the digital transformation. Even while some garment companies possessed the technology, their staff either did not know how to use it or continued to use outmoded processes. The factory owners had to devote both money and the time of their staff in this endeavor. In addition, they feared that automating the activities may lead to job losses, which would worsen the epidemic’s already high unemployment rate. This might make it challenging for China’s small textile and garment industry to absorb new technology. The sector’s reluctance to adapt to changing conditions is another reason it has not evolved as rapidly as other industries in India, Europe, and the United States.
Even among locally manufactured brands, there is intense rivalry. Due to social distance restrictions, markets and shopping complexes prohibit admission. As a consequence, people find it more difficult to move about, which has led to a nationwide shortage of retail locations. Managers and owners have admitted that the sharp decrease in consumer spending during the first half of 2020 has damaged the Chinese economy. Due to their imminent shutdown for almost the whole year of 2020, a number of stores in several of the nation’s most popular cities have either stopped paying their rent or abandoned their sites.
According to the collected data, it is obvious that the majority of domestic brand owners are affected by unsold inventory, often known as “deadstock,” overhead expenditures, and the need to decrease staff as a consequence of a rapid sales fall. The cash flow cycle is being interrupted as a result of the considerable amount of money being held back in finished, ready-to-sell products. Due to the fact that digital marketing is progressively becoming the most important means for selling and promoting products worldwide throughout the pandemic, it was researched if local business owners and designers were aware of it. The majority of them were aware of the omnichannel approach, but because they lacked comprehensive knowledge in this area, it was difficult for them to implement it. Internet sales of local brands produced much less income as a result. This demonstrates that there is a significant information gap in the digitalization of the value chain as represented in figure 3 below, which has generated a significant economic challenge for Chinese textile makers.
Fig 3: Value Chain Digitization of the Chinese Textile Sector post-Covid
Local community support was widely ignored by Chinese textile and clothing companies during COVID-19, despite its value in establishing local networks and reputations (Chakraborty & Biswas, 2020). One responder to this question said that their firm had arranged a sewing project to manufacture cloth masks with the assistance of volunteers and local facilities, resulting in a rise in demand for the company’s products. If these community projects were highlighted in the media and disseminated through social media, they would attract widespread interest. Despite the fact that enterprises in the Chinese clothing, textile, and garment industries have been working on adaptive clothing and other medical goods, it is questionable how much the textile and garment industry will gain from COVID-19’s health care standards. Notably, respondents feel that neither the accessible information nor the available resources are organized by textile entity in China. It is possible that textile firms would actively seek the aid or participation of the community in order to establish a good self-image and fulfill their social responsibilities.
The majority of respondents to the research identified innovation and a proprietary fabric, a solid working relationship with the local government, an agile supply chain, rapid responses, and sensible investments in digital channels as the company’s most valuable assets. According to several of the other study participants, the company’s powerful branding and unique product positioning helped it retain a loyal customer base. Even when the economy is failing, retail stores with adaptive physical and online distribution networks may continue to generate money. Strong sourcing skills in Asian countries guaranteed that orders could be changed to meet the organization’s specifications. One of the factory owners asserted that their company was able to quickly align with downstream mask businesses, obtain certification from foreign nations, and establish itself as one of the few mask manufacturers able to maintain complete control over the supply chain and quality by having access to buyers from various nations and regions. This was one of the aspects that facilitated the factory’s collaboration with subsequent mask manufacturers. This illustrates that even though Chinese textile and garment companies evaluate their resources and learn from their previous mistakes, they must continue be aware of how their surroundings and fashions are evolving.
The study highlights and emphasizes the following critical and crucial tasks that the Chinese clothing and textile industry must do in order to adapt to the new norm, based on what research respondents stated. To aid with this, a comprehensive analysis of each level of the conceptual model has been given. At important points in the conceptual model, it will be vital for members of many departments to cooperate and coordinate. In the new climate, the success of fashion businesses will depend on leadership and the implementation of innovative business ideas. Many everyday tasks need cross-functional coordination in order to maintain the consistency, efficiency, and effectiveness of large, complicated supply chains. Among these include expediting the fashion cycle, developing using sustainable materials, and manufacturing and distributing products.
Second, the crisis has hastened the use of digital technology throughout the whole value chain. Consequently, every part of the Chinese garment and textile industry has grown more inventive and efficient. This was a direct result of the crisis’s disruption of the value chain. Executives in the industry are certain that the enormous paradigm changes and modifications that have already occurred will persist long after the crisis has subsided. Despite the fact that the digital revolution was covered in the parts of our model pertaining to retail and wholesale, it is essential to remember that digital escalation should occur across the whole value chain. In difficult times, both courage and wisdom are required. Before COVID-19, the bulk of fashion companies were aware of digital advancements. Businesses in the fashion industry are excellent at executing innovative digital initiatives during normal business hours. These strategies include custom design, direct digital manufacturing, virtual trade shows, an intelligent supply chain, e-commerce, and worldwide sales.
Thirdly, new concerns have been raised over the competitiveness of China’s major and small textile and clothing sectors via collaboration. Due to the low barriers to entry, there are several small brands and garment manufacturers in the textile industry. Due to their lack of resources, the likelihood of long-term success for small businesses is diminished. Due to the fragmented structure of the textile and apparel supply chain, it is becoming harder for many small businesses to compete. However, these businesses promote the economy and provide novel ideas. They also provide individuals the option to get work. To aid these small businesses and build long-term plans for a speedy recovery, the whole industry must collaborate and enact the required legislative changes. The efforts of policymakers are also essential. However, even the greatest businesses have boosted their merger and acquisition activities. During the pandemic, some Chinese clothes factories and manufacturers filed bankruptcy indicating the seriousness of the pandemic and how it will influence the ongoing post-covid efforts.
Chapter 5: Discussion of Findings
Development in terms of Design and Product
To capitalize on new market prospects, the apparel, textile, and garment industries must develop new goods. Several individuals created a variety of masks during the epidemic, ranging from couture masks with ornamentation to masks with strange patterns (Coppola, Vollero, & Siano, 2021). Several Chinese textile and apparel companies, for example, have positioned themselves to compete in a certain market sector. To meet their customers’ health and safety demands, these firms created a range of antibacterial intimate apparel (Cui, 2022). A number of companies have produced new kinds of fabrics and clothes with safety features in response to consumer worries about their own health. Businesses in the textile, garment, and apparel sectors were compelled to implement the aforementioned changes in order to prevent becoming victims of the COVID-19 epidemic.
Companies have separated themselves on the market by using their own design skills and sourcing materials that are unique to their sector. As a result, they are able to satisfy their customers’ practical as well as aesthetic needs. Using idle manufacturing capacity helped numerous enterprises to start operations right away. They were able to do so because they had gathered experience in clothing manufacturing through tough times (Herbst, 2022). Firms that make knit underwear, for example, utilized their own fabric to produce one-of-a-kind items that met customer expectations both during and after the epidemic. Despite the epidemic, numerous firms were able to continue operations as usual. These items are designed for long-term use. Masks, for example, were upgraded to provide a better degree of protection, and they were made available to schools and other organizations for usage. To meet the ever-increasing demand for their products, a number of firms have invested in licenses that enable them to produce medical clothes as well as other items. The bulk of firms in China’s textile and garment sector are now pushed to explore commercial prospects in both local and international markets. Companies have been obliged to adapt their production techniques due to the complexity of COVID-19 strains (Huang, Yan, & Yang, 2021). The great majority of textile and clothing industries, for example, have adjusted their product lines to accommodate the rise of new mask brands. As a result, the variety of innovative marketing approaches has grown. For example, you may have seen that some businesses have created brand-new goods that clients may utilize according on their mood. Moreover, other businesses have employed a similar technique. These new items are currently available at a variety of retail places. Masks and gloves were often regarded just accessories, but they now serve a variety of functions. They may, for example, serve as both stylish accessories and necessary safety equipment. There are, however, a few foundations that stand out and are well-liked by consumers. Some items, such as an antibacterial seaweed fabric, are touted as having special health advantages.
To account for things now in store as well as those projected to come soon, the selection must be classified by time, season, and area. Seasonal paces have a significant impact on fashion, as seen by changes in China’s textile and garment industries. On the other side, as the number of individuals working from home increases, certain holiday themes are no longer as popular as they once were, and others are no longer available for purchase. The study results show a change in customer demand, as seen by a rise in demand for cosmetics, sports equipment, and loungewear, including yoga wear. The survey also found an increase in demand for loungewear. Chinese manufacturers are under intense pressure to expand their product lines to include more sports and loungewear, as well as boost the number of patterns that may be worn all year (Ivanov, 2020). The majority of textile and garment workers in China believe that streetwear firms can provide the need for casual and comfortable clothing. Customers spending less time outdoors have a detrimental influence on sales at high-end businesses selling luxury goods and streetwear, where these customers like to purchase (Kulsum, 2020). As a result, several companies in the garment and textile sectors are revising their assortment plans to accommodate for product distribution and shop locations throughout the globe. If a company’s strategy revolves on what its customers desire, it may be necessary to simplify its product categories (joy et al., 2012), inventory levels, and selection process. As a result, they will be better positioned to satisfy their clients’ demands.
In order to stay relevant in the face of the pandemic, a rising number of individuals and businesses are embracing basic designs that may serve several functions. Even if it is difficult to forecast how the economy would function after COVID, the Great Recession serves as a helpful reminder to keep to fundamental ideals. This is due to the fact that simple designs are more flexible to a variety of economic situations (Zhou, 2021). Consumers may be less likely to spend money on fashion as the global unemployment rate increases, but they may be drawn to traditional, timeless trends (McMaster et al., 2020). Customers are urged to use their own imagination to come up with new ways to design the items they currently own. As a consequence, they will have additional chances and financial savings (Niu & Zhu, 2021). Chinese garment, textile, and clothing manufacturers are being pushed to emphasize simpler designs and request customer feedback on redesigned goods through social media and other online forums. This is because customer demand for user-friendly goods is increasing.
Review of Post-Covid Sourcing and Manufacturing
According to the study’s results, it is becoming increasingly common for people to earn money from many sources. Because of their dependence on long lead times and a small number of suppliers, Chinese firms in the textile and clothing industries are especially vulnerable to the discretionary character of the category (Zhang, He, & Cheng, 2021). Some businesses are having difficulty owing to supply chain challenges. When China was badly damaged, these struggling businesses were forced to look for other suppliers, which may be tough owing to cost and quality problems (Park & Lin, 2020). Many fashion enterprises in China’s surrounding countries, such as Taiwan, choose to buy from many countries rather than just one. This is done to reduce risk and establish a balance between competing costs, quality, speed, reliability, and source flexibility (Pensupa et al., 2018). It was shown that many organizations continue to get their commodities from a wider range of sources. The bulk of these firms today get their resources from more than ten different countries or regions. Firms are now attempting to preserve critical linkages in their supply chains while simultaneously consolidating their supplier sources (Yoo, Jung, & Oh, 2021). Despite the fact that they have four facilities outside of China, big textile and garment enterprises continue to provide more on-site and efficient services to their customers in order to cut order fulfillment time and the number of possible safety problems.
Chinese textile, textiles, and clothing enterprises may need to pay more attention to the risks connected with international trade. As a result of COVID, hospitals and other facilities, such as nursing homes, need materials that may be used to make protective clothing. As a result, apparel and textile manufacturers now have access to an altogether new market. Many companies in the textile, garment, and clothing industries are keen to capitalize on this potential. More than 200 textile and garment companies in China have employed idle production facilities to compensate for the widespread shortage of personal protective equipment expected in 2020 (Rahaman et al., 2021). Small manufacturers confront a variety of important obstacles as a growing number of clothing, textile, and garment enterprises join the market for personal safety equipment. These challenges include having the knowledge and abilities required to assure high standards and quality, doing research on what importing countries want, acquiring the relevant licenses and certifications, and complying to legal restrictions. As a result, only major corporations have been able to pool their resources enough to profit on the rising market for PPE manufacture in China and other countries.
The garment industry is facing a number of new problems, including flexible capacity planning and moving production to its original location. As a result of global commerce advances, Chinese firms in the garment, textile, and apparel industries are learning that they must rethink the value chain. It is vital to study local shore options in order to make production more flexible and autonomous. According to recent research, there is an urgent need to initiate garment manufacture in countries where there is still a significant demand for clothes and related commodities (Ye, Hung Lau, & Teo, 2021).
It is a creative idea to change the traditional technique of making textiles, materials, and garments to fit current production trends. A flexible capacity design helps both parties by allowing supply and demand to balance. This is due to the fact that the clothing, textile, and garment industries may utilize underused capacity. As expected, the Chinese clothing, textile, and garment industries are fast altering their production techniques to produce face masks, hospital gowns, and scrubs in order to not only survive but also profit from the outbreak (Shah, Lütjen, & Freitag, 2021). Along with planning for flexible capacity, it is critical to return certain objects to their original places. When Chinese textile firms join the fashion manufacturing industry, they must examine how this will affect their value proposition, the market, and the organization’s goals (Yao & Shang, 2021). The variable capacity approach is much more difficult to execute and would need a complete industrial revolution.
Retail Distribution and Consumers
Because of shifts in client behavior, clothing firms are required to make adjustments to their business processes. As more nations release the lockdown orders and shops eventually reopen, consumers are coming to terms with the fact that they must go on with their lives despite the presence of COVID-19. This process of acceptance is occurring as more countries lift the lockdown orders. In each of the several markets that the wholesale and retail sectors service, new patterns of consumer behavior are becoming more noticeable (Tu & Wu, 2021). When creating and manufacturing new goods, it is vital to take into account the shifting expectations of consumers, the requirements of working from home, and the diminishing interest in buying high-end fashion items. These considerations were mentioned before. Purchasing practices have evolved in response to improvements in convenience and competitive pricing. During this period of economic uncertainty, a great number of customers have ventured into uncharted territory by trying out new product lines or making their first purchases online (Shao, Li, & Yao, 2021). When it comes to the process of shopping, consumers are less engaged in making real purchases and more focused with finding the best deal possible (Kulsum, 2020). They look for companies that can provide for all of their requirements, and they put their trust in merchants to safeguard them whenever they make a purchase. Chinese enterprises that deal in apparel, textiles, and garments need to reduce the amount of time it takes for them to respond to requests and boost how responsive they are in order to adopt a strategy that is more fluid and dynamic when it comes to selling items to customers.
The growing knowledge among consumers of the benefits of leading healthy lives will have an effect on the choices that businesses make about the creation of new products and investments. When a corporation makes the decision to invest a significant amount of money in a brand-new clothing manufacturing line, this marks the beginning of the company’s long-term goal. For instance, companies will see an increase in their earnings as a result of the launch of new mask brands, which will also assist these firms in developing a unique brand identity in this specialized market. in particular the very specialized market for masks. In addition, the primary products provide product attributes that may be useful to customers whose demands are still in the process of being formulated. Businesses are recommending the incorporation of technological ideas and the idea of smart clothes into the process of developing new products and engaging in branding activities in order to accommodate the changing lifestyles of their target clients (Shah, Lütjen, & Freitag, 2021). This trend may encourage more businesses to engage in new projects or change the way they approach creating retail experiences and other crucial phases of the clothes, textiles, and apparel supply chain. Alternatively, this trend may prompt more businesses to change how they currently create retail experiences. Instead, it may discourage companies from making investments in their operations.
Sustainability in the Clothing, Textile, and Garment Value Chain
The pandemic will alter people’s perceptions of sustainability, leading retailers and consumers of fashion to pay more attention to problems including waste management, consumerism, and unethical business methods. In a number of emerging countries that are important sourcing sites, such as India and Indonesia, millions of workers have lost their jobs, and each nation is working to preserve its position on the global market. The global economic crisis has caused major issues in a number of countries (Chakraborty & Biswas, 2020). Several employees have lost their jobs as a consequence of Chinese firm closures. Customers, it has been found, expect fashion brands to assume accountability for their actions and deal with social and environmental issues on a regular basis. The Chinese fabric, textile, and apparel industries showed a heightened sense of social responsibility during this pandemic by assisting the global community in meeting the rising need for personal protective equipment.
Businesses involved in the whole global value chain for garments, textiles, and apparel may gain by placing technology at the center of their sustainability activities and creating effective sustainable governance. Utilizing 3D printing, eco-friendly design, and slow fashion may boost the sustainability of product creation. Fashion firms must develop adaptable production methods in response to the disruptions in sourcing and supply chain management brought on by COVID-19 in order to prevent pandemic and demand risks (Huang, Yan, & Yang, 2021). Inadequate subcontracting practices in the apparel industry and unequal bargaining power among suppliers contributed to breaches of the “code of conduct” for social compliance during the COVID-19 epidemic. In the post-COVID-19 age, the inclusion of disruptive risk-sharing contracts will aid in the evolution of a sustainable sourcing paradigm.
If retailers and customers talk about the openness of the supply chain more often, customers will have a better understanding of organizations’ sustainability efforts. Fast fashion companies are being pushed to adapt as more customers show an interest in durable and timeless fashion products or a desire to maintain the things they currently own for lengthy periods of time (Niu & Zhu, 2021). The COVID-19 period may operate as a wake-up call for Chinese textile, apparel, and clothing manufacturers, spurring them to reconfirm their commitment to environmentally friendly business practices and quickening the pace of change in the sector.
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