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Inventory pressure threatens Chinese apparel makers
Sep '12
Garment manufacturers in China are facing huge losses due to over-stocked inventories.
Chinese apparel producers have piled-up unsold stocks that can take at least three years to deplete even if all the apparel factories in the country shutdown, according to the China National Garment Association (CNGA).
The industry experts believe that the stockpiling of unsold inventory has increased because of the declining demand in the domestic market.
In recent years, Chinese clothing labels like Li Ning, 361, Anta Sports, China Dongxiang, Peak Sports and Xtep International have expanded rapidly in order to avail the opportunity of consumption upgrade in the country. As of today, the six companies together own over 40,000 outlets across China.
However, on the other hand, the purchasing power of potential customers in the country did not increase at the same speed and this has led to an oversupplied market, according to the China National Textile and Apparel Council.
The Council adds that some apparel brands, in order to reduce costs, chose massive production, which ultimately resulted in product homogeneity and that further affected their sales.
The economic slowdown and the rising raw material and labour costs also have impacted apparel sales, due to which many factories have closed down or relocated to other countries like Vietnam.
According to industry analysts, a large number of unsold inventories affect direct cash flow of garment makers, which leads to strand breaks of funds for enterprises, thus forcing the manufacturing units to shut down.

Fibre2fashion News Desk - China

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