Interview with Mr Du Yuzhou

China’s apparel industry is undergoing a new round of upgrade. To be exact, it is at the turning point from make to create. It is transforming from quantity-oriented to quality-oriented.

China’s apparel industry has made great progress since the reform and opening-up policy, twenty years ago. Low labour cost, sufficient skilled workers (70 percent of more than 10 million people employed by the industry), rich experience in management accumulated over the past dozens of years and continuous technical upgrade ensure China a leading position in the world in terms of its apparel production capacity, and enable it with the capacity to process products of different categories, different levels and different fabrics.

Market economy injected unprecedented energy into the apparel industry. China rapidly becomes the most energetic apparel market, the most attractive investment destination and the market for talents and machinery. The complete industry chain and over 50 industrial clusters whose combined output has accounted for 70 percent of the country’s total, are the advantages for China’s apparel industry to grow.

Meanwhile, Opening-up policy accelerated the internationalization process of the industry. Capital diversification not only brings in advanced technology, management, marketing strategy and international operation experience, but also boosted the creation and growth of China’s original brands.

The new round of industrial upgrade, which is happening in China’s apparel industry, is to sharpen the competitive edge of China’s apparel industry through optimizing allocation of industrial resources, commit itself to fostering a group of original brands and multi-national groups which are competitive on the international market, accelerate technological advancement, restructure the industry and transform growth pattern.

CNGA has been working on the industrial restructuring and innovation of the growth pattern for many years, bearing the mission of improving the quality and development of China’s apparel industry. We are happy to see that after years of development, the structure of apparel industry in China is improving, while the growth pattern is also undergoing changes. A bunch of Chinese original brands begin to stand out and become the new force in the development of the apparel industry in China.

In the early 1990s we put forward the brand strategy as the general strategy for the industry. Since the beginning of Eleventh Five Year Plan, we have attached a great importance to building the self-owned brands on the basis of technological advancement and self innovation, and make increasing contribution rate of science and technology and that of brand as the major tasks of transforming growth pattern and facilitating industrial restructuring and upgrade, as well as the basic elements in improving industrial distribution, regulating market order and sharpen competitive edge.

When we are talking about the contribution rate of science and technology, we refer to equip enterprises with the latest technology and increase the investment on R&D. Chinese companies are now investing more on technology, and advanced technology is applied by the apparel industry more frequently and rapidly.

Contribution rate of brand means the important role that brand plays in lifting a company and even an industry. It is composed of four major factors, namely quality, innovation, quick response and social responsibility. ‘Quality’ is the life of a brand and reflected in the quality of processing and the skill level of labour force. ‘Innovation’ is the soul of a brand. Originality of a brand culture is reflected in the understanding of color, texture, style and lifestyle. ‘Quick response’ is the vigor of a brand. It is reflected in the upgrading traditional industry, setting up modern marketing network, implementing electronic management and online business through information. Social responsibility refers to the ethic criteria of a brand, including resource saving, environment-friendly, company credit, human harmony, and the like. No brand could go far without sound ethic criteria.

On the basis of promoting brand development and strengthening social responsibility, we expanded industrial diplomacy, creating a better environment for the communication and cooperation between Chinese and overseas apparel industry. Under today’s circumstances of economic globalization, no countries could stay away the relationship of cooperation and competition no matter how different they are in terms of opportunity they are facing, the development level and path. Over the past years, we have established sound dialogue mechanism with the apparel industry organizations of other countries, including those from Asia. We have also built sound cooperative relationship with well-known fashion brands and international sourcing and retailing industries. We have strengthened the connection with the world and boosted mutual prosperity.

Our tasks also include: protect intellectual property rights, safeguard the interest of the industry by formulating industry regulations and administering industry behaviors; research and analyze the industry development and market trends in China and abroad, participate in drafting industry development strategy, raise suggestions on policies and legislations to the government, provide information and consultation services to companies, hold various personnel education and training, join in the formulation and amendment of industry standards, organize the implementation of the standards, and so on.

As I have mentioned above, originality of apparel culture reflects the understanding and expression of real life by a fashion designer. Design has a significant influence on consumption. That’s why we have done more on fostering and promoting designers and designer brands.

Every year, we organize relative institutes to carry out researches on the fashion trends in terms of colour, pattern and style, and launch trend release twice a year for S/S and F/W seasons. To drive the development of the apparel brands, CNGA ranks top 100 Companies in terms of their performance, and holds CNGA Awards events in the principle of being tested by market. As for market expansion, CHIC has created the largest fashion fortune opportunity for the apparel industry in China and even in the Asia-Pacific region. With regard to industrial ideology, China Fashion Forum tests the intelligence of the practitioner in China’s apparel industry. All of these have laid a solid foundation for the development of China’s fashion industry.

Last October, Frankie Xie displayed his brand JEFEN on the stage of Paris Fashion Week. This is the first time that a Chinese designer’s brand walks on Paris Fashion Week and received a lot of applause from the western fashion world and media. In February 2007, JEFEN and another brand WUYONG displayed their works on the stage of Paris Fashion Week and won the recognition of the world again. This marks the growth of the Chinese fashion designers and the achievement that Chinese brands have made. This is the result of constant work we have done to promote development of China’s apparel brands.

Yes, CHIC is not only the largest fashion fair in Asia, but also an annual event widely recognized by the industry in China. It is a perfect platform for the companies to expand market, promote brands, and carry out business negotiation and communication with international counterparts. However, facing economic globalization, CHIC has been improved in organizational form, content and services with the development of the industry and the changes in demands.

CHIC was first held in 1993. Since then, we have been encouraging business talks, trade and orders between the buyers and exhibitors. Many companies took part in CHIC for its huge market potential during the following five years. Since 1998 the beginning of the second five years, its function of promoting international trade and communication further tilted towards commercial trade and shows, and fostered brands consciously. It is during this period that China’s apparel industry began to shift from product competition to brand competition. CHIC entered the third five years in 2003 when it focussed on guiding the industry. It is during these five years that CHIC experienced the most of the changes and improvements. Professional operation further enhanced the influence of CHIC. Breakthroughs such as theme hall, brands shows, CHIC shows and international cooperation, fashion trends release and organization of distributors and retailers were introduced during this period. CHIC was developing towards the aim of exhibition of brands, an access to channels, an event of fashion, an honor of the top and a source of wisdom. The integration of the whole industrial chain was brought onto the agenda.

CHIC-2008 will move to a new exhibition hall. It not only means a new venue, but also the improvement in its content, form and services. We raise the concept of ‘new race, new cooperation, new challenges and new height’ and invite international consulting company to draft strategic plan for CHIC with the opportunity brought by Beijing Olympic in 2008.

EU and the US have a significant influence on Chinese apparel manufacturers, especially those small ones. They may probably lose these markets under this pressure. But for those companies with own advantages, their profit may be affected negatively, but they will increase investment. Although their cost is higher, their competitiveness and company level will rise accordingly. This is the direction of the whole industry. I believe the key to success is the constant improvement in quality.

Joint Convention of China Apparel Distributors and Retailers is a platform we set up with aim to gather advantageous commercial resources of apparel industry, to standardize business operation mode of apparel retailers, and to facilitate cooperation between apparel companies and the components of apparel sales channel in China on the track of mutually beneficial cooperation and common development.

Held once in a year, and with distributors and retailers as its main body, the Convention invites participation of specialists in apparel industry and commerce. On this platform, the distributors and retailers can not only receive the latest news of the industry, but also benefit from the consultation provided by the experts in circulation. Convention keeps close contact with participating distributors and retailers in the form of convention circular and provides them with the latest industry information in a timely and prompt manner.

Although China’s retailing industry has made great progress over these years, we are still left far behind the leading ones in the world in terms of original operation, information management, HR development and E-commerce. Chinese companies should at this time strengthen market operation, create and apply new marketing mode and improve the foundation of sales service.

In fact, many strong companies have been engaged in construction of outlets, such as opening flagship shops, recruiting franchisees as well as research on consuming environment and consumer psychology, which have made a big progress. This is the expansion and extension of enterprises. ‘Regulation on the Administration of Commercial Franchise Operation’ released by Ministry of Commerce came into effect in May 2007. This will contribute to the regulation and administration of licensing operations, streamline relationship between brand owners and licensees, and drive them to set up entity of mutual benefit on the basis of same objective.

What we need to pay attention now is- new science and technology changing the traditional apparel industry. Chinese enterprises should react positively towards the challenge that modern logistics and E-commerce have posted to the traditional production. This will not only shorten logistics time and cut down the cost, but also strengthen the quick response capability of enterprises and the whole industry. Its significance also lies in improving the general usage rate of resources and the integrated benefits of the enterprises.