Unlike China’s ever ready athletes, recovery in the country’s exports following the 2008 financial crisis has been shortlived. Export growth is losing puff rapidly, at only 1 per cent a year last month, from 11 per cent in June. Where does this leave its industry?
Not in as bad a position as before, at least. Exports now make up about a quarter of output compared with about a third in 2008. And the reduced dependence on global consumers has encouraged managers to concentrate on their own domestic brand development. Take shoemaker Stella International. Shares in the design manufacturer for the likes of Clarks and Wolverinehave tripled since the crisis as its domestic retail and own-brand business grows. This homegrown focus has also helped quadruple nationwide business-to-consumer ecommerce sales during the past two years to Rmb450bn ($70bn), according to Analysys.
Still, China itself cannot fully compensate for the slowdown in demand overseas, and it is suffering a slowdown of its own. That leaves manufacturers with little pricing power. Worse, the prices of many products sold online have started to fall due to a glut of supply and tough competition among online retailers. No wonder online clothes retailers such as Vancl are looking to Bangladesh to save costs.