Domestic Sales Slided but Expected Further Increase

National Bureau of Statistics published the latest July national economic data on Aug. 11th. The total retail sales of consumer goods reached 1225.3 billion yuan in July, up 17.9% from the same period last year. The growth rate went down 0.4 percentage point from last month. Of which, the sales of textile, clothes, shoes and caps were 38.8 billion yuan, up 24.4%, with growth rate down 2.2 percentage points. The CPI reached a record high in 21 months to 3.3%, while the clothes CPI slided 0.8%.

According to a latest survey from taobao.com, the largest online store in China, the Taobao customer index had declinded for several months, from 12.9% in Feb. to 10.4%, 9.3%, 8.6%, 6.9% and 0.1% in the period of May to July.

The above data revealed that the gross consumer demand including clothes demand had slided. The domestic market for textile industry was going to be more competitve.

Under multi unfavorable impacts, textile and clothes industry had to go through a weak domestic market demand. But from a long term prospect, with the development of urbanization and the reform of income distribution system, the domestic market will keep growing.

With the advancement of urbanization and the improvement of people's living standards, the consumption of the textile and clothes products, market demand and consumer attitudes are all rising. Despite the current urbanization rate in China is still below the world average, but in recent years, China has entered a period of accelerated urbanization. According to statistics, in 2009 the proportion of urban population in China reached 46.6%, 17.2 percent higher than that in 1995. The urban population had reached 620 million people. According to recently released the "China Urban Development Report", the urbanization in China is going to account for more than 50% by 2020; while in 2025, China's urbanization rate will reach 55% and the urbanization population will reach 830 million or even 870 million. The urbanization on the one hand provides a broader market for textile and clothes products; on the other hand, it also will further accelerate the people's attitude for clothing culture and home decoration cultural, then further promote the market demand for textile and clothes products.

In recent years, China's income distribution system reform is gradually accelerated. This year, more than 20 provinces and autonomous regions have gradually raised the minimum wage. At the same time, equal pay and wage negotiations, and the income distribution reform programs also are in the pipeline, which marked the income level of Chinese residents will enter a new stage.

In addition, the Chinese Government in 2010 continued to increase health care, social security, education and other public services investment, which will lift consumer spending worries and further enhance the consumption. In recent years, the mainstream clothing consumption turned to be individuality, diversity and fashion. This will also continue to promote the prosperous domestic market. It is no doubt that with all the factors above, the domestic textile and apparel sales will maintain rapid growth the next few years.