Incredibly, last year was a good year for Zhili's children's wear industry. "We performed well primarily because we were able to expand business and transform and upgrade ourselves when rivals succumbed to the financial crisis," said Sun Wenyou, Secretary of the Huzhou City Party Committee.
Zhili produced 400 million items of children's clothing in 2008, with sales exceeding Rmb10 billion for the first time.
Together with upstream and downstream industries, such as the production of raw materials and accessories, the town's children's wear industry produced goods valued at over Rmb15 billion for the year.
An executive for leading children's wear producer Jintongwang, said the company's 300 workers have been on overtime day in and day out since the second half of last year, amid a flood of orders. Sales volumes for 2008 soared 30% over the previous year. Orders have been overwhelming again this year. All this is in contrast to many other clothing manufacturers on the Mainland, which have either drastically cut back production or gone out of business.
Other small- and medium-sized enterprises are also doing good business. Some have so many orders they don't have enough manpower. Chen Xu, owner of a medium-sized business called Grenco, said his company has been turning out 2,500 items of children's clothing a day on average since October last year.
Sales volumes soared nearly 50% in 2008 over the previous year. He said he had never seen such good times in his eight years in the business.
Expanding domestic market despite crisis
Among China's three major children's wear production bases more than half the enterprises in Guangdong's and Fujian's specialist centres are export-orientated.
With overseas orders dwindling under the impact of the financial crisis, many are on the verge of bankruptcy. Zhili-based producers have concentrated on the domestic market, with its low- to medium-range products and they're taking advantage of the current situation to expand into the high-end and international markets.
Market share of Zhili producers on the domestic market has increased to 30% from less than 25% in the past.
"95% of children's clothing produced in Zhili is for domestic sales," said one Zhili manufacturer. "Some people suggested going into foreign trade, but given that most of the enterprises in Zhili are small, it is too risky to venture into foreign trade. It's best to secure a firm foothold on the Mainland first before expanding into the global market."
Zhili's children's wear industry seeks to consolidate its domestic market share and the low- to mid-end market and targets second- and third-tier cities in its expansion.
This especially applies to cities in the central and western regions where residents have increased their income significantly thanks to the "Western Development Programme" under the central government.
Children's clothing from Zhili now covers over 80% of China's second-tier wholesale markets and virtually dominates the children's wear market in the Yangtze River Delta cities, such as Shanghai, Hangzhou, Nanjing and Suzhou.
Zhili is still trying to expand its marketing channels. For example, Jintongwang has opened more than 120 chain stores nationwide and one each in Japan and Russia between January and March this year.
In Zhili, the number of enterprises that attach importance to exports while striving to expand domestic market share is on the rise.
Through the four border trade ports of Xinjiang, Harbin, Beijing and Guangzhou they are exporting large quantities of children's clothing to Russia, Central Asia, the Middle East and other regions - and are even beginning to venture into Southeast Asia and the American and European markets.
Zhili has also taken a step forward in the direction of industrial transformation and upgrade with an eye on the mid- to high-end market.
It's establishing a public service platform with the children's wear technology innovation centre as its operating organ. Design, testing, training, demonstration and information centres for this platform provide a range of technical services to children's wear enterprises.
There's also a campaign to cultivate "100 enterprises of considerable size, 100 brand-name enterprises, 100 design centres and 100 enterprises with pre-tax profits exceeding Rmb10 million," as a backbone for the future industry.
These measures are transforming Zhili's children's wear enterprises from "copycat workshops" into enterprises capable of independent R&D. Compared with the old days when they merely copied from others and engaged in OEM operations, they now attach great importance to innovation in style and design.
Zhu Zhengbiao from Hunan is the owner of a children's wear factory in Zhili. It used to hire a tailor to draw patterns manually. Last year he invested over Rmb40,000 on equipment for computer-aided design.
"It no longer works to copy from others and make slight changes in these designs in our production. Several of our own designs are selling particularly well this year. We are hiring 20-or-so fewer workers but our sales volume has quadrupled."
Local government takes positive measures to upgrade the industry
Zhili was dubbed the "Famous National Children's Wear Town", the only one of its kind in the country, by the China Textile Industry Association and China Garment Association in 2002.
The subsequent "boomtown" effect has attracted children's wear enterprises from Guangdong and Fujian. Many workers also began flocking to the town from neighbouring Changshuo, Yiwu and Wenzhou.
However, the Zhili government recently decided to cut the number of enterprises by eliminating small and scattered "workshop-type" operations in a bid to upgrade the industry.
The town plans to re-fashion itself into an advanced manufacturing, design, branding, marketing and information centre for children's wear in three to five years by launching the "Children's Wear Industry Upgrade Year".
It will strive to keep output at around 350 million items in 2009, 12.5% less than last year, while raising sales revenue to Rmb12 billion. It also intends keeping the number of children's wear production enterprises under 7,000 from the present level of nearly 8,000.
