- China’s fashion industry is slowly resuming production following the lockdowns related to Covid-19.
- Local designers report residual delays and retail order cancellations, experiences that could serve as a blueprint for the rest of the global industry as it picks up post-pandemic.
- New opportunities for livestream sales and direct e-commerce have emerged for China’s designer brands, and attention to sustainable production could increase.
Menswear designer Feng Chen Wang is currently quarantined in Shanghai after returning from her second studio in London. Wang is following the rules imposed by the local government, which requires everyone returning from abroad or from outside the municipality to quarantine for 14 days.
Outside, the local retail landscape is showing signs of life after China’s lockdowns. “In the shopping malls there aren’t many people yet, but [people] are working, are on the street. Shops are opening,” says Wang.
China’s tentative reopening and wishful recovery offers a glimmer of hope to the West, where the Covid-19 pandemic is currently in full force. But the country is seeing mixed results after loosening regulations. With local infections curbed, China is now battling “imported” cases from abroad and local governments have in some cases backtracked decisions to reopen public venues such as cinemas, clubs and karaoke bars. The fate of a number of delayed trade shows and fashion showrooms tied to Shanghai Fashion Week is still uncertain.
Industrial and manufacturing production has resumed all over the country, but at limited capacity as a number of workers are still quarantined, ill or afraid to go back to work. China’s Purchasing Managers’ Index (PMI), which gauges market conditions as viewed by purchasing managers, reached 52 in March after a record low 37.5 in February. While the increase signals resumed activity, normality is a long way away. Liushu Lei, one half of Chinese brand Shushu/Tong, says that around 70 per cent of factory staff has returned, adding that quarantined workers have received sewing machines and materials to work from home. Wang says only 30 per cent of workers came back to the factory she uses.
The cautious reopening of factories and resuming of activities in China gives a blueprint to other countries of what their own post-pandemic resurgence could look like and the timings associated with it.
It is likely that, just as it’s happening in China, there will be a long delay between the lift of the lockdown and the return to full production capabilities. Some factories resumed production as early as 10 February in China, but reopening has been a challenge for many as manufacturers are required to follow strict policies, including proving that the working environment is safe, reporting their staff whereabouts and making sure that every single worker quarantined for the prescripted 14 days if travelling in. Designer Xuzhi Chen says the factory he uses was allowed to reopen only in the first week of March. “It’s a slow start,” says Wang.
Changing production and business mindset
Forced closures and the country’s lockdown have affected both the Spring/Summer 2020 and Autumn/Winter 2020 collections in different ways, with delivery delays for the former and production challenges and order cancellations for the latter. LVMH Prize semifinalist Susan Fang ordered 100 prints to her factory to use in her Autumn/Winter 2020 collection, which she showed during the Paris showroom. They didn’t arrive in time, which meant Fang had to reuse last season’s fabrics. Antwerp-based designer Shuting Qiu had to substitute Indian and Italian textiles with Chinese stock fabrics, cancelling a number of SKUs.
Without typical assistance in her studio, Fang says her output was just 30 per cent of what was originally planned, adding that the samples on show in Paris were handmade by herself and her mother, as their three workers were still stuck in their hometown. Fewer SKUs makes for easier production, Fang says, which is a silver lining.
Chen also cut down his SKUs for AW20 in light of bricks-and-mortar store closures in China and internationally. “Before, we were trying to get more shelf space [in the stores], so we offered different ranges,” explains Chen, adding that with many stores shifting their businesses online and on WeChat his output has become tighter and more focused. “Otherwise [inventory gets] diluted and people don’t remember what they have seen.” If that shift proves permanent, inventory will likely remain more controlled.
Other designers have decided to cut production numbers for their AW20 collections as they brace for more cancellations from retailers. “We reduced the production amount [because] even if some stores are not cancelling now, in the future they might,” says Wang, adding that the menswear delivery window for AW20 is between May and July, when some stores in Europe and the US are likely to still be closed and consumer sentiment low.
Cancellations have affected both 2020 seasons. Lei received cancellations for his SS20 collection. Zhi Chen, designer of knitwear brand I-am-Chen, managed to ship the first half of her SS20 collection before Spring Festival, but received cancellations for the second half as production was delayed. She expects buyers to be conservative for AW20. Fang says that more than half of her international shops have cancelled their orders for AW20, but she was already expecting sales to be lower than last season because of the outbreak. Qiu also has received fewer orders for AW20 compared to the previous season.
A surge in cancellations means an almost certain cash flow crisis for independent designers, which rarely have enough reserves to navigate a drastic drop in sales. According to Chen, Chinese retailers have been more understanding of delays as many already had the experience of Sars, another severe epidemic that broke in 2003, and were less prone to cancel orders. Designers left with extra inventory have redirected it to their online operations, hoping to make a portion of the sales anyway, or are hoping for reorders from the retailers who didn’t cancel.
The drop in orders has made clear the necessity of having a conservative approach to stock and inventory. Wang says that capping production numbers makes sense for business, and is also a step towards embracing more sustainable production. “There is no necessity to make a lot of samples and then only produce a few styles for each one,” she says. “It’s a waste.” She is thinking about changing her working process, producing less samples to reduce waste.
One of the key learnings for Wang was the need to detach her brand from the traditional wholesale model, which has crumbled under the Covid-19 emergency. She is now investing more in her e-commerce platform and in ways to communicate directly with consumers.
“It’s pushing us to do these things faster and we can see it works: through our e-commerce we continue to sell every week,” she says. Sales online have been a respite for Xuzhi Chen too, who has seen some of his retailers pushing online sales through livestreams on different platforms, opening up Taobao stores and organising WeChat groups with their customers. “Even if we were delayed, whatever we managed to deliver is selling and some stores are already reordering,” he says.