Statistical Analysis Of Chinese Urban Residents Clothing Consumption

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1 Volume 4, Issue 2, Fall2004 Statistical Analysis Of Chinese Urban Residents Clothing Consumption Jun Li, Xuchu Jin, and Yan Liu Fashion Institute, Dong Hua University, Shanghai, P. R. China ABSTRACT Clothing consumption plays an important role to indicate consumers living pattern and lifestyle. Confronting with the huge yet intensely competitive consumption market of apparel in China, the apparel companies at home and abroad face the problem of how to create and maintain their market shares. Utilizing the statistical data of cash income, discretionary income, living expenditure and apparel expenditure of urban residents in 2000, this paper analyzes the structure and characteristics of clothing consumption by region and by income level in China. In addition, this research includes sampling research of urban residents in Beijing, Shanghai, Guangzhou and Chongqing by means of questionnaire investigation to reveal the status quo of clothing consumption of China urban residents, and summarizes the characteristics of their consumption behavior. Keywords: China, Clothing consumption, Income, Expenditure Introduction China is famous in its consumption in clothing and food, which, for years, has been the principal one in people s life. With the rapid development of China s economy and with the significant increase in national economical income, fundamental changes have taken place in consumption market. With the rise of consumption in education, houses and cars, the percentage of apparel expenditure in living expenditure is gradually decreasing. However, the need of apparel and pursuit of beauty are everlasting. So, foreign apparel enterprises want to expand their market shares as well as domestic enterprises. NIKE, ADIDAS, LEVI S and other apparel giants have done their retail business in China And HAMPEL, MAXMARA, LUXMAN, GIVENCHY and other famous apparel 1 brands entered into China one by one. Then, what should Chinese consumers do in the increasingly rich market? With the gradually increasing income, Chinese people have changed much their hierarchy and composition of needs. Understanding the structure and characteristics of clothing consumption in China is helpful for enterprises to grasp the status quo of China s apparel market and its trend, but also make the suitable marketing strategy. This paper collects and analyzes relevant statistical data and investigation reports on Chinese consumers expenditure, esp. those on clothing consumption, and draws conclusions on the trend of clothing consumption to provide useful data and suggestions for enterprises at home and abroad.

2 Consumption structure refers to the proportions and mutual relationships of different consumptions. There are two major factors: income and living expenditure. Other factors such as purchasing power, age and preference also influence the aggregate sum and proportion of certain commodities, hence the consumption structure. Methodology This paper combines the macro-data (secondary data) with the micro-data (primary data) in analyzing. The former, also called processed data, refers to the data edited and reported by governments, institutes and other agencies, which include relevant information on enterprise s operation. The latter, also named real investigation data, refers to the data obtained from field investigation. The data from National Bureau of Statistics(NBS) are adopted and statistically processed in aspects of cash income, discretionary income, living expenditure, apparel expenditure and expenditure of each apparel item of Chinese urban residents in Also the structure and characteristics of clothing consumption by region and by income level in China are a focus. In addition, this research includes sampling research on the behavior of clothing consumption of residents in Beijing, Shanghai, Guangzhou and Chongqing, which are four typical metropolitan located in north, east, south, and west region of China. The contents of questionnaire includes per capita average clothing consumption; main streams of clothing consumption; main places for apparel shopping; opinion of apparel quality, discount and brand. The questionnaire mainly covers three aspects: 1) fashion consciousness: the degree of consciousness for fashion styles, the proportion of fashion clothes and the pursuit of new fashion change and individuality reflect whether a consumer will buy seasonal apparel. 2) brand perception: The perception for fashion and 2 the percentage of branded apparel reflect the degree of concern for apparel quality and social cognizance. 3) attitude for discount: The degree of concern for discount, the proportion of discounted apparel and the frequency of buying discounted apparel reflect the consumer s view of seasonal apparel and his purchasing power. The sampling method used is to randomly select a conventional sample of consumers from department stores, retail stores and free markets. A total of 200 consumers per city were investigated. Findings and Discussion Statistical Analysis of Chinese Urban Residents Clothing consumption Comparison of income and expenditure of urban residents by region NBS s data show that per capita annual cash income reached 7870 RMB Yuan in 2000, 8.81% higher than that in Based on per capita annual income, are categorized all the provinces and municipal cities (excluding Taiwan and Hong Kong) into three types: 1) High-income region This category includes Shanghai, Beijing, Guangdong, Zhejiang, Tianjin and Tibet, which have a per capita annual cash income of over RMB Yuan. From the highest to lowest are respectively Shanghai (14747 RMB Yuan), Beijing (12560 RMB Yuan), Guangdong (12520 RMB Yuan), Zhejiang (11874 RMB Yuan) and Tianjin (11141 RMB Yuan). 2) Medium-income region This category mainly includes Fujian, Jiangsu, Yunnan, Shandong, Guangxi, Hunan, Hebei, Chongqing, Ningxia, Sichuan and Hubei, in which per capita annual income is between 7000 RMB Yuan and RMB Yuan. The average of this category is RMB Yuan.

3 3) Low-income region In this category, per capita annual income is below 7000 RMB Yuan. From the highest to the lowest are Xinjiang, Shanxi, Liaoning, Inner Mongolia, Hainan, Anhui, Qinghai, Guizhou, Gansu, Shanxi, Jiangxi, Jilin, Heilongjiang and Henan. The average per capita annual income is RMB Yuan. [2] Figure 1 lists the geographic distribution of the three regions. We can see that, except for Tibet and Beijing, the rest provinces or cities of first category are all located close to the Pacific Ocean. The cities in the second category are distributed in the mainland of areas adjacent to the first region while those in the third category are completely located in the west or central inland. Figure 1. Geographic Distribution of Three Class Income Regions. The income differences exist in different regions, so do the expenditure structure of urban residents in different regions. Table 1 lists the expenditure of principal commodities and their proportions. The total annual expenditure of urban residents in 2000 is 4998 RMB Yuan, among which food accounts for the largest consumption (39.18 percent), and apparel reaches a total of RMB Yuan (the third place). The other largest expenditures are respectively recreation education and cultural services, household facilities, articles and services, transportation and communication, medicine and medical services, and miscellaneous commodities and services. 3

4 Table 1. The Comparison of the Expenditure Structure of Urban Residents in the Three Regions. [2] Compared with the past, the percentage of food and clothing consumption is getting higher partly because the total expenditure increases as the annual income increases and the percentage of recreation education and cultural services is increased. The first region is highest in the expenditure of all items and hence in the total expenditure. The largest three percentages in the first region are food, recreation education and cultural services and household facilities, articles and services, while those in the second and third region are food, recreation education and cultural services and clothing. As for clothing consumption, the first region is higher than the second and the third by RMB Yuan and RMB Yuan respectively. Comparison of clothing consumption by regions Table 2 lists the apparel expenditure of Chinese urban residents in According to the data of NBS, clothing is divided into four types. 1) Garments, 2) Clothing materials, 3) Foot, wear, hats and other accessories, 4) Tailoring and laundering service fees. According to the previously mentioned categories of regions and the data in Table 2, is summarized the expenditure in clothing by region, among which clothing is divided into men s clothing, women s clothing and children s garments. 4

5 Table 2. Apparel Expenditure of Chinese Urban Residents in [2] Table 3 shows urban residents of the first region have a significantly higher expenditure in garments and foot, wear, hats and other accessories than the other two regions. The reason is that people set higher requirements for accessories matched with their garments with the improvement of their income. The three regions have approximately the same expenditure in clothing materials and tailoring and laundering service fees. 5

6 Table 3. The Comparision of Clothing Expenditure in the Three regions in [1] Obviously, women s dress accounts for the largest percentage in the total clothing consumption in the three regions (35.33%, 35.78% and 34.42% respectively). The percentages of men s clothing in the three regions are 28.14%, 24.73% and 25.83% respectively. It appears the male consumers in the first zone or people who make shopping for them care for their image most, and implies a change in Chinese consumer conception: caring for image is no longer woman s privilege. Males in the first zone are no longer stingy in their expenditure in clothing. Analysis of clothing consumption of different household income Table 4 shows the relationship between per capita annual discretionary income and clothing consumption of different household income in From the highest-income household to the lowest, the percentages of living expenditure in discretionary income are 69.50%, 75.28%, 82.29%, 69.96%, 90.13% and respectively, with an average of 79.59%. Figure 2 shows the percentages of apparel expenditure in living expenditure of households by income level. From the lowest-income-household ( RMB Yuan) to the highestincome-household ( RMB Yuan), per capita discretionary income increases five times. The clothing expenditure also increases five times from RMB Yuan of the lowest-income household to RMB Yuan of the highest-income household. Figure 3 shows that with the increase of per capita annual discretionary income, the percentage of clothing expenditure in living expenditure also increases. There is an exception for the highest-income household, which has a relatively lower percentage because of its fairly higher living expenditure. 6

7 Table 4. The Clothing Expenditure of Different Household Income in [1] Figure 2. The Percentages of Clothing Expenditure in Living Expenditure of Different Household Income in Table 5 shows the percentage of the expenditure of clothing items in total clothing expenditure. The clothing consumption is also divided into 4 types: garments, clothing materials, foot, wear, hats and other clothing and tailoring and laundering service fees. Table 5 shows that the percentages of garments expenditure in clothing expenditure are all above 60% for different-income households, and are getting higher with the increase of household income. What we need to explain is that tailoring clothes are rather expensive in foreign countries because relatively few garments makers or designers provide such service. However, in China, many sewing shops provide such service at low prices. 7

8 Figure 3. The Percentages of Clothing Expenditure in Living Expenditure of Different Discretionary Income in Table 5. The Percentage of the Expenditure of Clothing items in Total Clothing Expenditure in Different Household Income (%). [4] Figure 4 shows the number of apparel consumed in different families (unit: piece). The average number is 6.24, among which men s clothing is 2.16, women s dress 3.05 and children s garments

9 Figure 4. The Number of Apparel Consumed in Different Income Households. From the above data, we can see that the households in the first region and those of medium and high income constitute the main force of garments consumption. Women are always the main consumers in clothing consumption. And men s clothing consumption begins to play an important part in clothing consumption for households in the first region and those of medium and high income. Analysis of clothing consumption in China s four metropolitans The famous 80/20 principle also applies in the apparel market. As mentioned before, urban residents that account for 1/3 of the total population are the main force in clothing consumption. According to the investigation data of Beijing, Shanghai, Guangzhou and Chongqing, we will analyze the trends of clothing consumption in these cities. Beijing, Shanghai and Guangzhou belong to the first region, while Chongqing the second. So, we can deem that the data reveal the clothing consumption trend of China s households of medium and high income. The investigation data shows that from the highest to the lowest, the annual apparel expenditures in 2000 are RMB Yuan (Shanghai), RMB Yuan (Beijing), RMB Yuan (Guangzhou), and RMB Yuan (Chongqing). Though huge differences exist in apparel expenditure, these figures rises 11.7%, 12.8%, 11.2% and 10.9% compared with those of The number of apparel consumed by female adults is 6.57, 3.1 times of that of males, 5.9 times of that of elders and 1.7 times of that of children. In addition, women are usually responsible for selecting apparel and making decision. So, women are the vital force in clothing consumption. [3] Table 6 shows the degree of concern for fashion in the 4 metropolitans. The data reveals 97% of Shanghai consumers care for and pursue fashion, and 94.7% of apparel are bought out of reason of fashion. The percentage of Shanghai consumers pursuing new clothing conception and individuality is significantly higher than that in the other three cities. Beijing, Guangzhou and Chongqing consumers attitudes toward purchasing fashion clothes are approximate. Though 92% of Beijing consumers care for fashion, only 66.1% of them pursue new clothing conception and individuality (lowest among the 4 cities). 9

10 Table 6. The Degree of Concern for Fashion in the Four Metropolitans. [3] Table 7 shows the characteristics of brand clothing consumption in the 4 cities. Beijing and Shanghai consumers concern for brand is approximate (about 87%), much higher that that of Chongqing consumers. As for consumers cognizance degree toward brand, Shanghai is much higher than the other cities. This may be explained as the information advantage of Shanghai. With the improvement of economic level and information amount, consumers make higher requirements for brand and quality of apparel. The percentage of brand apparel of Shanghai consumers is 77.8%, nearly 4.5 times of that of Chongqing. In addition, 57% of Shanghai consumers are fascinated with buying brand apparel, and 36.9% of them with buying foreign brands. The consumers who care for and pursue brand apparel, esp. those of medium and high income, consider brand as an embodiment of taste and social status as well as the guarantee of quality. Over 80% of Beijing and Shanghai consumers buy apparel in clothing departments and about 65%-68% of Guangzhou and Chongqing consumers in free markets. Table 7. The Characteristics of Brand Clothing Consumption in the Four Metropolitans. [3] The degree of concern for discount is showed in Table 8. Considering this index, Shanghai is obviously different form the other cities. 82.8% of Shanghai consumers care for discount information and 71.8% of them make shopping in discount period. Though conservative, Chongqing consumers care for discounts most. 87.1% of them care for discount and 90.5% of them make shopping in discount period. Perhaps the factors of region, culture and income level make them more care for the practical value of apparel. In addition, the arrival period of new apparel and discount period have been gradually stabilized because of the seasonal characteristics of apparel. Consumers generally consider discount as a price regression of apparel and a reflection of its genuine price. Of course, the enthusiasts of fashion & brand cannot be balked by exorbitant prices because elegant styles could be out of stock before discount season arrival. In sum, Shanghai and Chongqing consumers especially young female care for high fashion apparel. Although consumers of Beijing highly focus on the elegancy, but show obvious lower concern on fashion. 10

11 Table 8. The Degree of Concern for Discount in the Four Metropolitans. [3] Conclusions By analyzing the apparel consumption structure of urban residents by region and by income level, we can see the fundamental characteristics of apparel consumption market of different regions and of different household income. Great differences exist in living expenditure of different regions and of different household income. China is divided into 3 regions by per capita annual income: the first region is represented by Shanghai, Beijing and Guangdong, the second region by Chongqing, Fujian and Jiangsu, and the third region by Xinjiang, Shanxi, Liaoning, Inner Mongolia. Accordingly, apparel consumption of urban residents in different regions displays different characteristics. It is found in this paper generally the purchasing power and consumption trends are different for Chinese consumers living in different regions and of different income levels. But what Chinese consumers have in common is that their expenditure in apparel will continue to rise as their income increases. Therefore, the apparel market in China, though intensely competitive, is still full of potential. On the other hand, the imbalance of economic development in different regions and the expansion of income gap of different households will provide new opportunity for clothing consumption market. In addition to environment factors such as population, natural conditions, and cultures, the degree of economic development is surely a vital factor for geographic segment. All these factors considered, apparel enterprises could determine right target market, merchandise right products, and make marketing strategy. 11 For instance, though Tibet has higher per capita expenditure in apparel, it is not an ideal market for most enterprises to enter because of its special geographic position, cultural customs, and less total population. Beijing and Shanghai have greater consumption capacity and more intensely competitive consumption market, and may be suitable for enterprises with sufficient actual strength. The chance of success may be greater for enterprises to enter the market of medium-income regions, if these regions are matched with their actual strength. Each region has a number of households of medium and high income, who have strong consumption capacity and require more on brand and quality. If geographic segment with income segment could be combined properly, selecting target consumers by region and by income level, providing them right products and make specific marketing strategy, the chance of success of entering these markets will be greater. Acknowledgement We make sincere acknowledgment to Min Dong and Xiaojun Wang for their support. References 1. China Statistical Yearbook 2001, National Bureau of Statistics PRC (2000), China Statistical Yearbook 2001, China Statistics Press, Beijing 2. China Statistical Yearbook 2001 on price and income & expenditure of urban residents, National Bureau of Statistics PRC (2000), China Statistical Yearbook 2001, China Statistics Press, Beijing

12 3. Dongmin, Wangxiaojun, SSIC, Survey of clothing consumption in 4 metropolitans, China Apparel, 2002, (5): Wang huiqin, Zhaoping, Comparison of clothing consumption structure of Chinese urban residents, China Apparel, 2003, (11): Gong Jiao, 6 characteristics of consumption market in China, China Apparel, (11):

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