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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 98

China Business Intelligence No. 98

Samsung Economic Research Institute Beijing Office

Dec. 10, 2008

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I. Economy

Over the last three years, retail prices for clothing in China have risen nearly to the level of monthly income of ordinary citizens. Chinese consumers also pay higher prices than foreign consumers to purchase foreign brand clothes even if they are manufactured in China. The reasons behind these hikes are the Chinese government's policy-based support for textile exporters, high distribution costs reflected in total clothing prices, a small number of brands compared to market size, and Chinese consumers' inherent desire to express their social status. Currently, China's clothing exporters are considering the release of their own brands and intend to vitalize the domestic market. Furthermore, creating new sales networks, including direct sales and online shopping, is a new trend in the industry.

II. Industry

Since China joined the World Trade Organization a large number of foreign invested companies have entered the delivery business, threatening the survival of homegrown firms. Another threat to Chinese firms is the state-run delivery services. China Railway Express, for example, shifted its service concept to “door to door” from “waiting for customers” by making strategic acquisitions. To overcome this new competition, ZJS Express made its ill-fated direction. Since small package delivery requires a broad network and substantial personnel investment, ZJS Express expanded the number of couriers to 20,000 from 9,000 and established hundreds of sales offices throughout the country in 2008.

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