What’s the next step of the Textile and Apparel Industry?

Introduction and background

Since the economic reforms in 1979, the labor-intensive industries became the most engine of China’s economic growth. As a part of the engine, the Textile and Apparel Industry have also been benefited from low labor wages that were attracted capital and technique from outside-China.

After the last three decades, China’s economic opening-up and growth, Textile and Apparel industry became a pillar industry in china either export or domestic sales. On the other hand, as the profit drop-down as worker’s wage going-up in China latest decade, the supply chains tend to transfer from the mainland of China to the rest of the country in south-east Asia (GF Securities,2019)[1] and the value of Global export is gradually declining each year. An article points out that China’s textile export to the European Union reached $44.86 billion, falling by 10.6 percent year-on-year, the export to Japan reached $18.8 billion, dropping 12 percent, and the export to ASEAN countries hit $29.03 billion, slipping 1.7 percent, according to customs data(Wenqiang Zhu,2015)[2].

Those data told us that no country can keep forever its comparative advantage of labor-intensify industry based on low salary advantage. One of the solutions to upgrade or innovate the circumstance of the Textile and Apparel industry is digitalizing management in the manufacture and retail of the industry just like other traditional sectors did.

The increasingly coming into focus on customization, networking of devices and people as well as progressive automation of production and logistics processes is currently experiencing the effect of digitalization of the textile and apparel industry.

The opportunity during the transforming period

Although the export value of the textile and apparel industry is being such a kind of recessing in China, the GDP still steadily grows each year. It is certainly good news for the transformation of the entire industry’s sales structure. Coupled with the explosive development of China’s domestic e-commerce industry in recent years, after BtoC companies such as Taobao and JD.com upgrade their traditional retail industry through the Internet, there is no doubt Strong support was given to changing from the original export-oriented to domestic sales-oriented.

Second, looking back at around the 1980s, standardized products dominated the market. Judging from the situation at the time, most of the clothing product types will not change drastically with quarterly changes. Since the styles at that time were relatively single, manufacturers only needed to stock up on certain kinds of raw materials (certain kinds of fabrics) and immediately meet most of the order requirements to ensure the operation of production. This is a supply-driven business model. With the arrival of the third industrial revolution in the past, the information technology revolution, the traditional retail industry upgraded through Internet technology has transformed the textile and apparel industry into a market-driven business mechanism. Fewer single order amounts, more customized order requirements, and shorter production cycle requirements make the need for big data applications in the digital management process more urgent(INTERNATIONAL LABOUR ORGANIZATION,2014)[3].

The application of big data in the textile and apparel industry

1. Application and impact on the manufacturing side

Application

“IoT has amalgamated hardware and software with the internet to create a more technically-driven environment. Garner predicts that by the year 2020, there will be 20.4 Billion IoT devices”-The Manufacture,2018[4].

The rapid increase in memory capacity and the widespread application of 4G technology provide a strong foundation for the Internet of Things era. IoT technology uses interconnected smart sensors to comprehensively monitor production equipment.

IoT equipment can enable the company to track the inventory system on a global scale. Due to the real-time data transmission, the information channels between the upstream and downstream of the industry become smoother, so that the coordination between the various links of the supply chain The sex is effectively improved.

Monitoring of product quality. The image recognition algorithm becomes a reliable quality monitoring tool in the production process. Through the real-time monitoring of the production workshop by the camera, each process in the production process of the product is captured by AI, and it can be judged immediately when the defective product appears.

Monitoring of production equipment. Through the monitoring of different aspects such as temperature, vibration, voltages, currents, etc., the operating status of production equipment can be grasped at any time, and the maintenance and repair of equipment can be arranged in an orderly manner. At the same time, it can also provide early warning before equipment failure.

Making decisions based on KPIs of production tracking. Fully automated monitoring of various business KPIs is driven by IoT, which enables the company’s management to have detailed data support and fully understand the situation of operation when they are formulating business strategies. They can adjust their business strategies based on the advantages or disadvantages presented by these business KPIs(Valeriy Ilchenko,2020)[5].

Impact

One of the sources of profit in the traditional textile and apparel industry is the opacity of information. From a macro perspective, the emergence of digital management and production has gradually made the operation of the entire industry more efficient, resource allocation more reasonable, and information transmission more smooth. Under the current industry changes, raw materials and finished products are gradually forming a unified price standard index, and the interval of the intermediate price difference is smaller and more transparent.

On the other hand, one of the biggest pain points for small, medium, and micro-manufacturing companies is financing difficulties. In China, due to the opacity of the textile and apparel industry and the non-compliance of financial management of small, medium, and micro-enterprises, it is difficult for them to obtain financial support from banks. The emergence of the Internet of Things monitoring system allows financial institutions to obtain more comprehensive and reliable operating data during the due diligence process of credit granting, instead of the previous black box.

2. Application and impact on the retail side

The emergence of e-commerce in the past 20 years has opened up the information barriers of the entire industry. It has enabled small businesses that lack customer resources to compete fairly with large businesses through e-commerce platforms such as E-bay and Amazon. Merchants can obtain relevant data through the sales system of the e-commerce platform, and after analysis, they can clearly understand the current trend of product popularity, the demand for different products between regions, and the range of product prices. These key data enable retailers can build clearer sales plans and operational strategies, such as better pricing and assortment decisions, reduce markdowns and decrease costs of overstock those aspects to the analysis. All this benefited from the rapid development of big data undoubtedly.

Potential challenges of the industry upgrading

As mentioned above, the shift from supply-driven to demand-driven is what the retail market is experiencing in the past 20 years. This has made big data management demand in the retail market, but it seems to have brought more problems and challenges.

1.Create a better customer experience

One of the biggest advantages of online shopping over physical store shopping is convenience. Constrained by the coverage of branded physical retail stores, or the limitations of localized raw materials, consumers across regions are always unable to purchase specific products at home due to various reasons, so online shopping can make this possible. This physical obstacle is eliminated. However, in this way, the control of product quality has become one of the biggest challenges for e-commerce platforms, and consumers cannot ensure the quality of the products they purchase.

In addition to the issues of delivery and acceptance, there will also be distortions in the selection process during the shopping process. Although virtual shopping technology has become increasingly mature, it is limited to visual advancements. The touch of the product is also one of the important sources of judgment for consumers when making a purchase decision. How to ensure that the purchased goods are the goods consumers need is a pain point that has not been solved so far.

2.Accurate customer acquisition process and the data security and privacy issues that it brings at the same time

How to obtain accurate customer groups is always the biggest task for businesses. With the support of big data, this task that only to be accomplished through a large number of advertisements in past seems to have become easier now. The emergence of social platforms such as Facebook, Google, Twitter, etc. allows businesses to obtain huge traffic through this medium. On the other hand, the servers of social platforms store huge amounts of customer data which are used in the application of machine learning and other tools. Next, analyzing customer preferences, personality, and behavior has become a very simple task(Sophie Coy & Joe Berry,2017)[6]. However, this kind of back-system monitoring of customers the whole day is far beyond the scope of normal business. In addition to protecting individual information security and privacy issues, how to ensure that Internet giants are supervised under an effective legal framework and how to prevent government utilize Internet giants to generate digital totalitarian rule(Xiao qiang.2018)[7]? These issues are far beyond the scope of this article, but they are also issues that have to arouse people’s thinking.

Conclusion

The advent of the era of big data has become a very important opportunity for labor-intensive industries to upgrade to capital-intensive industries. Whatever the aspect of enhancement by that such as improvement of corporate management, the integration of supply chain resources, and the rise of new retail models, all aspects of the impact of the arrival of the big data era are far-reaching, and these impacts have already penetrated people’s daily lives. People’s daily life patterns are gradually changed with the development of science and technology. When new technologies appear, the sound of praise is always endless. This kind of human nature that is willing to appreciate things is needed, but it also reflects the preciousness of critical thinking. How to invent a technology that can increase productivity is only the first step. How to use this new technology correctly must be a more important issue. People must have the tools in their own hands instead of being dominated by them.

References:

[1]GF Securities. (2019).全球制造业转移下的东南亚国家收益程度解释[Southeast Asian countries benefit from global manufacturing shift

Degree analysis].

http://pdf.dfcfw.com/pdf/H3_AP201908191344637574_1.PDF

[2]Wenqiang Zhu. (2015). China’s textile exports decline in 2015. China Daily. https://www.chinadaily.com.cn/business/2016-01/14/content_23088319.htm

[3]INTERNATIONAL LABOUR ORGANIZATION. (2014). Wages and Working Hours in the Textiles, Clothing, Leather, and Footwear Industries.

http://www.ilo.org/wcmsp5/groups/public/@ed_dialogue/@sector/documents/publication/wcms_300463.pdf

[4]The Manufacturing. (2018). Applications of IoT in Manufacturing Plants.

https://www.themanufacturer.com/articles/applications-iot-manufacturing-plants/

[5]Valeriy Ilchenko. (2020). 5 best use cases of IoT in manufacturing.

https://www.byteant.com/blog/5-best-use-cases-of-iot-in-manufacturing/

[6]Sophie Coy & Joe Berry. (2017). From Big Data to Big Insights: How the Apparel Industry Can Benefit from AI

https://risnews.com/big-data-big-insights-how-apparel-industry-can-benefit-ai/

[7] Xiao Qiang. (2018). The rise of China as a digital totalitarian state. Washingtonpost.

https://www.washingtonpost.com/news/theworldpost/wp/2018/02/21/china-internet/