The Research Of Chinese Apparel Industry Upgrading Based On GVC Theory

Owing to entering to the WTO, Chinese apparel industry has developed rapidly and has become the world’s manufacture center. This paper is mainly used to research the Chinese apparel industry and the most important part is how Chinese apparel industry face the change from the global market. We review the related literature both at home and abroad and research how to upgrade value chain. The paper research how Chinese apparel industry can produce higher-value-added products. We take Hodo group case as an example to analyze how the whole industry level to upgrade the value chains to higher level.Firstly, we analyze division of labor theory in International trade, Intra-product Specialization (production fragmentation) theory, global value chain (GVC). Secondly, after analyzing the theories, we want to know transfer rule of the apparel industry and explore a road to upgrade along the value chain. We analyze the data of production, the export and regional distribution for Chinese apparel industry and find that the success of Chinese apparel industry depends on the low cost strategy to occupy the international market share in the past. We summarize the internal and external factors for Chinese apparel industry. The external factors include like weak demand, GSP policy without China, south-east Asia’s rapid rise. The internal factors like RMB appreciation, domestic competition pressure, unstable cotton price. Finally we summarize apparel industry manufacturing cost is rising.The author uses porter five force model to analyze Chinese apparel industry and we confirm that upgrading of the industrial chain is necessary because the development of south-east Asia. We use SLEPT model, porter’s diamond model to verify the potential development of textile and apparel industry in south-east Asia.China’s apparel industry can choose to transfer production base to reduce costs and to upgrade the industry through adjustment of the product structure, the establishment of brand.After the financial crisis, Hodo group takes actions to adjust the product structure, improve the product level of the export and transfer its production base in order to realize rising along the value chain which has made a great progress. We also find the transfer strategy of production base is an effective way to reduce the production cost.Conclusion is that the companies in Chinese apparel industry should upgrade the industry step by step and consider to carry the transfer strategy to the Southeast Asia countries and in order to maintain the low cost competitiveness of Chinese apparel industry under the new situation.