China’s garment manufacturing industry went from almost nothing to the largest in the world in four decades, and it is now going through its second transformation. The first took China from a closed planned economy to the supplier of one garment in every three sold worldwide. The second, under way now, is the move from volume to value as the simplest work leaves for lower-cost countries. Understanding both explains what China’s garment manufacturing industry is good at today, which is not what they were good at in 2005.
China’s Garment Manufacturing Industry: From Reform to World Leader
China’s economy began opening in 1978, and unlike the organic development of markets in the West, the shift was directed from the top: the state permitted and then encouraged private ownership as a way of relieving domestic economic pressure through the 1980s. State-owned enterprise reform followed, private firms multiplied, and the institutional changes supported rapid industrialisation and the building of regional production networks.
Garments were an ideal first industry. They need labour rather than capital, the technology is accessible, and world demand is constant. Value added in China’s garment manufacturing industry grew from around US$4.2 billion in 1980 to roughly US$140 billion by 2008, an average of about 13% a year, with an exceptional peak in 1993. Accession to the WTO in 2001 removed the quota system that had limited Chinese garment exports to Western markets, and the industry expanded sharply again.
Notably, textiles and apparel shrank as a share of Chinese manufacturing even while growing in absolute terms, from about 14.8% of manufacturing value added in 1990 to 9.9% by 2007, because other sectors grew faster still. China’s garment manufacturing industry was never the whole story of Chinese industry; it was the entry point.
Working Conditions in China’s Garment Manufacturing Industry
Conditions in China’s garment manufacturing industry have been criticised for decades, and the criticism was largely justified: long hours, low pay, and weak safety enforcement were normal in the industry’s expansion phase. Conditions have improved substantially, driven by three things. Labour has become scarce and expensive, which forces factories to compete for workers. Chinese labour law has tightened, with contracts, social insurance, and overtime limits now legally required. And Western buyers now require social compliance auditing, BSCI, SMETA, WRAP, or SA8000, as a condition of doing business, with audit reports the buyer can read.
Problems remain, particularly among smaller subcontractors outside the audited tier, which is why knowing whether your factory subcontracts matters. But the comparison that once favoured other Asian producers has reversed: China’s factories are now generally better on safety and conditions than those in the lower-cost countries that have taken its volume work, and since 2024 the EU’s due diligence rules and the US forced-labour regime have made a buyer’s ability to prove conditions a legal requirement rather than a preference.
The Second Transformation of China’s Garment Manufacturing Industry
China’s garment manufacturing industry is now shrinking in volume and holding in value. China’s share of world clothing exports fell to 29.6% in 2024 according to the WTO, its lowest since 2010, and garment export value has declined year on year as Vietnam, Bangladesh, India, and Cambodia have taken the simple, high-volume work. Manufacturing wages average around US$15,800 a year (National Bureau of Statistics), roughly twice Vietnam’s and several times Bangladesh’s, and for a basic t-shirt programme that difference decides the order.
What has stayed is everything that depends on more than labour. China produces the majority of the world’s textile fibre and fabric, so a garment made in China is made from material a few hours away while one made in Vietnam is usually made from imported Chinese fabric. Chinese factories have automated with computer-controlled cutting, automated spreading, and digital printing. And the skill layer, pattern makers, production managers, and quality staff, is deeper than anywhere else in the region. That combination is why technical sportswear, structured outerwear, complex constructions, and fast-turnaround work stay in China while basics leave.
Production has also moved inland. Wage costs in the central and western provinces run 20% to 40% below the coast, and government incentives have encouraged relocation, so a growing share of China’s garment manufacturing industry now happens in Jiangxi, Anhui, Henan, and further west rather than in Guangdong and Zhejiang.
What China’s Garment Manufacturing Industry Means for a Brand
The evolution of China’s garment manufacturing industry means the sourcing question is no longer “China or not” but “which product, which country.” Basic knitwear and simple wovens in volume for the US market often price better in Vietnam or Bangladesh, particularly with US tariffs on Chinese apparel at an effective rate around 35% against roughly 20% on Vietnamese goods. Technical, structured, fabric-intensive, or fast-turnaround products still make more sense in China, and for small and medium runs China’s flexibility is hard to match anywhere.
Working that out product by product, and managing production wherever it lands, is what our clothing manufacturing service does, across factories in China and Vietnam.
