Technology & Living Study Notes: The Apparel Industry

Hi everyone! Welcome to your study notes for the Apparel Industry. You might think this chapter is just about sewing clothes, but it's so much more! We're going to dive into the massive global business behind the T-shirt you're wearing, your favourite pair of jeans, and the latest sneaker trends.

Understanding this industry is super important, especially in Hong Kong, which has a rich history in textiles and fashion. You'll learn how clothes get from an idea to your wardrobe, and all the business decisions made along the way. Don't worry if some terms are new – we'll break everything down step-by-step. Let's get started!


Section 1: The Big Picture - Companies in the Apparel Industry

The apparel industry isn't just one type of company. It's a long chain of different businesses working together. We can group them into three main sectors.

The Three Sectors of the Industry

Think of it like making a pizza:

  • Primary Sector (The Ingredients): This is where the raw materials come from. In apparel, this is the textile manufacturing stage. It involves growing cotton, raising sheep for wool, or creating synthetic fibres in a lab.
    Example: A factory that turns raw cotton into yarn, and then weaves that yarn into denim fabric.

  • Secondary Sector (The Pizza Makers): This sector takes the raw materials and turns them into a finished product. For us, this is the clothing manufacturing stage. Factories in this sector cut the fabric, sew the pieces together, and make the actual garments.
    Example: A factory that takes denim fabric and produces 10,000 pairs of jeans.

  • Tertiary Sector (The Pizza Shop): This sector provides services. It’s about getting the finished product to the customer. This includes marketing and retailing (selling).
    Example: The Uniqlo store in your local mall, or the ZALORA website where you buy clothes online.
Quick Review Box

Primary = Raw Materials (making fabric)
Secondary = Making the Product (making clothes)
Tertiary = Selling the Product (shops & websites)

Size Matters: Small Scale vs. Mass Production

Companies can operate in very different ways depending on their size and goals.

Small Scale Production

  • Makes a small number of items.
  • Often customized or made-to-order.
  • High-quality craftsmanship is usually a focus.
  • Example: A local tailor who makes custom wedding dresses, or a small independent designer selling unique jackets on Instagram.

Mass Production

  • Makes thousands or millions of identical items.
  • Uses assembly lines for speed and efficiency.
  • Goal is to produce clothes quickly and at a low cost.
  • Example: H&M, Zara, or Nike producing T-shirts, trousers, and shoes for their stores worldwide.

Who Does What? Key Departments

Inside a clothing company, different teams have different jobs. Two of the most important are merchandising and marketing.

Merchandising: The Bridge Builders

  • The merchandising department acts as a bridge between the design team and the factory.
  • They are responsible for planning the product line, deciding on prices, calculating how much fabric is needed, and making sure production runs on schedule.
  • Think of them as the project managers of the clothing world!

Marketing: The Storytellers

  • The marketing department's job is to get customers excited about the clothes.
  • They create advertisements, manage social media accounts, work with influencers, and design the look of the retail stores.
  • They create the "story" and "image" of the brand so you want to buy it.
Did you know?

The four 'P's of Marketing are a classic concept: Product (what you're selling), Price (how much it costs), Place (where it's sold), and Promotion (how you tell people about it). Merchandisers are heavily involved in Product and Price, while Marketers focus on Place and Promotion!

Meet the Players: Local and Global Companies

You already know many apparel companies! It's useful to think about which ones are local and which are global.

  • Local Examples (Hong Kong): G2000, Bossini, Giordano. These brands started in Hong Kong and are very familiar to us.
  • Global Examples: Zara (Spain), Nike (USA), H&M (Sweden), Uniqlo (Japan). These are huge multinational corporations with stores all over the world.
Section 1: Key Takeaway

The apparel industry is a chain of Primary (materials), Secondary (making), and Tertiary (selling) sectors. Companies can be small scale or use mass production. Inside these companies, key departments like merchandising and marketing work together to bring clothes from the factory to you.


Section 2: The World Around Us - The Business Environment

No company exists in a bubble. Many outside factors can affect how an apparel company operates, from international agreements to the latest TikTok trend. This is the Business Environment.

Going Global: International Factors

Globalization is a huge concept in the apparel industry. It means that different parts of the production process happen in different countries.
For example, a jacket might be designed in Italy, made with fabric from Taiwan, sewn in a factory in Vietnam, and sold in a shop in Hong Kong. This allows companies to find the best skills and lowest costs, but it also creates a very complex supply chain.

Focus on Hong Kong: Local Factors

Hong Kong's industry has been shaped by specific local rules and agreements.

  • CEPA (Closer Economic Partnership Arrangement): This is a very important free-trade agreement between Hong Kong and Mainland China. For the apparel industry, it means that goods from Hong Kong can be sold in the Mainland with zero tariffs (taxes). This gives Hong Kong brands a big advantage when entering the massive Chinese market.

  • Quota System: This is more of a history lesson now, but it's very important! In the past, there was a global system of quotas that limited how many textile and clothing items a country could export to another (e.g., to the USA or Europe). Hong Kong was very good at managing its quotas, which helped its industry grow. This system was phased out in 2005, which created more free competition and changed the industry forever.

The PEST-C Analysis: A Super Tool!

To understand all the factors affecting the industry, we can use a tool called PEST-C. It's an easy way to remember the different influences.

  • P - Political: These are government-related factors.
    Examples: Trade agreements like CEPA, taxes on imported materials, political stability in the countries where factories are located.

  • E - Economic: This relates to money and the economy.
    Examples: If the economy is bad, people have less money to spend on new clothes. The cost of raw materials like cotton can also go up or down.

  • S - Social & C - Cultural: These are about society, people's lifestyles, and trends.
    Examples: The trend towards casual wear and sportswear ("athleisure"), celebrity and influencer styles, growing awareness of ethical and environmental issues. What is considered beautiful or fashionable changes over time and across cultures.

  • T - Technological: This involves new inventions and technology.
    Examples: The rise of online shopping (e-commerce), using computer-aided design (CAD) to create patterns, new fabric technologies like waterproof-breathable materials.
Section 2: Key Takeaway

The apparel industry is influenced by its environment. Key factors include globalization, local agreements like CEPA, and historical systems like the quota system. Using a PEST-C analysis helps us understand the Political, Economic, Social, Cultural, and Technological forces shaping the business.


Section 3: What Do People Want? - Market Research & Development

How do companies decide what clothes to make? They don't just guess! They do a lot of research to understand their customers and the market. This is Market Research and Development (R&D).

The Life of a T-Shirt: The Product Life Cycle

Just like living things, products have a life cycle. It has four main stages:

  1. Introduction: A new style is launched. Sales are low as people are just discovering it. The company spends a lot on marketing to raise awareness. (e.g., a new designer sneaker is released in limited numbers).
  2. Growth: The product becomes popular! Sales increase rapidly. More people want it, and competitors might start copying the style. (e.g., the sneaker is seen on celebrities and sales skyrocket).
  3. Maturity: Sales are at their highest point but are no longer growing quickly. The market is saturated (everyone who wants one has one). The company might lower prices to compete. (e.g., the sneaker is available everywhere and in many different colours).
  4. Decline: The style is no longer fashionable. Sales drop as people move on to the next new thing. The company might stop making the product. (e.g., the sneaker is now on the clearance rack).

Finding Your Customer: Market Segmentation

A company can't appeal to everyone. So, they divide the market into smaller groups of people with similar needs or characteristics. This is called market segmentation. Segments can be based on:

  • Demographics: Age, gender, income, occupation.
  • Geographics: Where they live (e.g., selling winter coats in cold countries).
  • Psychographics: Lifestyle, values, interests (e.g., targeting people who value sustainability).

When a company focuses on a very specific, small segment, it's called niche marketing.
Example of a niche market: Designing stylish and functional clothing specifically for wheelchair users.

Made Just for You: Mass Customisation

This is a modern strategy that combines the best of both worlds: the low cost of mass production and the customer satisfaction of customisation.

The company produces basic parts in large quantities, but allows the customer to choose certain features.
Analogy: It's like building your own bowl of noodles. The shop has all the ingredients ready (mass production), but you get to choose the noodle type, soup base, and toppings (customisation).
A famous real-world example is Nike By You (formerly NikeID), where you can go online and choose the colours and materials for your own unique pair of sneakers.

The Future is Now: Emerging Technologies

Technology is constantly changing the apparel industry. This creates new opportunities for products.

  • High-Functional Products: These are clothes that do more than just look good. They have special technological features.
    Examples: Waterproof but breathable jackets (like Gore-Tex), thermal underwear that generates heat (like Uniqlo's HEATTECH), or workout clothes that wick sweat away from your body.

  • "Green" Products: As consumers become more concerned about the environment, there is a growing demand for sustainable clothing.
    Examples: T-shirts made from organic cotton (grown without harmful pesticides), jackets filled with insulation made from recycled plastic bottles, or using production processes that use less water and energy.
Section 3: Key Takeaway

Companies use market research to succeed. They understand the product life cycle (Introduction, Growth, Maturity, Decline) to manage their sales. They use market segmentation and niche marketing to target specific customers. New strategies like mass customisation and technologies for high-functional and "green" products are shaping the future of the industry.