The US has a long history of creating high fashion and it is now losing ground in China.
As the world’s second largest consumer of imported luxury goods, China is growing at the same time as the US is losing market share to Japan and the European Union.
It has the potential to become the world capital of fashion, as the country boasts more than 200 million luxury consumers, according to research firm Mintel.
In the past decade, China’s fashion industry has expanded rapidly, with Chinese fashion brands selling more than $1.4 billion worth of goods in 2016.
But China’s consumer-led fashion industry is facing a global economic downturn and is not growing fast enough to catch up with the US.
In 2020, the global fashion market will be worth about $2.8 trillion, according the International Federation of the Fashion Industry.
Advertisement The global trend in luxury fashion is dominated by Chinese brands.
But the trend is changing.
The country’s consumer appetite has not grown as fast as the global economy, according Mintel, which projects that luxury sales will fall by 2.8 per cent this year and 5.1 per cent next year.
In Australia, luxury fashion has become the biggest export market for luxury goods in the world, accounting for about $1 billion in annual exports.
But in 2020, Australia will lose the third largest market in the entire world, after China and Japan, according US fashion retailer Urban Outfitters.
Advertisement Australia’s fashion sector is a cross-section of global fashion.
Its designers have designs that have been made in Italy, Italy’s second-largest economy, and the US, where the US$1.2 trillion clothing market is dominated.
The global fashion industry in Australia has grown at about 30 per cent a year for 20 years, Mintel says.
“This has led to the growth of brands such as Levi’s, H&M, Louis Vuitton, Tommy Hilfiger, Gucci, and more,” says Mr McIlwain.
“The trend for the industry is not slowing down.”
But that trend has not led to a global fashion boom in Australia.
“We are not seeing a big boom in the Australian fashion industry,” Mr McRae says.
That’s partly because the industry has not experienced a global boom.
In 2016, there were 1,622 luxury brands in Australia, according a Mintel report.
Only 16 of them were from Australia, while the rest were from China, Japan, France, the US and India.
The US accounted for about three-quarters of all the luxury fashion in Australia in 2020.
It accounted for 46 per cent of the market, followed by Japan with 20 per cent, and China with 13 per cent.
Australia’s luxury fashion industry faces several challenges.
Its economy is dependent on imports of fashion clothes, which makes it difficult for retailers to export to the US or elsewhere.
Australia is one of the only countries in the developed world that does not have an open border with China, so Australian retailers can’t sell their goods on the US market.
And unlike the US where imports are relatively cheap, the prices in China are high.
Advertisement One reason for this is that there is little demand for Australian fashion goods in China, says Mr Mok, the fashion analyst.
“If you look at what the market is looking for, you would expect Chinese consumers to spend more on their clothes in Australia than in other markets,” he says.
The fashion industry also has to adapt to changing trends.
Australia has long had a strong relationship with Japanese fashion brands, but it has struggled to build strong partnerships with other fashion houses in Asia, like China.
In 2018, fashion giant YSL launched a new line of premium women’s clothing, which it hopes will be the first in the US to be marketed exclusively in Asia.
However, many of the designers are Japanese.
While YSL is confident the women’s line will sell well in the Asian market, it has to contend with Chinese retailers who are still trying to catch-up.
“Chinese consumers are still quite used to Japanese brands,” says James Wort, chief executive of YSL.
“But with YSL, they are very comfortable with Japanese brands.”