COVID-19 economic impact hurts the fashion world
Updated 02:12, 28-Feb-2020
By Louise Greenwood

It's one of the busiest times of the year for the fashion industry. With London Fashion Week drawing to a close, the juggernaut of designers, stylists, buyers and press is now preparing to make its way to Milan for the Italian spring collections. 

But this year a shadow has fallen over what is traditionally a celebration of the industry's finest creative talent, as the COVID-19 coronavirus means that the majority of Chinese participants have, for the first time, been obliged to stay away.

With the number of reported cases in Europe rising, several countries and airlines are maintaining travel restrictions between China and the rest of the world. Many Chinese citizens are choosing to self-quarantine themselves by simply staying at home. At London Fashion Week the effect was profound.  

"It is absolutely hitting the fashion industry," British Fashion Council chair Stephanie Phair told CGTN. "There is a big partnership between China and London Fashion Week. We often host Chinese press, media, buyers... absolutely this has affected, due to travel restrictions, their ability to get to London. But we are using technology to bridge the gap."

This has meant the live streaming of shows online, facilitating interviews and ensuring an accurate flow of product details as Caroline Rush, the council's chief executive, explained.

"The first thing is to focus on getting information to them and make sure they feel connected to the event and to make the content, the images and the contacts details for the designers participating, front-of-mind for them so that the business for the future can continue."

And on contracts of this size, there is little margin for error. It's now estimated that China accounts for over a third of global sales in the luxury goods sector, of which designer clothing, shoes and accessories are part. It's a figure that has been growing by 20 percent a year. 

The shows must go on, but London Fashion Week has been hit by coronavirus worries (Credit: Daniel Leal-Olivas/AFP)

The shows must go on, but London Fashion Week has been hit by coronavirus worries (Credit: Daniel Leal-Olivas/AFP)

Financial implications

For an industry with an estimated value of $2.5 trillion, any disruption to sales can have huge consequences for the top brands. The British fashion house Burberry, admired the world over for its distinctive mackintosh coats, says it is closing around a third of its stores in China's mainland due to slowing footfall after the outbreak of the virus. Sportswear brands Nike and Adidas, which have until recently enjoyed booming sales in Asia, have announced similar measures. 

Aside from retail sales there are also implications for manufacturers. China is now the world's single largest producer of garments and many of the biggest fashion names produce their goods in China, as well as sourcing supplies such as silks and trimmings locally. Shanghai Fashion Week and several textile industry expos due to be held next month have been postponed amid the ongoing uncertainty. The ripple effect from the coronavirus across other parts of Asia means that countries that might have been expected to pick up the shortfall, such as Vietnam and Bangladesh, are suffering their own slowdown. 

Read more China in vogue: Chinese designers at London Fashion Week

Thierry Bale, fashion industry consultant and founder of Global Fashion Management, told CGTN that it is the top end of the industry - working on six-monthly manufacturing cycles - which stands to be hardest hit.

"Designer brands are going to have to make a decision this month, next month to basically manufacture (their autumn collections) with a Chinese factory or not… so potentially for them is there going to be a change of partner? When it comes to fast fashion then of course they order and manufacture every month and hopefully as soon as coronavirus is finished things will be able to go back to normal."

Industry consultant Thierry Bale wonders whether fashion labels will have to switch manufacture away from China (Credit: CGTN)

Industry consultant Thierry Bale wonders whether fashion labels will have to switch manufacture away from China (Credit: CGTN)

Silver lining

Whether it is in New York, Milan and Paris or Shanghai, Dhaka or Hanoi, the fashion industry the world over is feeling the effect of COVID-19. 

With no sign of a vaccine forthcoming and concern growing about the longer-term outlook, some of the biggest names in global fashion are fighting back. LVMH, the world's biggest luxury goods brand, has pledged $2.3 million to a fund set up to prevent the further spread of the virus. Other industry big hitters such as the cosmetics brands L'Oreal and Shiseido have contributed, along with the jewelers Swarovski. 

However there is a silver lining to the current gloom. China was already the global leader in online shopping prior to the coronavirus outbreak, with an estimated $1.5 trillion in sales last year. With many people now stuck at home unable to go out, sales of designer goods on the internet are expected to spike over this difficult time.

Andre Losekrug-Pietri, founder of venture capital group A Capital, told CGTN at the recent Munich Security Conference he was anticipating a swift recovery for the wider Chinese economy. 

"I expect it to be pretty fast… There are lots of overdue investments that will happen anyway, and especially the fact that China has gone over a few years to a massively online and e-commerce economy that has really prevented consumption from being hit too hard."

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