Garment makers with solid retail networks in the growing mainland clothing market are tipped to be the next big earnings performers, according to the investment banking unit of the Bank of China (Hong Kong).
Investors have been enjoying strong gains from playing Chinese garment makers oriented towards exporting to the West but BOC International (BOCI) sees the best growth from those with exposure to home markets.
BOCI said China had been the world's fastest growing importer of clothing in the past 10 years, thanks to an increase in domestic consumer spending.
However, the pie will not be shared by all. 'The fittest [will] survive,' BOCI said.
There are at present more than 20,000 textile and clothing producers in China - 71 per cent owned by the state and Chinese entities, and 29 per cent held by foreign entities, including Hong Kong and Taiwan investors.
BOCI estimates only 40 per cent of manufacturers will survive and thrive over the long run with the likely winners being those with dominant brands and retail networks, such as Hong Kong-listed Glorious Sun Enterprises and Shanghai-listed Youngor Group.