Global Trends in the Apparel Industry and Success Factors of Shenzhou International

This case study discusses the global trends in the apparel industry and the major factors contributing to the success of Shenzhou International. It analyzes Vernon's Product Life Cycle and Transaction Cost Minimizing approaches. It also evaluates the proposed venture of Shenzhou International to set up production operations in the United States.

Case study

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
PART 1............................................................................................................................................3
Discuss the global trends in the apparel industry........................................................................3
Determine the major factors that contribute to the success of Shenzhou International. ............5
Analyse Vernon’s Product Life Cycle and the Transaction Cost Minimizing approaches in
explaining growth of Shenzhou International and globalization .............................................6
Evaluate the proposed venture by Shenzhou International to set up production operations in
the United States. .......................................................................................................................8
PART 2 ...........................................................................................................................................8
Discuss the impacts of the pandemic on the aggregate demand of China..................................8
Evaluate the potential effectiveness of the fiscal and the monetary policy to overcome by
impact of pandemic.....................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERNCES:................................................................................................................................11
Books and Journals:..................................................................................................................11

INTRODUCTION
Globalisation and international market development has been rapidly rising due to many
technological up gradation and utilising effective resource into business. Diversification and
new product development is necessary to make the organisation expand to the world wide
market. There are a lot of benefits business take by expansion in terms of revenue, large
customer empowerment, brand name and become an perspiration for others through the lifespan
of the brand. The organisation work on initial level for regulating their products with regular
change into price, strategies as per customers demand. Through customers loyalty and
satisfaction, the companies take rise into other parts of the world. Therefore, this report is based
on the case of of Shenzhou international group, the company was established in 1970 by Baoxing
Ma(Okilwa and Barnett, 2017). The company is specialised in selling their best and unique
apparels into China market. By the time, it has explored their business into Hongkong, Shanghai
and Osaka in japan and many others. For that instance, this report is going to present the trends
and factors associated with apparel industry and reason for their success. This will be
demonstrate by diffing product life cycle and procedure to overcome with pandemic situation
that affects on business success.
MAIN BODY
PART 1
Discuss the global trends in the apparel industry
Trends are like the flow of country which are established by people through their personal
observation and fulfil the need for change into countries. Trends defines as a global factor that
impact on business and needs attention for being into the market. Market develop varieties of
global operation on which industry and companies needs to undertake. People get easily
influenced by what they see and what they likes. Sometimes these traditional trends also get
convert into modern trends when it wore by celebrity faces(Selvanathan and Jetten, 2020).
Mostly, in apparel industry, clothing, accessories are all based on design, colour contrast and
product quality. People mainly looking for comfortable clothing and unique design for every
time they carry their garments. In order with this, perceptions, taste and preference get regularly
change due to various trends in to market which affects organisation to undertake them into

their product process while carry out business into international market. These trends are
described below:
value chain: Under this trend of global market, the production procedure gets classified
into many task and capabilities that needs to be consider for carry out these production into
different parts of the world. Production procedure could not get same into every countries a
business operates. It differs as per countries requirements, environment and resources. It include
all the activities of production, marketing, distribution, financing. Business enable these process
by collaborative working with companies of different countries. Therefore, these trends creates
influence on companies by indulging them into working with multinational firm and follow those
trends that gives an unique exposure of catalogue(Stringfield, Reynolds and Schaffer, 2016). It
includes Transactional corporation, Outsourcing, under which, business needs run their
operations into different countries son that they need to deliver their resources, talent and input
of products to other countries development process. It basically aims for developing cross
cultural working environment into operations in which government does not get interfere In
taking decision of what to produce, business get freedom in their production. China has gain
advantage of this liberalization through which, they stared making Apples accessories with high
mechanism.
Bargaining power of players: players bargaining power reflects how much the
company gets potential into their product through which buyers could change their demand
easily. Into international market, new companies desires move thire operations or franchisee
needs to come up with unique and unapproachable product, marketing criteria and whole of
business function. As there are allot of chances to get failure into different market which in
return results sin facing heavy loss or bankruptcy. These situation are affected by bargaining
power of customers, when they get same product with less price but from different company,
they would easily make their demand for that one. So that, apparel industry have impacted with
customers changes very quickly as customers demands for best with minimum price of product
worth.
Governmental and international cooperation: Governmental cooperation is essential
for the companies starting operation's into international market. legal bodies creates influence in
undertaking exit and entry of new companies with various formalities and restriction that needs

to be maintained. In apparel industry, there is need for governmental support and corporations
into internation market in terms of land, labour, accommodation and pricing policy(Gut and et.
al., 2020). Some companies use quality materials and get materials import and export facilities.
So that, cost may get high and would not match with pricing policy into international country.
These trend must be significantly ensure about the companies looking forward to operate
into international market. By analysing trend, it will be beneficial for them to take expropriate
decision regarding apparel industry and its consequences on companies profit and brand name.
Determine the major factors that contribute to the success of Shenzhou International.
Shenzhou International has been the largest manufactures of appraisals into china market
due t making the most quality and hand-picked materials into their production. Their production
involves activities of combining weaving, dyeing and finishing, printing and embroidering,
cutting, and sewing. They use best of techniques and advance level of machinery for getting
effective output through putting right input and right place(Feng, Damon-Feng and Zhao, 2020).
The company involved into various factor that has contributed into companies success. These
factors may include governmental support, employees potential market environment and many
others. Apart from this, this company as risen their production and business activities into large
market by dividing work into smaller categorises make it established into other parts of China
and japan. The factors and history of Shenzhou International are mentioned below:
Facing challenges: The company needs to was started by Baoxing M. the owner of
company desired to take their company to large level by making partnership with multinational
firms and take advantage of new market. It was not easy for them to easily enter and start their
production rather they need to face challenges for accomplish their goals. For that instance, the
owner took the challenge of producing 3,00,000 sweaters in one month in order to work in
partnership with Uniqlo apparel based company is Hong Kong(Mirea and et. al., 2017). This
was the initial stage of Shenzhou from there they started its expansion into Hong Kong. This
challenge was seemed typical at first place, but the dedication of owner and workers had made
the challenges complete in a very less time.
Sustainable operations: Another factor behind the success of Shenzhou International is
their sustainable operations. Through liberalisation, and support of government, the owner has
started its business into different parts of China where, it ensure about operating environment
friendly solution for carry out the process. The owner decided to established sage pond by

spending¥48 million, energy saving facilities, emission reducing mechanism and dying
machines. Through these operation, environment get healthier which gives benefit to whole
economy and society. Through emerging these upgraded technologies, the company stared its
cooperation with other brands like Puma, Nike, Adidas. A sustainable operation gives truly
results in getting success the rim and attract other multinational firms for encouraging
technological power and product rarity.
Diversification with innovation: Shenzhou International desires to be the most tanked apparel
seller into world. For which, the company established its operation into new innovative
products ranges which include Chinese casual wear, in order to provide standard lifestyle or the
public of China and Japan(Nunes, 2019). They started launching new products for all age grips
and gender. Through which they gain competitive retail market ta worldwide nation.
These all are the factors that worked effectively in driving success of the company
therefore, it is analysed that facing challenges welcomes the opportunities that needs to win at
right time. Also, innovation must be maintained which is the most required factor while
operating into international market.
Analyse Vernon’s Product Life Cycle and the Transaction Cost Minimizing approaches in
explaining growth of Shenzhou International and globalization
Product life cycle: this product life cycle was Crete by Raymond Vernon. Through this,
it will be analyse how the production procedure of Shenzhou International is carry out to be
sustainable, cost effective, product quality, promotion and growth. A product life produce detail
plan though which product crises out continuously.
The introduction stage: first the product get introduce into the market through
promotion and techniques. Th company must be evaluate the stage of life cycle. The Shenzhou
International introduced their apparel fist into chins market by building the appropriate
techniques.
The growth stage: under this stage, it has been analysed that Shenzhou International has
become the biggest seller of many clothing items into national and international market ion china
and japan due to high customer satisfaction and product quality(Kambara, 2019). Therefore, the
growth was the first factor of their product life cycle in the history of company.
The maturity stage: according to this stage of life cycle, the competitors and product
value by identified where there are many sellers f the same product. Through this, the companies

needs to then lowers down the price or get avail many opportunities like innovations. In case of
Shenzhou International the company took over high growth into market due to taking
partnership and cooperation's with governments support. In result, the company established
many exposure or innovation into large market by setting up varieties of product range so that,
any uncertainties would not harm the proficiency of company.
The decline stage: under this stage,, the product faces decline stage by showing data of
low sales and outdated product categories. In case with Shenzhou International, the company
have faces this effect when crises have risen up during Covid-19, when people were not willing
to buy anything which comes in contact of infectious disease(Shuffler and et. al., 2018).
Although, overall companies decline growth were not typical.
Transaction cost approaches:
Under this cost approaches, the company enable theories and approach for maintaining and
reducing cost of goods and services. There are various cost that must be minimize to boost there
profit potential.
Search and information cost: the company must evaluate information and search cost
which they evaluate for making the research on product development and performing other
activities(Dalton and Cooksey, R., 2019). Therefore, Shenzhou International invested $40000
for getting partnership contract with other companies into japan market. Through this cost, the
company benga able to aware about twhat the customer and how their product will rise into
market. Promotions, marketing and information criteria are all involves under this cost.
Bargaining and decision cost: under this cost, the company does not spend money for
establishing and operation production of carry out activities. Under this, Shenzhou International
is being moving to the different market to acknowledge their competitors and make uniqueness
product segments so that customers were no left with bargaining and promotes unique features
and quality of products. Therefore, the company is being the best in rarity of products so that,
they make proper strategies or innovation and utilise every resources entitled with their
surroundings.
These product life cycle and cost breakdown is essential to see results of organisation
activity into large market. The company must ensure to carry out all cost and stages of product
life cycles that reflect current and actual performance of Shenzhou International

Evaluate the proposed venture by Shenzhou International to set up production operations in the
United States.
Shenzhou international is planning to impose their operation into United States. Their
market has been the largest among all, US economy has involved large manufacturing concerns
and long projects in terms of land, labour , capital an resources. In order to expand a business
and look for a better country, US would be the best option for china market as they have
capabilities and potential to provide resources needs for the business. Therefore, Shenzhou
international would serve an incredible opportunity if they open up venture into Us market. The
company has the global brand name and high financial potential which they gain with the
contribution in Vitenam, Cambodia Hong Kong and other cities(Lasrado and Pereira, 2018).
They became capable of doing business n most feasible manner which will be beneficial for
both economy and country development. Therefore, Shenzhou international has confronted to
build its another brand an large product range in men, women, children clothing. It has started
taking advantages of other brands like Nike, Puma in order to start operations in Vietnam and
Cambodia.
In 2016, an apparel factory was set up in Cambodia, with 2500 employees under which
the company made regular operations of 850000 piece of clothing in each month. They sell
these apparels through European Union members countries. By the time, the production get
enlarge and gathered other subsidiaries into collaboration through which four another factories
get stated. In US territory, due to the survey of USFIA, it has been revealed that a company
desires to expand its business will need to give supplier strong competitive edge for standing
into US market. By ensuring proper mode of distribution, protecting labour rights, good pay
wages and other(Warner and et. al., 2020). Due to this diversification, the Shenzhou has started
collaborating in other products like sports wear, knitting , all the material come from China to
reflect principle goods and brand name into product servicing into US.
PART 2
Discuss the impacts of the pandemic on the aggregate demand of China
Covid-19 is an infectious disease which spread more when person come in contact with
another. It is defected by Coronavirus. The diseases has originated from China, Wuhan. It was

spread globally that shocked the whole world and arrives a situation of pandemic, through which
all the operation got banned. And severely the whole Economy of China. Due to which business
in all the sectors hot stopped demand gets falls. The GDP of China has tend to reduce by 1%,
75% of companies suffered with huge losses due to global restriction on import and export.
China is very well known for its global dealings and worldwide suppliers which was extensively
reduced and economy has come to less money supply(Ayedun and et. al., 2018). The GDP
percentage was low form NDP as several countries refuse to take Chinese product by restricting
import and export from China also, several products of China got banned into India from where
China get most of its revenue. So that pandemic has impacted severely in to the nation, but due
to good financial resources and n potential it has took growth in 2020.
Evaluate the potential effectiveness of the fiscal and the monetary policy to overcome by impact
of pandemic
The problems and issues has two sides in terms of positive and negative impact through
which solution and measures could get in control. Therefore, monetary and fiscal policies have
played major role in overcoming with the issues of pandemic. China has faced lots of crises and
loss during Covid-19 in which companies are in need for governmental support to its best. In
order to provide the suitable changes and come up with effective relations and economic
development, government provide immense support for business.
Measures by fiscal policy:
Fiscal measures have defined to be effective in boosting organisation money flow and
their reliable contribution In economic development. It has become the main aim of fiscal
policies to maintain money flow into economy so that demand and supply gets in favour of the
country. Government provide short schemes and subsidies for making huge engagement of
workforces who have left out the job during pandemic(King and et. al., 2017)(Agarwal and
Kohli). They have promote to make influence on making financial support for the organisation
and people so that, the economy will regain its purchasing power and give rise to technology.
Shenzhou international was positively affected by these fiscal policies to incorporate gain into
the market with their apparels into whole wide world. There have made amendments into Tax
policies to structured and rebound budgets sand incomes. The purpose of providing fiscal
measures to to make the economy grow in terms of people interference and organisation

capabilities. When people get their purchasing power back only then the business will be
eligible to make profits and capturing market share.
Monetary measures: these measures provide immense support in making the world
developed and taking high growth into the market. In monetary terms, government provide
money support to public and private institution for carry out business activities for welfare of
society; during pandemic many firms has faced bankruptcy, supply gets lowers down and debts
gets high. The whole economy was in crises and made the possible efforts to cope up with
savings. In that case, people get support in term of financial security to live with basic
requirements. government provide an effective control for fixing the household amenities for
using it for gaining livelihood. Therefore, business like Shenzhou international has made their
efforts to provide support to the society by distributing apparels and food for people under below
poverty line.
CONCLUSION
The report has concluded the facts about the global trends and companies exposure into
market. It has analyse that every business face challenges but the biggest hurdles come in
fulfilling the it with highly effective manner. The opportunities may come and go, there is need
to analysing the best one for the business. So that, capability and potential could get maintained.
During the time of pandemic, government has adopted many measures for or houshold income
and household requirement for which they enable carious monetary and fiscal measures in order
to support the economy for better change into the world.

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