Panyu, the Rising La Coruña of China
Unveil Panyu: The Epicenter of SHEIN's Success
Background
Why is Panyu?
Rise During the Reform and Opening-Up Era
Panyu's Garment Industry: Size and Impact
Industry Roots
Clusters of Garment Factories
Well-Established Supply Chain
The Rise of SHEIN
SHEIN Effect
Temu
AliExpress
TikTok Shop
The Home of Global DTC Brands
Halara
Bloomchic
Cider
Commense
Background
Located in the southern outskirt of Guangzhou City, Panyu is as crucial to SHEIN as La Coruña is to Zara.
La Coruña, Spain, the base of Zara's headquarters, is considered a central hub of the European textile and apparel industry. Likewise, the Pearl River Delta, especially Panyu, where the supply chain center of SHEIN is located, is a powerhouse in the global textile and apparel market.
The competition between Zara and SHEIN signifies not just a rivalry between two enterprises but also a contest between the European and Chinese fashion industry supply chains.
Zara produces most of its items in Spain or nearby countries like Portugal and Morocco, ensuring high quality but at a greater cost. Their logistics strategy involves shipping products to Spain first before distributing them worldwide, even if the items are made in China. This process increases both time and costs.
In contrast, China's extensive garment production supply chain enables SHEIN to manufacture and distribute products at lower costs and faster speeds.
In 2015, SHEIN relocated its supply chain center to Panyu, Guangzhou. Leveraging Panyu's garment processing infrastructure, SHEIN can transition from design to delivery within two weeks, with suppliers taking only five days from receiving orders to delivering finished products to warehouses, much faster than Zara's four weeks. This efficiency allows SHEIN to respond swiftly to market demands and offer products at lower prices.
In 2023, SHEIN achieved sales of $45 billion, with a net profit exceeding $2 billion, up by 55% year-on-year, surpassing the entire sales of Zara's parent company Inditex for the first time.
With SHEIN's rapid growth, Panyu is emerging as a significant global fashion hub, akin to La Coruña.
Why is Panyu?
Rise During the Reform and Opening-Up Era
In the 1980s, China embarked on its journey of economic reform and opening up. On July 15, 1979, Guangdong and Fujian provinces were officially approved to adopt unique and flexible policies for foreign economic engagements. As part of the Pearl River Delta Economic Zone, Panyu quickly became a focal point for both foreign and domestic investments. As industrialization sped up, Panyu's garment manufacturing sector saw significant growth, with numerous garment factories established there, propelling the region's economic boom.
Panyu's Garment Industry: Size and Impact
Panyu has long been a major hub for China's garment industry, with the region's production and export volumes ranking among the top for years at the national level. In 2023, large-scale garment enterprises in Guangdong, where Panyu is located, produced a total of 3.174 billion pieces, making up for 16.36% of the national output, and exported clothing and accessories worth $23.68 billion, 14.9% of the country's total exports.
Guangdong's garment industry is distinguished by its cluster-based development, featuring 26 specialized industrial clusters spreading across the province. The fashion industry cluster in Guangzhou is notably large, with a total value of over $116.89 billion in 2021, in which the garment sector alone contributes $6.88 billion. The majority of this industry is centered in five districts, including Zengcheng and Panyu.
In the late 20th and early 21st centuries, Panyu developed an industrial cluster centered around garment manufacturing. Nancun Town exemplifies this growth, with hundreds of garment factories and related businesses creating a full supply chain. This chain spans from textile material supply and design to production and export. Panyu's garment industry not only meets domestic demand but also exports significantly to Europe, the US, Southeast Asia, and other international markets, making it a vital global garment production base.
Industry Roots
Clusters of Garment Factories
The garment industry in urbanized villages of Haizhu and Panyu districts in Guangzhou began to flourish around 2000. As of October 2022, Panyu housed over 34,000 garment enterprises, with 7,281 engaged in garment manufacturing. Small and micro companies dominate these 34,000+ registered companies in Panyu.
Panyu's garment manufacturers are mainly located in Nancun Town, Dalong Street, Dashi Street, Luopu Street, and Shiqi Town. Nancun Town alone has thousands of garment factories within a 3-kilometer area, acting as the supply chain base for numerous specialized textile markets like Guangzhou Shisanhang and e-commerce giants like SHEIN and Temu.
Well-Established Supply Chain
Zhongda Fabric Market: The World's Largest Textile Market
For more than three decades, Guangzhou's Haizhu district has been home to Zhongda Fabric Market, a thriving hub for fabric trading and garment production that serves customers in China and around the world.
Zhongda Fabric Market is located near Haizhu District's Kanglu area, which includes Kangle and Lujiang villages. covering about a square kilometer with over 100,000 residents. The area hosts more than 5,200 garment factories and warehouses, with 130 clothing markets and over $27.69 billion generated annually. Over 300,000 people work here in textile-related sectors, with over 95% from other cities.
Zhongda Fabric Market features 59 specialized markets like Guangzhou International Textile Market and Zhujiang International Textile Market, with nearly 23,000 shops. The area also includes modern trade centers, office buildings, apartments, hotels, and exhibition centers.
In Guangzhou, Zhongda Fabric Market and the urbanized villages with small textile factories work seamlessly with Shahe and Shisanhang Clothes Wholesale Market, forming South China's largest clothing hub.
The urbanized villages with small textile factories in Kanglu area is just a 10-minute walk from the Zhongda Fabric Market and a 30-minute drive from the Shahe Wholesale Market. Transporting fabrics and garments to Baiyun or Panyu districts takes no more than half a day.
The urbanized villages' greatest advantage lies in its interconnected, seamless, round-the-clock operations. From purchasing fabrics and accessories to cutting and sewing, and finally delivering finished garments to wholesalers, all these steps can be completed within a day or even half a day. This remarkable speed allows urbanized villages to take orders and ship on the same day, making it a key edge.
Zengcheng Xintang: The World's Jeans Factory
The denim textile and garment industry in Xintang Town, Zengcheng District of Guangzhou, started even before the Zhongda Fabric Market. Since the late 1970s, Xintang has flourished as a center for denim garments. Today, it stands as the largest denim production base in China with the most complete industrial chain, highest annual output, most diverse product range, and largest export volume.
More than just one part of the denim garment chain, the whole industry process is covered in Xintang, from spinning and dyeing to weaving, crafting, garment making, washing, bleaching, and anti-shrinkage.
By 2023, Xintang was home to 1,968 denim textile and garment enterprises, including 185 large-scale firms, and over 1,000 registered denim brands, employing around 200,000 people. In 2023, the output value of Xintang's denim garment cluster exceeded $1.38 billion. At its peak, Xintang dispatched 2.5 million pairs of jeans worldwide daily, with one in every three jeans globally originating from Xintang. Over 60% of China's denim garments and 40% of the nation's denim exports come from Xintang.
Xin Tang, the fashion hub of Eastern Guangzhou situated in the heart of the Greater Bay Area, has attracted numerous top fashion brands with its complete industrial chain. As early as February 2022, SHEIN announced its plan to establish its supply chain headquarters in the Greater Bay Area. Soon after, SHEIN set up a fabric center in Xin Tang's Sha Pu and launched the supply chain project in Zeng Cheng's Zhongxin Town.
SHEIN states that this project aims to create a logistics center that integrates operations, warehousing, stock management, picking, distribution, and shipping, enhancing the synergy of local supply chain ecosystem and offering core support for SHEIN's global brand suppliers and platform merchants.
Looking ahead, SHEIN might manage operations, design, and order processing in Panyu, with the fabric center in Xin Tang furnishing the necessary materials, and the supply chain in Zhongxin overseeing production, warehousing, and shipping.
The Rise of SHEIN
In 2014, SHEIN established its supply chain center in Guangzhou and the year after that, the company relocated this center and its headquarters to Panyu. With garment orders spread across the district's small and medium-sized factories, seamless coordination with surrounding suppliers is enabled across various stages from fabric sourcing, printing, photography, shelving, traffic testing, shipping, to reordering.
SHEIN connects with over 1,000 Chinese suppliers, with 300-400 core suppliers located near its base in Panyu. Data from Amap indicates a dense concentration of garment factories near SHEIN's headquarters.
This move marked the beginning of its efforts in developing its own brands, innovating a digitalized flexible supply chain model focused on on-demand production, minimal inventory, and rapid response to market demands.
Centered on small-batch manufacturing and shortened production cycles, SHEIN's digitally-empowered supply chain features fast-tracking prototype testing, immediate production scaling upon demand spikes, and rapid distribution.
Backed by the labor-intensive industrial ecosystem of the Pearl River Delta, SHEIN processes batches with as few as 100 units and maintains inventory rates as low as single digits with only 6% of stock remaining unsold for over 90 days. The entire process for SHEIN, from design to production to online availability, spans just 3-10 days, with delivery cycles around 14 days.
SHEIN ensures daily updates with approximately 1.3 million new SKUs annually, far exceeding traditional fast fashion brands like ZARA and H&M. Meanwhile, SHEIN refreshes its offerings every 7 days, maintaining an inventory turnover in about 40 days, compared to ZARA's 14-day cycle and Inditex's 80-day turnover in 2022.
SHEIN Effect
SHEIN's success has pulled a lot of rivals into the neighborhood around its headquarters.
Temu
Temu's headquarters is located in Aoyuan International Center in Panyu District, Guangzhou, just about 900 meters away from SHEIN's base in Sihai Cheng. Insiders believe that SHEIN's success lies in its innovative on-demand production model, which leverages Guangzhou's robust garment supply chain. In fact, Temu relies on Guangzhou's supply chain even more than SHEIN.
Temu's Pinduoduo roots require as many merchants as possible to offer low-priced products. Guangzhou and its neighboring cities are the largest sources of apparel in China, ensuring cost advantages from the very start. The factories, wholesalers, and e-commerce merchants clustered in various wholesale markets are all potential sellers for Temu. Plus, without overseas warehouses, all Temu merchants need to promptly dispatch goods to Temu's warehouses in Qingyuan, Foshan, Zhaoqing, and Guangzhou, giving local merchants a logistical edge.
Moreover, Guangzhou's strengths extend beyond the apparel supply chain to include six major industrial clusters: beauty and personal care, bags and leather goods, jewelry, food and beverages, and custom home furnishings. These clusters cover almost all top export categories and boast complete supply chains, making Guangzhou a prime hub for cross-border exports.
AliExpress
On July 25, 2024, AliExpress opened its first cross-border e-commerce industrial park in South China, located in Panyu's Vtrek Industrial Park. Teaming up with Alibaba's International Digital Commerce, the park aims to turn Panyu into a key hub for cross-border e-commerce in Guangzhou and the Guangdong-Hong Kong-Macao Greater Bay Area. This will foster industry clusters and promote rapid development in Panyu's cross-border e-commerce sector, establishing Vtrek Industrial Park as a standout in the Greater Bay Area.
TikTok Shop
Dmonstudio, TikTok's parent company ByteDance's cross-border fast fashion brand, also based its headquarters in Guangzhou's Panyu District, right where SHEIN is located.
In November 2021, ByteDance launched Dmonstudio to compete with SHEIN. For this top-tier project, ByteDance enticed over 100 key personnel from SHEIN with offers of 2-3 times their salaries. However, after only three months of operation, Dmonstudio announced its shutdown in February 2022. Around the same time, ByteDance's e-commerce platform Fanno was rolled out for testing, but rumors soon emerged in May 2022 that the project team had been disbanded in April and the project was scrapped.
Following the shutdown of Dmonstudio, ByteDance introduced IfYooou, an international DTC fashion and lifestyle website offering women's clothing, accessories, and home goods. This marked ByteDance's third attempt in the cross-border fast fashion domain.
IfYooou primarily focused on women's fast fashion, including dresses, swimsuits, tops, and shirts, much like Dmonstudio and SHEIN. Learning from Dmonstudio's failure, IfYooou adopted the same low-price strategy as SHEIN. The site also emulated Temu and SHEIN by offering substantial discounts and promotions to drive traffic.
But it didn't last long. By November 2022, IfYooou faced a traffic crisis. SimilarWeb data showed a dramatic drop in website visits from 351,000 in June 2022 to 43,600 in July, 177,000 in August, 45,000 in September, and just 5,007 in October. As of now, the site is no longer accessible.
The Home of Global DTC Brands
Panyu has emerged as a hub for China's e-commerce giants and a home for China's global DTC brands.
Recent years have seen the immense popularity of brands like Halara, Bloomchic, Commense and Cider — backed by Chinese entities — among American youth. The key lies in their supply chain's swift response, a cornerstone echoed in SHEIN's successful model, paving the way for these brands' rise.
Halara
Headquartered in VIPSHOP Topchain Community, Haizhu District, Guangzhou, Halara has notably become one of TikTok's most popular activewear brands. Founded in 2020, Halara has topped its category on TikTok's US with total sales of 1.38 million units and $38.55 million in revenue as of June 19 this year, offering products typically priced between $25 to $45.
Halara, owned by Beijing Doublefs, is a fashion brand whose founder relocated operations from Beijing to Guangzhou to oversee the supply chain firsthand and ensure quality control over fabrics, processes, and production flow.
Inspired by SHEIN's digital model for suppliers, Halara developed a Predictive Inventory Analysis (PIA) software to analyze user demand, forecast trends via algorithms, and digitize supply chain and inventory management. Through this initiative, Halara introduces hundreds of new styles weekly, achieving nearly zero inventory of its products and offering competitive priced items relative to its rivals.
BloomChic
BloomChic, a DTC brand for plus-size women's fashion, was founded in late 2020 by the son of Metersbonwe's Zhou Chengjian, aiming to offer stylish, comfortable, and varied choices for medium and plus-size women worldwide.
Based in Guangzhou, China, BloomChic uses SHEIN's flexible supply chain model to produce small-batch, on-demand clothing. They set new size standards with suppliers to meet their market needs, pre-stock fabrics, and streamline purchasing. Releasing over 300 new items monthly, BloomChic excels in product development and inventory turnover. By 2023, their website had over 2 million monthly views.
Cider
Cider, launched in September 2020, targets Gen Z women (ages 12-25) with fashion priced between $15 and $50. Within a year, it raised over $130 million, valuing the company at over $1 billion.
Using a Shein-like supply chain model, Cider quickly adapts designs based on sales data and feedback, with a production cycle of about seven days. Focusing on original, expressive designs and retro styles, Cider has a strong presence in 130 countries, especially in Korea.
Out of the four suppliers listed on Cider's official website, three are from Guangdong Province.
Commense
Commense is a womenswear brand under Infinite Waves, following a business model similar to SHEIN and targeting fashion-savvy females aged 18-24 in Europe and America. Infinite Waves' founder, Jingjin Zhou, was not only an early employee of ByteDance but also served as the CTO of the cross-border e-commerce company STARLINK. Shortly after the establishment, Commense secured $100 million in Series A funding from ByteDance and Sequoia Capital.
Infinite Waves is headquartered at the China Railway Nord Center in Panyu, Guangzhou. Since its founding in 2021, it has ranked among the top 20 Chinese overseas DTC brands, with a monthly average of over 700,000 visits. Nearly 64% of its traffic comes from the United States, with market shares in Canada and Italy growing rapidly.