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industry is ultimately supported by firm incentives. Figure E illustrates the different research and development incentives of firms within China established within the apparel industries that are mostly export-oriented. The revealed number one motivation for research and development is product quality improvement. (Lau, To, Zhang, & Chen, 2009)

Figure E: Enterprises’ Research and Development Incentives

Source: Lau, To, Zhang, & Chen, 2009

Firms within China feel that the most significant element that affects their competitive advantage is the product process, and believe the process is especially important. This would include activities such as product quality management, supply chain management, and research and development. Specifically, in Southern China the development of local industrial clusters and their use of business support systems for enterprise linkages has improved and as a result yields higher value added activities (Keane, & Te Velde, 2008). In other words, more attention on the supply-side rather than the demand-side is found to be more impactful on competitiveness (Lau, To, Zhang, & Chen, 2009).

Furthermore, corporate social responsibility is becoming a focal point and is at an all time high, which reflects social and economic development and increasing competitive advantage. (Linfei, & Qingliang, 2009)

8. Conclusion

The world takes a vigilant eye on China. Ever since the emergence from their isolation, government has taken steps towards a market-oriented economy, foreign companies have to take advantage of what China had to offer, and rapid and momentous development has taken place. Rising disposal income, increase spending power, and growing populations has helped China has prove prevalence during a worldwide recession, continual growth in GDP, and stable contribution to world growth. The same growth in China as a whole is seen in their clothing industry in terms of consumption and exports, as well as their luxury goods market. China claims nearly 27% of the world luxury market. These dynamics fuels curious economists motivation to investigate idea of China’s high-end clothing industry.

Although the current state of the Chinese high quality clothing industry is minor from a world perspective, the potential of development is exists. Foreign high-end firms that enter the market with years of experience flourish. China's middle class is rising, and the desire for brands and luxury goods increases. Even though the vital aspects of government support and technology and innovations need to increase to improve the development of the industry, domestic enterprises and the Chinese government are making steps in the right direction. However, there is still an immense about of room for improvement to be made in these areas. Yet, economic indicators point towards a shift towards quality. There are rising labor costs, sophisticating workforce, rising raw material costs, quality motivations for research and development. The idea of China remaining a source of unskilled cheap labor that yielding low-quality products is questionable. As stated by Dong Tao, a Hong Kong economist, “The cost of doing business in China is going up… it’s Heyday is over” (Barboza, 2008).