Name of City U eJournal Vol 1, September 2019

Increasing Chinese Traditional Fashions Exports to Malaysia: The Impact of the

China ASEAN Free Trade Area and the Belt Road Initiative

JING ZOU 1, MINGZHU LI 2, LIN LAH TAN 3

1
City Graduate School, City University, Malaysia, email address
2
City Graduate School, City University, Malaysia, email address
3
City Graduate School, City University, Malaysia, linlah@city.edu.my

Abstract
Introduction: In China has long history of exporting traditional fashions to Southeast Asia
including Malaysia, the Middle East and Europe through the ancient Silk Road and the
Maritime Silk Road which are the foundations for the Belt Road Initiative (BRI). The China
ASEAN Free Trade Area (CAFTA) is also increasing the exports of Chinese traditional
fashions (CTF) to Malaysia, which has a large Chinese diaspora which retain their strong
commercial and cultural ties with China. This paper presents the findings of research on the
impact of the China ASEAN Free Trade Area (CAFTA) and the Belt Road Initiative (BRI) for
increasing the exports of CTF to Malaysia.

Methodology: A two stage mixed methodology was used with the first being qualitative and
exploratory followed by a descriptive and quantitative stage. Data was collected through a
comprehensive literature review, personal interviews and a web survey.

Findings: The findings revealed that CAFTA and the BRI as well as the rapid growth of e-
commerce are supportive factors for increased exports of CTF to Malaysia. However, the CTF
exporting firms have to emphasize on developing good brands, promoting them and increase
their investments in e-commerce technologies to digitally promote their fashion products in the
Malaysian market.

Conclusions/and Recommendations: CAFTA and BRI create opportunities for increased CTF
exports. They have to adopt appropriate competitive strategies, develop network linkages with
Malaysian retailers, create designs that appeal to the different segments of the Malaysian market
and emphasize on branding, brand promotion and digital marketing.
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Keywords: BRI, CAFTA, Challenges, Chinese Traditional Fashions, Competitive

Strategies, Digital Marketing, Export, Findings
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1. Introduction
Market liberalization which has enlarged the global fashion market place has also
created intense competition (Kotler & Keller, 2006). Chinese traditional fashion (CTA)
firms have to overcome the competitive threats in the domestic market and diversify
revenue sources by venturing into overseas market including Malaysia which has a
large Chinese diaspora who retain their traditional and Chinese culture
(Chareonwongsak, 2016). This study examines the export prospects for CTF created by
the CAFTA and BRI. It commences with a literature review followed by the
methodology, the results and recommendations.

2. Literature Review
Four strands of literature were reviewed relating to i) Malaysia and China’s active
participation in CAFTA and the BRI; ii) The Chinese fashion industry; iii) the CTF for
????; iv)The opportunities and challenges for increasing the China’s exports of
traditional dress to Malaysia; and v) pertinent prior research. Based on the research
gaps and the identified research issues, 3 research propositions were crafted and tested
by this research.

i) China and Malaysia’s active participation in CAFTA and the BRI

China joined the Word Trade Organization (WTO) in 2001, and rapidly integrated into
global production networks (ITC, 2012). The country has become a shaper of
globalization by actively promoting regional co-operation on the principles of equality
and mutual benefit (Wang, 2016). The Chinese Government’s “going global” policy
and cooperation initiatives have strengthened regional economic cooperation and
increased cross border trade (Du, 2015). This is reflected by China playing a lead role
in regional economic groupings, which include the ASEAN-China Free Trade
Agreement (CAFTA) for increasing trade opportunities.

Malaysia was the first ASEAN country to establish diplomatic and trade ties with China
in 1974. Trade cooperation is a central theme of Malaysia’s China policy and this has
resulted in a rapid expansion in the Malaysia China trade (Cheng, 2013). China is now
a major contributor to Malaysia’s export revenues in respect of the natural rubber,
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tourism and education sectors. China imported about 20% of Malaysian’s total exports
and the total bilateral trade was US$97.3billion in 2015 (Chan & Hooy, 2016).

With the establishment of the CAFTA, the value of the textile and apparel trade reached
US$16.39 billion in 2010, or 7% higher than 2009. It further increased to reach
US$14.43 billion in 2011 (Tong & Lim, 2015). Exports from ASEAN countries to
China are projected to increase by 48% with a 53% increase of China’s exports to
ASEAN. Textiles and apparel, electrical appliances and machinery and other
manufactures are expected to benefit the most (Enright, Scott & Chang, 2005).

A more recent Chinese government initiative is the BRI which was launched in 2013.
Viewed as China’s plan to connect the world (Lim, 2019), it is a network of enhanced
overland and maritime economic corridors connecting China and Europe through a
region that connects over 60 countries, 60% of the global population, 70% of GDP and
75% of energy resources (Zhou, 2016 November 20). The largest infrastructure project
in the world, the BRI combines two outward facing concepts to connect East Asia’s
economic cycle and developing African nations to Europe’s development economic
cycle (The State Council, The People’s Republic of China, 2015). It comprises the Silk
Road, which follows the ancient Silk Road that connected the China to Europe through
Central Asia and the second is the old Maritime Silk Road, which was used to transport
and sell Chinese golden brocade and silk fabrics to countries in South East Asia and
Africa (Huamei, 2010; The State Council, The People’s Republic of China, 2015;
Yiwei, 2016).

The new Maritime Silk Road will also connect East Asian countries with developing
African nations as well as Europe (The State Council, The People’s Republic of China,
2015) for deepening China’s access to foreign markets (Wigaya, 2016). The BRI, which
would enhance connectivity between China and Malaysia, should further strengthen the
trade and investment ties between both countries (Yiwei, 2016). Much prior research
has been conducted on the BRI (Du, 2015; Swaine, 2015; Haggfai, 2016; Arduino,
2016; Chen, 2016; Zatko, 2016; Verlare, 2016; Aris, 2016; Liu, 2016; Wang, 2016; Li,
2016).
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Malaysia, located at the cross roads of the Maritime Silk Road, is positioned to benefit
from several planned BRI projects. These include a new RM30bil deep-sea port in
Melaka, and a 600km railway line, costing RM55bil, from the Klang Valley to the
Northeast border town of Tumpat, which then links to Thailand, the extension of the
Kuantan Port and the Malaysia China Kuantan Industrial Park. A related project is the
Digital Free Trade Zone (DFTZ) to serve as an E-fulfilment hub to speed up the imports
and exports of E-trades including fashion goods (The Star, 2017 May 5). These
infrastructure projects will increase connectivity between China and Malaysia, create
more effective supply chains and reduce transaction costs.

ii) The Chinese Fashion Industry

The clothing industry has been a driver of China’s exports since the country
implemented economic reforms and introduced the open door policy in 1979 (Qiu,
2005). A major source of foreign exchange, China is the world’s largest clothing
producer and accounted for 29% of the global market (Zhang, Kong & Ramu, 2015).
China, also the world’s largest mass fashion market, dominates the low to medium end
fashion market emphasizing on fast fashion, or low cost clothing collection that copy
luxury fashion trends. However, the forces of globalization and the liberalization of
trade has resulted in the entry of new foreign players in the Chinese domestic market
creating intense competition (Elsayed, Kulich, Lake & Megahed, 2006). This compels
Chinese fashion firms to increase their exports to foreign markets for business
sustainability.

The Chinese Government is actively promoting traditional culture to boost national

identity and an increasingly a growing number of young people are looking to the past
for their sartorial choice and donning traditional “hanfu” or “HAN” clothing (Ye &
Xiao, 2019 June 23). CTF firms are poised to take advantage of the generic preferences
of the Chinese diaspora by positioning designs targeted at this important market
segment (Elsayed, Kulich, Lake & Megahed, 2006). CTF firms are already promoting
and exporting fusion fashions which blend Chinese traditional designs and western
designs. CTF embody the identities of an individual, group or culture by focusing on
the emotional connection with its consumers (Catalin & Andreea, 2014). Consumers
Name of City U eJournal Vol 1, September 2019

can reinforce their identity by associating themselves with traditional fashion wear
(Kim &Brandon, 2010).

iii) Chinese Traditional Dress

The use of traditional clothing is aligned to the generic preferences of ethnic dressing.
Personality traits drive consumer behaviour (Rajagopal, 2011). A person’s wants and
behaviour are influenced by culture, which is acquired from values, perceptions and
behaviours that are based on religion, race and family background. Customers choose
certain products and services in order to be unique and to differentiate themselves to
signal their identity (Chan, Berger & Van Boven, 2012).

People tend to be influenced by those around them and traditional fashion apparel is an
influencing factor. Individuals can share similarities with each other in terms of culture
and fashion choices (Harton & Bourgeois, 2004). Traditional costumes are a vital part
of China’s history and culture (Humei, 2020) and this is reflected by the use of
traditional fashion apparel.

Chinese traditional dress can be defined as a dress with a tradition that is connected to
the past and has certain beliefs, norms and elements that have been passed through
generations (Handler & Linnekin, 1984). The meaning and use of garments are
“important components of Chinese culture and traditional costumes are much featured
in the country’s history and culture” (Huamei, 2010, p12). Tradition can be defined as
a set of customs passed down over the generations, and a set of beliefs and values
endorsing those customs (Gyekye, 1997). Associated with culture tradition, is
embedded in daily life and is a process of symbolic construction (Handler & Linnekin,
1984). Traditional dress is continually modernized, reinvented, and updated (Niessen,
Leshkowish & Carla, 2003).

The Manchu “banner robe” (qipao) and “long gown” or Cheongsam which emerged
during the Qing Dynasty (1644-1911) were adapted by fashionable women. This style,
in colourful silk, rayon, or printed cotton, soon became firmly entrenched as China’s
appropriately modern women’s wear (Major, 2005). New styles were created, after the
Chinese Revolution of 1911 and these were influenced by Western fashion culture and
Name of City U eJournal Vol 1, September 2019

styles. Western dress became a source to establish a new image for modern China
(Yang, 2007). New styles appeared for men’s daily robes and jackets combining
Chinese and Western clothes (HuaMei, 2010).

The qipao or cheongsam regained popularity in China after the economic reforms in
1978. It also gained popularity with overseas Chinese communities, as formal wear that
conveys a sense of ethnic pride, and as "traditional" dress worn by women in the
hospitality industry (Yang, 2007). Women often wear the Qipao at formal vocations as
it comes in a variety of widths, heights and lengths to suite all shapes and sizes (Major,
2005). More recently, western fashion trends influenced traditional Chinese fashion
cloth styles in terms of silhouette, materials and designs. Its profound cultural
background, which combines fashion with traditional Chinese elements, offers much
potential for meeting growing customer demands in both domestic and international
markets (Yin, 2015).

iv) The Opportunities and Challenges for Increasing the China’s Exports of
Traditional Dress to Malaysia
There are several supportive factors for the increased exports of Chinese traditional
dress to Malaysia. The first is the large Chinese diaspora who account for 23% of
Malaysia’s multi ethic population (Oh & Han, 2016). With above average disposable
incomes and more economic assets than other economic groups (Chua, 2003), they
prefer to spend their weekends shopping (Wing et al., 2001) at shopping malls which
also offer specialized high quality Chinese traditional fashions (Chuang, 2007). The
Malaysian Chinese diaspora, although born and raised in Malaysia, retain their
traditional Chinese culture (Chareonwongsak, 2016). This is reflected by Malaysian
Chinese women using traditional Chinese costumes at major cultural celebrations. They
prefer to wear the cheongsam for cultural and Chinese themed formal corporate
occasions especially around the time of the Chinese New Year. Older well-respected
women wear a samfoo, with a separate loose fitting top fastened by toggles and ankle
length, or above the ankle, pants (Tourism.gov.my.).

The second is a growing demand from the younger generation for clothing that mix
traditional and modern ideas and this is a good potential market for such clothing (The
Name of City U eJournal Vol 1, September 2019

Star, 2016 November 14). Malaysian Malays and Indians are increasingly purchasing
Chinese traditional cloth that combine Chinese traditional designs with local traditional
dress. Malaysian designers are now incorporating Chinese design elements into the baju
Kedah and sarong kebaya as these are in demand as attire for Chinese themed corporate
fictions (Emerald Brilliant).

The third is the Malaysian Chinese business network or guanxi which can be used by
CTF firms to gain information of business opportunities and enter into networks to
export their products (Zhan, 1995). The guanxi system has benefits for Chinese
companies and influences investment flows (Standifird & Marshall, 2000; Tong, 2003).

The fourth is the rapid growth of the Malaysian e-commerce market. Chinese traditional
fashion firms can reach out to Malaysian customers in Malaysia though social
platforms. Increasingly, the Malaysian Chinese diaspora are buying their clothes
directly from Chinese traditional fashion firms though online purchases because of
lower prices and greater awareness of the products available (Wang, Lau & Gong,
2016). This is also facilitated by the introduction of a cashless trading community with
customers being able to order their fashion products online with speedy delivery and to
make payments through their mobile phones and internet instead of cash and credit
cards (Sunday Star, 2018 March 26).

The fifth, as discussed, is the BRI, which should contribute to increased trade flows
including traditional clothing between Malaysia and China. The new air, sea and land
routes will facilitate the speedy delivery of traditional fashion goods from China to
Malaysia. The sixth are the opportunities created by CAFTA, which has lowered tariffs
and removed non-tariff barriers to promote trade flows between China and the ASEAN
countries. China is the largest individual trading partner in CAFTA (Salidjanova &
Koch-Weser, 2015).

However, Malaysian customers are price sensitive, demand better quality products and
services and seek the latest fashion styles (Mckinsey, 2012). The success of retail
outlets that sell Chinese traditional fashions in the Malaysian market depends on the
efficiency of the supply of quality goods at reduced prices. Retailers must also be
Name of City U eJournal Vol 1, September 2019

assured of security and a consistent supply of quality goods, at reduced prices, to avoid
customers switching to substitute products (Stokke, 2009).

The marketers of CTF in Malaysia have to identify the target market segments and to
choose the best mixed of communication, distribution and service channels to market
their fashion product to the targeted segments (Kotler & Keller, 2006). Good brands
signal quality levels and satisfied customers can acquire brand loyalty for making repeat
purchases (Erdem & Swait, 1998). However, Chinese brands are generally unknown
outside China. This requires the industry to focus and emphasize on branding (Li, 2009;
Yang, 2011). In line with the media dependency theory, which postulates that some
customers depend on the media for their purchase decisions, this underlines the
importance of brand promotion targeted at Malaysian customers (Baran & Davis,
2000).

v) Pertinent prior research

Previous studies (Elsayed, Kulich, Lake & Megahed, 2006) found that the CTF firms
are taking advantage of the Chinese diaspora by positioning designs targeted at this
important market segment. Malaysia Chinese business networks offer opportunities for
Chinese traditional fashion firms to market their traditional wear to the Chinese
traditional diaspora (Chareunwongsak, 2016). Branded fashion designs with traditional
elements increase the demands for Chinese traditional cloth and carry forward Chinese
traditional culture (Yin, 2015). The application of cultural elements in graphic design
brands increases the international competitiveness of Chinese graphic design firms
(Pugeng, 2014).

Prior research (Behrooz, 2013) on the purchasing preferences of young Malaysian

consumers for international brands of fashion products revealed that the country of
origin was the strongest predictor towards of consumer preferences followed by
perceived product quality, promotion stimulation, perceived brand image and fashion
lifestyle. Swaine (2016) found that BRI can boost exports and enhance access to natural
resources. However, there was limited recent research on the supportive roles that the
CAFTA and BRI can play for Chinese traditional firms to enlarge the export presences
in the Malaysian market. However, they face the challenge of developing good brands
Name of City U eJournal Vol 1, September 2019

and promoting them in the Malaysian market. They also have to strengthen their
marketing and competitive strategies as well as to create designs that appeal to the
different segments of the Malaysian fashion market and to emphasize on e-commerce
and the digital media to reach them.

vi) Research Issues and Propositions Development

The reviewed literature included prior research on CAFTA (Du, 2016; Salidjanoba
&Koch-Weser, 2015), the BRI (Wijaya, 2016; Zhou, 2016), the global fashion industry
(Mckinsey, 2014; Zhang, Kong & Ramu, 2015), the Chinese fashions and traditional
dress (Humei, 2010; Bain & Company, 2013; Zhang, Kong & Ramu, 2015; Yin, 2015;
Quora, 2015; Major, 2005) and the Malaysian retail market (Anistal & Anistal, 2011;
Hassan, Sade & Rahman, 2013; the Statistic Portal, 2016). There were research gaps
and based on these, three propositions were crafted and tested through the collection of
qualitative and quantitative primary data. These were:
a) CAFTA and the BRI creates opportunities for Chinese traditional fashion
firms to expand their exports to Malaysia.
b) Chinese traditional fashion firms face several challenges to increase their
exports of Chinese traditional fashions to Malaysia
c) Chinese traditional fashion firms lack appropriate marketing and
competitive strategies to increase their exports to Malaysia

3. Methodology
The research design was premised on a combination of inductive and deductive
approaches by way of two stages to benefit from the strengths and weaknesses of each
approach (Creswell & Plano Clark, 2007). The first stage was exploratory for the
purpose of gaining insights about the research problem and the crafting of the research
propositions (Carson, Gilmore & Perry, 2006). The second stage was descriptive to
generalize the research findings (Yin, 2009).

For the qualitative stage, data were collected through (i) a literature review and personal
interviews with 16 participants comprising Chinese fashion designer, traditional
fashion retailers, knowledgeable persons/ experts and representatives of selected 5 case
study firms, the qualitative data analysis, process involved data reduction, coding,
Name of City U eJournal Vol 1, September 2019

content analysis and drawing a conclusion. A web survey was used to collect
quantitative data and 204 completed error free responses were received from the four
groups of Government/regulators, traditional fashion retailers, Chinese fashion
designers and representatives of 5 selected case firms. Descriptive statistics were used
to analysis the data from the web survey.

4. Results and Discussion

There were four discussion topics related to each of the three research propositions
which were addressed by the interview participants. These also formed the basis for
developing the questionnaire for the web-survey and the results from the testing of each
research proposition are as follows,

Proposition 1: CAFTA and the BRI creates opportunities for Chinese traditional
fashion firms to expand their exports to Malaysia.

• The interview participants generally agreed the CAFTA and the BRI create
opportunities for CTF firms to increase their exports due to the large Malaysian
Chinese diaspora with high disposable incomes and close cultural ties with
China. The BRI will also benefit CTF firms as it will create more efficient supply
chains, provide for faster transportation of fashion goods and reduce transaction
costs. The interview participants also commented that the rapid growth of e-
commerce and digital marketing in both China and Malaysia were effective
modalities for CTF firms to promote their products and offer Malaysian
consumers more choices in terms of clothing designs.

• The analysis of the web survey data revealed a relatively high mean rating of 3.71
for this proposition as shown in Table 1. This indicated that the CAFTA and the
BRI would contribute to increasing CTF exports to Malaysia. However, there
were some differences of options between the groups as the standard deviations
ranged from 0.78 to 0.88 with the average being 0.81.

• This proposition was accepted as it was supported by the outcomes of the

interviews and the web survey.
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Table 1. Standard Deviation by Groups to Proposition 1

Group Mean N Std. Deviation
A 3.76 15 0.78
B 3.68 105 0.88
C 3.67 54 0.80
D 3.71 30 0.88
Total 3.71 204 0.81
A: Government Regulators; B: Fashion Retailers; C: Fashion Designers; D: Case study firms

(Source: Developed from the Survey Data)

Proposition 2: Chinese traditional fashion firms face several challenges to increase

their exports of Chinese traditional fashions to Malaysia.

• The interview participants generally agreed that CTF firms should address four
significant challenges to take advantage of the Malaysia market for Chinese
traditional clothing. i) The need to develop and promote a good brand image and
identify effective marketing channels to reach Malaysian customers. ii)
Equipping their managers with language and skills to manage businesses at the
international level. iii) Developing Malaysian business networks. iv) Increasing
their investments in e-commerce as Malaysian consumers are increasingly
purchasing their fashion goods online.

• As shown in Table 2, the mean of 3.19 reflected modest support for this
proposition. However, there were variations among the groups with a low of 3.13
for the fashion designers and a high of 3.33 for the regulators indicating
differences on the levels of support. This is also reflected by the standard
deviation which was 0.983 for all the groups ranging from a high of 1.05 for the
fashion retailers to a low of 0.90 for the Government/ retailers.

• Taking full account of the findings from the interviews and the web survey, this
proposition was accepted.
Name of City U eJournal Vol 1, September 2019

Table 2. Standard Deviation by Groups to Proposition 2

Group Mean N Std. Deviation
A 3.33 15 .90
B 3.17 105 1.05
C 3.13 54 .92
D 3.27 30 .91
Total 3.19 204 .98
A: Government Regulators; B: Fashion Retailers C: Fashion Designers; D: Case study firms
(Source: Developed for the Survey Data)

Proposition 3: Chinese traditional fashion firms lack appropriate marketing and

competitive strategies to increase their exports to Malaysia

• The interview participants were of the view that CTF firms lack effective
competitive and marketing strategies to take advantage of the export
opportunities created by CAFTA and the BRI for the Malaysian market due to i)
the limited finance and professional skills for effective branding and marketing
communication strategies for enlarging their market share in the Malaysia
fashion market. ii) the lack of professional staff for formulating, implementing
and monitoring appropriate competitive strategies. iii) limited staff with global
mindsets and the language skills for successfully penetrating the Malaysian
export market.

• The web survey participants generally concurred with the views expressed by the
interview participants as reflected by the mean of 3.15.

• Taking full account of the findings from the interviews and the surveys, it can be
concluded that CTF firms have to emphasize on crafting and implementing
effective marketing and competitive strategies to increase their export presence
in the Malaysian market.
Name of City U eJournal Vol 1, September 2019

Table 3. Standard Deviation by Groups to Proposition 3

Group Mean N Std. Deviation

A 3.21 15 0.53

B 3.13 105 0.46

C 3.11 54 0.52

D 3.14 30 0.40

Total 3.15 204 0.47

A: Government Regulators; B: Fashion Retailers C: Fashion Designers; D: Case study firms
(Source: Developed for the Survey Data)

4.1. Discussion
Several key findings emerged from this research. The first is that the CAFTA, with
reduces trade barriers and the BRI which provide better transportation connectivity
between Malaysian and China, creates opportunities for CTF firms to increase their
exports to Malaysia. The large Malaysian Chinese diaspora with their ancestral ties to
China are also a supportive factor for increasing the demand for CTF firms.

The rapid growth in e-commerce, which has generated new electronic markets for
fashion apparel, is increasingly becoming an important modality for Malaysians
consumers to purchase CTF directly from Chinese suppliers. This situation requires
CTF firms to increase their investment in the latest e-commerce technology to digitally
promote their traditional fashion products on the internet and the social media platforms.
The increased volume of online purchases would have to be supported by improved
transportation systems for timely delivery of the purchased fashion products to
customers. For this purpose, the BRI would create better transportation links, support
the supply chain and reduce transportation costs.

Chinese apparel brand awareness is generally low outside of the Chinese market and to
address this, CTF firms have to develop and promote good brands to meet customer
brand preferences. This requires them to formulate effective marketing strategies and
emphasize on market promotion through the conventional media, the digital media and
Name of City U eJournal Vol 1, September 2019

social commerce. They also have to create designs to meet the needs of the different
segments of the Malaysian target market.

5. Conclusion
This paper examined the implications of of the CAFTA and the BRI for increasing the
exports of CTF to Malaysia, where there is a growing demand from the large Chinese
diaspora, which continue to retain their strong commercial and cultural ties with China.
This study was considered to be significant as the highly competitive Chinese domestic
apparel market requires Chinese fashion firms to venture aboard to seek new revenue
sources. It can be concluded that in order to take advantage of the opportunities created
by CAFTA and the BRI, CTF firms have to adopt appropriate competitive and
marketing strategies and emphasize on digital commerce and digital marketing to reach
out to customers in the Malaysian market.

Acknowledgements (Example only; not for this paper)

The authors acknowledged City University Malaysia for the grant to conduct the data
collection.
Name of City U eJournal Vol 1, September 2019

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