The Chinese luggage and bags industry is facing a challenge of homogenous competition in exports, and differentiation is the key to breaking the deadlock

The Chinese luggage and bags industry is facing a challenge of homogenous competition in exports, and differentiation is the key to breaking the deadlock

China, as the global core base for luggage and bags production, accounts for over 70% of the world's output and 45% of its export share. In 2024, the export value of luggage and bags reached $34.541 billion , yet the contradiction of "volume increase but price decrease" is increasingly prominent: export volume grew by 8.9% year-on-year, but the average export price dropped to $4.1/piece, a 12.4% year-on-year decline. Core industrial clusters like Shiling in Guangdong, Pinghu in Zhejiang, and Baigou in Hebei have long been trapped in product homogenization and intense price wars. Differentiation and innovation are becoming the critical path to breaking the deadlock and increasing the added value of exports.

I. Status Quo of Homogenous Competition: Scale Dividend Fades, "Involution" Crisis Intensifies

The homogenous competition within China's luggage and bags industrial clusters has permeated the entire chain, from product and price to market, becoming the core bottleneck restricting the high-quality development of exports.

(I) Product Homogenization: Design Imitation, Single Function

Products in the core industrial clusters exhibit a "thousand faces of one person" characteristic, which is particularly evident in mid-to-low-end products. At the Canton Fair, most exhibitors' luggage and bags are largely similar in appearance design, material selection, and function configuration, focusing primarily on basic storage functions and lacking innovative highlights. 90% of enterprises in Baigou, Hebei, primarily engage in OEM/ODM processing , lacking independent design capabilities. The price of a similar backpack can be reduced from 30 Yuan to 25 Yuan to clear inventory, with profits approaching zero. Although Shiling, Guangdong, the "Capital of Chinese Leather Goods," produces over 700 million luggage and bags annually, 70% of exports are still OEM production, with own brands accounting for less than 30%. Products are mostly concentrated in the popular mass market in Europe and the US, with frequent design plagiarism.

(II) Price Homogenization: Low-Price Slaughter, Meager Profits

Cost-driven price wars have become the main competitive method in the industrial clusters, leading to a continuous decline in the average export price. In 2024, the average export price of Chinese bags fell by 12.4% year-on-year. The export unit price in producing areas like Zhejiang and Anhui is only $2.7-2.9/piece , with the profit of some low-end backpacks less than 1 Yuan. Baigou even sees vicious competition like "selling goods at a loss," where the same bag is 5 Yuan cheaper than in Yiwu, plus a free pendant, solidifying the vicious cycle of the "low-price label". Under this competition model, enterprises lack the capital to invest in R&D, falling further into the trap of "low price - low quality - low added value".

(III) Market Homogenization: Path Dependence, Concentrated Distribution

Export markets are highly concentrated in the traditional markets of Europe and the US , and the superposition of escalating trade barriers exacerbates survival pressure. In 2024, China's export share of luggage and bags to Europe and the US still reached 47.12% , but the industry faces the impact of increased tariffs from multiple countries: Brazil imposes a 20% tariff on imported goods under $50, and the US tariff increase on Chinese luggage and bags is much higher than on products from Southeast Asian origins. At the same time, the industrial clusters do not adequately adapt to the needs of emerging markets ; most enterprises continue to use the product system for the European and US markets, failing to develop differentiated products tailored to the scenario needs of markets like ASEAN and Africa.

II. Causes of Homogenization: Triple Constraints of Entry Threshold, Supply, and Perception

(I) Low Entry Threshold, Dispersed Production Capacity

The luggage and bags industry's sewing process relies on manual labor and is difficult to completely replace with machinery. A small factory can be set up with just a few hundred thousand Yuan, leading to a highly dispersed industry. The Chinese luggage and bags industry is dominated by the ODM/OEM contract manufacturing model, with small-scale, workshop-style enterprises making up the majority. Baigou in Hebei and Shiling in Guangdong have numerous family workshops, lacking large-scale production and innovation capabilities. This dispersed structure makes it difficult to standardize industry standards, and the cost of imitation is far lower than the cost of innovation, further promoting homogenization.

(II) Weak R&D and Design, Single Supply Side

Most enterprises prioritize production over R&D, with insufficient design investment. The industrial clusters generally lack high-end design talent. Although wages in small towns like Baigou are 20%-30% higher than in surrounding cities, it is still difficult to attract excellent university graduates. Core technologies and high-end materials rely on imports , with a high proportion of key components such as high-end PC materials and precision bearings being imported. This makes it difficult for enterprises to achieve substantial innovation, forcing them to focus on appearance and price.

(III) Weak Brand Awareness, Severe Path Dependence

The long-term contract manufacturing model has led to a mindset of "heavy orders, light brand". Enterprises in industrial clusters like Shiling and Baigou rely heavily on orders from foreign brands , and the development of own brands is lagging. Even with own brands, they lack the ability for international market promotion, making it difficult to break the stereotype of "Made in China = Low Price". At the same time, enterprises are slow to react to changes in market demand, failing to capture trends such as the upgrade of environmental standards in Europe and the US and the scenario-based demands in emerging markets.

III. Paths to Differentiated Breakthroughs: Transition from Scale Competition to Value Competition

(I) Product Innovation: Technology and Design as Dual Drivers

Technology empowers functional upgrades: Focus on the two major tracks of smart travel suitcase technology and environmental protection to break homogenization. The TraveRE smart travel suitcase integrates GPS tracking and biometric lock functions, with an average export price of $120, double that of ordinary products. Xinshou Group's developed environmentally friendly PP material exceeds the industry standard for compression resistance by 30%, achieving a premium of over 15%. In 2024, the export growth rate of luggage and bags made from environmentally friendly materials was 18 percentage points higher than that of traditional products. Recycled polyester fiber and biodegradable materials have become hot selling points at the Canton Fair.

Design highlights personalized differences: Strengthen original design and scenario adaptation. ITO achieves a 300% premium with its "rivet-free structure" patent technology. 90Fen (90 Points) has entered Apple authorized stores with its minimalist design. Addressing the demand for short-distance traveling bags in Southeast Asia, they launched 20 inch suitcase and 24 inch trolley bag lightweight hardside luggage (20-24 inch lightweight hard-shell luggage), with sales increasing by 40%. Shiling Town has cultivated over 5,000 own brands, establishing supply chain barriers through customized hardware fittings and fabrics to prevent imitation.

(II) Brand Upgrade: From Contract Manufacturing to Own Brand Going Global

Cultivate local global brands: Break away from ODM dependence and build international recognition. AOKING has registered brands in 150 countries, covering 76 sales markets, building a moat through quality and service. 90Fen and TraveRE (China suitcase brands) utilize cross-border e-commerce platforms like Amazon and TEMU to enter over 20 countries, meeting the needs of young European and American consumers. In 2024, the market share of domestic brands in the mid-range market increased to 28%, gradually breaking the monopoly of international brands.

Collective empowerment of regional brands: Strengthen the brand endorsement of industrial clusters. "Shiling Leather Goods" has completed trademark registration in 19 countries, with a brand valuation of 20 billion Yuan, driving its member enterprises to improve their bargaining power. Baigou has obtained "Super Factory" certification, integrating supply chain resources and enhancing brand credibility.

(III) Supply Chain Optimization: Industrial Cluster Collaboration and Global Distribution

Deepen industrial cluster collaboration: Rely on the advantages of the complete industry chain to create differentiated supply. Shiling Town gathers 16,800 raw and auxiliary material merchants, offering 1.2 million types of accessories, enabling "one-stop procurement" and supporting rapid customized production. The Xingan County industrial cluster can achieve "500,000-piece orders shipped in 2 days," leading the global response speed.

Rational layout of overseas production capacity: Avoid trade barriers and reduce costs. Kairun Co., Ltd. and Xinshou Group have established factories in Indonesia and Cambodia, reducing labor costs by 35%-40% and effectively avoiding high tariffs in Europe and the US. TraveRE uses its Vietnam factory for transit, and its exports to Japan and South Korea grew by 30% in 2024.

(IV) Market Deepening: Precise Positioning and Channel Innovation

Differentiated layout in emerging markets: Customize products according to the needs of different regions. Exports to ASEAN focus on cost-effective basic models; Fujian's exports to ASEAN grew by 25.58% in 2024. For the European and US markets, the focus is on smart travel suitcase technology and environmental protection features; smart luggage orders for North America account for 31%. Low-priced backpacks exported to Africa occupy 70% of the market share.

Empowerment through cross-border e-commerce channels: Face consumers directly and rapidly iterate products. Taofactory helps enterprises shorten the new product launch cycle to 15 days, and the concentration of bestsellers increases to 72%. Baigou enterprises' domestic sales increased from several million Yuan to 20 million Yuan through the 1688 Super Factory, while also expanding overseas retail channels.

IV. Challenges and Future Trends

Currently, the Chinese luggage and bags industrial clusters still face challenges such as dependence on core technology, brand recognition barriers, and the upgrade of environmental standards. The European Union's Carbon Border Adjustment Mechanism (CBAM) is about to be implemented, and carbon footprint tracing requirements will increase export costs. The global high-end market's CR10 reaches 42%, with international big brands dominating, making it difficult for local brands to break through.

In the future, differentiated competition will deepen in three directions : First, the acceleration of digital transformation, achieving "small batches, quick customization" through flexible production to meet personalized needs. Second, green standards will become a core competitiveness; the application of recycled materials and carbon footprint management will become export prerequisites. Third, ecological synergy will become the norm, with industrial clusters deepening cooperation with cross-border e-commerce, overseas warehouses, and design institutions to build a full-chain differentiated advantage in "R&D - production - sales - service".

The path to a breakthrough for the Chinese luggage and bags industrial clusters is essentially a transition from "scale dividend" to "value dividend". Only by breaking away from the price "involution" and focusing on product innovation, brand cultivation, supply chain upgrading, and market deepening can they build a true "moat" in global competition and achieve the leap from "world factory" to "global brand hub".

The Chinese luggage and bags industry is facing a challenge of homogenous competition in exports, and differentiation is the key to breaking the deadlock.

China, as the global core base for luggage and bags production, accounts for over 70% of the world's output and 45% of its export share. In 2024, the export value of luggage and bags reached $34.541 billion, yet the contradiction of "volume increase but price decrease" is increasingly prominent: export volume grew by 8.9% year-on-year, but the average export price dropped to $4.1/piece, a 12.4% year-on-year decline. Core industrial clusters like Shiling in Guangdong, Pinghu in Zhejiang, and Baigou in Hebei have long been trapped in product homogenization and intense price wars. Differentiation and innovation are becoming the critical path to breaking the deadlock and increasing the added value of exports.

I. Status Quo of Homogenous Competition: Scale Dividend Fades, "Involution" Crisis Intensifies

The homogenous competition within China's luggage and bags industrial clusters has permeated the entire chain, from product and price to market, becoming the core bottleneck restricting the high-quality development of exports.

(I) Product Homogenization: Design Imitation, Single Function

Products in the core industrial clusters exhibit a "thousand faces of one person" characteristic, which is particularly evident in mid-to-low-end products. At the Canton Fair, most exhibitors' luggage and bags are largely similar in appearance design, material selection, and function configuration, focusing primarily on basic storage functions and lacking innovative highlights. 90% of enterprises in Baigou, Hebei, primarily engage in OEM/ODM processing, lacking independent design capabilities. The price of a similar backpack can be reduced from 30 Yuan to 25 Yuan to clear inventory, with profits approaching zero. Although Shiling, Guangdong, the "Capital of Chinese Leather Goods," produces over 700 million luggage and bags annually, 70% of exports are still OEM production, with own brands accounting for less than 30%. Products are mostly concentrated in the popular mass market in Europe and the US, with frequent design plagiarism.

(II) Price Homogenization: Low-Price Slaughter, Meager Profits

Cost-driven price wars have become the main competitive method in the industrial clusters, leading to a continuous decline in the average export price. In 2024, the average export price of Chinese bags fell by 12.4% year-on-year. The export unit price in producing areas like Zhejiang and Anhui is only $2.7-2.9/piece, with the profit of some low-end backpacks less than 1 Yuan. Baigou even sees vicious competition like "selling goods at a loss," where the same bag is 5 Yuan cheaper than in Yiwu, plus a free pendant, solidifying the vicious cycle of the "low-price label." Under this competition model, enterprises lack the capital to invest in R&D, falling further into the trap of "low price - low quality - low added value."

(III) Market Homogenization: Path Dependence, Concentrated Distribution

Export markets are highly concentrated in the traditional markets of Europe and the US, and the superposition of escalating trade barriers exacerbates survival pressure. In 2024, China's export share of luggage and bags to Europe and the US still reached 47.12%, but the industry faces the impact of increased tariffs from multiple countries: Brazil imposes a 20% tariff on imported goods under $50, and the US tariff increase on Chinese luggage and bags is much higher than on products from Southeast Asian origins. At the same time, the industrial clusters do not adequately adapt to the needs of emerging markets; most enterprises continue to use the product system for the European and US markets, failing to develop differentiated products tailored to the scenario needs of markets like ASEAN and Africa.

II. Causes of Homogenization: Triple Constraints of Entry Threshold, Supply, and Perception

(I) Low Entry Threshold, Dispersed Production Capacity

The luggage and bags industry's sewing process relies on manual labor and is difficult to completely replace with machinery. A small factory can be set up with just a few hundred thousand Yuan, leading to a highly dispersed industry. The Chinese luggage and bags industry is dominated by the ODM/OEM contract manufacturing model, with small-scale, workshop-style enterprises making up the majority. Baigou in Hebei and Shiling in Guangdong have numerous family workshops, lacking large-scale production and innovation capabilities. This dispersed structure makes it difficult to standardize industry standards, and the cost of imitation is far lower than the cost of innovation, further promoting homogenization.

(II) Weak R&D and Design, Single Supply Side

Most enterprises prioritize production over R&D, with insufficient design investment. The industrial clusters generally lack high-end design talent. Although wages in small towns like Baigou are 20%-30% higher than in surrounding cities, it is still difficult to attract excellent university graduates. Core technologies and high-end materials rely on imports, with a high proportion of key components such as high-end PC materials and precision bearings being imported. This makes it difficult for enterprises to achieve substantial innovation, forcing them to focus on appearance and price.

(III) Weak Brand Awareness, Severe Path Dependence

The long-term contract manufacturing model has led to a mindset of "heavy orders, light brand." Enterprises in industrial clusters like Shiling and Baigou rely heavily on orders from foreign brands, and the development of own brands is lagging. Even with own brands, they lack the ability for international market promotion, making it difficult to break the stereotype of "Made in China = Low Price." At the same time, enterprises are slow to react to changes in market demand, failing to capture trends such as the upgrade of environmental standards in Europe and the US and the scenario-based demands in emerging markets.

III. Paths to Differentiated Breakthroughs: Transition from Scale Competition to Value Competition

(I) Product Innovation: Technology and Design as Dual Drivers

Technology empowers functional upgrades: Focus on the two major tracks of smart travel suitcase technology and environmental protection to break homogenization. The TraveRE smart travel suitcase integrates GPS tracking and biometric lock functions, with an average export price of $120, double that of ordinary products. Xinshou Group's developed environmentally friendly PP material exceeds the industry standard for compression resistance by 30%, achieving a premium of over 15%. In 2024, the export growth rate of luggage and bags made from environmentally friendly materials was 18 percentage points higher than that of traditional products. Recycled polyester fiber and biodegradable materials have become hot selling points at the Canton Fair.

Design highlights personalized differences: Strengthen original design and scenario adaptation. ITO achieves a 300% premium with its "rivet-free structure" patent technology. 90Fen (90 Points) has entered Apple authorized stores with its minimalist design. Addressing the demand for short-distance traveling bags in Southeast Asia, they launched 20 inch suitcase and 24 inch trolley bag lightweight luggage case (20-24 inch lightweight hard-shell luggage), with sales increasing by 40%. Shiling Town has cultivated over 5,000 own brands, establishing supply chain barriers through customized hardware fittings and fabrics to prevent imitation.

(II) Brand Upgrade: From Contract Manufacturing to Own Brand Going Global

Cultivate local global brands: Break away from ODM dependence and build international recognition. AOKING has registered brands in 150 countries, covering 76 sales markets, building a moat through quality and service. 90Fen and TraveRE (China suitcase brands) utilize cross-border e-commerce platforms like Amazon and TEMU to enter over 20 countries, meeting the needs of young European and American consumers. In 2024, the market share of domestic brands in the mid-range market increased to 28%, gradually breaking the monopoly of international brands.

Collective empowerment of regional brands: Strengthen the brand endorsement of industrial clusters. "Shiling Leather Goods" has completed trademark registration in 19 countries, with a brand valuation of 20 billion Yuan, driving its member enterprises to improve their bargaining power. Baigou has obtained "Super Factory" certification, integrating supply chain resources and enhancing brand credibility.

(III) Supply Chain Optimization: Industrial Cluster Collaboration and Global Distribution

Deepen industrial cluster collaboration: Rely on the advantages of the complete industry chain to create differentiated supply. Shiling Town gathers 16,800 raw and auxiliary material merchants, offering 1.2 million types of accessories, enabling "one-stop procurement" and supporting rapid customized production. The Xingan County industrial cluster can achieve "500,000-piece orders shipped in 2 days," leading the global response speed.

Rational layout of overseas production capacity: Avoid trade barriers and reduce costs. Kairun Co., Ltd. and Xinshou Group have established factories in Indonesia and Cambodia, reducing labor costs by 35%-40% and effectively avoiding high tariffs in Europe and the US. TraveRE uses its Vietnam factory for transit, and its exports to Japan and South Korea grew by 30% in 2024.

(IV) Market Deepening: Precise Positioning and Channel Innovation

Differentiated layout in emerging markets: Customize products according to the needs of different regions. Exports to ASEAN focus on cost-effective basic models; Fujian's exports to ASEAN grew by 25.58% in 2024. For the European and US markets, the focus is on smart travel suitcase technology and environmental protection features; smart luggage orders for North America account for 31%. Low-priced backpacks exported to Africa occupy 70% of the market share.

Empowerment through cross-border e-commerce channels: Face consumers directly and rapidly iterate products. Taofactory helps enterprises shorten the new product launch cycle to 15 days, and the concentration of bestsellers increases to 72%. Baigou enterprises' domestic sales increased from several million Yuan to 20 million Yuan through the 1688 Super Factory, while also expanding overseas retail channels.

IV. Challenges and Future Trends

Currently, the Chinese luggage and bags industrial clusters still face challenges such as dependence on core technology, brand recognition barriers, and the upgrade of environmental standards. The European Union's Carbon Border Adjustment Mechanism (CBAM) is about to be implemented, and carbon footprint tracing requirements will increase export costs. The global high-end market's CR10 reaches 42%, with international big brands dominating, making it difficult for local brands to break through.

In the future, differentiated competition will deepen in three directions: First, the acceleration of digital transformation, achieving "small batches, quick customization" through flexible production to meet personalized needs. Second, green standards will become a core competitiveness; the application of recycled materials and carbon footprint management will become export prerequisites. Third, ecological synergy will become the norm, with industrial clusters deepening cooperation with cross-border e-commerce, overseas warehouses, and design institutions to build a full-chain differentiated advantage in "R&D - production - sales - service."

The path to a breakthrough for the Chinese luggage and bags industrial clusters is essentially a transition from "scale dividend" to "value dividend." Only by breaking away from the price "involution" and focusing on product innovation, brand cultivation, supply chain upgrading, and market deepening can they build a true "moat" in global competition and achieve the leap from "world factory" to "global brand hub."