
MANAGING DEMAND AND SUPPLY IN CHINESE
FASHION APPAREL FIRMS: AN EXPLORATORY
STUDY UNDER THE FOURTH INDUSTRIAL
STRUCTURAL CHANGE
A Thesis Submitted in Fulfilment of the Requirements for the Degree
of Doctor of Philosophy
Ying YE
MSc (Logistics and Supply Chain Management)
BSc (Logistics Management)
School of Business Information Technology and Logistics
College of Business
RMIT University
January 2018

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DECLARATION
I certify that, except where due acknowledgement has been made, the work is that of the author
alone; the work has not been submitted previously, in whole or in part, to qualify for any other
academic award; the content of this thesis is the result of work that has been carried out since the
official commencement date of the approved research programme; any editorial work, paid or
unpaid for, by a third party is acknowledged; and ethics, procedures and guidelines have been
followed.
Ying Ye
January 2018

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ACKNOWLEDGEMENTS
I take this opportunity to express my appreciation to the special people who have provided me a
fulfilling research candidature at RMIT University.
I wish to express my profound gratitude to my supervisory team: Dr Kwok Hung Lau, Dr Leon Teo,
and Dr Konrad Peszynski. Their invaluable support, advice, proper guidance, and continuous
inspiration enhanced my confidence to accomplish this research. I am indebted for their
encouragement and inspirational advices received throughout the association.
I would also like to extend my appreciation to Dr Sek Yong Wee and Dr Chin Eang Ong. They have
provided me with many great opportunities and advices on teaching which helps me further develop
my academic competency. Their generous support has made this journey more fulfilling.
My gratitude also goes to the colleagues and all my PhD friends in school. We have been sharing our
sweat, tears, joy and love during these solid years. It has been a great pleasure to meet each one of
them, and I hope our lives will cross-path again in future.
My deepest thanks are felt to my beloved family, who provided me this opportunity to follow my
academia passion, and further my education. Without their valuable financial support, this journey
would have never commenced. Their encouragement has been a constant source of substance in my
journey.
To my partner and best friend, Weixiao Jia, I am deeply grateful for his unconditional love, trust and
support during this journey. He has made me a better person.
This thesis is dedicated to the memory of my beloved grandmother.

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ABSTRACT
The Chinese market represents one of the largest growing retail markets in the world. The new rise
of e-commerce and digital technology has transformed the local commerce and retail landscape
creating significant competitions and opportunities. Driving $4.84 trillion worth of sales alone in
2016, Chinese retail market is fuelled by rising demand from the large inland and regional areas, and
growing purchases for high quality services and products. The fashion apparel (FA) sector, often
characterised by short product lifecycles, high market volatility, low demand predictability, and a
high number of impulse purchases, is one of the main retail industries in China experiencing radical
transformations. Traditional FA companies have encountered a series of disruptive changes,
including rising labour costs, out-dated manufacturing lines, and a chronic oversupply problem,
which has led to supply chain breakdowns. Despite the challenges and uncertainties faced by the
industry, research on how Chinese FA companies adapt to these changes is limited.
The present study explores how the Chinese FA companies manage and restructure their supply
chain under the emerging market dynamics. As supply chain management (SCM) is still at the
nascent stage of development in China, this study establishes an exploratory research, proposing a
strategic SCM framework, comprised of core demand and supply process elements, and
management components based on Western practice. Drawing upon the theoretical perspective of
Alignment Theory, the study introduces four strategic fit types of the supply chain configurations:
Make-to-forecast/Administration (A), Make-to-order/Production (P), Pack-to-order/integration (I),
and Buy-to-order/Development (D). Working under the proposed SCM framework, the study applies
the framework into the Chinese market context to probe how domestic FA companies have
restructured their internal supply chain during the period of transformation, and whether the
alignment of internal supply chain elements and components of the external market situation exists
in current businesses.
The findings of this study reveal that companies capable of leveraging a new strategic fit of SCM
alignment among their process elements and management components encourage a better business
performance during the transformation. Key actions driving the business into a successful strategic
fit configuration are identified in the findings. The findings also unveil some of the common
characters residing in the Chinese economic ecosystem, and prescribe a series of practical
implications in terms of formulating strategic supply chain solutions and enhancing competencies for
the Chinese businesses.

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TABLE OF CONTENTS
Declaration .............................................................................................................................................. ii
Acknowledgements ................................................................................................................................ iii
Abstract .................................................................................................................................................. iv
List of Tables ........................................................................................................................................ viii
List of Figures ......................................................................................................................................... ix
List of Acronyms ...................................................................................................................................... x
CHAPTER 1: INTRODUCTION ................................................................................................................... 1
1.1 Research Background .................................................................................................................... 1
1.2 Motivations ................................................................................................................................... 5
1.3 Purpose and Research Questions ................................................................................................. 7
1.4 Research Scope ........................................................................................................................... 11
1.5 Significance of the Study ............................................................................................................. 12
1.6 Structure of the Thesis ................................................................................................................ 12
CHAPTER 2: LITERATURE REVIEW ......................................................................................................... 14
2.1 Origin of the SCM and Definitions .............................................................................................. 14
2.2 Scopes of the SCM Framework ................................................................................................... 17
2.3 Process Elements of the SCM Framework .................................................................................. 21
2.4 Management Components of the SCM Framework ................................................................... 25
2.5 Strategic Configurations of the SCM Framework ....................................................................... 27
2.6 Achieving Strategic Fit of the Alignment in SCM ........................................................................ 30
2.7 Summary ..................................................................................................................................... 32
CHAPTER 3: CHINESE FA INDUSTRY UNDER THE STRUCTURAL CHANGES ........................................... 33
3.1 The First Structural Change ......................................................................................................... 33
3.2 The Second Structural Change .................................................................................................... 35
3.3 The Third Structural Change ....................................................................................................... 37
3.4 The Fourth Structural Change ..................................................................................................... 39
3.4.1 External Impacts on the Supply and Production .................................................................. 39
3.4.2 External Impacts on the Market Demand ............................................................................ 40
3.4.3 External Impacts on the Corporate Management ............................................................... 41

