Using a firm‐level database from 1999 to 2008, this paper sheds new light on the industrial dynamics of China's clothing industry, highlighting the multi‐scalar process of spatial restructuring primarily driven by differences in the rate of job creation, especially through start‐up firms. At the inter‐provincial level, 2004 represents a turning point where the industry ceased to be concentrated in coastal areas and began to relocate inland, especially to central provinces. At the intra‐provincial level, cities in coastal provinces remained the most attractive locations for start‐up companies even after 2004. The results suggest that the regionally decentralised authoritarian regime, intertwined with market forces shaping the multi‐scalar process of spatial restructuring, is pivotal to understanding the changing geography of China's apparel industry.