SGS to help apparel brands access new markets

05 Jan '11

4 min read

With the ongoing boom in the Asian fashion markets, SGS is using its global textiles experts network and fashion knowledge base to assist brands wishing to expand into these new markets.

This move into Asian markets has become ever more important as US and European brands have sought to compensate for less favourable currency exchange conditions and weaker wholesale markets, both impairing brand revenue growth and both the result of the present economic downturn.

The extent of these currency fluctuations can be highlighted by considering that were the cost of a product to have remained stable at 100 units of currency, due to recent financial market fluctuations it would be valued at 101 units of currency in Japan, 112 units of currency in China and Koran and 152 units in Russia.

Nonetheless, this currency revaluation has also represented a growth opportunity. Korea, Russian, Japan and China are among the high consumption Asian markets toward which EU and US brands are driving expansion, aimed at an overall increase in Asian market share along with a diversified global market presence, a minimisation of business risk, better business balance and increased returns.

Russia and Japan
Further expansion into Japan and Russia represents a key growth and brand positioning opportunity for many leading US brands. One driving force behind this market expansion is the spending behavior of Japanese women, which has been shown to involve up to 30% of income being spent on skin care and clothing products in particular situations.

This level of spending has been arising, along with increases in women's incomes in Japan. Victoria's Secret is among those brands having announced plans to expand into Japan, Russia and other international markets, giving them and other brands the opportunity to establish themselves as brands without boundaries. Timberland, Tiffany, Nike, Coach, Calvin Klein, Ralph Lauren, Gap, and Levi's are already established in these markets.

Korea
Korea also represents a key opportunity for international brands. Where many local Korean companies have tended to compete for the middle market sector, foreign brands including Giordano and G2000 from Hong Kong, Forever 21 and Gap from the US, Sweden's H&M and Spain's Zara have positioned themselves at the top end of the market. Korea is now filled with such brands, providing a range of options to accommodate Korean preferences outside of the local middle-market brands which have tended to compete by emulating, “Uniqlo” a Japanese chain store.

China
With the global economic recovery being lead by Asia, and China in particular rebounding from a dip in growth to return to a double digit growth rate of 11.1%, the Asia market stands as highly likely to be the next region for retail growth and expansion.

With sales for the same period in China now at 3.7% points higher than last, the Chinese representsto many key players a highly appealing growth opportunity, particularly for luxury brands. Conservatively, the apparel market expansion rate in China is estimated to be around 10.5% by 2015, while for 2010 the capacity of the apparel market is expected to total in excess of 6300 billion Yuan. Previous figures show a 25.8% increase in retail clothing sales for November 2009 in comparison with November 2008. In total, from 2001 to 2008 an annual growth rate of 14.7% was recorded for clothing consumption in China, alongside a 2009 rate of 15%.

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