Apparel Makers Descend on China
By Yaser Anwar, CSC of Equity Investment Ideas
It appears there is a growing market for casual clothes in China - one that is expected to blossom by about 10% a year and hit a whopping $58 billion within the next four years, according to one expert cited by The Wall Street Journal.
Clothes retailers from around the globe have long manufactured their merchandise in China - only to ship it out of the country for sale elsewhere. But that seems to be changing."Prompted by the easing of the country's regulatory hurdles and the explosive growth of the Chinese middle class, a number of retailers are starting to see the world's most populous nation as a budding clothes market itself," the Journal reports.
Brands from around the world - including H&M and Lee jeans - are set to open their first Asian outlets in Hong Kong and Shanghai at the beginning of next year, according to the article. And "by the end of this year, Jones Apparel Group Inc., will operate 50 stores in China, double the number at the end of 2005.
The company also plans to add 10 to 15 stores a year under its Nine West, Anne Klein and Jones New York names."The story goes on to explain that there will be a major markup in prices for Western products, as a number of American retailers promote themselves as upper-echelon premium brands, even though they are perceived that way in the United States.
But there is no guarantee the venture will succeed."Higher prices are meant to give brands cachet in the eyes of Chinese consumers, analysts say," according to the Journal."Though the strategy has worked for premium brands, it may backfire for mid-priced foreign brands that don't appeal to China's nouveau riche generation, says MasterCard International economist Yuwa Hedrick-Wong
http://www.equityinvestmentideas.blogspot.com/
It appears there is a growing market for casual clothes in China - one that is expected to blossom by about 10% a year and hit a whopping $58 billion within the next four years, according to one expert cited by The Wall Street Journal.
Clothes retailers from around the globe have long manufactured their merchandise in China - only to ship it out of the country for sale elsewhere. But that seems to be changing."Prompted by the easing of the country's regulatory hurdles and the explosive growth of the Chinese middle class, a number of retailers are starting to see the world's most populous nation as a budding clothes market itself," the Journal reports.
Brands from around the world - including H&M and Lee jeans - are set to open their first Asian outlets in Hong Kong and Shanghai at the beginning of next year, according to the article. And "by the end of this year, Jones Apparel Group Inc., will operate 50 stores in China, double the number at the end of 2005.
The company also plans to add 10 to 15 stores a year under its Nine West, Anne Klein and Jones New York names."The story goes on to explain that there will be a major markup in prices for Western products, as a number of American retailers promote themselves as upper-echelon premium brands, even though they are perceived that way in the United States.
But there is no guarantee the venture will succeed."Higher prices are meant to give brands cachet in the eyes of Chinese consumers, analysts say," according to the Journal."Though the strategy has worked for premium brands, it may backfire for mid-priced foreign brands that don't appeal to China's nouveau riche generation, says MasterCard International economist Yuwa Hedrick-Wong
http://www.equityinvestmentideas.blogspot.com/
posted by douglas mcintyre at 6:58 AM
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