The Export Challenge

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TheExport Challenge

Brian Dunn. WWD. New York: May 19, 2010. Vol. 199, Iss. 106; pg. b.7

Abstract (Summary)

Things are looking up for the Canadian economy, but that could be a mixed blessing forretailers and trade show organizers.

Canada's economic growth will outpace that of all other G7 countries this year and next,according to the International Monetary Fund. Its gross domestic product will expand 3.1percent in 2010 and 3.2 percent in 2011. The U.S. will match Canada's growth this year,before falling behind next year, according to the IMF's World Economic Outlook report.

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COPYRIGHT 2010 FAIRCHILD FASHION GROUP. ALL RIGHTS RESERVED.

The Export Challenge

MONTREAL

Things are looking up for the Canadian economy, but that could be a mixed blessing forretailers and trade show organizers.

Canada's economic growth will outpace that of all other G7 countries this year and next,according to the International Monetary Fund. Its gross domestic product will expand 3.1percent in 2010 and 3.2 percent in 2011. The U.S. will match Canada's growth this year,before falling behind next year, according to the IMF's World Economic Outlook report.

This means, however, that Canada's retailers and trade show groups must also contendwith a Canadian dollar that has appreciated 25 percent against the greenback from a yearago. The Canadian dollar is now flirting with par, and some economists are predicting itwill go even higher which is bad for Canadian exports. Investment firm UBS Securitiesestimates the local dollar's rise since 2002 has hit Canadian exports by 14 percentagepoints, with a loss of 553,000 Canadian manufacturing jobs.

As for retail, luxury, home furnishing and sporting goods stores seem to be leading theway in sales growth year-on-year, according to the Retail Council of Canada. And basedon early estimates, the RCC predicts a rise of 3.5 to 5 percent in apparel, accessories,cosmetics and footwear sales from 2009.

While retailers are enjoying the moment, let's also consider how long this can last if theU.S. economy does not develop some momentum, said RCC president and chief
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Toronto's LG Fashion Week has an enviable problem in that it has outgrown its twoprevious venues and is looking for new digs to host its next event, Oct. 18 to 23.

We need over 50,000 square feet and we rely on corporate sponsors, as we get nogovernment support, noted Robin Kay, president of the Fashion Design Council of

Canada, which organizes the week. We've built the brand and now we have to work withthe designers to get them export-ready, as the consumer market in Canada is not very big.

LGFW is important enough to attract international buyers, but Kay would like to seemore foreign designers, like Kate Moss for Topshop.

Vancouver Fashion Week featured more local than international designers this pastspring because of the Winter Olympics, but expects to put the emphasis back oninternational designers at the Nov. 3 to 8 event, said VFW spokeswoman Pam Saunders.The number of buyers was down as people felt they wouldn't be able to book hotel roomsdue to the Olympics. But we had a number of U.S. lines at the show, including Civil

Society Clothing and Hot Air Clothing from Los Angeles.

VFW added hair and jewelry products this spring and expects to maintain them inNovember. But some fear the strong Canadian dollar might discourage American buyersfrom attending.

Credit: HARRY LEONARD; By Brian Dunn

Ch

Export challenges and potential strategies; Canadian manufacturers in the Chinese

market

Ronald V. Kalafsky. Journal of Small Business and Enterprise Development.Bradford: 2009. Vol. 16, Iss. 1; pg. 47

Abstract (Summary)

Purpose - This paper aims to examine the case of Canadian manufacturers involved in theChinese market. In particular, it seeks to look at the challenges of entering a new exportdestination, including access to market intelligence. It also aims to analyze recent

performance. Design/methodology/approach - A postal survey of Canadianmanufacturers that examined the myriad challenges and strategies for manufacturersserves as the basis for this research. Findings - The findings show that, for thesemanufacturers, face-to-face contact is important in the Chinese market. The group ofexporters, on average, was not as dependent on the US market. Perhaps most importantly,export success is not limited solely to larger manufacturers. Researchlimitations/implications - The small sample size and survey structure limited statisticalanalysis. Firm-level interviews need to be conducted in order to examine unique export
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success strategies in this booming market. Practical implications - The findings show thatin-person business relationships are important in the China market. Also, export successis not limited solely to larger manufacturers. Companies involved in implementing leantechniques tended to view China as an opportunity (rather than a threat) at a much higherrate than other manufacturers. Originality/value - The paper provides an examination of

manufacturers attempting to enter a relatively new market after years of regionallyfocused sales to a mature customer base. [PUBLICATION ABSTRACT]


Full Text

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Copyright Emerald Group Publishing Limited 2009

Introduction

The decision to engage in export activity can be a difficult one for many manufacturers.First and foremost, information on the viability of distant markets and new customers isoften difficult to obtain. For newer export markets, firms must often craft entirely distinctstrategies and generate innovative product lines in order to appeal to a faraway andunfamiliar clientele. An inclusive, firm-level orientation toward export markets has beendemonstrated as critical for success with international customers ([1] Akyol andAkehurst, 2003; [10] Ellis, 2007). A big part of the export strategy concerns theacquisition of accurate market information on new business environments. This canconsequently provide significant obstacles for many manufacturers who are accustomedto serving longtime buyers likely located in geographically proximate markets ([14]Gertler, 2004; [17] Hassink, 2005). On balance, then, exporting introduces additional

complexity to most business processes, given the effort that is required. Despite thesechallenges, encouraging and developing export activity is important, as exporters havebeen shown to be a critical element of regional economic development. The criticalitystems from the innovative nature of their products. In the addition, the recent findingsdemonstrate that outwardly focused firms, on average, provide higher average salariesthan producers serving largely internal markets ([24] Porter, 2003).

Canadian manufacturers are now faced with the challenge of expanding globally toincrease sales and in many cases, to survive. Most Canadian firms, of course, havealways been exporters to some extent. Most of these exports were destined, by and large,for the USA. Given the relative decline of the US manufacturing base (i.e. decreasing

purchases of components from Canadian firms) and the rapid ascent of many Asianeconomies, a geographical expansion of exporting activities would appear to be aworthwhile and almost necessary goal for many manufacturers. China, in particular,presents a unique set of market dynamics that can present difficulties for outside firms([3] Child and Tse, 2002). In addition to examining recent manufacturer exportperformance, this paper provides initial explorations on the case of Canadian firmscurrently engaged in the Chinese market. Two questions are examined in these analyses.First, what characterizes export-intensive firms in this market and how do they differ
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from other firms? Second, what strategies are companies using to explore opportunities inChina? Evidence from a survey of manufacturers indicates that many firms view China asan opportunity to expand beyond nearby, traditional export markets, echoing a trend byfirms located in most industrialized economies. A number of firms are already doing wellin this emerging market, despite many obstacles including less-than-complete access to

information.

Research context: exporting and market orientation

Moving products across international borders entails different laws, businessenvironments, and organizational cultures than firms whose market is largely domestic.The challenges and resulting initiatives that are used by firms to export differ widely, inmost cases, from those used in domestic markets. The specific ages and types of productlines of manufacturers often determine the choice to export. Tenets of the product lifecycle framework, originally developed by [18] Hirsch (1967) and [30] Vernon (1979),come into play when describing exporting, both in terms of product selection and

manufacturing sites. Most often, manufacturers initially produce their goods in theirhome country, satisfying domestic market needs. Given domestic competition and theneed to expand sales, firms may then look to access international markets in order toincrease overall market share. This is generally the first stage in the internationalizationprocess for most firms (see [7], [8] Dunning, 1988, 1995). Firms can often maintainproduction in their home country, via technological ownership advantages if the domesticmarket remains robust. Market dynamics, however, most often cause changes in thegeographies of manufacturing, as production moves to cheaper, offshore locations ([22]MacLachlan, 1992). And, to complicate things further, changes in the worldmanufacturing environment have often led to firms that produce abroad initially ratherthan first manufacturing in the home market ([6] Dicken, 2007). Given the rapidly

changing geographies of global manufacturing and customer demands, producers arealmost compelled to consider exporting as a survival strategy.

Which firms are best positioned to export? A longstanding debate continues over whatleads to manufacturer-level export success, encompassing numerous firm-level variables.Certainly company size can be one determinant, as conventional thinking has held thatlarger firms have the resources to explore new markets and moreover, can weather anyrisks if the market entry does not work. For the most part, however, the evidence isequivocal on the size-export matter (e.g. [32] Wagner, 2001; [31] Verwaal and Donkers,2002). Often, firm size will be an asset in some product niches, while not in others. Theempirical evidence, at least in advanced manufacturing industries (e.g. high-endmachinery), points to internationally successful firms having active research agendas andnewer product lines ([21] MacPherson, 2000; [19] Kalafsky and MacPherson, 2003).

The exporting decision is not necessarily easy, as research from Martin and Sunley(2006), [15] Grabher (1993), and others have clearly demonstrated that companies oftenbecome dependent on local markets and in too many cases, their product lines tend tostagnate. To access foreign markets, then, manufacturers most likely must develop newproducts and implement new strategies, which ties into the concerns regarding export


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market orientation, but again, reliance on long time, proximate customers often becomesa hindrance to the development of new export strategy. Such innovative strategies wouldrequire intelligence on new markets and customers.

Beyond product strategies and firm-level characteristics discussed above, a number of

other issues come into play when considering a foray into a new export market, such asprevious international experience, access to information, and networks. Given thecomplexity of exporting and how it differs from most ordinary domestic transactions,accurate and timely information on new markets is virtually a requirement (Rose andShoham, 2002). Furthermore, a concerted commitment to opening and succeeding inthese new markets would appear to be a priority for potential exporters, rather than astrategy of tentative international market exploration (see [11] Evangelista, 1994).Overall, the degree to which a firm commits to an export market has been shown to havea positive relationship with overall export success ([28] Slater and Narver, 2000; [2]Cadogan et al. , 2002). Up-to-date information pertaining to individual customers and tothe overall market, therefore, is paramount to fostering innovation and it is hoped,

eventual success ([4] Cornish, 1997a). These firm-level strategic changes are difficult forfirms with little or no exporting experience. Overall, firms must be fully committed to anexport market in terms of their strategies.

Part of this commitment entails the collection of intelligence regarding the market and itscustomers. Without a doubt, obtaining international market information remains achallenge to manufacturers, given different the legal and economic environments andlanguage-based challenges ([27] Shaw, 1995). Research from [5] Cornish (1997b)emphasized that while distance does not necessarily provide an impediment to servingnew markets, collecting information on potential new customers remains paramount.Additional research points to the fact that in order to succeed in international markets, a

face-to-face presence is needed. However, [10] Ellis (2007, p. 382) demonstrated thatexpanding into export markets can provide more difficulties for firms in terms ofdistance, the amount of dependence on international markets, and the variety of marketsserved. The importance of such contact only increases for advanced manufacturers, whomust accurately assess the needs of distant, high-end clients ([12], [13], [14] Gertler,1993, 1995, 2004).

These challenges are magnified in relatively new trade environments such as China (see[23] Peng, 2000). [3] Child and Tse (2002) clearly showed that the Chinese marketentrance provides a number of obstacles not generally seen elsewhere, even in otheremerging economies. First and foremost, there are distinct differences with regard tobusiness communication and even hierarchies within business organizations ([20] Knossand Beveridge, 2007). Perhaps one of the most important obstacles to doing business inChina includes the unique and changing relationships between governments and firms([3] Child and Tse, 2002). Differing degrees of involvement exist between private firmsand government at various levels - these relationships are also in flux. Indeed, thestructures of firms themselves change rapidly in this dynamic economy. Moreover, thedifficulties of establishing social connections that are so critical to business provideadditional challenges for the new market entrant ([16] Gu et al. , 2008). Business and


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social networks in China are complicated and in the case of this study, different fromwhat many North American firms are accustomed to. Given this rapidly changing marketand its relative inaccessibility to newcomers, accurate market information is imperative,perhaps more so than in other countries ([33] Wolff, 2007). These business relationships,cultural differences, and the overall difficulties in understanding this relatively new

market, should impel firms to look for local representation. Otherwise, an alreadydifficult decision to export will be further complicated.

Methodology

The first stage in this research entailed examining existing data sources on exporterswithin the Canadian manufacturing sector. In order to examine salient issues formanufacturers, the CME (Canadian Manufacturers and Exporters), a leading industrytrade group, conducts an annual postal survey of producers across Canada. The CME2006 survey instrument included queries on all facets of manufacturer operations,encompassing the performance, challenges, and strategies of these firms[1] . An entire

section was devoted to trade-related issues and many questions focused specifically onthe Chinese market. A total of 986 valid responses were received during the 2006 survey,providing a response rate of just under 10 percent. Chi-square and difference of meanstests compared the sample of respondents against the manufacturer population acrossmetrics such as firm size and product line. These tests confirmed that the sample wasstatistically representative of all Canadian manufacturers. A second stage of this researchconsisted of exploratory conversations with Canadian embassy (Beijing) and consular(Hong Kong) personnel in July, 2007 and March, 2008. These informal interviews wereused to address some of the difficulties that North American firms encounter whenattempting to enter the Chinese market.

The export intensity breakdown for the survey respondents is shown in Table I [Figureomitted. See Article Image.]. This group of manufacturers is relatively export-intensive,with almost half of the firms reporting that over a quarter of their sales were derived fromexports. The export intensities for the US market alone are also displayed in the lastcolumn. Given the proximity and size of the next-door market, is there a relationshipbetween these metrics? Gamma tests indicate a coefficient of 0.855 (p < 0.01) for theassociation between total export intensity and US export intensity for the manufacturersparticipating in the survey. At the outset and as expected, one sees a group ofmanufacturers whose export activities are tied largely to the North American market.Will this dependence present difficulties as firms are compelled to look elsewhere whenglobal markets change?

China: exporter challenges, performance, and market entry

Within the export section of the survey instrument, a question asked manufacturers toselect the international market that held the most current and future potential. This listconsisted of 16 regions or countries. Not surprisingly, the US was the largest current andfuture market. Mexico and Western Europe edged-out China for the market with mostpotential. Interestingly however, China, among all countries and regions, showed the


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greatest positive difference between current and future export market opportunities. Atthe outset, then, the China market demonstrated signs of potential for firms looking toexpand their markets.

Taken as a whole, however, the survey data indicated that only 13.1 percent of the

manufacturers are currently exporting to China. The next several analyses will examinethis particular set of 129 firms. For this group of manufacturers, China indeed hasemerged as the country that, except for the US, was felt to have the most potential. Thisstands in contrast to the findings for the entire sample, as discussed above. The responsesfrom the China exporters yield some noteworthy findings. For starters, this group of firmsis far more export-intensive when compared with the entire group. As seen in Table II[Figure omitted. See Article Image.], roughly half of the firms operating in China claimthat 75 percent or more of their sales come from international markets versus just over 20percent for the entire manufacturer sample. The links between the overall exportactivities of this group and US export intensity are also noteworthy. While the gammatests indicated a coefficient of 0.855 between US-destined and total export intensities for

the entire sample, the coefficient falls to 0.570 for the group of manufacturers exportingto China. This group of producers, then, is far less dependent on the US market andoverall, more export intensive.

Descriptive statistics for the China exporter sample are provided in Table III [Figureomitted. See Article Image.]. The firms are relatively small, with just over three-fifthsconsisting of fewer than 250 employees, a commonly used measure for defining a small-to-medium-sized enterprise (SME). The group of China exporters derived roughly 23percent of sales from new products, versus only 15 percent for the entire sample ofmanufacturers. The difference illustrates the importance of innovative products whenentering world markets. The last three statistics refer to competitive issues and strategies.

Roughly two-thirds of the respondents viewed the strong Canadian dollar as a criticalbusiness impediment, set against 54.9 percent for the entire sample. The workforce issueis a concern for manufacturers across most of Canada, given an aging population andincreasing employment demands from the extractive industries in the western part of thecountry. Finally, 35.7 percent of firms planned to use Chinese market expansion as amain competitive strategy, compared to with only 9.9 per cent for the entire number ofrespondents. This final figure would suggest that the group of China exporters sees theimportance of the market in their business operations.

It should be noted that this sample of manufacturers already doing business in China isalso fairly new to the Chinese market (see Figure 1 [Figure omitted. See Article Image.]).Roughly 80 percent of the firms have conducted business in China for less than a decade,over half for fewer than four years. This indicates that these manufacturers, on balance,are recent entrants into this promising market. It also worth noting that even for theseexporters, the percentage of sales that they derived from the China market is quite small.In fact, more than four-fifths of the respondents received 25 percent or less of their totalsales from business with China. However, as seen in Figure 2 [Figure omitted. SeeArticle Image.], the current group of exporters was rather bullish on the China market,with fully 60 percent of the respondents indicating that China holds "great" or "very


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Conclusion

This study contributes to the exiting literature in three ways. First and foremost, the dataprovide evidence of the challenges that firms from mature economies face whenattempting to expand outside of traditional markets; in this case, exploring beyond the

large North American market out of necessity. Secondly, this study offers additionalsupport for the importance of information, particularly when entering a new market.Finally, these analyses supply recent data on entering the Chinese market, a rapidlychanging trade environment. Most studies do not look at specific industries, but makegeneral observations about strategies for market entry. This case study focused onCanadian manufacturers, many of whom are in mature industrial sectors and besides,have been reliant on the large and quite mature North American market for theseproducts. This study aimed to provide empirical evidence on such manufacturers in theirattempts to enter a largely unknown and dynamic international market.

What factors lead to success for the export of manufactured goods to China? More

investigation is needed regarding the catalysts necessary for excelling in the Chinesemarket. The aforementioned conversations with consular officials showed that a widerange of firms were succeeding in China - no particular product niche seemed to excel inthe market. The next stage of this research will explore several aspects of exports,product niches, market entry, and market intelligence. Further analysis will examinewhich specific company-level strategies are working in China, beyond the more generalmeasures mentioned in this paper. This line of inquiry will add to research on theimportance of accurate market information, local representation, and face-to-face contact.It would stand to reason that manufacturers with established networks of agents ordistributors in China would exhibit higher performance. The next stage will also comparethe export performance of British Columbia and Ontario-based firms against others. It is

expected that many firms located in these two provinces will utilize existing Chinesebusiness networks located in Vancouver and Toronto.

The statistical analysis and preliminary consular and embassy interviews indicated thealmost idiosyncratic nature of firms succeeding in the China market. These exploratoryfindings point to the next stage of this research: detailed interviews with individualexporters to find what can be done to assist such firms to enter this promising market.This method is supported by research from [34] Yeung (1995), who suggested thatinterviews are particularly crucial for research in international business, given often-disparate economic environments and rapidly changing companies. It should also bementioned that [26] Schoenberger (1991) found that firm-level conversations wereessential to understanding the complex dynamics of firms. The interviews that will takeplace during the next stage of this research must explore factors not found on the surveyinstrument, such as the relative international experience of firm personnel and the successof certain product lines. It appears that in-person contact matters for this group ofexporters, but qualitative research must also further analyze exactly what specificnetworking and market intelligence strategies work in this market.

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Figure 3: Sources of information for China market strategies (percent of firmsresponding)Figure 4: Market expansion strategies (percent of firms responding)

Table I: Export intensities for all firms in the sample (percent of firms)Table II: Export intensities for the sample of China exporters (percent of firms)Table III: Selected descriptive statistics for the China exporters (percent of firms)Table IV: Relationships between export intensity and other firm-level measures (gammastatistics)Table V: Lean planning stage versus viewpoints of the China market (chi-square tests)

Indexing (document details)

Subjects: Exports, Marketing, Competitive intelligence, Studies, Manufacturers

Classification

Codes

1300 International trade & foreign investment, 7000 Marketing,9130 Experimental/theoretical, 9190 United States, 9172 Canada,9179 Asia & the Pacific

Locations: United States--US, Canada, China

Author(s): Ronald V. Kalafsky

Author

Affiliation:

Ronald V. Kalafsky, University of Tennessee, Knoxville, Tennessee,USA

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features:

Graphs, Tables, References

Publication

title:

Journal of Small Business and Enterprise

Development. Bradford:2009. Vol. 16, Iss. 1; pg. 47

Source type: Periodical

ISSN: 14626004

ProQuest

document ID:

1882612471

Text Word 5617
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In a year that saw consumer demand plummet at a staggering rate, Vietnam, Bangladesh,Cambodia and India held onto significant market shares and in some instances were ableto grab a larger piece ofapparel exports.


Full Text

(1256 words)

COPYRIGHT 2010 FAIRCHILD FASHION GROUP. ALL RIGHTS RESERVED.

SATELLITES CIRCLING CHINA'S DOMAIN

Asia remains the epicenter of apparel manufacturing, but within the region newmanufacturing sources are emerging to challenge China's dominance.

In a year that saw consumer demand plummet at a staggering rate, Vietnam, Bangladesh,

Cambodia and India held onto significant market shares and in some instances were ableto grab a larger piece of apparel exports.

Among the top exporters to the U.S., only Vietnam maintained an upward trajectorythrough the bulk of 2009, but industry sources pointed to Bangladesh, India andIndonesia as important emerging producers of textiles and apparel. The countries arewell-positioned to begin growing once the global macroeconomic outlook stabilizes,sourcing executives said.

The top emerging exporters to the European Union by value, according to the most recentdata available from Eurostat, were Bangladesh, Sri Lanka, China, India, Pakistan,

Indonesia, Cambodia and Vietnam. Japan's top emerging apparel sources, according toJapan Customs data, included Haiti, Cambodia, Nicaragua, Honduras, Guatemala andBangladesh.

If you are looking at emerging suppliers, defined as places where there's growth& thenthere's few and far between where there's any growth [in 2009], said Julia Hughes, seniorvice president of international trade for the U.S. Association of Importers of Textiles &Apparel.

Cost, speed-to-market, experience and the availability of raw materials figureprominently in sourcing decisions and the countries that did well in 2009 offered

companies opportunities their competitors did not, sources said.

The beneficiaries are countries that don't just offer a trade advantage, but offer a businessadvantage, said Mark Jaeger, vice president and general counsel for Jockey InternationalInc.

Another draw was countries that have an industry of scale, so you can have confidencethat [the orders] you put there can be absorbed and produced, Jaeger said.


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Countries like Vietnam, Cambodia, Bangladesh and China are able to offer firmscomplete finished goods solutions, Jaeger said.

According to the Commerce Department's Office of Textiles & Apparel, Vietnam'stextile and apparel exports to the U.S. increased 20 percent for the first 11 months of

2009 to 2 billion square meter equivalents, or $4.9 billion. Vietnam is the fifth largestsupplier of textiles and apparel to the U.S., but it is the second-largest source for apparel.

Exports to the EU from Vietnam rose 0.3 percent to 938.6 million euros, or $1.3 billion atcurrent exchange, according to EU data for 2009. The benefits of doing business inVietnam include access to inputs from China and the quality, needlework and skills thatapparel firms want, said Jeff Streader, senior vice president of global sourcing for GuessInc.

We feel the capacity to produce a quality product exists there, Streader said.

Vietnam's textile and apparel export revenue in 2009 is expected to reach $9.3 billion, 3percent higher than the previous year, according to a source in the Vietnamesegovernment. Vietnam suffered smaller losses in market share during the recessioncompared with its Asian competitors. The end of a controversial U.S. monitoringprogram of Vietnamese apparel imports early last year helped stimulate further growth inexports and production.

Bangladesh was also not immune to the impact of the global downturn, but after a suddenintensification in the slowdown in export orders for apparel in the second half of 2009,sales started to pick up in the new year.

As the recessionary situation is now improving in the main markets of the West, buyersare busy with deals for improved shipments from Bangladesh, said Abdus SalamMurshedy, president of the Bangladesh Garment Manufacturers & Exporters Association,which represents more than 3,000 woven apparel factories.

Bangladeshi apparel manufacturers were able to eke out some market share gains. TheApparel Exports Promotion Council of India said shipments of apparel from Bangladeshsurpassed those from India in the first nine months of 2009. Commerce Department datashow India still outstripped Bangladesh in textile and apparel imports to the U.S., whileBangladesh saw a smaller decline in shipments.

Textile and apparel imports from Bangladesh to the U.S. dropped 3.2 percent comparedwith a year earlier to 1.5 billion SME, or $3.2 billion, in the first 11 months of 2009.Shipments of textiles and apparel from India fell 5 percent compared with a year earlierto 2.5 billion SME, or $4.2 billion, during the same time period.

Indian garment manufacturers expect business to improve in 2010 after a bruising 2009,but reform of the sector is as vital as a global economic recovery.


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Abstract (Summary)

Some creative thinking inspired by the recession within the clothing and textile sectorwas on show this month. On May 19, Marks & Spencer, the UK's biggest clothingretailer, launched a new initiative to accelerate business reforms after posting a 37.5%

slump in annual profits. Meanwhile, UK luxury retailer Harvey Nichols on May 6 said itwould focus on consumers young enough to ignore the recession and tourists cashing inon the weak pound. On May 11, Morocco's government followed suit with a new strategyto boost exports -- including textiles. May also showed how the challenges posed by theslump could challenge the biggest names. On May 28, French luxury fashion houseChristian Lacroix declared itself insolvent and a commercial court subsequently placedthe company in administration for six months.


Full Text

(507 words)

Copyright Aroq Limited Dec 2009

Some creative thinking inspired by the recession within the clothing and textile sectorwas on show this month.

On 19 May, Marks & Spencer, the UK's biggest clothing retailer, launched a newinitiative to accelerate business reforms after posting a 37.5% slump in annual profits. Its'202O - Doing the Right Thing' programme was designed to increase the pace of changefrom design to delivery, drive international expansion in China, India, and Central and

Eastern Europe, and hasten the integration of its multi-channel operations.

Meanwhile, UK luxury retailer Harvey Nichols on 6 May said it would focus onconsumers young enough to ignore the recession and tourists cashing in on the weakpound. Speaking at The World Retail Congress, in Barcelona, Spain, Harvey NicholsCEO Joseph Wan unveiled a double-pronged strategy to adapt to lower spending in theUK. "As a business we need to find new ways to find market share, " he said.

On 21 May, a new body was set up to represent the UK's fashion and textile industry andhelp companies to trade more effectively both domestically and overseas. The UKFashion and Textile Association succeeded the UK Clothing Industry Association(BCIA).

On 1 1 May, Morocco's government followed suit with a new strategy to boost exports -including textiles. 'Maroc Export Plus' would promote Moroccan products worldwide andboost productivity, including training for export industries, notably clothing.

May also showed how the challenges posed by the slump could challenge the biggestnames. On 28 May, French luxury fashion house Christian Lacroix declared itself


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insolvent and a commercial court subsequently placed the company in administration forsix months. It had been "hit by the world financial crisis which is having a significantimpact on the luxury goods sector," said the company, with women's fashion sales, itscore segment, declining 35%.

"The current recession has brought great change to the apparel industry. To those whocan recognise and embrace this change, and who are in its forefront, it will bringenormous opportunity. To those who are blind, obdurate, and in the rear, this change willbring disaster.

"Nowhere is this change greater than on the supplier side, where the entire garmentindustry is in a state of flux. For the past decade, the global garment export industry hasbeen changing rapidly and constantly. "

just-style editorial comment, 12 May 2009

[Author Affiliation]About the authorInternational News Services' writer for this briefing is its editor Keith Nuthall.International News Services is an 11-year-old international news agency, serving around150 specialist publications, with more than 40 experienced writers based around theworld. Copy is edited centrally to a high standard, providing smaller titles with anextensive feed of bespoke foreign news and features. It focuses especially on thecommercial impact of globalisation and the growth in power and authority ofinternational organisations. The agency's writers explain the regulations and laws flowingfrom these often remote and usually complex institutions, such as the European Union,the World Trade Organisation and United Nations agencies.

For more information, see www.internationalnewsservices.com


Subjects: Clothing industry, Recessions, Retail stores, Initiatives

Classification

Codes

9175 Western Europe, 8620 Textile & apparel industries,8390 Retailing industry

Locations: United Kingdom--UK

Author(s): Anonymous

Author Affiliation: About the authorInternational News Services' writer for this briefing is its editorKeith Nuthall.International News Services is an 11-year-old international newsagency, serving around 150 specialist publications, with more than40 experienced writers based around the world. Copy is edited
http://searchsideways%28%22sub%22%2C%22clothing%20industry%22%29/http://searchsideways%28%22sub%22%2C%22recessions%22%29/http://searchsideways%28%22sub%22%2C%22retail%20stores%22%29/http://searchsideways%28%22sub%22%2C%22initiatives%22%29/http://searchsideways%28%22sub%22%2C%22clothing%20industry%22%29/http://searchsideways%28%22sub%22%2C%22recessions%22%29/http://searchsideways%28%22sub%22%2C%22retail%20stores%22%29/http://searchsideways%28%22sub%22%2C%22initiatives%22%29/


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Ours is a very strange industry. It is not just global, it is ubiquitous. If there are 192countries worldwide, there are 192 garment exporting industries.

At any given time, a very few national industries dominate the industry. At some point,their dominance usually ends and their importance as a supplier fades away.

For example, there was a time when the Philippines and Thailand rivalled China asdominant garment industries.

There was a time, less than 10 years ago, when Mexico supplied the US with moregarments than China. These erstwhile winners have all but disappeared, lost in an evermore complex market.

But there are a few countries whose industries have been able to maintain their dominantposition for decades - Hong Kong, Korea, Taiwan and most recently China.

Surprisingly three of the four do not rank high on the US government list of majorgarment suppliers. Hong Kong is 16th, Taiwan 22nd and Korea 27th (just behind Haiti).

True, none of the three export much in the way of garments, but their companies are stillthe industry leaders.

If you have any doubts, consider this: Hong Kong-based Li & Fung is the world's second-largest garment supplier after China.

In the past 12 months, Li & Fung sales were larger than total garment exports from all ofSouth Asia - Bangladesh, India, Pakistan and Sri Lanka combined.

Furthermore, Li & Fung may be the largest company in Hong Kong but there are othersin their league.

Korea and Taiwan are home to the vast majority of the world's 50 largest garmentexporters. Throw in China and you have the greatest agglomeration of garment exportersin the world.

So while Bangladesh, Vietnam and Indonesia certainly look good today, we should wait afew decades before rushing to place them in the same category as Hong Kong, Korea,Taiwan or China.

Secrets of success

There are good reasons why these four have consistently succeeded while the 188 othershave not.

It is all about change and the relationship between each national industry and change.


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In its latest brief on economic and financial developments in Jordan, National Bank ofKuwait (NBK) noted the Jordanian economy has undergone remarkable results in recentyears and has begun to reap the fruit of structural adjustments and steady progress withreforms. The economy has grown by more than 12% per annum over the last four years,which resulted in a 10% annual improvement in per capita income over the same period.

Real growth averaged 7.8% despite external challenges which have taken their toll on theeconomy in recent years. The prospects for the Jordanian economy look promising,though will not be insulated from the negative effects of the global financial crisis andrecession. Economic growth, exports, and tourism are expected to suffer slowdowns, asshould workers remittances though to a lesser degree. Furthermore, Jordan still needsadditional measures to address major issues where efforts so far have met with limitedsuccess. Unemployment, poverty, and the considerable vulnerability of the economy toexternal factors remain key challenges. Political stability and security are the backbone ofthe Jordanian economy, as is the government's commitment to reform. The creation of amarket-oriented economy, privatization drive, WTO membership, enhancedtransparency, investment in education and, most importantly, Jordan's firm stance on

reform, have all contributed to the transformation of the country's economy over the past20 years. Confidence, as evidenced by the number of domestic and foreign investorsengaged in huge projects, has been well leveraged and Jordan can be seen as somethingof an example in the area of privatization.Jordan has, however, been adversely affectedby the rise in oil prices between 2002 and mid-2008 as reflected in the governmentbudget and current account. The rise in the oil imports bill has caused a significantdeterioration in the current account, causing it to shift from a surplus of 5.7% of GDP in2002 to a deficit of 18% in 2007, which is estimated to widen further in 2008. On thepositive side, receipts from tourism and workers remittances climbed considerably,benefiting from the regional abundance of liquidity. The budget deficit also increasedfrom 3.2% in 2002 to 5.2% in 2007 in light of the expansionary fiscal policy and oilsubsidies introduced by the government. The estimated deficit for 2008 is expected toexceed the original budget forecast of 5.6% of GDP as a result of the substantial increasein government salaries in early 2008. However, the projected budget deficit of 4.6% ofGDP for 2009 may force the government to rein in spending and adopt a moreconservative approach.NBK mentioned that the extraordinary performance of exports inrecent years has been the result of a free trade agreement with the US that was signed in2000. Since 2003 the US has become a major destination for Jordanian exports absorbing28% of total exports in 2007. Apparel is the main export. However, with the ongoingliberalization of trade, and especially in the light of the WTO agreement on textiles andclothing that have led to an increasing number of countries forming free trade areas withthe US, as well as the weakness in the US economy, it is likely that the domestic textileindustry could face a rough ride. This is already evident in the drop in Jordanian exportsto the US by 17% during the first half of 2008. Jordan has been a beneficiary of the boomin the Gulf Cooperation Council (GCC) countries, which has resulted in abundantliquidity and unprecedented levels of private capital inflows. The GCC economic boomhas had another positive influence on Jordan, namely the rise in remittances that reached17% of GDP, given that an estimated 350 thousand Jordanians are believed to work there.Tourism has also been a beneficiary. Unfortunately, the global scene does not bode wellfor continued growth in this area.Over the last two years, NBK noted that oil prices have


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NextMart Announces Plans to Adopt New Business Direction of Financial Advisory

& Direct Investment

Anonymous. PR Newswire. New York: May 22, 2008.

Abstract (Summary)

The Company's plans to change its main business is a result of ongoing challenges withits core OEM appareloperations, including (a) A drop in export apparelsales due tointernational market conditions; (b) A continually appreciating Chinese yuan, whichmakes Chinese exports more expensive to foreign buyers; and (c) An inability to raiseadditional financing under the current share price level in order to expand the Company'sdomestic direct sales operations.


Full Text

(1130 words)

Copyright PR Newswire Association LLC May 22, 2008

BEIJING, May 22 /Xinhua-PRNewswire-FirstCall/ -- NextMart, Inc. (OTC BulletinBoard: NXMR), currently a China-based direct sales and apparel OEM company, todayannounced that it plans to change its main business to the area of financial advisory anddirect investment in Mainland China.

The Company's plans to change its main business is a result of ongoing challenges withits core OEM apparel operations, including (a) A drop in export apparel sales due to

international market conditions; (b) A continually appreciating Chinese yuan, whichmakes Chinese exports more expensive to foreign buyers; and (c) An inability to raiseadditional financing under the current share price level in order to expand the Company'sdomestic direct sales operations.

By adopting a new business in financial advisory and direct investment, NextMart'smanagement believes that the Company can reduce its need for working capital, incentivekey management and position itself to profit from the next wave of domestic and globalfinancial transactions involving Chinese companies.

About NextMart's New Business

NextMart's new business will consist of financial advisory services and direct investmentactivities. For its financial advisory services, the Company intends to become a nichefinancial advisor for the privatization of Chinese state-owned enterprises ("SOEs"). TheCompany plans to develop and provide a suite of strategic advisory services for corporaterestructuring, business strategy, valuation and financing to Chinese companies wishing toprivatize their businesses and expand their operations globally.
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SOURCE NextMart, Inc.

Credit: NextMart, Inc.


Subjects: Acquisitions & mergers, Working capital, Marketing, Market value,Investment banking, Home shopping, Expansion, Corporate planning

Author(s): Anonymous

Document

types:

News

Dateline: BEIJING

Publication

title:

PR Newswire. New York: May 22, 2008.

Source type: Wire Feed

ProQuest

document ID:

1483075431

Text Word

Count

1130

Document

URL:

http://proquest.umi.com/pqdweb?did=1483075431&sid=8&Fmt=3&clientId=97393&RQT=309&VName=PQD

ndian Textiles & Clothing (2006) Profiles Top 21 Major Players Containing Details

about the Company, Products, and Recent Strategies Describing the Management

Business Wire. New York: Dec 5, 2006.

Abstract (Summary)

Contribution of the textile sector to Indian economy is reflected in terms of industrialproduction, employment generation and foreign exchange earnings. It contributes about4% to the GDP, 14% to industrial production, and 16% to India's country's exportearnings. Thus the textile industry plays an important role and is one of the key growthengines of the economy.

Readers will develop and understanding of growth drivers of Indian Textile & ClothingIndustry along with issues & Challenges, regulatory Issues. It profiles Top 21 Majorplayers containing details about the company, Products, Recent Strategies describing themanagement. This report is a valuable resource for use for developing company strategiesand useful for expansion of business in this rapidly growing industry.
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Document

types:

Release

Dateline: DUBLIN, Ireland

Publication

title:

Business Wire. New York:Dec 5, 2006.

Source type: Wire Feed

ProQuest

document ID:

1174493531

Text Word

Count

384

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URL:

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CENTRAL AMERICA/CARIBBEAN:Apparelfaces challenges

Oxford Analytica Daily Brief Service.Jul 19, 2005. pg. 1

Abstract (Summary)

Outlook for the apparelsector in Central America and the Dominican Republic.

The apparelsector has contributed to the expansion of manufacturing exports andemployment in Central America and the Dominican Republic since the beginning of the

1990s. However, the entry of China to the WTO, and elimination of quotas in the apparelsector, may reduce its impact in the near future.


Full Text

(1213 words)

Copyright Oxford Analytica Ltd. 2005. No publication or distribution is permittedwithout the express consent of Oxford Analytica.

SUBJECT: Outlook for the apparel sector in Central America and the DominicanRepublic.

SIGNIFICANCE: The apparel sector has contributed to the expansion of manufacturingexports and employment in Central America and the Dominican Republic since thebeginning of the 1990s. However, the entry of China to the WTO, and elimination ofquotas in the apparel sector, may reduce its impact in the near future.
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ANALYSIS: Until the 1980s the apparel sector in Central America and the DominicanRepublic was small and primarily concentrated in domestic and regional markets. Forexample, in Costa Rica, textiles and apparel only accounted for 10.3% of totalmanufacturing production in 1970 and 7.8% in 1980. Exports to third countries werenegligible. Apparel production was relatively inefficient and depended on high levels of

protection.

Since the 1980s in Costa Rica and the Dominican Republic, and early 1990s in the rest ofCentral America, apparel production for export increased substantially:

Between 1990 and 2003 exports of man-made fibre products from Central America to theUnited States increased from 798 million dollars to 7.1 billion dollars.

In 2003, textiles and apparel represented 55% of total exports from Central America andthe Dominican Republic to the United States.

Apparel is a major source of employment in the region. For example, in the DominicanRepublic, there were over 119,000 people working in apparel production in free tradezones in 2003 ( see CENTRAL AMERICA/CARIBBEAN: Trade zone pros and cons -March 24, 2005 ). In Central America, the textile and apparel sectors have created over380,000 jobs.

In Central America there are over 960 firms that produce textile and apparel products,mostly located in free trade zones.

Apparel production in Central America and the Dominican Republic in the 1980sbenefited from provision 807 in the US trade regime, which established that all apparel

assembled from US-made and cut textiles only had to pay duties for the value addedgenerated outside the United States. The expansion of apparel exports also benefited fromincentives established in the 1980s under the Caribbean Basin Initiative:

In 2000 the US-Caribbean Basin Trade Partnership Act expanded preferential treatmentto apparel products that used inputs cut in the Caribbean Basin.

It also allowed for duty-free import of a limited amount of apparel made with fabricproduced in the Caribbean Basin.

Apparel production for export has been particularly important in Honduras, the

Dominican Republic and -- more recently -- El Salvador and Guatemala. In Costa Rica,apparel production and exports have decreased since the mid-1990s as the country hassucceeded in attracting foreign direct investment from Intel and other large multinationalcorporations. Nonetheless, it remains the third largest export sector after fresh primaryproducts and electronics.

Chinese threat Despite significant success during the 1990s, the apparel sector inCentral America and the Dominican Republic has been losing market share in the United


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