By  on May 4, 2007

As major retailers head East and China's exports thrive, some observers expect these trends to pose a challenge to other Asia-Pacific nations.

Worldwide mega-store H&M opened its first two stores in Mainland China last month, contemporary brand Generra will begin distribution in Japan this fall, and exports of women's underwear from China reached $2 million in just the first half of 2006, a staggering 80 percent increase from the previous year. However, it is amidst this economic boom that experts are worried that China might be displacing competitors in terms of production.

Shanghai celebrated the opening of its first H&M store at Pudong's Science and Technology Museum with special guest Kylie Minogue. The singing sensation performed for over 1,000 guests in honor of her H&M Loves Kylie collection debuting the following day, four weeks ahead of its global launch. On April 12, the new store opened to lines around the block, skyrocketing H&M to bonafide popularity in the Chinese market. On April 25, a second H&M in Shanghai opened in the Super Brand Mall, and by the end of the year there will be an additional four Hong Kong stores, according to spokeswoman Kristina Stenvinkel.

American sportswear favorite Generra, a division of Public Clothing Co., has signed a licensing agreement with Mitsubishi and Sanyo to both produce and distribute the brand in Japan. Marui department stores will carry Generra apparel and accessories beginning next fall, and starting in 2008, up to 10 freestanding Generra stores will open throughout the country.

Trade show producer Global Sources is aiming to reach the market that was responsible for the $2 billion in sales from January to August of last year in China with a new exhibit. During the China Sourcing Fair: Fashion Accessories show in October, Sarah Benecke, executive director of Global Sources, said that company tested an underwear and swimwear pavilion with 180 booths. China Sourcing Fair: Underwear and Swimwear ran for four days alongside the accessories show, and together the two shows attracted 13,717 buyers from 108 countries. The success of the new underwear and swimwear exhibit made it clear that the pavilion could expand to become its own show. In June, Global Sources is organizing a new Shanghai show for fashion accessories, as well as infants' and children's products aimed at the domestic market.Although China has been lauded for its recent economic growth, this may pose a serious problem to Asia-Pacific nations, according to a United Nations report. In the report, "Asia and Pacific, 2007: Surging Ahead in Uncertain Times," said that there were large increases in market shares for all of China's top 10 export products. Labor-intensive goods, although they account for a declining share of China's total exports, still are significant in many sectors. The study, carried out by the U.N. Economic and Social Commission for Asia and the Pacific, concluded that China may be displacing competitors in terms of low-skilled, labor intensive products. The main reason that exporters manufacture from China are the really low labor rates that in turn, ensure large profits. The report also stated that neighboring countries such as Mongolia, the Philippines, and Indonesia are already challenged by competitive pressures from China's vast export industry.

For a detailed look at the stories behind the headlines, see the following archived articles:

1. H&M Heads East With First Unit in Shanghai

2. Generra Expands Into Japan

3. Buying Buoyant at Expanded China Sourcing Fair

4. China Growth Seen Hurting Neighbors

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