PANEL PICKS THE HOT SPOTS FOR U.S. FASHION

Byline: V.S.

NEW YORK — Canada, the European Community and developed Asian nations are big and fertile markets for American apparel exports, according to the members of WWD’s financial roundtable.
They cited the United Kingdom and Germany as especially ripe, since they more closely mirror the American market than the rest of the continent.
Asian markets identified as strong include Taiwan, Hong Kong, Singapore and Japan. “They’re very pro-American brands,” noted Anthony K. Brown, managing director, Trading Alliance Division, MTB Bank.
“Japan is a great U.S. apparel market,” agreed Richard V. Romer, executive vice president at The CIT Group/Commercial services here, despite the nontariff barriers — such as complex distribution networks — that must be surmounted.
“Japanese youths are dying for Levi’s, Lee’s, CK jeans,” he said.
Added David Goldberg, partner in the Marketing Management Group Inc. here, “U.S. fashion is exploding globally.”
As for China, whose GNP of $400 billion is 1/15 of the United States’ but triple Hong Kong’s and seven times Singapore’s, the readiness for purchasing American apparel is far away, said roundtable members, even as desire for U.S. branded goods builds.
Though China may someday surpass Canada as the single biggest market for U.S. apparel exports, Goldberg said, “In terms of real dollar value it’s in its infancy.”
Tariffs there on consumer products average 40-80 percent, the money supply is tight, distribution is fragmented and difficult to penetrate, and transportation and telecommunications problems abound.
In contrast, economic power along with exposure to American brands is driving apparel export sales in the EC and developed Asian nations, said Brown, “notwithstanding the particular cultural differences — one can overcome them.”
Further, the depreciation in the exchange-rate value of the dollar and the growing desire abroad for quality apparel have contributed to the burgeoning global demand for American clothes.
Still, Kenneth V. McGraime, a vice president at State Street Bank & Trust Co., Boston, emphasized, “The weak dollar is a secondary factor in fueling exports. It helps profit margins and negotiations, but it’s always in flux so you can’t plan an international strategy on it. You develop a strategy and allow for currency fluctuations over time.”
Also brightening the picture for apparel exports, said roundtable participants, is the global news media, computer technology and telecommunications boom.
“The spread of American movies, television and music is an overwhelming factor creating demand for U.S. apparel worldwide,” said Richard V. Romer, executive vice president at The CIT Group/Commercial Services here.
In addition, travel to America for vacations is building interest in U.S. brands like The Gap, Levi’s, Lee and others.
“Many Latin American markets are very much geared towards the U.S. for tourism,” said State Street’s McGraime, “so the impact of our social trends on style leadership there is significant.”
Among the worldwide locales said to hold the greatest promise for U.S. apparel exports are a number of South American countries and, some say farther down the line, Mexico.
Goldberg cited opportunities over the next several years in Brazil, Argentina, Colombia and Venezuela, while McGraime added Chile to the list.
Citing the U.S. media’s “fantastic impact” in South America, Goldberg noted the export potential there for goods “distinctively American — sportswear as opposed to dresses.”
“Jeans are typically American, and the Levi’s label is important,” he said. “Their Americana cachet enhances the appeal.”
“I think South American countries are a vast, untapped marketplace,” offered Romer. “Some U.S. labels have such great cachet, even though they’re expensive, consumers will be willing to pay for them.”
Although sources agreed that Mexico, like South America, has potential as a destination for U.S. goods, especially those aimed at the mass market, they differed about when the nation’s economy would be ready to support substantial export shipments.
“Mexico is already starting to happen,” asserted McGraime. “The export market’s development is less than five years away. Mexico is emerging, but the trouble is the middle class isn’t that large yet.”
Romer said, “I think it’s going to take a long time.”
The North American Free Trade Agreement and the control of inflation — enabling Mexicans to make more credit-card purchases — will help develop the market, he added.
“The Mexicans use cash instead of credit cards; they don’t even mortgage their homes,” Romer explained. “Why buy a suit on credit if inflation means paying more for it over time? But as inflation gets driven down, Mexico’s middle class will feel more confident buying on credit,” springing its demand for exports.

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