Retail demand in several emerging markets will grow at double digit
annual average rates in the five years to 2016. This is one of the
findings of a report in the latest issue of Global Apparel Markets,
published by Textiles Intelligence.
The fastest growth will be in China and India, where demand is set to
rise by an average of 16.9 per cent per annum in each country.
Double-digit growth is also forecast for Indonesia (13.3 per cent per
annum), Russia (12 per cent per annum), Saudi Arabia (11.7 per cent
per annum), Turkey (11.4 per cent per annum), Peru (10.3 per cent per
annum) and South Africa (10.1 per cent per annum), while growth in
high single digits is expected in Brazil, Chile, Colombia and
Thailand.
By contrast, demand in a number of major Western European countries is
expected to grow only modestly between 2011 and 2016.
In China, the population is benefiting from rising personal disposable
incomes. In fact, the number of households earning over $50,000 is
expected to increase five-fold between 2010 and 2015. Furthermore,
there is strong potential for growth in clothing retail demand as a
result of urbanisation within the country.
However, competition is fierce as several foreign brands are entering
the market. They have been attracted by the country’s massive
potential and are all vying for market share. Also, several Chinese
companies are looking to explore opportunities in their domestic
market, given that future export growth is likely to be curtailed by
economic uncertainty in Western developed countries.
In India, a growing middle class of about 300 million people with a
purchasing power parity of $30,000 a year are seeking access to world
class products. This group of people is adopting international trends
much faster than initially expected, and consumption is moving beyond
big cities such as Delhi to smaller cities.
Furthermore, this trend is expected to accelerate following a recent
easing of the rules governing foreign ownership of single brand
retailing in the country. In fact, the designer wear market in India
is predicted to grow at an average rate of 40 per cent per annum
between 2012 and 2020 compared with a global average growth rate of 12
per cent.
In Indonesia, much of the growth in retail demand is likely to be
fuelled by cheaper imports. Under the Asean-China Free Trade Agreement
(ACFTA) there has been a lowering of tariffs on imports into
Indonesia, and this has led to a steep decline in Chinese prices. As a
result, a number of domestic producers have been forced to cease
operations.
In Turkey, several international brands have entered the market in
recent years in the hope of taking advantage of the country’s growing
young and fashion conscious population. Indeed, Turkish imports grew
by 32 per cent in 2011, which represented the eighth double-digit
increase in imports in nine years.
But much of the expected growth in the market over the five years to
2016 could be provided domestically. The Turkish Government has
approved the implementation of additional customs duties on imports of
woven fabrics and readymade garments from countries with which it does
not have free trade agreements. The aim of the duties is to protect
Turkish manufacturers from losing market share as a result of rising
low cost imports.
In Brazil, imports shot up by 52.5 per cent in 2011 after increasing
at double digit rates in seven of the previous eight years, reflecting
strong growth in retail demand in the country.
To combat the sharp rise in imports, the Brazilian Government
announced plans in December 2011 to replace its current tariff system,
which imposes duties on a price-based mechanism, with a system which
imposes duties on a per item basis. The purpose of the new system is
to safeguard the interests of domestic manufacturers, who are facing
increasingly tough international competition as a result of low import
prices.
Despite the new initiative, import growth is expected to continue at a
significant rate over the coming years as retail demand continues to
outstrip domestic supply. Indeed, consumption of fibres per head in
Brazil is expected to double between 2005 and 2015, from 10 kg to 20
kg.