NATIONAL: A new report showing strong demand in China defying the global recession could herald growth opportunities for Australian apparel exporters.
Released by US based global market research company RNCOS and titled China's apparel industry - New opportunities for growth, the survey claims the global financial crises of 2008 and resulting market conditions will not affect China's dominance in the apparel and textile industry, nor growing demand for branded apparel from China's rising affluent classes.
"The emergence of a middle class, growing young population and rapid globalisation of culture is fuelling the demand for branded apparel in the country," the report stated, corroborating data released mid February that showed Chinese retail sales rose by 21.6 per cent in 2008. This was mainly due to increased domestic demand resulting from the Chinese's government stimulus initiatives, including reduction in vehicle sales tax and fuel prices.
Data also showed that in 2008 urban retail sales registered an increment of 22.1 per cent, while there was also an increase of 21.5 per cent in collective sales for retail and wholesale sectors.
RNCOS noted that during the latter half of 2008, retail sales grew sluggishly, warning the global economic recession would continue to impact consumer expenditure.
Bag brand Crumpler - which has had a wholesale presence in China for around four years - confirmed China represented a long term opportunity.
"In terms of the financial crisis, we have seen growth slowing recently," said co-founder David Roper. "But since we started from nothing in China, we're not too worried. We certainly can't go backwards."
The Crumpler brand had recently entered a new phase with the opening of a standalone store at the Sanlitun complex in Beijing - a state of the art shopping centre stocking high recall brands including Apple, Nike and Adidas, he said.
The company's immediate strategy for China included five free standing stores and concession arrangements with department stores. Crumpler was also stocked in Shanghai store The Source, which carries other Australian brands including Ksubi and Insight.
Roper said strong partnerships with local companies were vital to doing business in China. The company has distribution partners in both Hong Kong and mainland China, and also runs an office out of Beijing.
Sean Ashby, proprietor of underwear and swimwear label AussieBum, said his company initially executed a soft entry into the Chinese market.
"We started by using our existing internet site at aussiebum.com and having it translated into Mandarin and simple Chinese. We also employ Asians in house with the specific purpose to further develop and market to this territory. We actively advertise in leading publications throughout Asia and use out door advertising in strategic locations."
Ashby issued a warning for first time entrants however.
"If your brand is strong and has a global audience, expect it to be copied and sold from China once local 'entrepreneurs' start to see the brand has a commercial presence in their own country."
However, the growth of the internet meant Chinese consumers were increasingly confident with online retail, which had the benefit of boosting brand exclusivity while minimising copying.
"As the internet grows globally, many smart brands will realise they do not have to be in Asia to sell to Asians. This helps on all levels. The Asian market is no different to other regions - everyone wants to be associated with a brand that best identifies them as an individual or with which they align themselves culturally."
Tim Harcourt, chief economist at Australian Trade Commission Austrade, said the RNCOS report's overall positive spin on opportunities in China re-confirmed Austrade's view.
"The macroeconomic data shows that the growth of the Chinese middle classes continues to drive demand," he said, adding that while China's growth had slowed in recent months compared to double digit figures at the height of its boom, "the news is still good."
"The evidence shows that affluent Chinese want western luxury brands and, increasingly, Australian brands," he said, naming Sass & Bide as one high end label that was performing well in China.
Austrade offered a match making service and could assist Australian companies with vetting contacts on the ground in China, he added.