Ap­parel in­dus­try should fur­ther tap main­land mar­ket

The Pak Banker - - Front Page - Eddy Li

WEEKS ago I wrote an ar­ti­cle about the fea­si­bil­ity of a Hong Kong whole­sale mar­ket, in which I men­tioned five po­ten­tial cat­e­gories of mar­kets, in­clud­ing ap­parel and tex­tiles in Che­ung Sha Wan, jew­elry in Hung Hom, elec­tron­ics in Sham Shui Po, mis­cel­la­neous goods in Kwun Tong, and fur­nish­ings in Wong Chuk Hang.

Of th­ese five in­dus­tries, the ap­parel in­dus­try seems to have the most ma­ture con­di­tions. Since the mid­dle of the last cen­tury, Hong Kong be­gan trans­form­ing from a re-ex­port com­mer­cial port into an in­dus­trial city of ex­port, and the ap­parel in­dus­try played an in­dis­pens­able role in lead­ing the in­dus­tri­al­iza­tion of the city. Be­sides, gar­ments have al­ways been an im­por­tant part of our ex­port.

The devel­op­ment of the ap­parel in­dus­try de­pends greatly on con­sump­tion in the tar­get mar­ket. Devel­oped coun­tries in Europe and Ja­pan haven't yet re­cov­ered from the global fi­nan­cial cri­sis and the macroe­co­nomic en­vi­ron­ment is fa­tigued and weak. Th­ese coun­tries don't en­cour­age con­sump­tion, and con­sumers hold a cau­tious dis­po­si­tion when buy­ing. In com­par­i­son, the emerg­ing mar­kets, where the de­mand is in­creas­ing, are un­prece­dent­edly im­por­tant.

The Chi­nese main­land for a long-time has been the ma­jor trad­ing part­ner to Hong Kong and the big­gest mar­ket among the emerg­ing ones. That mar­ket is def­i­nitely wor­thy of se­ri­ous con­sid­er­a­tion. Ac­tu­ally, the HK government has al­ready no­ticed this. It has in­vested many re­sources re­search­ing and study­ing in­dus­trial con­sump­tion. Th­ese sur­veys, which have prac­ti­cal val­ues for eco­nomic devel­op­ment, need only one more step to be pro­moted to the pub­lic, so that the re­sources are ef­fec­tively uti­lized.

Last month, HKTDC pub­lished a re­search report named "The ap­parel con­sump­tion in China's main cities". There were more than 3,000 re­spon­dents from 13 main cities in the sur­vey, in­clud­ing ma­jor ap­parel con­sumers, such as peo­ple in em­ploy­ment, house­wives and stu­dents.

Based on the model of 4P (prod­uct, price, place and pro­mo­tion) in mar­ket­ing, the report also gives some sug­ges­tions. Gen­er­ally speak­ing, the prod­ucts and pric­ing of Hong Kong brands need no sig­nif­i­cant mod­i­fi­ca­tions, but there is still much to do with re­gards to place and pro­mo­tion. Ac­cord­ing to the report, in the pre­vi­ous 12 months, re­spon­dents had an av­er­age ex­pen­di­ture on ap­parel of 2,635 yuan ($423) and plan to spend 3,616 yuan on cloth­ing in the coming year. The av­er­age growth of nearly 1,000 yuan is con­sid­er­able, re­flect­ing that the main­land mar­ket has not yet reached its sat­u­ra­tion point. The seller's mar­ket, in which de­mand ex­ceeds sup­ply, still pre­dom­i­nates.

The in­crease in de­mand for ap­parel is es­pe­cially ob­vi­ous in north­ern cities. On one hand, eco­nomic devel­op­ment in the north has gen­er­ally come af­ter the south, so at the moment, the north has greater po­ten­tial and the liv­ing stan­dard there is im­prov­ing more rapidly. On the other hand, the report shows that the cold weather ex­pe­dites in­creases in av­er­age ap­parel con­sump­tion.

The re­search also re­veals that the re­spon­dents are will­ing to pay 58 per­cent more as a pre­mium. In pur­chas­ing mid-priced clothes, Hong Kong brands are their first choice. In some real ex­pe­ri­ences, how­ever, we can find that only a few of the numer­ous Hong Kong brands are fa­mil­iar to the pub­lic. In neigh­bor­ing Guang­dong province, many brand names have al­ready won many reg­u­lar cus­tomers. But in other places es­pe­cially the north, the brands re­main un­fa­mil­iar to con­sumers. The north­ern mar­ket, there­fore, is wor­thy of de­vel­op­ing, and the space is huge.

Lo­cal brands are equipped with full-blown mar­ket­ing strate­gies and pro­mot­ing mea­sure; they now need to build their rep­u­ta­tions and recog­ni­tions to per­me­ate through other cities. Pref­er­ences of pro­mot­ing and plac­ing in dif­fer­ent cities in the report are good ref­er­ences. For ex­am­ple, we can strengthen vocational train­ing in ar­eas other than the north, where con­sumers take staff ser­vices se­ri­ously; and we can add tai­lor­ing ser­vices in the north be­cause peo­ple there care about the fit­ness the most. To dif­fer­ent de­grees, we can im­prove and mod­ify the sug­ges­tions ac­cord­ingly, so that the Hong Kong brands can be suc­cess­fully im­planted into the mar­ket.

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