Malaysian Fashion Retailer Wishing to Expand its Business into the African Market - Term Paper Example

Phase Selecting the Global Export Business Opportunity Though known for her conservative citizens, Malaysia is one ofthe few East Asian countries with rapid revolution in terms of garments and apparel. This means that the fashion industry is flourishing in Malaysia today than in the past two decades (Crinis 66). Perhaps it is important to note the fact that the competition in the apparel industry is quite high considering the huge number of players within the industry (Rasiah 540). When it comes to ranking of clothing exports, Malaysia is at the same level with Sri Lanka, Morocco, Tunisia, and Poland, which more or less share the same cultures and customs (Khadmudin para. 2). This being the case, it is important to take note of the fact that the main clothing brans in the market include Adidas, Gucci, Calvin Klein, and Nike, which have swept the fashion industry in the East Asian region, particularly in Malaysia (Appelbaum 69). Due to the growing competition for the clothing brands and the emergence of new global business opportunities, the Malaysian apparel industries is working closely with a number of global business partners in order to identify the most lucrative geographical and economic environment for its clothing brands. Identifying the Global Business Opportunities (Product / Service and Market) As one of the rising stars of the East Asian region, Malaysia prides itself as being one of the business hubs that deal with various industrial goods (Appelbaum 70). Since the discovery of oil in Malaysia, business has never been the same again especially considering the fact that the Islamic nation preserves culture while at the same time engaging the global business world in its unique sense of business ingenuity (Khadmudin para. 2). Indeed, the success of Malaysia is because of the democratization of the business space as to involve both international and local brands. Owing to this level playground, several clothing brands have chipped in in the nation to the extent of expanding the trade to the neighboring countries (Crinis 72). Perhaps it is crucial to mention that the primary goods and agriculture drove the Malaysian economy in the 1960s, a strategy that took a sharp turn since the discovery of oil drove the Malaysian economy (Rasiah 539). Currently, the major booster to the Malaysian economy is the exports market that account for over 50% of her total revenues (Appelbaum 79). Over the last decades, the Malaysian economy has tripled with the global trade growing to the tune of US$41.58 billion, mostly due to the growth in the apparel industry that the Malaysian government embraced fully (Khadmudin para. 3). To this extent, the global economic raking places the East Asian nation at the seventeenth position due to its robust global trade in the fashion industry. The industry of textile and apparel is certainly one with a long history as far as revolution is concerned, despite its remarkable growth in the past half century (Crinis 72). While the textile industry was existent in the 1950s, the Malaysian government had not taken it seriously since the world was not so much into fashion the way it is the case today. This being the case, Malaysia highly discouraged any imports in order to promote local talent particularly in the textile industry (Khadmudin para. 4). With both spinning and weaving of the textiles present in southern and northern parts of the country respectively, Malaysian is strategically placed to serve the international market with its unique sense of fashion (Crinis 67). Since the raw materials for the development of the textile and apparent industry are locally available, the East Asian nation is guaranteed of a continuous supply of the raw materials, which ultimately leads to enormous volumes of garments available for export. With ready market for the textiles in Hong Kong, Singapore, and Taiwan, the fashion industry in the Malaysian peninsula continues to grow at unprecedented levels (Khadmudin para. 2). The continued growth coupled with heightened global competition for the market has seen the Malaysian Fashion industry penetrated other global markets including Africa and Brazil. This has presented many opportunities since the new market is ready to try out new things, especially those imported from the East (Appelbaum 77). Assessing the Economic and Geographic Environment (Location and Purchasing Power) When it comes to economic strategies and geographical locations, Malaysia is perhaps the second biggest player in the fashion industry after Italy (Rasiah 542). The Fashion industry is certainly worth billions of Dollars with many nations doing business in the industry earning significant revenue from the business (Appelbaum 79). This is perhaps due to the dynamic nature of the fashion industry whereby every season calls for new and distinctive apparel. In terms of textile export volumes, Malaysia gets the 24th slot with over one million USD of textile exports in 1999 (Crinis 62). Similarly, it is ranked one of the world’s largest importers of textile products that fuel the fashion industry, bringing it at per with such nations as Morocco, Sri Lanka, Poland, Tunisia, and Spain (Smakman 24). These are great nations with immense economic muscle, meaning that their purchasing power of the textile and apparel products is rather high (Khadmudin para. 4). With the continual growth in the fashion industry, the major players continue to grow in their economy at an average rate of 10% (Rasiah 536). It is vital to mention at this point that Malaysia imports her textile from Taiwan and china with Japan and the EU contributing a great deal towards the same course (Appelbaum 74). Although their exports are not included, the percentages for the imports range between 6% and 12%. When it comes to the export market for the Malaysian textile and fashion industry, the US takes the lead at 28.7% followed closely by the European Union with a percentage of 17.7. With this in mind, it is important to note that the major products in the fashion industry include the women’s wear, manmade garments, and the men’s wear (Crinis 62). Africa is perhaps one of the largest markets for the textile products owing to the low number of competitors for the fashion products in the region (Smakman 32). With a GDP that is still in the rise, most African countries such as Kenya, Morocco, Ghana, and Angola have the capacity to absorb most of the export goods from Malaysia. Although some nations in Africa have a rather large GDP, it is important to note that the GDP of the individual nation varies across the board (Rasiah 532). For instance, Equatorial Guinea, which has an average GDP per capita of US$19,780, is a rather small country with an incredible economy. Similarly, South Africa boasts as the largest economy in Africa with an average GDP per capita of South Africa US$10,346 while Sudan has one of the least GDPs in the continent averaging at US$1,910 (Crinis 62). Another important fact in the African market is inequity that has been the cause of disagreement for many years (Rasiah 532). Due to the unequal growth that has always been a major challenge to most African economies, a vast majority of the citizens in virtually all African states languish in abject poverty while the few who can afford lavish lifestyles live in upmarket residences (Smakman 32). This dual economy has proved an obstacle to many investors for the past two decades. This actually means that the distribution of income has some significant element of skew, whereby only 11 percent of the total income goes to nearly 40% of the population (Crinis 62). On the contrary, the rich, who account for a smaller percentage of only 20%, receive the biggest chunk of the national income that averages at 57%. This skewed economy is mostly conspicuous when the statistics are taken from the incomes of the residents of the urban areas and those who dwell in the rural areas (Smakman 32). Perhaps it is worth noting the fact that Malaysia too has the same challenge of having a dualist economy whereby the gap between the haves and the have-nots is quite wide (Smakman 32). Thus, it is only advisable that for the Malaysian products to penetrate deeply into the African market there has to be elaborate plans to harmonize the cost of the fashion products since most of the prospective buyers will not be the middleclass (Rasiah 532). This being the case, the Malaysian Fashion Designers, and textile industries will be able to succeed in the African market because they operate on a large-scale basis hence they enjoy economies of scale (Smakman 32). Although Africa is still of the economies that still lag behind, it has experience tremendous economic milestones since the year 1990 when most states fully embraced the trade unions for the prosperity of Africa (Crinis 62). In this regard, it is projected that the investment in the textile and fashion industry will boost the economies of most African states, as the major driver of their economies is agriculture, except for a few nations that have huge deposits of oil and minerals. Besides, the GDP of the African states, especially Kenya, Ghana, and Angola, will benefit grossly, as more avenues for employment will surface (Rasiah 532). Assessing the Global Socio-Cultural Acceptance of the Product / Service Although the trends of fashion in the global market are dynamic, it is understandable that some players have a unique test of fashion that perhaps reflect their identity as a nation or religious sect (Rasiah 532). In this regard, Malaysia has had its fair share of challenges as far as the socio-cultural acceptance of their fashion products and services is concerned (Appelbaum 81). Indeed, Malaysia is largely an Islamic nation and all the elements of art and design, which extend to the textile and apparel industry, reflect on the conservative nature of the Islamic religion (Smakman 32). Although the western world has found this a bit restraining, with few adjustments, they have seen the appealing nature of the Malaysian fashion context (Crinis 62). Perhaps the Malaysian textile and apparel industry, which go hand in hand with fashion trends, has found solace in the robust African market (Crinis 62). With more or less similar conservative cultures, the Malaysian fashion products including textiles and jewelry have received wide acceptance in many African states especially in West Africa that embraces the conservative way of dressing (Rasiah 532). This is not to mean that Africa is the only prospective market for the Malaysian fashion products, as many players in the industries including global brands, have collaborated with the major designers in the Malaysian textile, and apparel industry in order to have a competitive marketing edge (Appelbaum 83). In conclusion, it is important to note the fact that while the Malaysian fashion industry continues to be on an upward trajectory, more effort should be channeled into getting acquiring more global market especially the untapped African market that practices more or less similar social-cultural aspects. Works Cited Appelbaum, R. “Giant Transnational Contractors in East Asia: Emergent Trends in Global Supply Chains.” Competition and Change 12.1 (2008): 69-87. Print. Crinis, V. D. “Global commodity chains in crisis: the garment industry in Malaysia.” Institutions and Economies 4.3 (2012): 61-82. Print. Khadmudin, Hj Mohd Rafik. Outlook of Textile and Apparel Industry in Malaysia Today. MKMA Newsletter, February 2010. Web. 17 Nov. 2013. Rasiah, R. “Malaysia’s Textile and Garment Firms at the Crossroads.” Journal of Contemporary Asia 39.4 (2009): 530-542. Print. Smakman, F. Local Industry in Global Networks: Changing Competitiveness, Corporate Strategies, and Pathways of Development in Singapore and Malaysia’s Garment Industry, Amsterdam: Rozenberg Publishers, 2003. Print. Read More