Criteria for Exporting Fashion Products to the African Market - Case Study Example

Malaysian Fashion Retailer wishing to expand its Business into the African Market The textiles and clothing market represents an extremely significant market for many firms, especially where fashion is involved. Exported garments reflect the culture of the countries from where they originate. Africa has a significant force in contemporary fashion markets, and inspires fashion designers from all over the world (Allman 189). This paper seeks to create a presentation where a Malaysian fashion retailer wishes to expand its business into the African Market. In this presentation, international, export fashion competitors to Africa have been analyzed. The top twenty economies in Africa, representing the African market, have been analyzed. The presentation also provides ways in which international, financial and business risks can be managed, and defines the relevant criteria for exporting fashion products to the African market, where the market opportunities/business opportunities are of interest and risks may be acceptable. International Competitors The major, international competitors in fashion product’ export to Africa includes Guangzhou City Clothing Business Company Limited, Qingdao Shuoyuan International Trade Company Limited and Shenzhen USD Pack Production Limited. Brogan Sakutu International LLC also competes in exporting fashion products to African Countries. Guangzhou City Clothing Business Company Limited and Shenzhen USD Pack Production Limited are located in Guangdong, China while Qingdao Shuoyuan International Trade Company Limited is located in Shandong, China. Brogan Sakutu International LLC is situated in Florida, United States. Turnover Qingdao Shuoyuan International Trade Company Limited has a turnover of US$ 50-100 Million while Guangzhou City Clothing Business Company Limited has a turnover of US$100 Million. Shenzhen USD Pack Production Limited has a turnover of below US$ 1 Million while Brogan Sakutu International LLC has a turnover of US$4,700 (Manta MediaI nc.) Areas where they are Present Qingdao Shuoyuan International Trade Company Limited trades in Central America, Middle East, Southeast Asia, North America, and Africa (Qingdao Shuoyuan International Trade Company Limited). Africa represents 55% of the company’s world market, where it covers countries like Nigeria, Uganda , Cameroon, Cote d’ Ivoire and Ghana. Guangzhou City Clothing Business Company Limited’s primary markets are North, Central and South America, Middle East and Africa. (Guangzhou City Clothing Business Co. Limited). The main markets of Shenzhen USD Pack Production are Limited Northern Europe, Eastern Asia, Central America and Africa (Shenzhen USD Pack Production Limited). South East Asia, Europe, America and Africa are the primary markets of Brogan Sakutu International LLC (Brogan Sakuti International LLC). Product Range The product range for Qingdao Shuoyuan International Trade Company Limited includes used clothing, used clothes, used bags and used shoes while Guangzhou City Clothing Business Company Limited markets used shoes, used clothing and used clothes, among other commodities. Shenzhen USD Pack Production Limited deals with wooden boxes, jewelry bags and jute bags. Brogan Sakutu International LLC sells used clothes, used shoes, used purses, belts and toys. Strengths and Weaknesses These companies have various strengths and weaknesses. For instance, Qingdao Shuoyuan International Trade Company Limited uses agents in exporting fashion products to Africa. It uses its no torn, no dirt slogan to offer the best quality to customers. It also sorts, packs and loads clothing promptly to ensure efficiency. In addition, the company helps buyers from Africa to find other goods like computers and bicycles. Shuoyuan International Trade Company Limited has a superior geographical advantage because it is located near Qingdao Port, facilitating import and export procedures. The company has cooperative relationships with the international business community. However, the company lacks online presence in assisting its customers through features like live chat. Guangzhou City Clothing Business Company Limited offers customized services by sorting, packing, loading and shipping clothes and goods as requested by customers. It has greater industrial technology strength, over ten years experience and international market access. It also has a professional design team and offers perfect service. On the other hand the company does not offer customer support. Shenzhen USD Pack Production Limited designs and makes products according to customer ideas and samples (Shenzhen USD Pack Production Limited). It has a five year experience in the fashion industry and guarantees high quality to customers. The major weaknesses of this company are that it does not ship goods or provide customer support. Finally, Brogan Sakutu International LLC is known for its high quality products. However, Brogan Sakutu International LLC has a low capital base and does not offer online customer support. Table 1: Company Strengths and Weaknesses Company Name Strengths Weaknesses Qingdao Shuoyuan International Trade Company Limited Uses agents in exporting products Offers the best quality to customers Prompt and efficient sorting, packing and loading of clothing Helps buyers to find other useful goods such as computers and bicycles Superior geographical advantage Cooperative relationships with the international business community Lacks online customer support Guangzhou City Clothing Business Company Limited Offers customized services as requested by customers Greater industrial technology strength Has over ten years experience Has international market access Has a professional design team Offers perfect service Does not offer customer support Shenzhen USD Pack Production Limited Customizes products by designing and making products according to customer ideas and samples Has five years experience in the fashion industry Guarantees high quality to customers Does not ship goods Does not provide customer support Brogan Sakutu International LLC Offers high quality products Lacks online customer support Since Africa is the target market, the top twenty economies of Africa have been analyzed as a sample representative of the African market. The analysis includes country risks, GDP, inflation, population and unemployment rates. Table 2: Economic Performance of the Top Twenty African Economies Country GDP (US$ Billion) Exports (US$ Billion) Imports (US$ Billion) Population (Millions) Inflation (%) Unemployment Rate (%) South Africa 524 82 94 51 6 24.9 Egypt 498 26 53 81 10.2 9.7 Nigeria 378 82 44 155 10.8 4.9 Algeria 251 57 40 37 3.9 10 Morocco 155 18 35 32 1 9.1 Angola 107 54 22 19 13.5 25 Sudan 100 5 6 31 18 18.7 Tunisia 100 17 22 11 4.4 13 Libya 91 47 18 7 15.9 30 Ethiopia 86 3 10 82 33.2 20.5 Kenya 66 6 15 41 14 40 Ghana 62 14 18 24 8.7 11 Tanzania 59 6 10 44 12.7 13 Cameroon 44 6 7 19 0.8 30 Uganda 42 3 5 32 18.7 4.2 Cote de’ Ivoire 37 12 9 21 1.42 50 Senegal 24 2 6 14 1.3 48 Equatorial Guinea 24 15 8 0.7 7 22.3 DR Congo 23 9 8 72 17 73 Gabon 23 10 4 1.5 4.3 21 Source: The Richest Chart 1: Population, Imports, GDP and Exports of the Top Twenty African Economies Chart 2: Inflation and Employment Rates in Nigeria and South Africa International Business Risks From the analysis of economical and political risks, it is noted that some countries such as South Africa enjoy political stability while other countries such as the Democratic Republic of Congo are the worst in terms of political stability. Egypt, Nigeria and Algeria are quite stable politically, compared to Morocco, Angola and Sudan which have high political risks. In terms of economical risks, South Africa has the lowest risks, followed by Morocco, Algeria and Egypt. The economical risks for Angola, Nigeria and Sudan are quite high. The Democratic Republic of Congo has the highest economical risks. Table 3: COFACE Rating Country Explanation A1 Stable Economic Situation A2 Less Secure than A, but good A3 South Africa, Morocco, Algeria Relatively good, but payment is low A4 Egypt Medium payment security, but risk acceptable B Angola, Nigeria Quite poor payment situation, with uncertain political situation C Sudan Very uncertain political and economical situation, with poor payment D Democratic Republic of Congo Bad payment with high risk in political and economical environments Using the COFACE country risk classification, South Africa falls in category A3, with a relatively good economical and political situation. Morocco and Algeria also fall under the same category. Egypt is in category A4, with medium payment security and acceptable risk. Angola and Nigeria fall in category B, with quite poor payment situation and uncertain political situation. Sudan falls in under category C with very uncertain political and economical situation while the Democratic Republic of Congo is in category D, which is characterized by high political and economical risks and bad payments. Therefore, countries like South Africa, Algeria and Morocco are characterized with low risk and high attractiveness. The market opportunities are promising, and the countries’ risks may be acceptable. Chart 3: Economical and Political Risks among some Top African Countries Table 4: Risk Table Extreme DRC Very High Sudan High Nigeria Significant Angola Medium Egypt Moderate Algeria Low South Africa Morocco Negligible Insignificant Insignificant Negligible Low Moderate Medium Significant High Very High Extreme Criteria for Exporting Fashion Products to the African Market In exporting fashion products from Malaysia to Africa, the fashion retailer may liaise with companies based in Africa to foreign direct investments. Subsidiaries may be established in African countries. These subsidiaries will be responsible for importing fashion products from Malaysia African countries. The subsidiaries established in African countries will distribute fashion products through wholesalers and agents who will be situated in major towns of the selected countries. Warehouses will be located in all the cities and major towns of the selected countries, where competitor warehouses have been set, as well as, those towns that have not been covered by competitors. Since the major competitors have weak communication strategies, the fashion retailer will embrace superior communication and promotion of products. First, target country nationals will be hired as agents and sales personnel. The sales team will be able to reach the locals through an aggressive advertisement and promotion campaign. The fashion retailer will have to offer discounts and market only high quality fashion products at reasonable prices to gain a competitive edge in Africa. Works Cited Allman, Jean Marie. Fashioning Africa: Power and the Politics of Dress. Bloomington: Indiana University Press, 2004. Print. Brogan Sakuti International LLC. "Brogan Sakuti International LLC." (2013). Web. 22 November 2013. Guangzhou City Clothing Business Co. Limited. "Guangzhou City Clothing Business Co. Limited ." (2013). Web. 22 November 2013. Qingdao Shuoyuan International Trade Company Limited. "Qingdao Shuoyuan International Trade Company Limited ." (2013). Web. 22 November 2013. Shenzhen USD Pack Production Limited. "Shenzhen USD Pack Production Limited." (2013). Web. 22 November 2013. The Richest. "Africa’s Largest Economies – Top 20 Economies In Africa." 16 September 2011. Web. 25 November 2013. Read More