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China exporters, hit by slump, see potential at home

(Agencies)
Updated: 2009-05-05 11:06

Firms such as Berkam can expect plenty of company, said Paul French, chief China analyst with retail consultancy Access Asia in Shanghai.

"It's classic China. Everyone will do it, and all of a sudden there will be more shirt shops than you can shake a stick at. But you won't have heard of any of them and the only people who sell shirts will still be people who've got the brand," French said.

The main routes for clothing companies to break out of the pack will be to go through the laborious and expensive process of building their own brands or buying existing ones, he said.

Many are likely to drop out of the race, as they are not ready or able to put up the investment needed to do so.

"I think at the moment it's a kind of panic strategy," French said. "I'm not quite sure, from the ones I've talked to, that they quite understand what that will involve."

Plunging Exports

Chinese exporters in a range of sectors have good reason to look for new markets to offset the drop in consumer demand in North America and Europe, which has taken a hefty toll on their order books.

Garment exports dropped by 5 percent in the first quarter from a year earlier, but that was actually less than the nearly 20 percent fall in overall exports in the first three months.

The high-tech goods sector fell even more sharply, by 23 percent, giving electronics producers an incentive to look to the Chinese market as well.

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