DHL plans further expansion in China to profit from the growing opportunities in the country’s$7.5 billion fashion and apparel logistics industry.
The company said it is enhancing its supply chain solutions, infrastructure and human resourcesto cater to rising demand for faster, more efficient door-to-door distribution in the sector.
To enhance its capabilities, DHL has developed the Door-to-More solution to meet the needs ofcustomers in the fast-moving fashion and apparel market where product availability in retailoutlets is essential. The service consolidates multiple vendor shipments to a single shipment forthe international movement and local customs clearance. This consolidated shipment is then brokendown into individual deliveries to multiple customers (retail or domestic) who extend far beyondChina’s borders.
“China’s fashion and apparel industry is undergoing fundamental changes and has evolvedsignificantly since the start of the global economic slowdown,” said Kelvin Leung, CEO, North AsiaPacific, DHL Global Forwarding. Pointing to expected compounded annual growth in China’s domesticapparel retail market of 21% through 2014 from $305 billion last year, Leung added: “Rapidurbanisation is continuing to expand the potential market for fashion retailers who are facingshorter product cycles and margin pressures from fierce competition from South Asia, a key sourcingbase for the industry.”
China is a key growth driver for the industry in North Asia Pacific, with the region producingand exporting more than half of the world’s fashion and apparel goods. North Asia Pacific made up66% of the global airfreight export last year, while ocean freight constituted 54% of the globalfashion and apparel export market. While China remains the world’s largest textile and apparelexporter, with 6% CAGR in airfreight and ocean freight exports till 2014, the domestic retailmarket is also growing rapidly, DHL confirmed in a statement.
These trends are contributing to the strong growth in the ‘organised retail’ sector.Western-style retailers are growing in the bigger cities, supported by a large number ofhigh-income Chinese with a significant amount of discretionary spending. These retailers alreadyaccount for 20% of the total retail market and the figure is expected to grow to over 40% by 2014.Luxury shopping is also expanding quickly, and is forecast to grow from $9.4 billion by the end oflast year to $14.6 billion within five years, making China the world’s biggest luxury market.
“It is clear that large brand owners are buying back and acquiring retailer and distributionchannels in the local markets,” said Steve Huang, CEO, China, DHL Global Forwarding. “Thisincreased retail footprint demands new supply chain models where distribution centers in China areneeded. Responding to the growing demand, we have expanded our warehousing and distribution networkbeyond first-tier cities, and are penetrating deep into second- and third-tier cities, and will beinvesting to enhance our expertise and capabilities in the fast-moving industry.”
Since 2009, DHL has invested in six Fashion & Apparel Centres of Excellence across the AsiaPacific region. These centers are responsible for developing tailored solutions and providingconsultancy services to help customers better manage the product flow further upstream in theirsupply chain. A similar centre is expected to be ready in Shanghai by Q4 2010.
“DHL has established a comprehensive network in Asia Pacific to harness our global capabilitiesin the fashion logistics industry in the region. With our industry-leading solutions that spanwarehousing and distribution, transportation, customs brokerage and value-added services such aspackaging, we have the capabilities to truly offer end-to-end services with full visibilitythroughout the supply chain process for our customers in any part of the world,” said AmadouDiallo, CEO, South Asia Pacific, DHL Global Forwarding.
