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VENTURES AFRICA – Swedish-based global clothing giant, Hennes & Mauritz (H&M) on Wednesday said it will shift focus to sub-Saharan Africa’s textile market as opposed to its previous reliance on Asia.
Most of H&M’s garments are sourced from factories in Asia, particularly Bangladesh, the world’s second biggest textile manufacturer after China. However, election-related violence in the country has strained its garment industry.
H&M has already started producing clothes on a small scale in Africa to complement the company’s production in Bangladesh, China and Cambodia, where it sources most of its textile materials, Swedish business daily, Dagens Industri (DI) quoted CEO Karl-Johan Persson as saying.
“I think that there is great potential in sub-Saharan Africa when it comes to production. We have started producing on a small scale in Ethiopia and we will see how it goes. It seems very interesting,” he said.
Persson believes that Africa has great sales potential with its emerging markets and a “growing middle class.”
According to the African Development Bank, Africa now has the fastest-growing middle class in the world. With some 313 million people, 34 percent of Africa’s population, spending $2.20 a day, this represents a 100 percent rise in less than 20 years and a huge potential for retailers.
H&M plans to carry out a survey on production opportunities in Africa. “We are looking at several African countries, like South Africa,” Persson says, affirming plans that it will open its third store in South Africa in 2015.
It also plans to open other retail stores in Morocco and Egypt.
According to him, there won’t be “dramatic changes in the distribution of production in the short term, but there may be bigger changes in the long term.”
“It depends on how prices, quality and lead time develop,” he said.