just-style management briefing: PLM suppliers excited about Asia's potential
These days, PLM software suppliers are feeling ecstatic about the growth potential that China, India and Asia Pacific are bringing to their business - which is poised to benefit from the region's booming fashion markets.
"We've had a lot of response from Asia where we've had major sales," says Simon Poulton, sales vice president at French software provider Lectra. "Domestic brands are growing surprisingly quickly and because there are hardly any legacy systems, they are embracing technology straight away."
One anonymous observer says Asia's growth rates could easily double the global average in the next few years as the region's economies continue to grow at an average of 7% a year.
Judy Gnaedig, strategic projects director at Lectra, adds the market, particularly China, will grow "considerably" in the next three years as Chinese national retail brands continue to grow, seeking better quality and more sophisticated products for the domestic market.
She adds Japan and Asia Pacific are also embracing PLM technology where fashion companies are increasing their investment.
Gnaedig notes, however, that the US and Europe still remain the largest PLM markets. "Fashion retail in the US and European markets is stagnant," she says, while "China and India are experiencing significant growth."
Domestic fashion markets
As China and India move out of low-cost sourcing, manufacturers are turning a keener eye on the fast-developing domestic fashion markets. To meet consumers' rising demand for higher-quality and more fashionable clothing, Chinese companies are quickly turning to technology such as CAD and PLM, observers say.
"We are seeing manufacturers in both China and India verticalising and developing their own brands and channels to market to capitalise on the large emerging middle class domestic markets," explains Andrew Dalziel, marketing director at Lawson.
"Verticalisation offers companies an opportunity to take higher profits and have more control over their destiny. This verticalisation creates a much broader set of requirements in terms of processes and software, which is good for Lawson as we can support companies from manufacturing through sourcing and retail to multi-channel sales."
Chinese PLM implementations
Dalziel's view is underscored by the handful of Chinese apparel firms that have implemented PLM solutions in last couple of years.
Showing the market's resilience to the 2009 recession, many of these began using the software in 2009. They include Mark Fairwhale Enterprises (MFW) and Li Ning. MFW tapped DeSL's PLM solution to improve design and development management and meet customers' requirements faster.
In turn, sporting goods brand Li Ning used PTC's FlexPLM to help drive its corporate expansion and globalisation initiatives. Another big fashion brand, Xtep, is also using PLM.
Kathleen Mitford, vice president of product and market strategy at PTC, says China is the company's fastest-growing emerging market.
"We have won new customers in India and China," she enthuses. "In terms of BRIC countries, we see China and India as immediate opportunities," while growth in other BRIC markets Brazil and Russia is many years off, she says.
Gnaedig of Lectra adds the firm also saw strong growth in Japan and Australia last year. But observers say Australia, New Zealand, Indonesia, Thailand and many other Asian countries are also important markets.
Despite the market's strong growth potential there are some big challenges.
According to market participants, China's reliance on a manual labour force remains costly for apparel manufacturers, stifling investment.
Moreover, many fast-growing Chinese brands and their retail chains are being developed and financed by existing apparel manufacturers so their growth pace is limited by sometimes slow restructuring processes at the parent company.
Other market participants say the region's "lower-skilled" workforce makes it difficult to find experienced designers, pattern developers and merchandisers.
Dalziel adds that rising labour costs, availability, raw material prices, oil prices and fluctuating exchange rates are also denting the apparel industry growth curb, hindering investment in new technologies. Poor infrastructure and volatile politics in some countries must also be improved to boost the market's growth equation.
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