Geodis rides Asian emerging market growth
As traditional US and European market demand has caved in on the back of dampening world trade, global players in the retail, pharmaceutical, high-tech, healthcare and automotive sectors are increasing their expansion into the Asian emerging markets. Geodis Wilson, a leading global freight management company, is tapping this phenomenon and translating it into airfreight and logistics growth. Wong Joon San reports.
July 15, 2012
Looking back 10 to 20 years ago, most of the global top quality branded goods were then produced in China and exported for sale in North America and Europe. Today, there have been big changes with business flows doing a 180 degree turn, with traditional markets manufactured products are flowing back to Asia. Sales of popular retail branded luxury products are booming in Asia, thriving and becoming a norm in the region, while sales of luxury products in traditional markets are in the doldrums. But for logistics companies like Geodis Wilson, this is a welcome development indeed. Leading Asian cities like Shanghai, Beijing, Guangzhou, Hong Kong and Singapore, which are teeming with booming middle-class, are fiercely competing to out-do each other to part the rich from their money. Top department stores and high-end luxury brand name stores, which promote brands like Prada or Louis Vuitton, are enjoying steady business at their outlets, translating into big business for freight management companies like Geodis Wilson. As an indication of the huge market potential, Italian luxury design house Prada said its net profit soared 72.2 per cent in the year ending January 2012, driven by strong retail sales especially in Asia. As a potential market for global expansion, Asia is fast becoming an attractive region for the global retail industry‘s expansion in the next decade. Growing at a rate of nine per cent per year, the Asian retail industry, which is now worth US$1 trillion, will have more than doubled in value by the year 2020, according to a retail market study. In recent global recessionary years, Asia is one of very few regions that has continued to show an increase in retail profits and overall economic development. Global retailers are increasingly moving into Asia to capitalise on its fertile retail markets. According to PricewaterhouseCoopers, Wal-Mart and Tesco have implemented aggressive expansion plans in Asia in the near future. This is not surprising for these powerful retail giants since profits in the Asian retail sector have been predicted to reach US$8.5 trillion by the year 2014. Even though government incentives that fueled consumer spending during the global economic downturn of 2009 have expired, the growing upper class is extremely attractive to luxury retailers throughout the world. Large global chains are also eager to move into areas where small locally-owned shops and markets were the only shopping option with PricewaterhouseCoopers predicting that the Asian retail industry’s growth will be two to three percentage points higher than global retail growth in general.