VF Corp seeks inroads to India's middle class | india | Hindustan Times
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VF Corp seeks inroads to India's middle class

india Updated: Jul 14, 2006 10:44 IST
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VF Corp is trying to open a wider road into India's growing market for branded apparel. The Greensboro producer of such brands as Lee and Wrangler jeans and Eastpak backpacks, recently got permission from the Indian government to enter into a joint venture with Arvind Brands Ltd to market and distribute VF's products there.

Arvind Brands, a unit of denim giant Arvind Mills, already sells VF's jeans and Nautica sportswear under a license agreement, but the joint venture would expand that relationship.

VF Chairman and Chief Executive Mackey J McDonald, in an interview this week, was tight-lipped on the relationship, saying VF won't discuss it publicly until additional details are finalized. "We continue to talk to them about ways that we can improve the presence of our brands," McDonald said of Arvind Brands. But press reports in India, citing unnamed sources, said VF planned to take a 60 percent stake in the new joint venture, routing its investment through VF Mauritius, a subsidiary based in the island nation of Mauritius. An Arvind Brands representative couldn't be reached immediately for comment.

VF spokesman Paul Mason said on Thursday the Indian government's approval represents one step in the process, and the company will release more details in the weeks ahead should the joint venture come to fruition.

Meanwhile, McDonald identified both India and China as countries of growing importance to VF.

"We have a lot of activity going on in both of those areas," he said.

"Not only do they have large populations _ close to 1 billion in India and over 1 billion in China, but they also have what's very attractive to us: a growing middle class," McDonald said. Many of VF's brands, which also include Red Kap, The North Face, Vans and Nautica, are targeted at middle-class consumers and are well known in India and elsewhere around the world, McDonald said. "But there's not been the level of disposable income for much of that population to be able to purchase our brands," he said. "That's changing."

As one sign of the company's interest in India, Nautica, through Arvind Brands, opened its first standalone retail outlet in the country in May with a 6,000 square foot (540 square meters) store in Bangalore. The companies plan to open several more Nautica stores, McDonald said.

Asia represented only 2 per cent of VF's $1.6 billion (euro1.26 billion) in international revenue in 2005. International revenue represented 25 percent of total company revenue of $6.5 billion (euro5.12 billion).

But VF has outlined plans to grow international revenue to as much as 40 percent by the end of 2009 as it targets such emerging markets for its brands as India and China.

"We have a very large European business today, and that's going to grow as we bring in new brands," he said. "But the rate of growth will actually be much greater coming out of India and China."

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