Outsourcing to India enables Benetton to sell 20% cheaper
Italian clothing giant Benetton has cut prices by 20 per cent this season thanks to lower production costs from suppliers in India, its Asia-Pacific chief executive said at the weekend.
Diego Menarin said prices were generally down by about one-fifth.
Hong Kong-based Menarin said Benetton was using Indian suppliers because of customer demand, not cost-cutting. "We will have more collections tuned to Asian markets with Asian patterns and Asian fitting," he said. The company does not use Thai suppliers. Menarin was in Thailand over the weekend for marketing activities celebrating Benetton's 15 years in the country. Central Marketing Group subsidiary Central Trading imports and distributes the United Colours of Benetton brand, known for its colourful knits and provocative advertisements. The Indian-made products will attract lower tariffs. Wool is normally subject to a 60-per-cent tariff, but Asian fabrics are cheaper. Benetton said this would increase sales by 15 to 20 per cent this year. Menarin declined to reveal turnover in the Kingdom, where it has 18 shops - three selling Benetton only. Menarin believes the current political and economic environment here will be short-lived and is bullish about the outlook. "The scene in Thailand is changing every day. And Thai people are fashionable. They are open to new ideas but not fashion-addictive," he said. Menarin added that Indian suppliers would allow the company to respond to local needs by transferring production closer to the market. "We are getting products from India, but we won't compromise quality," he said. From June, Warner Music executive Gerolamo Caccia Dominioni will be the company's new chief executive, ending uncertainty following his predecessor's resignation several months ago over differences in developing internationally, especially in Asia. Menarin has been with Benetton since 1989 and became its Asia-Pacific chief executive in 2004.
Jeerawat Na Thalang The Nation
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