Uniqlo to expand its manufacturing bandwidth through 20 partners in India

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Fast Retailing, Uniqlo’s parent company, plans to expand its manufacturing presence in India with 20 “production partners,” according to a report in The Economic Times (ET).

uniqloone of the most valuable clothing retailers in the world, already has several production partners in the country and is looking to expand this network with a major investment.

Uniqlo’s current production partners in India are Shahi Exports, Brandix Lanka, Tangerine Design, Maral Overseas, Shingora Textiles, Silver Spark Apparel, SM Lulla Industries Worldwide, and Penguin Apparels.

A source said the investment amount will be significant because Uniqlo views India as an important market and the production partners that Uniqlo will bring to India will be for the local market specifically, ET reports.

One of the company’s production partners told ET that their current mission is to produce only for export.

Tadashi Yanai, CEO of Uniqlo, has indicated that he wants Uniqlo to become “the top-selling retailer in India”.

The Japanese brand opened its first store in India in September 2019. It has stores in Delhi, Lucknow and Chandigarh. The brand is now planning to enter Mumbai and Bangalore.

Uniqlo does not own any factories and outsources the production of nearly all of its products to factories outside of Japan. This helps the brand keep the break-even point low and improve the return on investment.

As of March 1, 2023, Uniqlo has 227 factories in China, 54 in Vietnam, 33 in Bangladesh, 13 in Indonesia, and 16 in India and Japan, ET reports.

India has developed as an attractive market for clothing brands. Over the past decade, international brands such as Zara and H&M have become market leaders in the country’s fast fashion segment.

Devangshu Dutta, founder of Third Eyesight, a retail consulting firm, said, “For global brands, India should be one of the most logical sourcing hubs, given its large, vertically integrated manufacturing sector on the one hand and the large and growing domestic market driving demand on the other.” .

Weight in sourcing baskets has been historically low in India for many reasons, Dutta said, even though China has been visible for decades to brand management teams and retailers as a concentrated sourcing risk.

Uniqlo International said its revenue in the first half of 2023 was $5.25 billion, and its operating profit was $852.93 million, ET reports.

The company said regions such as India “reported significant gains in revenue and earnings as they enter a full growth phase.”