INTERNATIONAL TRADE BETWEEN UK AND INDIA

Fashion Trade between UK and India

TABLE OF CONTENTS

Introduction………………………………………………………………………………………………………4

The Industry…………………………………………………………………………………………4

Country (A) UK …………………………………………………………………………………5

Country (B) India……………………………………………………………………………6

Implication for Xtreme Fashion…………………………………………7

Cultural Conditions and National Business System ……8

National Business System ………………………………………………………8

Characteristics of National Business system……9

Business Culture……………………………………………………………………………10

Industrial Trends and Patterns of Trade……………………………11

UK outward investment………………………………………………………………11

Indian and UK Industrial Trade ……………………………………12

Limitations in Indian Industry ……………………………………12



The Exchange Rate Regime in UK and India…………………………13

Exchange Rate …………………………………………………………………………13

Exchange Rate Risks and The Currency Appreciation Issue Within the Indian's economy…………………………………………………………………………………………14

FDI outlook……………………………………………………………………………………………………15

Indian's FDI outlook………………………………………………………15

Mergers and acquisition approach of Xtreme Fashion……………………………………………………………………………………………16

Corporate Social Responsibility…………………………………………………17

Corporate Social Responsibility in Indian Fashion Industry …………………………………………………………………18

Tariffs, Regulation and customs in the Fashion industry…………………………………………………………………………………………18

Conclusion…………………………………………………………………………………………………………19

References…………………………………………………………………………………………………………21

Appendix 1…………………………………………………………………………………………………...23

Appendix 2…………………………………………………………………………………………………...24

INTRODUCTION

A researcher working in a Multinational Corporation (MNC) - Xtreme Fashion, which is based in the UK, was approached by a Chief Executive Officer (CEO) to write a report for the company on a proposed international business venture into India fashion market. Xtreme Fashion is a huge UK based company that specialises in clothing for women, men, children and footwear. The aim of this report is to help the CEO decide if the Xtreme Fashion should engage in trade and/ or invest in the retailing market in India. To gain a comprehensive overview of the Indian retailing market, this report provides an in-depth analysis as to why Xtreme Fashion entrance into the India retail market will be advantageous or not for the company.

The Industry

The UK Fashion industry has met the challenge to advance from a domestic manufacturing based industry into a design-oriented industry operating globally in the past ten years (JNCC, 2008, 3). The industry comprises of women's wear, men's wear, children's wear, footwear and accessories. The UK apparel retail market has undergone a period of fundamental changes since 2004. This trend is expected to continue for the projected period up to 2012. The industry maintained total revenue of $62billion in 2007, which represented an annual growth rate of 3.1% (Datamonitor, 2008, 10).

The India apparel retail market on the other hand, with subsequent growth rates since 2003 is projected to decline for the forecasted period of 2012. However, a report by Ernst and Young for IBEF states that the Indian young populations is beginning to embrace western lifestyle, which is encouraging investors such as Xtreme Fashion, who are planning on expanding into the Indian retail market for fashion. For further information see appendix 1 showing a SWOT analysis for Xtreme Fashion.

Country A (United Kingdom)

The UK is a major trading nation and financial centre, falling amongst the quintets of trillion dollar economies of Western Europe. Since the 1992 recession, the UK's economy has enjoyed sustained economic growth ranging from 2-3% since 2004, outpacing most of Europe. This has allowed the retail sector to prosper in a diversified market-based economy, in turn enabling high employment, easier access to products and services and thus facilitating most residents with a high standard of living. Economic sustainability is a major source of comparative advantage for the retail industry due to its influence on demand. This has allowed companies like Xtreme Fashion to ...