Fastener Emerging Market(F) Latest

Fastener India- Market Overview 2009

Fastener Asia Pacific

112/04/132

Market Overview - India

• Market Overview – India

» Garment and apparel industry market size is US$27 billion in 2008» Expected continuous growth for the coming years» By 2013, will expect its market size up to US$39.4 billion with an increase of 45.9%» Manufacturers in India

› Garment  = 118083   ( 27.8% )› Accessory = 89641 (  21.14% )  › Fabrics  = 67010  ( 15.8%)› Clothing Accessory  = 33581  ( 7.91% ) › Yarn  =  30537  ( 7.20%)              › Equipment  = 25347  (  5.97%  )› Fibre   = 21756    ( 5.13% )    › Leather & Footwear  = 15335  ( 3.61% )   › Home Textiles  = 13044  ( 3.07% )     › Dyes & Chemicals =  9682  ( 2.28 % )

» Location of factories› Bangalore, Chennai, Tirupur, Coimbatore, Madurai, Ahmadabad, Nagpur, Indore,Srinagar, Kanpur,

Kolkatta & Guwahati.

•

Fastener Asia Pacific Market Overview - Bangladesh

• Market Overview – Bangladesh» Garment and apparel industry ‘s market size is US$14.11billion in 2008» Annual growth rate is between 20-30%» Manufacturers in Bangladesh

› Garment           › Jute and jute goods   › Fibre          › Leather & Footwear   › Clothing Accessory   › Home Textiles      › Yarn      › Dyes & Chemicals  

» At present there are about 5000 garment industries in the country and 75 percent of them are in Dhaka» Location of factories

› Dhaka & ChittagongLocation (%of Industries)

IndustryDhaka

Dhaka Export

Processing Zone

Chittagong

Chittagong

Export Processing Zone others

Garments62.30% 4.70% 15.90% 9.80% 7.30%

Leather/Footwear87.50% 4.20% 4.20% 4.20%

Textiles29.40% 1.50% 9.60% 3.70% 55.90%

Fastener Asia Pacific

112/04/134

Market Update - India

• Market Update

» Our market share is being threatened since 2006 for the keep competition.

» Nomination program is no long popular for fasteners products

» Decision for fasteners product selection is down to the factory level

» Buyers are extremely price sensitive for the fasteners commodity items, there is almost no brand preference, price comes always the first

» AD’s share is getting very limited in the current emerging markets, share less than 5% market share on commodity items

Fastener Asia Pacific Fastener Distribution Channel in India

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Fastener Manufacturer

Distributor / Stockiest

Sub Dealers / Reseller

Dealer / Channel Partner

End Customer

China / TSP / Saga

AD

AD

Arrow

Arrow

Arrow

Arrow

Arrow

China / TSP / Saga

China / TSP / Saga

Arrow

Arrow

AD

Fastener Asia Pacific

112/04/136

Directions & Strategies

• Distribution channel» Multi-reseller approach as for the huge market scale in India» Develop new resellers to expand our customer base and eliminate the risk on over-rely on

particular resellers who may or may not loyal to AD» Try to reach as much end users possible via different reseller network» Work closely with IBMD Sales team for market exploration on RBOs and Vendors levels

• Focus on garment and apparel industry» Maintain business on the product categories which AD still have values for the intensive

application on stone washing which requires higher quality and less price sensitive› PS, PSM, MCF, NPD(Tends) › Washing application:

» PS / PSM – 35%» TEND – 50%» Micro Pin – 15%

› Only big factories are using PS & PSM for washing› Washing process are mainly done through small washers or job workers in manual methods› Micro Pins were mainly used for washing 2 years ago but now have shifted to cheaper options like 7TEND

and 5TEND because of prices

» Develop alternative/strategic items to recapture the market share – SPC1763 & 7Tend

• Market Diversification to different industries» Promotion VNS solution for packaging in non-garment industries» Establish AD professional image on providing one-stop solution for packaging

Fastener Asia Pacific

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New projects under progress for Packaging - VNS

Target Market Segment No. of Mfrs. Action Taken Target for 2010

Toy Industry 800 Approached toy association to get their data base and leads and promoted VNS to 30 factories.

15 units and ES

Hand Tool/Garden Tool 2500 Given demo to 20 manufacturers. 10 units and ES

Kitchen Cutlery 300 Trying to get more information 3 units and ES

Socks Industry 200 Trying to get more information 5 units and ES

Home furnishing Units 117 Market Research & Information under progress 5 units and ES

Car mattress mfrs. 100 Market Research & Information under progress 5-10 units and ES

Challenges for VNS:

-Extremely low labour cost in emerging market, local manufacturers are preferring for manual packaging method-Take time to educate the market to aware the importance of production cost saving, value-added from standardization & efficiency from automation and long-term benefits.>Figure support the result with on site demonstration>Trial sales in bundle selling with VNS + ES

Fastener Asia Pacific

112/04/138

• Major Competitors in the market :

» ARROW (NPD, PPD, GUN & ATACH)» TSP (PS, PSM)» SAGA (PS, PSM, MCF)» Local & others (NPD, PPD, GUN & ATACH)

• Competitors update:

» Earlier TSP used to sell their products through SAMTEX, but now they have opened their own office in India.

» SAMTEX is now selling 5TEND & 7TEND in their own brand name- SAMTEX

» Made in China PS (with or without brand) are being sold by dealers

» Major local producer,- Arrow has their own manufacturing facilities in Bangalore,India

» Anchor- No manufacturing unit so far in India, Pee-Vee is the main company who is importing this brand from China and selling it in India.

» SAGA ‘s dealer – Godolo & Godolo who are used to sell AD products in 2005

Competitors info

Fastener Asia Pacific Market share by Product Category

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Fastener Asia Pacific

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Major product category & competitor information

Item Cat. ApplicationTSP/China/SAGA (Landed prices

to Dealers)

Arrow price to Dealer (Landed

prices)

AD Price to dealer (Ex-Works

HK prices)

AD Landed price (Ex-Works

HK+Freight+Import Duty+in land Haulage+Dist.

Margin)

Landed Price Difference

Price Difference in

%

Target Prices (Ex-Works HK)

Monthly Qty projection

(approximate qty)

PSM WashingUS$ 700/pc to US$ 750/pc

  US$ 1100/pc US$ 1540/pcUS$ 840/pc

-54.5%

US$ 750 to US$ 800/pc

5 pcs

PSLabel Attaching &

WashingUS$ 0.60/k to US$ 0.70/k

 US$ 0.60/k to

US$0.75/KUS$ 0.84/k to US$ 1.05/k

US$ 0.24/k 33%US$ 0.45/k

to US$ 0.50/k

37,500k

NPD WashingUS$ 0.50/k to US$ 0.60/K

US$ 0.50/k to US$ 0.60/K

US$ 0.50/k to US$ 0.60/k

US$ 0.70/k to US$ 0.84/k

US$ 0.20/k 29%US$ 0.35/k

to US$ 0.40/k

25,000k

MCF WashingUS$ 0.80/k to US$ 0.85/k

 US$ 0.76/k to US$ 0.81/K

US$ 1.06/k to US$ 1.13/k

US$ 0.26/k 25%US$ 0.60/k

to US$ 0.65/k

20,000k

ATACH Label Attaching  US$ 0.24/k to US$ 0.28/k

US$ 0.92/k to US$ 1.46/k

US$ 1.29/k to US$ 2.05/k

US$ 1.05/k 86%US$ 0.20/k

to US$ 0.25/k

40,000k

PPD Label Attaching  US$ 0.14/k to US$ 0.20/K

US$ 0.34/k to US$ 0.53/K

US$ 0.48/k to US$ 0.74/k

US$ 0.34/k 73%US$ 0.15/k

to US$ 0.18/k

50,000k

Fastener Asia Pacific Price difference in %

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Fastener Asia Pacific

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Issues to be resolved to close the gap

Fastener Asia Pacific

112/04/1313

Actions to be considered

Big gap on pricesHigh Import Duty > Develop 2nd Tier Products as alternative/strategic items > Develop 2nd Tier Brand > Seek for OEM sources locally > JV manufacturing locally for long term

Service Level / offer in local currencyFlexibility on MOQ/Lead time

Payment Credit Term

After-sales and technical support locally

Commission request for the buyers

• > Develop good partner for such supports when we can allow them enough margin • > Expand potential reseller base to provide better local support and share our burden and risk

CounterfeitFake/counterfeit products ruin AD Brand/ Reputation

>Collect market information and counterfeit samples as evidence for legal action >Legal action for IP infringement >Promote strategic item- SPC1763 instead of ST15 in long term to rebuild the market confidence on AD- PS

Fastener Asia Pacific Landed cost calculation – Commodity items

ADHK >>>> Distributor >>>> End Usere.g. Plastic Staple ( SPC 1763) @US$0.60/K Ex-work HK+Freight (7%) +Import Duty (40%) +Local handling charge (2%) +Margin for resellers (15%) ------------------------------------------------------------------------------------------- End User price = 0.6 + 0.042 + 0.24 + 0.012 + 0.09 = US$0.984 / K

Fastener Asia Pacific

Import Duty Structure:

Simple Case: PSM - Plastic Staple Machine( ST 9000) : @USD 1100 / K Ex HK.

+ Freight (7%)

+Import Duty (40%)

+Inland Haulage (2%)

+Dist Margin (15%)

________________________________________________

End User Price = 1100 + 77 + 440 + 22 + 165

= USD 1804

Fastener Asia Pacific

• Thank you~