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Tightening the belt

American jeans company Levi’s has launched its first Cambodian outlet, but company officials have said its primary competition will initially come from the domestic black market.

Located in Phnom Penh’s Lucky Department store, the outlet is run by licensee DKSH (Thailand) Ltd.

DKSH general manager Kevin Cornning said:“It’s really a venture into the unknown.”

He emphasised DKSH began with similar circumstances in Thailand with one or two stores some 20 years ago, and had since increased its outlets to 145.

DKSH was licensed to produce and sell Levi’s products in Thailand, and its Phnom Penh branch represented its first foray outside the country, he said.

While DKSH does not plan to manufacture any Levi’s products in the Kingdom, the US-based company Levi Strauss & Co does produce clothing in Cambodia.

These Cambodian-produced wares are now exported to foreign markets.

Cornning acknowledged that the Levi’s brand’s local production may lead to genuine products “falling off the back of a truck” and ending up for sale on local markets, which could then compete with sales from the genuine store.

However, he said domestic demand for legitimate brand-name clothing was maturing, pointing to fashion names such as Mango opening outlets in Phnom Penh.
“If we were the only brand name [launching right now], we’d be a little concerned,” he said.

He said counterfeit Levi’s products were also available in local markets, but that experience from Thailand showed customers were interested in spending extra money for genuine goods.

“There’s always a consumer who wants a real, authentic product,” he said.

Levi’s Cambodia Manager Chariya Preap said the firm’s focus would be on an upper-middle class demographic, as its pricing was higher than most other retailers presently operating in Phnom Penh.

“Everyone knows of Levi’s,” she said. “The emphasis [of the new store] is on authenticity, that Levi’s is selling authentic products.”

The firm is keeping its eye on sales at its first store, and testing products to see which product lines resonate with Cambodia’s consumers. DKSH is considering expanding with up to three more Cambodian stores during 2011, she said.

Meanwhile, Levi Strauss & Company has announced plans to add another 50 stores in China, Singapore, and South Korea under its dENiZEN brand.

The dENiZEN clothing line targets 18-to 28-year-olds, and includes jeans, tops and accessories, the company said in a statement from August.

“There’s this consumer in rapidly emerging markets in developing countries around the world, China being the most notable,” said Aaron Boey, a president in charge of the Asian operations. ADDITIONAL REPORTING BY BLOOMBERG

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