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Reebok to expand and add 60 new stores in India while importing 50% footwear can they survive long-term especially with looming India China Free Trade Zone
Global sports goods brand Reebok is optimistic on India. They plan to add another 60 stores and is aiming at revenues of Rs 3.75 billion (US$86 million) as Indian economy accelerates in growth and the elite middleclass becomes ready to spend on sports footwear and apparel. Experts say its the craze and people want Reebok. The sales is impressive with 40% jump in sales in 2004.
"We are aiming at a growth of 50 per cent in sales. We are adding one outlet every week in India," Reebok India Co Managing Director Subinder Singh Prem told reporters on Sunday. Reebok earns 60% of its revenue in India from footwear and the rest 40% from apparel. "We have about 120 stores in India. This year, we are adding 60 more stores," Prem said, adding that franchisee outlets are emerging in small towns and cities.
Reebok imports 50% of the footwear and 45% of the apparel that it sells in India. Experts and trade think tanks say there lies the problem and the red signal. Long term it is very difficult to survive with a business model in India and China that requires 50% import from other countries. Bigger problem for Reebok is the India-China Free Trade Agreement that looms as a threat for Reebok. The Chinese and Indian domestic companies can very well compete. If the world accelerates into a recession, Reebok will have a very tough time to compete Indian and Chinese consumer goods deflation.
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