Denim Jeans Project

Launching Jeans in U.K Presented To:

Mr. Rana Shahzad Presented By: Nouman Saleem (011114)

ACKNOWLEDGEMENT All praises for Almighty Allah who is “THE CREATOR” of whole of the universe and admires to our Holy Prophet Muhammad (Peace be Upon Him) who taught us every thing of this life and the life thereafter. Now it is our responsibility to convey the “WORDING OF SUCCESS” to whole of the Ummah. As it was indicated in the last Address of our Holy Prophet (Peace be Upon Him). And the graves of “FELLOW BEINGS” are the proof of the completion of this responsibility. I am thankful to my respected teacher Mr.Shahzad who taught us “International Marketing ” with heart and also gave a guideline to this report.

Executive Summary This report is about launching the Denim Jeans in U.K.It includes the following aspects. • Reasons for choosing this product • Trends in international market • Position of Pakistan in international market • Internal process • Machinery profile for Jeans • Legal environment of U.K • Political environment of U.K • Trade environment of U.K • Geographic environment of U.K • Major imports profile of U.K

Sheikh Garments For manufacturing the Jeans and exporting it to other countries, I have established a new garments unit named as Sheikh Garments.

The Product The product my unit is manufacturing is Denim Jeans & we are exporting it to U.K.

Why I Selected Jeans I have selected the Denim Jeans for exporting it to U.K for the following reasons. • The overall imports of U.K are very good. • Cheap labor is available for producing Jeans. • Resources are available for producing Jeans. • This industry is growing very fast. • Pakistan has good relations with U.K.

Where did the name Denim Jeans come from? The phrase denim jeans is thought to derive from several sources. No one is totally certain where the words come from. A majority of source books suggest that denim derives from the English translation of the South of France French phrase 'serge de Nîmes' It may well be that the fabric which was made in France also had a version made locally in England and was called by the same name of denim in the same way that Cheddar cheese is called cheddar all over the world. The

Serge de Nîmes was originally a wool silk mix, twill weave. Certainly by the 19th century in England denim had a white warp and a navy woof (weft). Denim was considered a hard wearing sturdy fabric, ideal for heavy laboring.

Category 603 Denim is known as Category 603 in Pakistan and other countries.

Trend The trend for jeans is increasing in the whole of the world. It is not only popular in Pakistan but also in the whole world.

The Most Important Issue Not only for the Jeans, also for all products, it’s essential to know your product. I am a manufacturer and if I have no idea about the processing of my product, then I cant run my business well.

Our Unit We are the manufacturers and we give product to the wholeseller .He sends the product to U.K. The main strength of this unit is derived from the availability of a large variety of fabrics in normal twills.

Denims Greenwood of USA and Legler of Italy’s denim manufacturing facilities around Lahore and because of a large number of other Denim producing units, normal denims and stretch denims of almost all weights and qualities are available.

Administration Patterns / Sampling Cutting

Stitching Laundry Finishing Quality Control Stores Boiler Electricity / Generator General Maintenance Security There are 250 people working for us divided into 8 departments excluding security. These departments are administration, sampling, cutting, stitching, washing, finishing, quality control and stores. Our employee turnover is low and hence the skill level of our workers has grown with us. We are a stitching (BROTHER brand machines) and washing unit (NGAI SHING, Hong Kong) based on 4000 pieces per day production of 5 pocket basic jeans. This essentially means that as the style gets complex the production per day drops accordingly. We are constantly adding new and more modern machines to our unit to enhance our production. Lately we have added a computer controlled automatic Brother brand "Pocket Welt" machine for any trouser type back pocket welts and flap attaching as we anticipate that the market is going to demand these pocket types in the coming seasons.

Contact with Buyers We contact the potential buyers through following sources. • We use secondary sources mostly • Trade fairs

• Agents • E-Marketing • Personal contacts • Other sources

Competition Internationally, we are facing competition from the following countries. • India • China • Bangladesh

Marketing Mix • Our product is a 5-pocket men’s jean. It can be made for any waist and any length. The buyers from England send the sample & we provide it accordingly. • Our pricing ranges mostly from 4.7$ to 6.7.it is based on the length and waist of Jeans. We deal in $ and not in the pounds. • We don’t need too much promotion. It’s done by fairs, e.commerce, agents etc. • We export the product to U.K.The distribution channel is as follows. MANUFACTURER (COMPANY)

WHOLESELLER

JEANS SEND TO U.K

Internal Process It is as follows. Sample

Cutting

Stitching

Washing

Pressing and labeling

Finishing

Dispatched to store

Packing and containers

Explanation •

The sample is first send by the buyer. It’s called a gold seal sample.

•

In cutting dept, one piece is placed on the other and in this way a bundle of 50 Jeans is made. Then the cutter cuts it.

•

In the stitching dept, front end or the upper part is made. Then backend is made and they are assembled together in the assembly end. Then the belt is made.

•

Washing can be done by simple garment wash or through the stone wash and chemicals. It is done according to the buyer’s request.

•

In Pressing and Labeling dept, the Jeans are pressed and then labeled for identification.

•

In finishing dept, the quality of jeans is checked and mistakes are rectified.

•

Then the Jeans dispatched to the store.

•

Then packing is done. It is done according to the buyer’s request. Then they are sent to the containers.

Machinery Profile We are currently using the following machines. Stitching Unit: Lock Stitch

84 units

Double needle

16

Safety 5 threads

12

OverLock 3 threads

11

Loppers

02

Waist Belt

03

Belt attaching

04

Bartacks

12

Shank Buttoning

05

Plastic Buttoning

02

Feed of the Arms

10

Eyelets

04

Pocket welting

01

Pockets hemming

02

Elastication

02

Flap attaching

02

Total

170

Laundry: Washing Machines Double Chamber 800 lbs

3

Single Chamber 400 lbs

3

Dryers

1

Extractors

4

Total

10

Boilers: 2 Tone Capacity

1

Small Units

2

Total

3

Pressing: Steam Vacuumed pressing tables

4

Normal pressing tables

7

Steam press

12

Total

23

Quality Control Raw Material All of the raw materials pass through a rigorous quality inspection and materials not found within the acceptable criteria of our set quality standards are rejected.

Production A well-trained staff is deployed to ensure that quality produced is within the set parameters of our quality standard.

Workers Training Each of the worker is trained, tested and absolutely familiarized with the jobs he has to perform. He/She is not deployed unless Quality Control Department is satisfied of his/her ability to meet our quality standard.

Cost Schedule for One Piece Fabric Accessories Thread Stitching Overhead costs Quota for 1 year Total

Rs .130 Rs.15 Rs.10 Rs.20 Rs.15 Rs.20 Rs 210 or 3.5$

External Environment of U.K SUMMARY The United Kingdom (UK) is the world's fourth largest economy, and is a trading nation with a generally open market and a "level playing field". The UK is a member of the European Union (EU), but has not committed to signing up for the Euro. It attracts U.S. exporters and investors as a place in which to do business, because of the common language, a similar legal framework and business practices, and relatively low rates of taxation and inflation. Once here, it is easy for American firms to use the UK as a gateway to the rest of the EU. There are very few sectors in which foreign ownership is limited, and no restriction on the repatriation of capital and profit. Within the EU, the British Government supports the rights of any company registered in the UK, irrespective of the nationality of its ultimate parent.

ECONOMY The United Kingdom is the fourth largest economy in the industrialized world. With the heavy emphasis on privatization and lowering of taxes in the last twenty years, the wide economic cycles that characterized the economy of the 1970's and early 1980's have become more moderate in scope. The UK is entering its ninth consecutive year of economic expansion, although growth has slowed in concert with the economies of the other EU

countries. The main economic focus of the Labour government, re-elected in May 2001, is welfare reform, trade liberalization, productivity improvement, and

possible

entry

into

the

single

European

currency

(Euro).

The two largest impacts on the British economy in late 2000 and early 2001 have been the global economic slowdown, including the downturn of the U.S. economy, and the outbreak of foot and mouth disease. The slowdown in the U.S. economy has the potential to contribute to a similar slowdown in the UK economy, as UK exports to the U.S. are approximately 3% of overall GDP. A U.S. slowdown could also contribute to a widening of the UK current account deficit, which stood at 16.2 billion pounds sterling in 2000, but which could widen to close to 20 billion in 2001. Moreover, over investment in telecommunications infrastructure, including prices paid for so-called third generation licenses by British firms, could exacerbate a UK slowdown, as the companies involved struggle to service their debt. The

services

sector,

including

finance,

transport,

storage,

and

communications, accounts for almost 75% of the overall economy and remains robust. In manufacturing, productivity has continued to increase, but growth is slowing. The manufacturing sector, which accounts for 20% of GDP, grew by only 0.7% in 2000. One of the major challenges facing the Labour government is to improve this figure. It has signaled that it intends to achieve this improvement by focusing on policies that promote greater competition. Reductions in capital gains taxes, reform of insolvency laws, and simpler taxes for small businesses are among the policies that will be put forth by the new government in hopes of spurring productivity. The UK has an essentially free and market-driven economy, with

independent regulatory bodies providing additional direction in those sectors where private individuals are the principal users of the product or service. Regulated industries include the privatized utilities: telecommunications, electricity, water, and gas supply, and passenger rail transportation. The Financial Services Authority regulates financial services, while the Office of Fair Trading regulates consumer credit. Further liberalization of the financial services, air travel, energy, and telecommunications sectors are all economic goals. The relationship with Europe also dominates the economic landscape of the UK, particularly whether the United Kingdom should adopt the single European currency (Euro). The Labour government has stated that a decision on whether to join the Euro will be made on the basis of strict economic self-interest, and only if approved by the electorate in a public referendum. Most observers do not expect a referendum on the Euro before 2003 at the earliest. Private sector production, transportation, warehousing, communications, and distribution facilities in the UK are adequate, although some of the physical assets employed show the need for repair and replacement. Much of the responsibility for public sector infrastructure in the UK has been transferred to the private sector, and to independent executive agencies that are accountable. To supplement government investment, the Public-Private Partnership (PPP) initiative enables Private Finance Initiative (PFI) schemes that create viable business entities from public assets at minimal cost to the government have been developed. PFI schemes transfer ownership of public assets to the

private sector, as well as transferring financial risk and reward – i.e. the private company has no recourse to the government if the business fails. Information on the UK's economic performance and prospects is published in the Bank of England Quarterly, and similar data can be obtained from many of the major U.S. banks and investment houses

POLITICALENVIRONMENT The

exceptionally

close

and

productive Anglo-American

"special

relationship" is anchored by a long-standing and vibrant political and security purpose, common values, close trade and investment links, and a shared cultural heritage. At the government level, the strength of the relationship ensures continued cooperation on a very broad range of foreign policy. No important local political issues affect the business climate in the UK as a whole, although resolution of the peace process in Northern Ireland is important for business sentiment. The Labour Government has said that, if certain economic conditions are met, it will hold a referendum on joining the EU Economic and Monetary Union (EMU) and accepting the Euro as a common currency. The Conservatives, by contrast, are likely to oppose such referendum.. An important EU issue is the prospect of harmonizing direct taxation policies among member states, as in the recent case of savings withholding tax. Labour and Conservatives alike oppose this, as both political parties are committed to defending individual EU member states' tax powers.

TRADE

REGULATIONS

&

STANDARDS

The UK has no significant trade or investment barriers, and no restrictions on the transfer of capital or repatriation of profits. The very few barriers that exist are the result of UK implementation of EU Directives and regulations, and

do

not

reflect

UK

Government

intentions.

Customs duty is assessed on the fair market value of imported goods at the time they are landed in the UK. The commercial invoice value is usually accepted as the normal price, but if a preferential arrangement has been established between the overseas supplier and the importer, or an unrealistic value has been declared, HM Customs reserves the right to assess a fair market value for duty purposes. The duty is payable at the time the goods are imported, but established importers can defer payment for up to 30 days. In addition to customs duties, an excise tax is levied on sales of alcohol, tobacco,

road

vehicles,

and

oil

and

petroleum

products.

A limited range of goods requires import licenses, which are issued by the UK Department of Trade and Industry's Import Licensing Branch. These include firearms and explosives, nuclear materials, controlled drugs and certain

items

of

military

equipment.

The UK participates in the Wassenaar Arrangement for the control of dualuse exports, the Australia Group (AG) for the control of chemical and biological weapons, and the Nuclear Suppliers' Group (NSG) for nuclearrelated goods, preventing the export of restricted goods and technology to countries of proliferation concern. The UK also supports United Nations' sanctions restricting exports to certain other destinations. Although sensitive to the extraterritorial application of U.S. law in export controls, the UK authorities cooperate with the U.S. in preventing the re-export of sensitive

goods and technology of U.S.-origin to unauthorized destinations, when the enforcement

action

is

based

on

multilateral

controls.

The documents required for shipments include the commercial invoice, bill of lading or air waybill, packing list, insurance documents, and, when required, special certificates of origin, sanitation, ownership, etc. A copy of the commercial invoice should accompany the shipment to avoid delays in customs clearance. No special form of invoice is required, but all of the details needed to establish the true value of the goods should be given. At least two additional copies of the invoice should be sent to the consignees to facilitate customs clearance. Consular documents are not required for shipments. Origin, weight and dimension, chemical composition and appropriate hazard warnings are required for consumer protection purposes on any product offered for retail sale. If the product cannot be labeled or marked, the data may be included on any packaging or accompanying printed material or product literature. Although metric units of weight and dimension are required, the continued use of labels with both metric and standard U.S. units is permitted. This continued freedom is supported by importers, and also by British exporters of products destined for the U.S. market. European and British clothing and shoe sizes are differently marked, and special provision may have to be made for retail labeling of apparel. Prohibited imports include AM citizens band radios, switchblade knives, devices that project toxic, noxious or harmful substances (e.g., tear gas), counterfeit coins and currency, and certain types of pornography. The UK supports the use of ISO, EU and national standards, with the higher standard superceding the lower as soon as it is issued. Although industryspecific standards and approvals have no legal standing, they are often

accepted as an assurance of product quality if no relevant national standard exists. Such acceptance, though, is invalidated when a national, EU or ISO standard.

ECONOMIC

AND

TRADE

STATISTICS COUNTRYDATA

-- The UK population is estimated to be just under 60 million people. -- The population is forecast to reach 63.6 million people in 2021. This 6 per cent increase over the next 21 years equates to annual population growth of just0.3percent. -- The UK is a constitutional monarchy. The Head of State is Queen Elizabeth II. The head of government is Prime Minister Anthony (Tony) Blair. The monarch is hereditary; the Prime Minister is the leader of the majority party in the House of Commons (assuming there is no majority party, a prime minister would have a majority coalition or at least a coalition that was not rejected by the majority). The legislative branch consists of two chambers: the elected House of Commons (659 members) and the unelected House of Lords (686 members as at June 18, 2001. The number varies as peers are created). In addition to the UK government in London, there are an elected Scottish Parliament in Edinburgh, an elected Welsh Assembly in Cardiff,

and

an

elected

Northern

Ireland Assembly

in

Belfast.

The official language is English. Welsh is spoken by a substantial minority in Wales, and Gaelic by a minority in Scotland. In addition, there are many large communities in the UK whose first language is not English. Numerous languages are spoken in London, including thirty-three for which there are resident

populations

of

10,000

or

more.

--GDP(2000)=$1,355billion --EstimatedGDP(2001)=2.3% -- Government spending is estimated to be 39.7 per cent of UK GDP -- Inflation: The underlying rate of inflation in the UK is forecast to be 2 per cent in 2001. This compares to the UK government's target of 2.5 percent.

Samples of Our Product

Pictures of Processing

Sources of information • Internet • Journal • Books • Visit to a manufacturing unit (Delta Garments)