A moderation in the growth of China and India has had a substantial impact on the world's largest luggage maker Samsonite, given that both the countries are among the top 4 markets for the USD 2 billion company.
Global CEO Tim Parker says growth rates in emerging markets will continue to outstrip those in the more mature markets for the foreseeable future. He expects Asia to become proportionately a larger part of Samsonite business.
Below is the verbatim transcript of Tim Parker's interview with Farah Bookwala on CNBC-TV18
Farah: How important are some of these emerging markets for you?
Parker: The growth rates in emerging markets will continue to outstrip those in the more mature markets for the foreseeable future. A lot of these markets have many more younger consumers as well. So, my expectation is that Asia will become proportionately a larger part of our business. Also Latin America and inevitably some of the more established markets will become a smaller part of our business.
Farah: These markets of China and India they are countries that are touted to have the highest propensity to consume and the fact that the sheer population is large enough to drive consumption but because these economies are not performing well today and are falling short on expectations is this something that worries you and does this change your view on Asian going ahead?
A: If you look at our business it is important to remember that although China and India are still second and fourth largest markets collectively they account for around 16 percent of our business. So, we like to see growth but our company is in no way dependent on the really large high growth population markets for our overall future.
Farah: How do you see India's contribution to global revenue shape up given the fact that over the last two years India has definitely fallen behind China?
A: That is probably true for all macro economic terms but luckily for us in a sense our business is very much driven by the travel industry. Travel is still continuing to grow.
Farah: If you had to see in absolute terms the luggage industry in India between you and your biggest competitor VIP Industries is still only Rs 1200 crore.
A: There is a market there. People are moving around. They need bags, they are buying bags. What we need to convince people to do is to buy a quality bag that lasts for a little bit more.
Farah: In the last year your performance was greatly affected in Asia because of the devaluation of the Indian rupee. Given that the situation has recovered but we are never going to go back to those 50 odd levels versus the dollar. Are you relooking at how Asia is going to pan out for you?
A: We just have to adapt our cost structure. So, we try and make efficiencies, we try and negotiate better with our suppliers. Everyone in the market is subject to the same sorts of pressures on imported products.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
