H&M to open PH shop soon?
Swedish fast-fashion house H&M says it is entering the Philippine retail market on its own

MANILA, Philippines – Another Swedish fast-fashion house Hennes & Mauritz AB (H&M) is laying the foundation for the establishment of its first store in the country.

H&M is among the Swedish companies, which previously had little interest in the Philippines, that want a piece of the “rising tiger.” Furniture giant Ikea has previously expressed interest to set up shop in the country following the trade visit of Swedish investors in February. (READ: Is Ikea coming to the Philippines?)

With the Philippines’ robust economic growth rates of over 7% in the past quarters, the retail and construction industries have been thriving, attracting even foreign players. (READ: Philippine retail market expected to grow double digitsMall construction soars in 2013)

H&M representatives have come to the Philippines expressing their intention to participate in the Retail Trade Liberalization Act initiated by the Department of Trade and Industry (DTI), said a source from the government who asked not to be named since he is not authorized to speak about the investment.

‘Luxury’ category?

Under provisions of the Act, foreign retailers are allowed to enter the retail market on their own given they comply with capital and investment requirements.

The source said that, without getting a local franchise or in a joint venture, H&M could apply for Category C or D.

DTI reserves other categories to local players.

READ: Bayo, Unica Hija merge to compete with foreign brands

For a firm to be wholly foreign under Category C, it should have a paid-up capital of at least $7.5 million and a per-branch investment of at least the peso equivalent of $830,000. The parent firm should have $200 million in net worth.

Enterprises offering high-end or luxury goods fall under Category D, and are required to have $250,000 in paid-up capital for each store. Their parent firms should have $50 million in net worth.

Unless the foreign enterprise has at least one store with at least $25-million capitalization, DTI requires it to have 5 branches or operations outside the Philippines and a 5-year track record.

DTI monitors and regulates foreign enterprises, and ensures that the firms’ parent groups comply with the law’s required capitalization and track record.

Some of the foreign firms that have signed up for the Act are Louis Vuitton and Japanese fast-fashion brand Uniqlo.

H&M is currently the world’s second-largest fashion retailer with 3,000 stores in 53 countries. It has 6 independent brands, namely, H&M, COS, Moki, Weekday, Cheap Monday & Other Stories.

It expects its stores to grow at 10% to 15% annually, recently expanding to Southeast Asia through opening its first store in Indonesia early this October.

The Swedish fashion retailer works with independent suppliers in Europe as it does not operate its own factory.

H&M has also sought partnership with Asian cotton suppliers earlier this year, alongside other Swedish brand Ikea, among others, as part of its cotton sustainability initiative. –