Reverse Flow: Levis Jeans Created in China to Debut in US

Innovation is no longer the sole province of western economies. China has been the place where things get made, not where they get designed. That is changing. In a global marketplace, sources and uses of products and ideas ought to be freely exchangeable. This development suggests that is beginning to happen. This may also be good news for western job creation as honest recognition of value and cost will inevitably lead back to the countries that produced high quality for so much of the last two centuries. Barney Jopson and Patty Waldmeir report in the Financial Times:

"Levi Strauss, the maker of Levi’s jeans, is to bring a brand of jeans that it nurtured in China back to its home market in the US, as the growing influence of emerging economies on product innovation reaches the clothing sector.

The company plans to launch its Denizen brand of low-cost jeans in the US in the summer, after eight months of experience selling to Chinese and other Asian shoppers.

While a significant proportion of global apparel manufacturing has been done in China for many years, consumers in the country have historically had little influence on global design and marketing.

Clothing has lagged behind sectors such as telecommunications and beverages, where multinationals have boosted their R&D in emerging markets and local rivals are producing a growing volume of innovations.

Aaron Boey, president of Denizen, said that Levi had learnt to produce affordable jeans in emerging markets by working out which features consumers were most sensitive to – be it the feel of the fabric, stitching, or the wash of the denim.

“It’s not about taking costs out, it’s about deciding what costs to put in to deliver the value that consumers appreciate,” he said. “We’ve gotten that validation in the markets we’re currently operating in. So ... we know we can nail it as well in the US.”

Apparel manufacturers are searching for ways to control costs as the price of cotton soars.

Matthew Crabbe of Access Asia, a Shanghai retail consultancy, said: “[This is] more of an operational management and accounting innovation – they work out how to shave a few percentage points off their costs, which China is a good training ground for.”

Since last August Levi’s has opened more than 150 stores that sell only Denizen jeans in China, India, Singapore, South Korea and Pakistan. Levi’s would not provide sales figures ahead of its earnings report on Tuesday. In the US the jeans will be sold through Target, a discount retailer, for between $20 and $30.

Levi’s said when it launched the brand last August that it would eventually bring it to the US.

Torsten Stocker, retail analyst at Monitor Group in Hong Kong, said shoppers often do not notice features that manufacturers think they value.

“If launching a ‘value brand’ for emerging markets forced Levi to really think about what matters to consumers in jeans, and they incorporate that into how they make, market and sell them, the principles are just as valid in the US as they are in China,” he said.