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					                CBI MARKET SURVEY: THE BODYWEAR MARKET IN FINLAND




                                       CBI MARKET SURVEY

                         The bodywear market in Finland
                                   Publication date: July 2009

Introduction
This CBI market survey gives exporters in developing countries (DCs) information on some
main developments in the bodywear market in Finland. The information is complementary to
the information provided in the CBI market survey ‘The bodywear market in the EU’, which
covers the EU in general. That survey also contains an overview and explanation of the
selected products dealt with, some general remarks on the statistics used, as well as
information on other available documents for this sector. It can be downloaded from
http://www.cbi.eu/marketinfo.

1       Market description: consumption and production

Consumption
Total consumer spending on bodywear rose by 2.1% in 2008 and have reached € 504 million,
including sales tax.

Finland ranked 16th in EU consumption of bodywear, behind Denmark (14th) and the Czech
Republic, accounting for 1.2% of total EU consumption. Per capita expenditure on bodywear
amounted to € 95 in 2008, which was well above the EU average of € 78.

Table 1.1 Consumption of bodywear in Finland, 2004-2009, in € million
                                    2004        2006           2008      AAGR           2009
                                                                          in%       forecasts
 Underwear                           122         136            144     +4.5%             140
 Foundation wear                     109         115            125     +3.7%             120
 Night- and home wear                 76          85             86     +3.3%              80
 Swimwear                             28          30             31     +2.7%              30
 Hosiery                              93         105            118     +6.7%             115
 Total bodywear                      428         471            504     +4.4%            485

 Annual change in %             +4.8%      +5.2%         +2.1%                          -3.8%
 T-shirts                          206        224           241          +2.9%            235
Sources: Euromonitor (2009), Eurostat (2009) and trade estimates

As described in appendix A of the CBI market survey ‘The bodywear market in the EU’,
functions of T-shirts vary strongly. According to most bodywear analyses, T-shirts are not
included in statistics about consumer expenditure of bodywear, but are mentioned separately in
table 1.1.

A fall of 3.8% in bodywear spending is expected for 2009, mainly due to the recession in
Finland, as will be described below (economic developments).

Demand for bodywear is determined by several factors like demographics, economic
developments and attitude of consumers towards fashion. These factors are discussed below.
Other more general factors and consequences for the bodywear market are discussed in
chapter 2 of the CBI market survey ‘The bodywear market in the EU’.

Demographics
The size and age structure of the population is one of the basic determinants of how much will
be spent on bodywear. The Finnish population is increasing at a steady pace from 5.22 million
in 2004 to a projected 5.35 million in 2010.




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                CBI MARKET SURVEY: THE BODYWEAR MARKET IN FINLAND




Table 1.2 Population trends in Finland, 2004-2010 (in ‘000)
                           2004        2006         2008            2010
                                                               forecasts
 Males                     2,553       2,572       2,597           2,621
 Females                   2,667       2,683       2,704           2,727
 Total                     5,220       5,255       5,301           5,348

 Age groups:
 0-14                    17.6%        17.3%        16.9%           16.6%
 15-64                   66.8%        66.7%        66.6%           66.4%
 65+                     15.6%        16.0%        16.5%           17.0%
Sources: Eurostat and Euromonitor

Just like in other major EU countries, the category below 15 years has decreased in Finland;
18.0% in 2000; 17.1% in 2007 and 16.6% in 2010. Following the trend in other European
countries of an ageing population, in 2007 16.5% of the Finnish population was 65 or over,
against 15.3% in 2003.

Economic developments
GDP growth, at 2.8% in 2005, accelerated to 4.8% in 2006 then declined to 4.1% in 2007 and
to 0.7% in 2008.
Having entered into recession in mid-2008, Finland will remain in a severe recession for most
of 2009, although this is not expected to be as long-lasting as the one it experienced during
the early 1990s. Finland's open economy will continue to be hit by a sharp fall in global
demand. The economy should begin to recover more substantially towards the end of 2010,
aided by the gradual recovery of the global economy, but growth for the year will still be
negative. GDP is forecast to fall by 5.7% in 2009 and by a further 0.1% in 2010.

Attitude of consumers towards fashion
Generally spoken, in the short term the clothing market is affected primarily by four factors:
the propensity to consume, disposable income, changes in the industry and the weather.
Women’s outerwear and children’s outerwear are affected most by these factors, whilst lingerie
reveals a considerably more stable sales level regardless of the economic climate, fashion and
weather. Sales are usually relatively spread throughout the year, although with peaks in the
autumn and spring and around Christmas.

Production
The Finnish clothing industry is one of the smaller ones in the EU. According to Finatex, the
Finnish trade association for textiles and clothing (http://www.finatex.fi), the bodywear sector
in Finland accounted for 21 companies in the underwear and swimwear sector and 15 in the
hosiery sector. The website mentioned includes links to manufacturers. Total turnover in the
bodywear sector decreased to € 36 million (ex-factory) in 2008. A further fall is expected for
2009.

Table 1.3 Bodywear production in Finland, 2004-2008 (in € million)
                                   2004          2006           2008         AAGR
                                                           estimates          in %
 Underwear                          11.9           1.8            2.1      -20.6%
 T-shirts                            6.4           8.3            6.2        -0.8%
 Foundations                         0.2           0.1            0.1        -8.6%
 Night- and home wear               11.3           8.3            6.9        -9.7%
 Swimwear                            0.6           0.4            0.3      -12.3%
 Hosiery                            25.0          19.9           20.6        -4.4%
 Total bodywear                     55.4          38.8          36.2        -8.7%
Source: Eurostat/Prodcom (2009)

Finatex supplies names, addresses and links of manufacturers of dressing gowns etc. (5);
underwear (17); lingerie (2); T-shirts (24); swimwear (4) and nightwear (12). Several
companies produce more than one product type.



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                CBI MARKET SURVEY: THE BODYWEAR MARKET IN FINLAND




Trends in consumption and production
• Companies’ manufacturing strategies include further intensification of outsourcing.
• Consumers in Finland have become more price-conscious in recent years. Bodywear sold
   through discounters, variety stores and hypermarkets have won ground in the period under
   review.
• The outerwear, as well as the bodywear, sector has been boosted by the arrival of a
   number of foreign retailers. Many Finnish shoppers still tend to be more price- and quality-
   conscious than fashion- or brand-driven in their apparel purchases. However, new entrants
   targeting the fashion-conscious and happier-to-spend young generation have found growth
   potential in this generally subdued market.

Opportunities and threats
+ Factors offering possibilities for bodywear exporters in DCs are:
  o strong fall in output of Finnish bodywear manufacturers;
  o growth in sales of wholesalers following three years of decline;
  o lower growth rate in consumer expenditure on bodywear based on higher volumes, but
      against lower prices.
± It should be noted that exporters in DCs will be faced with demands for high quality and
  environmentally friendly products.

    The same development or trend can be an opportunity for one exporter and a threat to
    another. Exporters should therefore analyse if the developments and trends discussed in
    this survey provide opportunities or threats. The outcome of this analysis depends on each
    exporter’s specific circumstances.

More information on opportunities and threats can be found in chapter 7 of the CBI market
survey ‘The bodywear market in the EU’.

Useful sources:
• http://www.finatex.fi is the website of Finatex. Click on ‘publications’, which results in a
   member’s directory including links and recent statistics.

2       Trade channels for market entry

The most interesting channels for exporters in DCs are:
• Manufacturing companies (see the previous chapter);
• Importers/wholesalers, most of the Finnish importers/wholesalers are member of the
   Association of Textile and Footwear Importers and Wholesalers. They can be reached via
   the website of this association: http://www.teja.fi;
• Retail organisations, especially central buying groups, chains and hypermarkets as will be
   described below.

Which channel will be chosen, depends on factors like (among others):
• Which type of bodywear producer (OPT, CMT, FOB, private label or own brand producer)
   tends to export to Finland. These types of producer are described in chapter 1 and 2 of the
   CBI survey ‘Guidelines for exporting bodywear to the EU’.
• The resources available and the priority given to the market in Finland.

Specialist clothing retailers accounted for 60% of the bodywear market in 2008, of which 14%
was independent retailers and 46% chains.

Lindex from Sweden offers lingerie, women’s and children’s wear in 51 outlets in Finland
(http://www.lindex.com). A third of total Lindex turnover concerned lingerie. Lindex competes
mainly with Sweden’s H&M (36 outlets), Sweden’s KappAhl (51 outlets in Finland), Sweden’s
Gina Tricot (12 stores in Finland), domestic chain Seppälä (127 outlets and among others 30 in



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                CBI MARKET SURVEY: THE BODYWEAR MARKET IN FINLAND




the Baltic countries - http://www.seppala.fi), Emotion (18 lingerie and beauty outlets -
http://www.sokos.fi) and the smaller specialised independents.
Lindex as well as H&M claim to be the market leader in the bodywear sector in Finland (and
Sweden).
Other general clothing chains including bodywear in their assortment are: Varner Gruppen
from Norway, offering men’s full wardrobe (from under- to outerwear) through 58 outlets of
the Dressman formula (http://www.dressmann.com), Marimekko (25 outlets, of which 23 in
Finland - http://www.marimekko.fi), the Danish Bestseller (30 Vero Moda and 29 Jack & Jones
stores in Finland - http://www.bestseller.dk), the Italian Benetton (8 stores;
http://www.benetton.com), the Swedish chain for women’s (outer- and) bodywear Gina Tricot
(12 stores) and, from Spain, Zara (4 stores). It should be noted that the role of bodywear
varies strongly between these chains.

Non-specialists accounted for 40% of the bodywear market in 2008, of which 20% department
and variety stores, 9% hyper- and supermarkets, 6% sports specialists shops, and 5% other
channels, including street markets and home-shopping companies.

There are few department store chains in Finland, but bodywear accounts for a considerable
part of the business for the main players Stockmann (15 stores of which 7 in Finland -
http://www.stockmann.fi) and Anttila (28 stores and part of Kesko Ltd.; http://www.anttila.fi).
The Stockmann department store chain is the largest clothing retailer in Finland by turnover.
The Stockmann group also owns the specialist clothing chain Seppälä and holds the Zara
franchise in Finland.

Sports speciality organisations are: Intersport (59 outlets; http://www.intersport.com), Elmo
Sport (23 outlets; http://www.elmo-sport.fi) and Sportia (50 stores; http://www.sportia.fi).

While hypermarkets and variety stores historically hold a considerable share of the clothing
market, they have less authority in terms of fashionability than grocers such as Tesco and
Asda in the UK. Two co-operative/voluntary groups dominate the Finnish grocery market. S
Group, SOK's cooperative arm, leads the sector, operating the largest (by sales) hyper- and
supermarket chains, 46 Prisma hypermarkets and 412 S-markets. Kesko, Finland’s largest
retail group, use a multi-format strategy too, trading through K-City markets (56
hypermarkets) and over 1,000 supermarkets and neighbourhood outlets.
Food discounter Lidl of Germany operates in Finland through a network of 126 stores since its
market entry in 2002.

The low population density and considerable distances between towns in Finland have led
many clothing specialists to limit their presence to the larger population centres. Despite these
factors, home shopping has not become a particularly important channel for purchasing
clothing. Finland is one of the seven European countries where H&M operates the Rowells
home-shopping division.
The above-mentioned department stores Stockmann and Anttila are active in home-shopping
and compete with international chains from France (PPR/La Redoute) and Germany (some
Arcandor formula).

Margins will vary depending on which market segment is being approached. Price is an
important selling factor, especially in the lower segments of the clothing market (hyper- and
supermarkets and discounters), whereas in the higher segments factors like quality and
fashion are more important than price. An indication of differences in price levels by types of
outlets has been given in chapter 1 of ‘The bodywear market in the EU’ and an overview of
margins valid for the levels distinguished in the bodywear market can be found at chapter 3 of
the same survey.

3       Trade: imports and exports

Imports



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                CBI MARKET SURVEY: THE BODYWEAR MARKET IN FINLAND




In 2008, Finland imported 13,530 tonnes of bodywear with a value of € 290 million, consisting
of 85% knitted bodywear and 15% woven bodywear. Total imports showed an annual growth
of almost 5% in the period 2004-2007 and stabilized in 2008.
Finland is the 16th largest importer of bodywear in the EU, behind Portugal and the Czech
Republic but above Hungary, accounting for 1.2% of total EU imports.

Sweden remained the leading bodywear supplier to Finland. Swedish exports to Finland
increased almost 10% in the period 2006-2008. The import share of Sweden accounted for
25% (in terms of value), followed by China (14%), Denmark (13%), Germany (10%), Estonia
(4%), Poland (4%) and India (3%). Imports from China showed the biggest increase in the
period 2006-2008, while imports from Denmark and Germany decreased. Other countries with
exports of more than € 4 million to Finland were The Netherlands, Bangladesh, Turkey,
Belgium, Italy, Portugal and United Kingdom.

Bodywear imports from other EU countries were 4% higher in 2008 (in terms of value) than in
2006, however, the import share of EU countries decreased from 77% in 2006 to 75% in
2008. In 2008, 23% of Finland’s total imports of bodywear came from DCs (in value) against
20% in 2006. Imports from DCs increased in terms of volume (+28%) and value (+25%) in
the period 2006-2008. This growth can mainly be ascribed to the growing imports from China,
at distance followed by India and Bangladesh, while imports from Turkey, Pakistan and
Thailand slightly decreased.

Table 3.1 Bodywear imports by Finland per product group, 2004-2008, in € million
                                  2004        2006        2008    Annual change in
                                                                         %
                                                                  2004-08 2007-08
 Total bodywear                  242.6       269.1        290.4    +4.9%    +0.0%
 Of which:
 Underwear                         44.8        46.2        46.8      +1.1%       +0.0%
 T-shirts                          98.2       117.6       128.4      +7.7%       -0.2%
 Night- and homewear               21.5        20.1        22.6      +1.3%       +4.6%
 Hosiery and socks                 39.0        42.1        47.3      +5.3%       -3.1%
 Foundation wear                   30.1        33.9        34.6      +3.7%       -0.9%
 Swimwear                           9.0         9.2        10.7      +4.7%      +10.3%
Source: Eurostat (2009)

In 2008, 9.2 million knitted underpants for men and boys were imported into Finland, of which
89% was made of cotton; against 9.0 million in 2006, of which 85% cotton-made. Average
import prices of cotton underpants for men and boys were € 1.91 in 2006 and € 1.98 in 2008.
Leading suppliers of cotton pants in 2008 were China (4.0 million units at € 1.32), Sweden
(1.6 million at € 2.76) and India (0.8 million at € 0.95).

Imports of knitted briefs for women and girls decreased from 14.9 million in 2006 to 14.2
million in 2008, of which 60% was made of cotton and 39% of man-made fibres. Average
import prices of cotton briefs were € 1.44 in 2006 and € 1.51 in 2008. Leading suppliers of
cotton briefs in 2008 were China (3.3 million at € 0.82), Sweden (2.3 million at € 1.55),
Denmark (1.4 million at € 3.14) and India (0.4 million at € 0.59).

Finnish imports of T-shirts increased from 33.7 million at € 3.49 in 2006 to 36.4 million units
at € 3.52 in 2008. 86% of imported T-shirts was made of cotton and 12% of man-made fibres
in 2008. Leading suppliers of cotton T-shirts in 2008 were Sweden (6.2 million at € 4.22),
Bangladesh (6.0 million at € 1.22), India (3.0 million at € 2.44), Germany (3.0 million at
€ 4.67) and China (2.9 million at 2.54).

83% of total imported value of night- and home wear concerned knitted nightwear (night-
dresses and pyjamas). 2.2 million knitted nightdresses and pyjamas for women and girls were
imported into Finland in 2008, of which 71% was made of cotton at € 4.33 per unit and 0.8
million knitted pyjamas for men and boys, of which 85% cotton-made at € 4.86 per unit.



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                CBI MARKET SURVEY: THE BODYWEAR MARKET IN FINLAND




One product type: knee- and full-length cotton stockings for women and girls covered 48% (in
value) of total hosiery and socks imports. Imports decreased by 12% to 25.8 million pairs,
whereas the average import price increased by 14% to € 0.88 per pair in the period 2006-
2008.

Imports of bras (excluding sets of briefs and bras) increased from 5.0 million at € 6.08 in 2006
to 5.1 million at € 5.99 in 2008. Leading suppliers were China (1.5 million at € 2.66), Sweden
(1.4 million at € 4.91), Denmark (0.7 million at € 13.69) and Poland (0.4 million at € 2.73).

Exports
Finland exported 1,187 tonnes of bodywear valued € 36.6 million in 2008, consisting of T-
shirts (35%), hosiery and socks (26%), night- and home wear (18%), underwear (11%),
foundations (6%) and swimwear (4%). Total bodywear exports (in value) grew annually 8%
during the period 2004-2007 and fell 1% in 2008 compared to 2007.

Finland is the 23rd largest exporter of bodywear in the EU, only Ireland, Luxembourg, Cyprus
and Malta exported less bodywear in 2008. Finland accounted for 0.2% of EU total exports.

Destinations were for 50% (in value) other EU countries in 2008 against 64% in 2006. Russia
remained the leading destination of Finnish exports; 43% of total exports went to Russia in
2008. Other destinations were Estonia (16%), Sweden (9%), Latvia (7%) and Germany (6%).
Leading destinations outside the EU, besides Russia, were Norway (3%), Japan (1%),
Kasakhstan (1%) and the USA (1%).

The size of re-exports cannot be derived from the available trade statistics.

Opportunities and threats
+ 24% of imports into Finland came from DCs in 2008. This percentage was higher for the
  product groups: underwear (28%), T-shirts (26%), night- and home wear (35%) but much
  lower for foundation wear (13%) and hosiery (16%). The low share of imports from DCs,
  which is far below the EU average of 54%, offers possibilities for exporters in those
  countries.
+ For starting and/or SME exporters, selling to wholesalers and importers has the most
  advantages. Disadvantages are lower margins and the missing of direct contacts with retail
  organisations.

More information on opportunities and threats can be found in chapter 7 of the CBI market
survey ‘The bodywear market in the EU’.

Useful sources:
• EU Expanding Exports Helpdesk - http://exporthelp.europa.eu             go to: trade statistics
• Eurostat – official statistical office of the EU - http://epp.eurostat.ec.europa.eu       go to
   ‘themes’ on the left side of the home page        go to ‘external trade’    go to ‘data – full
   view’   go to ‘external trade - detailed data’
• Understanding Eurostat: Quick guide to easy Comext
   http://www.eds-destatis.de/en/database/download/Handbook_Comext_Database.pdf
• Euratex bulletins - http://www.euratex.org

4       Price developments

Consumer prices
Inflation in Finland was 0.2% in 2004, 1.6% in 2006 and 4.1% in 2008, which was higher than
the EU average. The annual rates of inflation for 2009 and 2010 are forecasted at respectively
1.0% and 1.1%.




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                CBI MARKET SURVEY: THE BODYWEAR MARKET IN FINLAND




According to a price level study by Eurostat, clothing prices in Finland were 23% above the EU
average in 2008, which is the highest level in the EU. Sweden ranked second with 19%.

The VAT rate for bodywear in Finland is 22%.

Import prices
Prices of imports into Finland increased slightly during the period 2006-2008, as table 4.1
indicates, mainly caused by higher import prices of intra-EU trade. Please note that these
trends should be interpreted with care, as changes in imports do not reflect the demand in
Finland.

Table 4.1 Developments in Finland of average import prices in €, 2006-2008
                               2006          2007              2008     AAGR
                                                                         in %
 Total imports                  2.32           2.41            2.37     +1.1%
 Intra-EU                       2.68           3.02            3.03     +6.5%
 DCs                            1.54           1.49            1.43     -3.6%
Sources: Eurostat (2009)

Developments in import prices of specific bodywear products or product groups are mentioned
in chapter 3 of this survey.

Useful sources:
The Rowells home shopping division of H&M (http://shop.hm.com) or the on-line catalogue of
Sokos (http://www.digipaper.fi/sokos) provides an opportunity to get an idea of consumer
prices in Finland.

5       Market access requirements

As a manufacturer in a DC preparing to access Finland, you should be aware of the market
access requirements of your trading partners and the Finnish government.

For information on legislative and non-legislative requirements, go to ‘Search CBI database’ at
http://www.cbi.eu/marketinfo, select bodywear and Finland in the category search, click on
the search button and click on market access requirements.

Detailed information on packaging can be found at the website of ITC on export packaging:
http://www.intracen.org/ep/packaging/packit.htm.

Information on tariffs and quota can be found at http://exporthelp.europa.eu.

In the field of bodywear, mandatory labelling requirements in Finland are required for
composition of textiles. The materials/fibres used for the product must be declared on the
garment in the Finnish language. ‘Care labelling’ with recommendations or instructions on how
to treat the garment (eg washing, drying, ironing) is encouraged but not mandatory (see:
http://www.ginetex.net).

6       Doing business

Information on doing business like approaching potential business partners, building up a
relationship, drawing up an offer, handling the contract (methods of payment, and terms of
delivery) and cultural differences can be found in CBI’s export manuals ‘Export Planner’, ‘Your
image builder’ and ‘Exporting to the EU’. These can be downloaded from
http://www.cbi.eu/marketinfo - go to search publications.

More information on business practices in bodywear trade in Finland can be found at:




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                CBI MARKET SURVEY: THE BODYWEAR MARKET IN FINLAND




•   http://www.finatex.fi; website of Tekstiili (the Finnish Textile & Clothing Association).
    Information about the trade fair Helsinki Fashion Fair can also be found at this site. This
    major fair takes place in January and August, however, the role of bodywear is limited.
•   http://www.muotikaupanliitto.fi/en; website of Modin, the main trade magazine and
    published by the Association of Fashion Retailers in Finland.
•   http://www.kauppakamari.fi; the Finnish Chamber of Commerce.

Websites offering information on Finnish business culture are:
• http://www.kwintessential.co.uk/resources/global-etiquette/finland-country-profile.html
• http://www.buyusa.gov/finland/en
• http://virtual.finland.fi



                This survey was compiled for CBI by Fashion Research & Trends

              Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer




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