H&M sees great potential for textile sector in Africa

Swedish fashion giant H&M sees huge promise in Sub-Saharan Africa for the textile industry, chief executive Karl-Johan Persson said Wednesday.

"I think there is great potential for production in Sub-Saharan Africa," Persson told Swedish financial newspaper Dagens Industri.

"We have started with small-scale production in Ethiopia and will see how it goes. It looks interesting."

After placing test orders in Ethiopia last autumn, H&M plans to explore other areas in the region in the spring.

"We are looking at several African countries, like South Africa," said Persson, who praised the business climate in the region.

"Government officials, Swedfund (the Swedish government development bank) and the NGOs, they all welcome that H&M and other clothing manufacturers are coming in," Persson said.

"They know how important it is for job creation and their economies."

Most of H&M's products are currently made in Asia and, according to Persson, "there won't be any dramatic changes in the distribution of the production in the short-term."

"But there could be changes in the long run," he added.

"That will depend on how prices, quality and lead times evolve."

Persson also highlighted the great sales potential in Africa, "where many countries are growing very fast, where there is a growing middle class."

South Africa, where the company expects to open stores in 2015, will be the third country in H&M's African retail expansion after Morocco and Egypt.