Jessica Pang F.4C (27)
F.4 Economics: News Analysis
The casual wear retailer Bossini international group had earlier invested a huge sum of
money to market on its new brand in China, Sparkle. However, the Executive director of
Bossini, Kathy Chan said that this new brand’s performance was dissatisfactory, as many
other new brands had emerged in the mainland and sell their garments at a very low price.
The group unveiled their interim results on the 7th December,2005, which showed that
operating profit in the mainland fell from six million dollars a year ago to 1 million dollars in
the first half, dropped by 83%. Sparkle could not make any profit facing its low price
competitors.
P
P
Fig.1
Fig.2
S
P1
P1
P2
D1
P2
D1
0
D2
Q
Q1
Q2
Decrease in price of other
new brands in China
0
Q
Q2
Q1
Decrease in demand for
Sparkle garments

As shown from the above graphs, Sparkle and the new brands in China are in
competitive demand. They can be replaced by each other.

As other new brands lower their selling price (Fig.1// P1 to P2), there is a movement
down the demand curve, the quantity demanded for garments will relatively rise (Fig.1//
Q1 to Q2) This phenomenon can be explained by the law of demand.

Consumers turn to other new brands, the demand for garments in Sparkle will drop and
the demand curve shifts to the left (Fig.2 // D1 to D2).