Turkey looks to strong clothing export growth in 2014
Turkey's clothing industry is anticipating stronger export growth in 2014, despite growing concerns within the sector about increasing pressure on price from European retailers.
Cem Negrin, president of the Turkish Clothing Manufacturers' Association (TCMA), has told just-style the Turkish garment industry is aiming for growth of between 9% and 10% in 2014. According to data from the TCMA, Turkey's clothing exports grew by 8% to US$17.4bn in 2013.
Demand from the EU, which accounts for around 70% of Turkey's clothing exports, remains strong, Negrin explains.
While the cost of sourcing from Turkey is currently between 30% and 40% higher than countries such as China and India, he added that Turkey's ability to offer shorter runs, as well as turnaround times of between four and five weeks, is proving increasingly beneficial, especially as European retailers continue to face economic uncertainty.
"If all the people in Europe were confident, they would buy more from the Far East," he says. "But instead they are staying with us, and I think this will continue. We have several advantages, especially our location, and having the entire supply chain and our working power here."
According to TCMA figures, Germany remains the biggest market for Turkish clothing, with its exports there growing 7.9% to US$3.7bn in 2013. Turkey's other leading markets include the UK, where Turkish exports fell 1.8% to US$2.1bn in 2013; Spain, which was up 4.5% to US$1.5bn; and France, which lifted 8.8% to US$1.1bn.
Turkish garment exports to the Ukraine also grew strongly in 2013, climbing 72.5% to US$333m, as well as Iraq, which was up 39.4% to US$580m. Negrin says the sector is aiming for stronger growth in Russia in 2014. Exports there grew 8.4% US$412m in 2013.
Across Turkey's export markets as a whole, sales of knitwear grew by 10%, and woven apparel by 5%, with sales of T-shirts climbing 9%.
Pressure on price points
However, Gunhan Kildiran, co-owner of Gün Örme, a knitwear company in Istanbul, says that whilst overall industry revenues are increasing, the garment sector is facing growing pressure on its price points - making it increasingly difficult to achieve profit levels at which companies can invest in R&D and new technology.
"The way it works with many European retailers is that they look to buy from Asia and if they have problems they come to Turkey, but they still want to pay Far East prices," he says.
"But because our legitimate expenses are so high, and we work to EU standards, we can't work with those sorts of prices. Previously we had government subsidies, but now our industry is not a priority for the government. Many companies here are just keeping their head above the water now."
Mustafa Balkuv, chairman of the Turkish Knitwear Industrialists Association (TRISAD), concedes that the prices being paid for Turkey's clothing have dropped over recent years, but says the way the industry is facing the challenge suggests it can be optimistic about the future.
"There were previously many smaller companies in Turkey with high profits but, as profits have fallen, many companies have chosen to share production facilities or merge," he says.
"As this means there are more and more big companies here, productivity is improving, which means that a more competitive price can be achieved."
Negrin says Turkey is also expecting to benefit from a significant drop in the Turkish Lira over recent months.
After falling 17% in 2013 amid political uncertainty caused by widespread anti-government protests, the Lira fell a further 9% in January and sunk to several new all-time lows, following the launch in mid-December of a major corruption investigation involving a number of people close to Prime Minister Recep Tayyip Erdogan's administration.
Like many other emerging market currencies, the Lira has also been affected by the US Federal Reserve's December decision to begin tapering its US$85bn-a-month quantitative easing programme.
"We are planning for growth of 9% in 2014, but it could be over 10% if the Lira doesn't go back up," says Negrin.
"We had a big meeting recently with our member companies and many of them said they are confident of 10% growth in 2014." He adds that clothing exports grew by 9% in the first three weeks of 2014.
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