As a textile and clothing producer, Hungary offers a mix of the traditional and high-tech, ranging from fabric makers supplying the automotive and other advanced industries, to medium-sized CMT-manufacturers (often owned by, or working for, German and other foreign apparel groups) and a number of small fashion brands.

Despite facing a succession of challenges since 1990 – from the privatisation and restructuring of companies, to the rise of merciless international competition especially from Asia, and its integration into the European Union (EU) in 2004 – Hungary still has 43,000 textile and clothing workers.

It is also remarkable that the industry continues to do well, despite the loss of some traditional segments like staple fibre spinning and wool weaving and a discouraging business environment.

According to World Bank data, the country's textile and clothing exports edged up 3.2% in 2014 to US$1.62bn, from US$1.57bn the year before. Its top five export markets are Germany, Italy, Austria, Romania and France.

However, the World Economic Forum Competitiveness Report 2015-2016 ranks Hungary in 63rd place on a list of 140 economies examined. Four years ago (in 2011-2012) it occupied 48th place. Hungary scores well on infrastructure, technological readiness and innovation, but badly on institutions and business sophistication.

Moderate level of salaries

Dr Livia Kokas, CEO of the textile engineering and testing institute Innovatext in Budapest – a member of the Hohenstein Group – has a bird's eye view of the sector thanks to her roles in the Hungarian textile and clothing associations.

She points out that the industry enjoys a number of comparative advantages. Some are easy to measure, like the moderate level of salaries. Hungarian wages are significantly higher than in neighbouring countries like Ukraine, Romania and Serbia, but still much lower than in Western Europe. In 2014, Hungarian textile workers earned on average EUR548.8 (US$583) per month, and clothing workers EUR454.3 (US$483).

This could explain why foreign companies like the lingerie makers Felina (which has 602 workers in Hungary) and Calida (344 workers), and MITI, the Italian manufacturer of knitted fabrics (100 workers), continue to produce in Hungary. Also Coats, the British-based manufacturer of industrial sewing thread, is present in Hungary, with 263 workers.

However, most strengths of the Hungarian industry are more difficult to assess, like its traditional textile know-how, focus on quality, openness to new technologies, flexibility and creativity. Dr Kokas says that Hungary is traditionally a country of scientists and inventors.

Among the main problems the sector has to tackle are a shortage of capital, its weak image as a long-term career, and a loss of skills. Just as in Western Europe, industry associations and textile education institutes have a hard time convincing the next generation that the local textile and clothing industry has a future.

Fortunately, there are success stories in the field of manufacturing, such as the flourishing workwear sector, as well as brand building. The Hungarian brand Retro-Jeans has 19 brand stores, 11 franchisees and shops in 8 factory outlets in Hungary, and a number of stores in Czech Republic, Slovakia, Serbia and Spain.

The Hungarian company Flas Kft, which in 1999 bought the Italian jeans brand Devergo, distributes the brand in 13 European countries. Danube Fashion Office (DFO) in Budapest says it is currently the largest fashion distribution and press office for Hungarian and international brands in China and Southeast Asia, representing more than 40 top fashion and accessories brands and around 500 effective buyers.

Great craftsmanship

Compared with Western European countries, Hungary still has a strong pool of workers who know to manufacture high-quality clothing. In recent years the Belgian lingerie company Van de Velde, which until 2008 had a production unit in Hungary, lured skilled Hungarian clothing workers to its factory in Belgium to make prototypes.

In spite of complaints about the lack of capital, the Hungarian textile and clothing sector continues to invest. According to figures from the association TMTE (Textilipari Muszaki és Tudományos Egyesület), textile factories invested EUR21.2m in 2014 or 5.6% of textile industry turnover, and the clothing industry invested EUR14.5m or 4.5% of turnover.