Georgia to Hit Clothing Market
07 July, 2011
Georgia to Hit Clothing Market

Thanks to a combination of skills, fitting geographic location, preferential trade regimes and global market changes, Georgia looks forward to the apparel industry development.

Experts having researched Georgian apparel industry in frames of the USAID- supported Economic Prosperity Initiate (EPI), find that development of apparel and textile industry is a good opportunity for Georgia to attract both foreign and local investments and hit the EU as well as post-Soviet market. Margaret Bishop, an EPI International Expert in the Apparel Sector,

personally researching Georgian apparel and textile industry potential, gives recommendations to the investors to focus on garment and fabric manufacturing in Georgia.

She believes that the underway changes at the global market coupled with favorable geographic location of Georgia, good apparel construction skills and low-cost labor force, as well as liberal trade regimes with the EU and Commonwealth of the Independent States (CIS) create a huge opportunity for Georgia to become a supplier country to the EU and CIS and meet local market demands at the same time. This was the key message she discussed during the workshop held for representatives of Georgian apparel and textile industry on June 24, 2011.

The value of global apparel exports is approximately USD 315 billion. Countries such as China, India, and Sri Lanka have significantly increased exports since the expiration of the apparel quota regime in 2005. However, China, the major bulk supplier of garment and fabrics globe over, is receding in its exporting positions due to upwardly going wage rates, fuel prices and local market demand, Bishop said.  Chinese who worked in apparel industry prefer to move to well-paid electronics industries that diminishes labor pool in apparel industry. As Chinese economy developed purchase power of Chinese consumers went up and many Chinese factories are shifting focus from export to local markets. On the other hand increasing costs on fuel jacks transportation expenses up and China is getting much more expensive to provide global market by apparel that hurls the international brands and retailers [sourcing most of their product in China] away.

They  are much more interested to find producer countries close to their market now. Georgia with its skilful and cheap workers of garment industry, as well as management experience, proximity and preferential trade regimes with the EU and CIS has quite a chance to become one of the supplier/manufacturing countries to this end.

If Georgia succeeds to get even a small portion of Chinese export market it will be a huge profit to the country. In 2009, 4,116 people were employed in the sector in Georgia; 85% of employees were women (3,488). 269 registered businesses are currently involved in the manufacturing of textile and apparel products. These businesses range from one or two employees working from home, to large-scale Turkish-owned apparel factories in Ajara. A new, Georgian-owned factory is getting started in Lilo, emphasizing branded apparel for the EU market.

Bishop approves competitive power and skills of Georgian apparel industry.

“I think Georgia has a tremendous opportunity, I am very impressed with the apparel production in particular here, you have a legacy and high quality garment construction, you have number of people who have got good design talent, good apparel construction skills, have some good apparel factory management experts here. Combination of factories you have currently and the trade preferences you have free trade agreements with CIS, GSP+ duty free preference for EU give tremendous advantage than the other  producing countries for European market and CIS,” She told Georgian Journal.

That wage rates are lower than in neighboring Turkey is also an advantage to Georgia. Turkey was an important supplier for European market for the last decade but it is becoming too expensive that increases Georgian chances to attract Turkish investments.

To increase its competition potential Bishop recommends Georgia that fully depends on imported fabrics and fashion accessories like buttons, zips, and other trifles at the moment to boost investments in fabric manufacturing both foreign and local alike. She advises Georgian government to create an affordable credit access to local companies so as the entire benefit might stay in Georgia.

On the other hand Bishop recommends Georgian apparel entrepreneurs to hit local market as well for it gives higher profit as exempts from extra costs related with the export.

Georgian apparel entrepreneurs look forward to the upcoming opportunities and expect fair deals.  As a matter of fact, foreign companies contracting Georgian apparel producers underpay generally that disappoints Georgians. Some have already contracted EU partners and were exporting garments to Europe but they stopped partnership due to underpayment. Labor cost in Georgia and China  are almost equal – USD 150-180 per worker, while transportation from China takes 45 days and only 2 days from Georgia. Transportation from Turkey also takes 2 days but salary stands at USD 800 there.

“For example they sold a garment produced by our company for EUR 30 and were reluctant to pay us EUR 5 for it. That’s why we stopped partnership,” Elguja Mamasaxlisi, Founder of “Elselem” apparel and textile manufacturing company told GJ.

Giorgi Kurkhuli, an owner of Knitex Ltd, an apparel producing company, also used to produce garments for a certain EU-based company and exported product to Germany, Switzerland, Austria, Belgium, and Holland, but stopped partnership due to similar reason. Both companies are focused on providing service to state tenders generally but still are open to foreign partners if they propose reasonable prices.

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