Textile & Apparel business in Turkey

Economies Of Scale - Textile & Apparel business in Turkey

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Market Overview

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Economies Of Scale

Textile and Apparel industry has a great contribution to the Turkish economy. The industry has been denominated as the locomotive of the Turkish economy for years. Turkey's textile and apparel exports continued rising recently after began falling in January, with elimination of Eu and Us quotas.

The industrialisation efforts of the 60's and 70's gave birth to the contemporary textile industry in Turkey. At the beginning, this sector was operating as small workshops. But the sector showed rapid improvement and while the 1970's began exporting. Today, Turkey is one of the foremost textile and clothing producers and exporters in the world.

Turkey's textile and clothing manufacturers began relocating yield in Eastern Europe and Central Asia. In the last three years, Turkish textile and apparel companies faced raising difficulties, after having substantially succeeded in the eighties and the first part of the nineties.

Chinese textile exports after a decades-old quota theory limits ends on January 1, 2005 and the World Trade assosication believes that within three years the Asian giant could be producing over half of the world s textiles, up from 17% in 2003.

The end of the quota regime has spawned fears of broad job losses nearby the world, including in Turkey, whose own textiles and apparel exports stand at nearby billion a year.

Thus, it is indispensable to understand the Turkish textile and apparel sector, the weakness and the drive it has in the World market.

Current scenario of Textiles and Apparels in Turkey

The textile and apparel sector has been the backbone of the Turkish economy with a vital role to play in the industrialisation process and store orientation of the economy in the last two decades. In the 1980s, it was the foremost sector connected to the global economy and the export revenues of this hard currency earning sector contributed substantially to the broad economy. The textile sector continued to be one of the major contributors to the Turkish economy, being one of the fastest growing sectors in the 1990s with an average 12.2% yearly growth, while the Turkish economy had an average growth of 5.2% per year. Total speculation in the sector exceeded Us$ 150 billion, of which more than Us$ 50 billion was invested in the last 5-10 years.

Textile industry started out in the 1960s in small workshops, have rapidly advanced and transformed Turkey into a global competitor.

The total number of firms in the sector, dominated (95%) by the underground sector, number nearby 44,000 and 25% of them are active exporters. The apparel industry is constituted generally (80%) of small and medium sized firms whereas the technology-intensive textile yield has been undertaken by large-scale companies. Today, nearby 20% of Turkey's 500 largest companies are complex in the textiles and apparel sector.

Low labor costs, a qualified workforce, relatively cheap raw materials have played an foremost role in the indispensable growth of the sector; as well as a liberalized economic environment and export-led policies in the last two decades.

The yield value of the sector is over Us$ 20 billion. Employment in the sector is estimated to be about 4 million habitancy (2.5 million employed directly and a additional 1.5 million indirectly straight through the sub-sectors). Lawful statistics also reveals that nearby 500,000 employees in the sector due to unregistered labor force.

The apparel sector exports approximately 60% of its production. Capacity utilization rates are approximately 75% especially among exporting manufacturers.

Turkey ranks also among the top ten global producers of wool cloth, carpets, artificial filament and fiber, polyester and polyamide filament. While Europe's 3rd largest polyester producer is a Turkish-Us joint venture, Turkey's synthetics yield mounts to 15% of Western Europe's capacity.

Economic Contribution

Textile and clothing industry has a great contribution to the Turkish economy. For example, textile and clothing industry accounts for:

. 10% in Gnp

. 40 % in commercial production

. 30% manufacturing labor force

. 35% of exports earning

The textile and apparel sector contributes over 20 billion Usd to the Gross National Product. The sector is mostly foremost for its export earnings; its share in the country's total exports has been between 33-39% since 1990.

The major export store for Turkish textile and apparel goods is the Eu countries, which inventory for about 65% of total textile and apparel exports. Turkey ranks 2nd in apparel and textile imports to the Eu having an 8.2% and 4.8% share in the Eu's total textile and apparel imports respectively as of 2003.

Export scenario

Textile and apparel exports increased by 14.6% on average per year while 1980-2003. Especially until the second half of 1990s, the sector's exports increased at a rate above the growth in total exports of Turkey as well as the growth in global textile and apparel exports. In 2003, the sector's exports totaled Us$ 15.1 billion, having a share of 32.6% of the total exports. Exports rose to 23% in 2003, terms of value to 2002. The addition share of apparels in exports since 1986 signifies the efforts to produce more value added products.

After the Eu, the Usa is a big and impending market. Turkey is the 19th apparel supplier and ninth textile supplier of Usa with a 1.9% and 2.9% share respectively. Beside the Eu and the Us market, new markets are North African countries namely, Tunisia, Egypt and Algeria; Middle East countries namely Syria, Israel and Saudi Arabia; Eastern European countries namely Romania, Bulgaria, Poland and Hungary; and Cis countries. The sector faces quotas only in the Usa and Canada. The Russian Federation was also a big store for the Turkish textile and apparel sector till the financial emergency of August 1998. It was the 3rd biggest store for apparel and 9th for textile products in 1997. Russia is still a promising store for textile and apparel sectors with its high consumption possible that will come out in the following years especially after developments towards better integration to the world economy and Wto membership prospects.

Cotton market

Turkey is a very foremost cotton country, which is an benefit in raw materials, for the clothing industry. Turkey is a traditional cotton producer and uses this benefit in the textile and apparel sector. Turkey ranks 1st in Europe and 6th in the world cotton yield with an average yield of 800,000-900,000 tons per
year. Moreover, with the completion of irrigation projects within Southeastern Anatolian scheme (Gap), Turkey's most broad improvement program, current cotton yield is startling to double by the year 2005.

During 2003-04 season Turkey produced 893,000 tons of cotton. About 30% of the cotton yield is high potential long staple cotton and the rest is of medium quality. The cotton industry provides a contentious edge to the textiles industry, which utilizes cotton as its indispensable raw material.

Cotton store Trends
Main destinations for cotton yarn exports are Italy, Portugal, Greece and Belgium and for cotton fabric the Uk, Italy, Usa and Belgium. Whilst Turkey used to be a net exporter of cotton, the trade balance reversed in 1992 and since then Turkey has been a net importer of cotton since domestic interrogate has persistently exceeded ready stocks. Beside cotton, Turkey has a strong standing in artificial fiber, wool and mohair productions. Turkey ranks ninth in artificial fiber, eighth in wool and third in mohair yield in the world.

Home Textile Industry

Besides the Turkish textile industry Turkish home textile industry has also shown a growth in terms of yield and exports. In new years the yield of home textiles has shown a stable growth due to the rise in domestic and external interrogate for home textiles. Turkish home textile industry has recorded growth in terms of yield and exports in new years. approximately all kinds of home textiles are produced in Turkey. These may be listed as follows in order of their export values: bed linens, bedspreads, table linens, towels, bathrobes, voiles, curtains, lace, interior blinds, curtain or bed valances, blankets, cushions, pillows, quilts, eiderdowns.

In home textile sector, also large scale firms there are many small and medium sized firms scattered all nearby the country. As a department of the textile industry, the home textiles sector accounts for 3.2% share in Turkey's total exports and have been an foremost sub-sector for the Turkish economy. European countries are the most foremost markets for Turkey s home textile exports. At present Germany, the Uk, France, the Usa, Netherlands and Russian Federation are the major markets for Turkey s home textile exports. New markets such as Poland, Hungary, Romania and Cis countries are gaining more and more importance.

Foreign Investments in the Sector

The products of the Turkish textile and apparel sector have a good credit in foreign markets as a result of the availability of high potential cotton in Turkey, wide usage of Cad (Computer Aided Design) and Cam (Computer Aided Manufacturing) and the growth in the number of qualified personnel.

Conclusion

The sector is aware of the trend in international markets towards addition interrogate for healthier and more environmentally cordial products and tries to adapt itself to these developments by legal and technical regulations.

Nevertheless, it is hard to keep its contentious position in the world store full of emerging players. Thus, manufacturers have shifted their operations to value-added products and creation of brand names. Currently, 30% of Turkish manufacturers have their own designs and brands in international markets.

As current studies reveal, advanced countries will have a decreasing share in global textile yield while the developing countries will growth their manufacturing capacity to meet the addition demands. It is also estimated that by 2005, the developing countries will growth their self-sufficiency in textile production. The Us with an estimate of 200% growth in textile consumption is also estimated to have a 32% decrease in self-sufficiency by the year 2005.

Turkey, with its adaptability to European standards and regulations connected to environment, health, quality, and security is aiming to move into the yield of more and more value added products, into an era in which the Turkish textile industry will be known for its potential trademarks and will be pricing a product for the Made in Turkey sign.

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