Slide1: TEXTILE AND CLOTHING INDUSTRY
operated as small workshops
years between 1931-1945 products of textile was sufficient for 80% of domestic demand
significant capacity improvements in textiles and clothing industry starting by the 1970s
after January 24, 1980 economic reforms, the textiles and clothing industry has developed
the textile and clothing industry is one of the most important sectors in Turkish economy in terms of GDP, employment and exports and has great significance in terms of development; mounting to 11% of the GNP and shares of industry in employment is 21% in manufacturing industry
Turkey does not have significant cost advantages to compete with Asian countries, which enjoy lower labor costs
the leading Turkish entrepreneurs in the textile and clothing industry are now focusing on how to make Turkey more competitive under pressures of globalization and constricting domestic capacity.
Slide3: STRUCTURE Number of firms and buyers in industry numbers of small and medium size firms- SME-
the rest are worldwide operating leading firms in industry
total numbers of firms are 49278 and 65% of that amount is SME
large numbers of buyers in textile and clothing industry Slide4: Numbers of employment textile and clothing industry is one of the most hiring industries in Turkey
in Ministry of Labor and Social Security statistics, total amount of employment in January, 2003 were 538.709
according to labor and employer union, employment is around 3 million
according to CFD and EURATEX employment is around 2 million and 1.783.000 respectively
there is not enough formal research about children worker and foreigner illegal workers but according to observation numbers of children worker and foreigner illegal workers are around 300.000 in 2002
Slide5: Density of firms textile and clothing production become dense in İstanbul, İzmir, Bursa, Denizli, Adana and Gaziantep
Household textile producers are generally located in İstanbul, İzmir, Bursa, Denizli, Kayseri, Gaziantep and Uşak
Towel and burnoose producers are located in Denizli and Bursa. Blanket producers are located in Uşak. Slide6: ENTRY AND EXIT CONDITIONS developed and developing countries made an agreements like;
Long-term Agreement on Cotton Textiles-1962
Multi-Fibre Arrangement -1974
Agreement on Textiles and Clothing-1995
In 1996, the realization of the Customs Union between Turkey and the EU has eliminated quota restrictions on Turkish textile and clothing products in the EU market
In 2005, all quotas were eliminated
Slide7: PRODUCT DIFFERENTIATION In general, the textile and clothing industry in Turkey currently bases its competition strategy mainly on low price rather than product differentiation
There is not enough specialization and companies do not develop new products. There is not sufficient product differentiation
Slide8: VERTICAL INTEGRATION SME can only focus on some activities so it causes forward and backward linkages
there is not vertical integration in SME
leading firms can provide raw materials and needs by producing into the firms. It shows us in leading firms there is vertical integration
Slide9: CONDUCT 1.BUSINESS OBJECTIVES
3.BRANDING AND MARKETING
4.RESEARCH AND DEVELOPMENT
4.1. THE UNAVOIDABLE EFFECTS FOR R&D
4.2.THE MAIN PROBLEMS OF R&D IN TEXTILE
5.COLLUSION AND MERGERS
5.1.RESULTS OF SWOT ANALYSIS DONE FOR
COMPLEMENTARY AND RELATED INDUSTRIES
Slide10: 1.BUSINESS OBJECTIVES There are lots of small businesses in the industry
They usually don’t give attention to become an expert about their branch
The other business objective of firms is to maximize their profit but this is a monopolistic market so the first thing to increase their profit is to improve the information net between them and to follow technology.
Export activities in textile industry is very common
It is an objective to increase their market share and profit
These are some of profit and non-profit maximization objectives of the firms in textile industry.
Slide11: 2.PRICING POLICY The pricing policy can change for each foreign and domestic market
The results of researches shows that big percentage of the exports made to E.U. and U.S.A. Export of textile and ready made clothing done by U.S.A. is highly price elastic but the price elasticity of exports to E.U. is very low this means that the firms should be careful to export high quality goods and to keep up with the latest fashion for E.U. market and price should be more crucial for U.S. Market.*
The pricing policy for domestic market is affected by large scaled firms but small and medium enterprises produce products suitable for all income level and determine their price according to demand in the market
*resource:Esra YARICI,İGEME Slide12: 3.BRANDING AND MARKETING Some of strategies to develop branding and marketing are ;
To sell or export highly fashioned products with Turkish global brands and to increase the amount of this production group in total export.
To sell medium level fashioned products to domestic market with Turkish regional brands.
To produce less simple/standard products and decrease the production level of outsourcing clothing.
Technology should be used for marketing such as e-commerce.
To improve the infrastructure of e-commerce and e-marketing is very important in a competitive world.
Slide13: 4.RESEARCH AND DEVELOPMENT The subjects that are in the consideration of R&D are as follows ;
Raw materials and textile
Fiber technology and equipment.
Weaving-knitting technology and equipment
General discipline of textile.
Paint- press technology
Fashioned ready made clothing
Production planning in textile
Quality control management
There are some institutions which are ready to help for the firms interested in R&D are; TUBITAK, universities such as DOKUZ EYLÜL ÜNİVERSİTESİ, EGE ÜNİVERSİTESİ ,KOSGEB, MAM (MARMARA ARAŞTIRMA MERKEZİ).
Slide14: 4.1. THE UNAVOIDABLE EFFECTS FOR R&D World is getting competitive day by day, new technological innovations are going rapidly so; all the firms which compete in this world; have to get an advantage to get a market share.
The best way for this is to invest in technology and education; which are the main part of R&D.
All firms should follow the technology whatever it is scale is.
Slide15: 4.2.THE MAIN PROBLEMS OF R&D IN INDUSTRY The conscious of r &d is not get into the vision of firms.
R&D is understood as a luxury rather than a compulsory investment.
Not to create R&D projects.
Firms could not understand the importance of total quality management.
Lack of infrastructure of communication and high cost of these services.
Common R&D projects should be created between firms.
Firms should benefit from subsidies, founds, laws for education etc.
Slide16: 5.COLLUSION AND MERGERS Most of small firms in the industry try to collude or become a cartel to be stronger in the competitive market.
These relations are especially forward linkages
For the firms use their own brand abroad or in the domestic market generally prefer backward linkages for raw materials
New organizations or groups about development of ready made clothing during the last ten years such as IGEME, İTKİB, some departments in universities also the chambers of commerce; Denizli Ticaret Odası, İzmir Ticaret Odası, Istanbul Ticaret Odası etc. these associations are very important for this industry.
Slide17: 5.1.RESULTS OF SWOT ANALYSIS DONE FOR COMPLEMENTARY AND RELATED INDUSTRIES Strength : The joint information system and cooperation between firms makes industry stronger. Also there is a large accessory industry which complement the textile industry. There are three organization in İzmir which support research an development in textile industry; Ege Üniversitesi Tekstil ve Hazır Giyim Araştırma ve Uygulama Enstitüsü, Dokuz Eylül Üniversitesi Hazır Giyim ve Dokuma Araştırma Enstitüsü. But these institutions are not enough for comprehensive researches.
Weakness: They become dependent to each other without success of coordination. The weakness of finance sector affects textile industry in a negative way.
Opportunity: To constitute research department in universities for complementary industries can make textile industry stronger. Government can affect it in a good way.
Threat: High inflation threatens the industry
Resource:”Tekstil ve Hazır Giyim Endüstrisi İçin Sürdürülebilir Gelişme-2003”
Slide18: PERFORMANCE 1.PROFITABILITY
1.1. EXPORT PROFITABILITY
1.2.IMPORT PERFORMANCE OF TEXTILE AND CLOTHING INDUSTRY
1.3.COMPETITIVE FACTORS FOR 2005 THAT AFFECT PERFORMANCE OF INDUSTRY
3.1.ECOLOGY OF TEXTILE
3.1.1.DEVELOPMENT IN THE STUDY OF ECO-TEXTILE IN TURKEY
Slide19: 1.PROFITABILITY The structure of market is monopolistic competition
Exporting is very common in the market, so their profit is not as much as they want because; they could not use their own brand in exporting .
They usually export clothing without any brand and the most value addition process is completing in foreign countries.
To maximize profit; creating own brand is very important but it is not a common idea or application in the industry.
Slide20: 1.1. EXPORT PROFITABILITY At the end of 2002, the export of textile industry was close to $3 billion and increased 23% in 2003; up to $3.7 billion. It’s share in total export was 8.9% as seen on the table.
Most of textile export done to Italy, Germany and U.S.A. But owing to devaluation of U.S. Dollar in 2003 the export decreased 11% compared to other years.
In 2004, increase in export of textile stayed behind of increase in total export. So the share of textile industry in total export decreased from 8.3% to 7.9%.
Resource:DTM Slide21: 1.1. EXPORT PROFITABILITY In 2003 the percentage of clothing in total export was 23.7% but in 2004 it regressed to 20.2%.
In 2005,the acceptance of China to WTO, threats the countries especially Turkey, because they sell high quality ,low costly products to all over the world and cost of labor is very low in China ; but not in Turkey ; so other countries choose to import clothing from China.
Resource:DTM Slide22: 1.2.IMPORT PERFORMANCE OF TEXTILE AND CLOTHING INDUSTRY The implementation of Custom Union Agreement provide the elimination of tariffs and taxes that Turkey apply to Europe countries related to that the import of textile and clothing increased from 1996 to 2003. Import increased from 3 billion dollars to 5 billion dollars and the its share increase from 6.8% to 7.3%in total import.
Resource:DTM Slide23: 1.3.COMPETITIVE FACTORS FOR 2005 THAT AFFECT INDUSTRY PERFORMANCE Trade without quotas and China’s acceptance to WTO
The candidate countries for EU which one producer for textile industry
Stronger Mexico in NAFTA
The free trade process of South America with NAFTA
Formation of G-20
Rapid technological progress to create new local brands for market
Find niche markets
High quality products
To export our own brands
Slide24: 2-GROWTH At the beginning of 1980s Turkey was exporting especially fiber, fabric and knitting but later 1986 and up to now export of clothing increased year by year. In 90s export was fed with value added clothing.
Economic stability program caused an economic crises in Turkey in 2001 and this made textile industry worse off.
In 2001 the cost of production increased so the profitability of the industry decreased.
R&D is very important for the vigorous growth and if this is the case; to become an expert on the field that they produce is also a component of growth.
Slide25: 2-GRW 2-GROWTH The researches made a SWOT analyses for demand of sales in below;
Strength : There is large demand from E.U. to Turkey. But if Turkey should adopt to develop ISO Standards and environmental conditions better. The demand will increase much more than today. .
Weakness: Turkey do not have any effect on E.U. decisions.
Opportunity: Turkish textile firms should increase the quality of their products and make stronger the procurement chain of them to rise comparative advantage up.
Threat: Non- branded products will goon to face with high competitive .
Resource:”Tekstil ve Hazır Giyim Endüstrisi İçin Sürdürülebilir Gelişme:2003” Slide26: 3.TECHNOLOGICAL PROGRESS Technological progress is not developed rapidly because of the market structure. It is discussed in research and development with detail. The common growing idea in technology is ecologic textile in recent years.
Slide27: 3.1.ECOLOGY OF TEXTILE The term ecology in textile means that the process start with the raw material of product and goes on to the time that it become waste. It is a term that must be understood as a entire process. This process can be examined in three parts:
1) Production Ecology
2) Human Ecology
Slide28: 3.1.1.DEVELOPMENT IN THE STUDY OF ECO-TEXTILE IN TURKEY For foreign consumers it is important that the product they consume is friendly environment or not. Recent years they usually demand eco-textile products.
In turkey, Eco-textile terminology is not as broad as in the world but recent years textile industry got more successful progress on this subject compared to 90s. Well then the health care institutions give attention to this in Turkey and in trade partner countries.
After the Southeastern Anatolian Project(GAP) the improvement of eco-textile become faster because; the fields opened to cotton were very suitable to produce raw materials without any chemical addition.
It is costly to produce an ecologic product compared to others. That is a barrier for eco-textile.
Slide29: 4.THE ROLE OF GOVERNMENT The main contributions of government should be as follows:
Support for technology and R&D.
Support for finance
Support for production and quality
Support for marketing
Other kinds of supports.
The enlargement of Eximbank opportunities
Stronger finance structure for firms.
PSBR Policy etc.
Slide30: 4.1.PSBR POLICY AND TEXTILE AND CLOTHIG INDUSTRY PSBR(public sector borrowing requirement policy) policy affect the direct investments to industry and increase interest rates. So government should be very careful about not to borrow much more from internal financial markets. The best contribution for this problem is to reduce the authority of public sector on monetary and finance markets. So the balance of expenditure and income must be under controlled.
Slide31: 4.2.EXCHANGE POLICY AND TEXTILE AND CLOTHING INDUSTRY 4.2.1.INFLATION, EXCHANGE RATES, TEXTILE AND CLOTHING INDUSTRY Volatility in reel exchange rates creates a volatility in export and imports and valuation of exchange.
Resource:YAŞAR UYSAL Slide32: 4.2.2. SHORT TERM FINANCIAL INVESTMENTS, EXCHANGE RATES,
TEXTILE AND CLOTHING INDUSTRY As other emerging market economies, to borrow money from international financial markets much more, Turkey sometimes create a suitable condition for short- term financial investors. For this aim, they use interest rates and exchange rates ; reel interest rates increase above the world interest rates and some foreign currencies are valued less.
Less valuation of exchange reduce exports in textile and other industries
Slide33: 4.3.UNDERGROUND ECONOMY AND TEXTILE AND CLOTHING INDUSTRY If the government cannot control the whole economy; the amount of underground transactions increase and this creates a problem such as unfair competition
Slide34: 4.4.MISUNDERSTOOD OF ECONOMIC SYSTEM AND TEXTILE AND CLOTHING INDUSTRY In January 24 , 1980 turkey accepted the free market economy. Before 1980;the economic system was mixed economy . Liberal economy was understood as “arbitrary” not as liberalization for a long time.
The main complementary condition of liberal economy is competitiveness but; firms avoid themselves from competition by cartels, illegal collusions etc. Still there is not an institution against to cartels in Turkey. It is lack of fair competition.
Slide35: CONCLUSION Provision of cheaper and quality raw materials ,
Mass production and rapid delivering, investments for eco- textile,
Fashioned and branded products,
Being close to big markets,
New marketing techniques,
Service after sale ,
Direct foreign investments can be advantage to enlarge the industry and profitability.
The producers should evaluate these factors carefully.
Also to struggle with China, firms should give attention to easy procurement too much because it is a comparative advantage for Turkey against China. Slide36: THANKS
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