Transcript Slayt 1 - Dokuz Eylül Üniversitesi

TEXTILE AND
CLOTHING INDUSTRY
HISTORY
•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.
STRUCTURE
•Number of firms and buyers in industry
•numbers of small and medium size firms- SMEthe rest are worldwide operating leading firms in industry
•total numbers of firms are 49278 and 65% of that amount is SM
•large numbers of buyers in textile and clothing industry
•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
•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.
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
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
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
CONDUCT
1.BUSINESS OBJECTIVES
2.PRICING POLICY
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
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.
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
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 ecommerce.
•To improve the infrastructure of e-commerce and emarketing is very important in a competitive world.
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
•Ecologic textile
•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).
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.
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.
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.
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”
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
2-GROWTH
3.TECHNOLOGICAL PROGRESS
3.1.ECOLOGY OF TEXTILE
3.1.1.DEVELOPMENT IN THE STUDY OF ECO-TEXTILE IN TURKEY
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.
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%.
9
8,8
8,6
8,4
8,2
8
7,8
7,6
7,4
export
share(%)
2002 2003 2004
Resource:DTM
1.1. EXPORT PROFITABILITY
25
20
15
export share
of clothıng(%)
10
5
0
2002 2003 2004
Resource:DTM
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.
1.2.IMPORT PERFORMANCE OF TEXTILE AND CLOTHING INDUSTRY
35
30
25
20
ım port s hare
of te xt.&clth.
İn total(%)
15
10
5
0
2002 2003 2004
Resource:DTM
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.
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
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.
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”
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.
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
3)Waste Ecology.
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 ecotextile 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.
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.
•Economic stability.
•PSBR Policy etc.
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.
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
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
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
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.
CONCLUSION
•Provision of cheaper and quality raw materials ,
•Mass production and rapid delivering, investments for eco- textile,
•Fashioned and branded products,
•R&D activities,
•Packaging ,
•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.
THANKS
FOR YOUR ATTENTION