International Apparel Federation: ’05 Key

Garment manufacturers and speakers at the IAF congress in Istanbul focused on China’s growing world dominance in manufacturing.

ISTANBUL — Garment manufacturers across the world share one major worry these days, and Turkey’s industry is no exception.

This story first appeared in the August 12, 2003 issue of WWD.  Subscribe Today.

“All everyone wants to know is whether China is going to take over the world,” said consultant David Birnbaum, a speaker at the International Apparel Federation’s 19th congress, which was recently held in Istanbul.

He was referring to the yet-to-be-seen effects of the end of quotas on textiles and apparel among the 146 World Trade Organization nations in 2005.

Ian Wilkinson, director of the European Commission Directorate General for Trade, laid out the figures: In the last year, EU imports from China had increased by 53 percent in value, but 164 percent in volume terms. That meant an average drop of 42 percent in price. U.S. import figures show a similar pattern.

“I leave you to do the calculations,” he said.

The conclusions, for Turkey and other countries trying to compete with the manufacturing powerhouse after the end of quotas, do not look very comforting. Textiles and apparel were the largest piece of Turkey’s $32 billion in exports last year, and the twin industries employ 6.5 million people here — almost one-tenth of the population — which makes the industry’s survival a key issue.

Wilkinson warned that, after the removal of quotas, serious problems could arise from the shift of the balance away from some of the world’s poorest countries, some of whose economies have a 90 percent dependency on the sector. But these could be guarded against if economic decisions were taken in a wider, more social context, he added.

“China has a major responsibility and is a major problem,” he concluded, “But it is not a great Satan.”

Still, apparel executives at the June event acknowledged there will likely be a sharp consolidation among manufacturing countries when the quotas are lifted.

“Would we be in 35 countries if quotas didn’t exist?” asks Gary Ross, vice president of worldwide operations, at Liz Claiborne. Answering his own question, he continued, “We’d probably be in as few as 10 to 15 countries. ”

Bill Lakin, director-general of the trade group Euratex, said the removal of the quotas could inflict serious damage to quality of life and hurt the developed world, too, if not handled properly.

“There appears to be a quasi-religious conviction that everyone in the developing world has a God-given right to sell whatever they wish in whatever quantities they wish on the developed markets,” he told delegates at the meeting.

He said if the idea of low-price, one-way trade from the developing to the developed world is accepted without question, the whole world could end up impoverished by the increased prevalence of “run-of-the-mill mediocrity produced at knock-down prices in Asia and with margins squeezed by large distributors.”

World Trade Organization textile division director Chiedu Osakwe contended the quota removals would enhance the credibility of the trade body, but acknowledged there will be pain ahead.

“A lot of the quota phaseout has been back-loaded,” he said, referring to the 10-year phaseout schedule that means the quotas on most goods will not be lifted until Dec. 31, 2004. “The most difficult adjustment in terms of the most sensitive products under restriction has been left until the final stage — 49 products [that remain to be liberalized] contain 80 percent of the quotas.”

Despite the fears, overall, speakers tried to emphasize the opportunities presented to textile-exporting countries. The advice to Turkish manufacturers was clear: Go upscale.

“As far as prices are concerned if it’s difficult to compete today, after 2005 it will be impossible…especially in Turkey,” said Bob Zane, senior vice president of production, sourcing and logistics at Liz Claiborne.

The idea is not new here. It is what farsighted apparel firms and the exporting body ITKIB have been trying to do for the past few years, fostering designers, introducing consultancies for brands and textile firms, improving marketing abroad and raising quality to move to a higher-priced market.

Yet there are still few discernible Turkish brands sold abroad, with some exceptions, such as Mavi jeans in the U.S. Brands such as Damat-Tween and some designers sell abroad, but have yet to gain the high profile enjoyed by the big European and American names.

Turkish State Minister for Trade Kursad Tuzmen was upbeat. He contended that 2005 would be an opportunity for Turkey, because it has already lifted most import restrictions through a customs union agreement with the European Union.

“It will be an advantage because countries to which we currently can’t sell will lift their quotas,” he said.

IAF President Umut Oran, who also heads up the Turkish Clothing Manufacturers’ Association, said the country is better placed to meet the challenge than it had been years ago.

“In the past, the industry didn’t pay much attention to designers. It didn’t give them money,” he said. “Now, the Turkish economy isn’t in good shape but the industry has good cash flow. We have to compete with France and Italy and we have to find the right strategy together. So we have been introducing creativity.”

Observers acknowledged that Turkish manufacture had improved from the days when the local industry was just a cheap, anonymous assembler of undistinguished foreign products.

“Today Turkey is on the verge of becoming a perfect producer,” said Didier Grumbach, president of the French Fashion Federation. “You are on the verge of achieving this with quality, flexibility and productivity.”

Turkish-born Ayse Ege, of the Paris-based Dice Kayek label, said that when she and her sister Ece started up the brand 10 years ago, they were unable to have their pieces made up at home, which was one reason she moved to Paris.

“They weren’t able to create small quantities of complicated items,” she said. “There hadn’t been any investment in a skilled workforce. Now firms are more open to the idea.”

Many Turks in the sector, be they designers, mainstream brands, wholesalers or manufacturers, are now trying to improve their branding. This explains the leap in the number of exhibitors to 397 from last year’s 177 at the fourth International Istanbul Ready-to-Wear Fair, which coincided with the end of the IAF congress. Organizers reported more than 1,000 foreign visitors, including press and buyers, as compared with around 250 last year.

Exhibitors at the show also turned their attention to quotas.

“The lifting of the quotas will be a problem but it’s best to see the positive side,” said Bulent Gencer, who works for the family firm Kelebek Tekstil, a women’s wear wholesaler that is trying to add to its current markets in Russia and the Middle East, as well as opening own-brand stores under the name Perspective. “I think we’ll be able to show that, quality-wise, we can be as good as Europe. Even looking around the fair you can see that people have made more effort — they saw how the nice stands did business last year and there are many attractive stands here now.”

Perspective’s stand was set out like a showroom with a bar and coffee tables in the center.

The men’s wear label Spasso also set out an attractive booth.

“We’ve had a lot of foreign interest — and many were attracted by the stand,” said Nil Kayarlar, who works for the label’s designer, standing at the center of the all-white display stand, which even boasted its own DJ.

The Spasso brand is only five years old, but it is already being sold in boutiques in the U.K. and is being pitched at the less-expensive end of the market for labels such as Dolce & Gabbana and Roberto Cavalli.

Exhibitors said their business had not been affected much by the war in Iraq, and some reported seeing an uptick of orders diverted from the Far East during the spring SARS outbreak.

They will have opportunity to build on any contacts made here, as the government-backed Turquality fairs series will be touring London and New York once more.

“The progress made by Turkey needs to be made known to the world,” said Sabahnur Erdemli, textile and apparel fairs group director at the CNR international fair organizing body.