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ISTANBUL — Turkey closed down its New York clothing and textiles showroom nearly a decade ago, bowing to pressure from Chinese manufacturing competition and stiff U.S. tariffs.
This story first appeared in the September 17, 2013 issue of WWD. Subscribe Today.
Over the following few years, Turkish ready-wear companies focused on building their own brands to service a growing, youthful domestic audience and expanding their businesses into Europe, the Balkans, Russia and the Middle East. Exports to the U.S. slumped.
Now the Turkish fashion industry is plotting a North American comeback. The Istanbul Textile and Apparel Exporters Association, or ITKIB, is to hold its first trade mission to the U.S. on Sept. 24 and 25 at New York City’s Gotham Hall with the aim of bringing together Turkish apparel and textile manufacturers with U.S. sourcing and distribution executives.
“In the Eighties and Nineties, Turkey was more of an outsourcer for well-known brands, but after East Asian competition kicked in, it was no longer able to maintain price competitiveness and that model ended,” ITKIB chairman Hikmet Tanriverdi told WWD. “Since then, our strategy has been to focus on value-added, high-quality products and to develop design power. Turkish companies have really developed. We’ve come to the stage where we are ready to take our branded products to the U.S.”
Turkish ready-to-wear companies now operate some 3,000 stores internationally, compared with just 300 five years ago. By 2023, the goal is to have 20,000 — and the U.S. is a new priority.
Clothing and textiles are among Turkey’s biggest businesses, accounting for 6.8 percent of gross domestic product and $24 billion in exports last year. It is the world’s sixth largest apparel supplier and the second largest to the European Union after China.
The industry draws on a rich domestic supply of cotton: Turkey is the world’s third largest organic cotton producer, after Syria and India.
Europe — which has a trade agreement that eliminates customs restrictions on trade with Turkey — accounts for 44 percent of the nation’s textile exports and 76 percent of apparel exports.
Moreover, Turkey has become an increasingly sought-after sourcing destination for European fashion brands seeking reliable alternatives in the face of rising logistic and Chinese labor costs.
“The increased cost of manufacturing in China, recent events in Egypt, concerns over labor conditions in Bangladesh — all of these are helping to highlight Turkey’s advantageous position,” Tanriverdi said. Luxury brands such as Ermenegildo Zegna, Burberry and Prada, as well as high-street names like Zara, Mango and Levi’s, all produce in Turkey, according to ITKIB.
Yet cracking the American market has proved tough for Turkish firms. Rtw exports to the U.S. have fallen to about $450 million from historic highs of around $2 billion.
“The U.S. market presents its own particular challenges,” Tanriverdi acknowledged. “Logistics, mainly. Its domestic market is spread over a wide area, which makes distribution difficult. But the most important challenge is tariffs.” He noted Turkish companies face import duties of between 17 and 30 percent on clothing and textile products.
To circumvent that, some Turkish firms have taken the route of setting up manufacturing facilities within special Qualifying Industrial Zones established in Egypt and Jordan that operate in collaboration with Israel and export to the U.S. under free-trade agreements. Turkey has petitioned the U.S. to set up similar zones within Turkey, but with little success, Tanriverdi said. The Turkish government is now lobbying for inclusion in the free-trade agreement being drafted between the U.S. and the EU.
If that goes through, Tanriverdi said, U.S. firms would gain a foothold in a part of the world that is a rapidly growing fashion market. “From the point of view of the U.S., such an agreement benefits them because it gives them access to an important market and U.S. companies involved in ready-to-wear gain a serious partner in the region,” said Tanriverdi.
International fashion brands such as Prada, Hermès, Gucci, Burberry and Armani are now as present in Istanbul via department store concessions and monobrand boutiques as they are in most European capitals.
“Turkey is taking on a more and more important regional role,” Élisabeth Ponsolle des Portes, president of the Comité Colbert trade association, which represents nearly 80 French luxury firms, said at a recent Istanbul event. “For the last two to three years it has attracted a clientele from the Gulf countries, as well as from the ex-Soviet republics, with very strong purchasing power.”
Turkey’s bridgelike position between Europe and Asia is an operational asset, too. “American companies can run many of their operations across a broad region, from Central Asia to Africa, from here,” Tanriverdi said.
According to the ITKIB chairman, the New York trade mission is but a first step. The goal is to enable Turkish firms to meet with top-tier executives in production and global sourcing of all major American brands, licensing groups and department stores.
“Once companies are able to make that one-on-one contact, we will follow it up with visits to Turkey to show them what our capabilities are,” he said.
For more information on the trade mission, contact Natasha De Santis, president of consultants Tactica, at firstname.lastname@example.org