The tough competition with the Far East has landed on the domestic market

The clothing and textile industry, which has gained prominence in exports after the pandemic, is losing share to Far Eastern countries both in the domestic market and in exports, with rising costs despite the exchange rate.

The sector, which experienced export losses of more than 25 percent per country due to the recession in Europe, tripled energy and labor costs compared to its competitors, and orders from the domestic market accelerated to turn to rival countries. .

Seref Fayat

PRODUCT FROM THE FAR EAST TO STORES ABROAD

While imports increased in the domestic market in the textile sector, on the apparel side, brands accelerated their preferences for competing countries instead of Turkey in their supply to stores abroad. The president of TOBB Ready-to-Wear and Apparel Assembly, Şeref Fayat, noted that orders placed by domestic brands to rival countries for their operations abroad have accelerated.

Fayat said: “There are brands that get 30 to 40 percent of their turnover from foreign operations. Because it was buying from its Far Eastern rivals and there was no exchange rate risk there, the rate of outflows went up a lot. Purchases were limited to polyester-based jackets and coats, which we weren’t competitive at all and should have been in that region, but as long as this monetary pressure continues, it’s normal for orders to shift into knits and classics. They feel very comfortable in Turkey.”

Noting that there will be price increases in the domestic market in the coming periods, Fayat made the following assessment regarding exports: “If the exchange rate does not reach at least 23-24 TL, it is not possible for us to receive orders at unless we increase prices in our major markets at these prices. With the new minimum wage, the exporter of ready-made clothing has to bear a loss of 10 percent from the first merchandise loaded.”

Losing power inside

In the textile and raw materials sector, especially energy costs are a challenge for the players in the sector. Ahmet Öksüz, president of the Istanbul Association of Textile and Raw Materials Exporters, noted that orders have fallen due to the recession of the past 3 months and their competitive power in Europe has decreased due to freight costs.

Ahmet Oksuz

“The purchases are directed to Asian countries. High energy costs are what negatively affects the textile industry in Turkey the most. There is an intense use of energy in productions such as fabrics and yarns. While our competitors pay 8 cents for electricity, we pay 24 cents. 3 times the cost of our competitors. Imports are also increasing in the domestic market and we are losing our competitiveness in the domestic market. Either energy costs go down, inflation goes down, or exchange rates go up, there is no other way out.”

exhausted mechanism

Ramazan Kaya, president of the Turkish Garment Manufacturers Association, said they expect a 20-30 percent decline in numbers next year; He indicated that with the stable exchange rate, there is no mechanism to offset labor costs. Noting that logistics and raw material costs have decreased, Kaya said, “Ready clothing is now transitioning from ‘fast fashion’ to ‘slow fashion’, it will be a slower turnover system. With these prices, customers began to flee, ”he said.