Ready-to-wear manufacturers lose their supply advantage


The difficulty in keeping prices in Turkey due to increasing costs caused the ready-made clothing industry to lose its gains during the epidemic period. Noting that especially in high volume basic products, large buyers are turning to East Asia for supply, the representatives of the sector stated that imports are now becoming more attractive even for domestic brands.

Ready-made clothing orders to Turkey due to the changing supply chain due to the epidemic began to change direction. Despite the increasing costs in Turkey, the falling freight in the international market has led to the shift of orders for especially high basic products from Turkey to East Asian countries. Recently, countries such as Morocco, Tunisia and Egypt have come to the fore. Although a decrease in global ready-made clothing orders is expected due to inflationary pressure and recession concerns, the fact that existing orders will also be supplied from these countries caused concern in the sector.

Inditex, which includes the world’s largest fast fashion brands, stated in its statement last week that it will increase its purchases from Asia due to possible supply problems, and it was reminded that H&M, including Inditex, also reduced its purchases in Turkey. On the other hand, it has been stated that large buyers purchasing from Turkey, especially these brands, will reduce their supplies by another 15 percent in the first half of next year. Industry representatives stated that the decrease in domestic brands that make domestic entry-level products has reached 15-20 percent due to the increase in the prices of final products, and said that imports are now becoming more attractive for them at the point of price fixing. In this context, it was noted that many brands such as LC Waikiki, DeFacto and Koton are working to increase overseas supply.

The rate of increase has slowed

Ready-to-wear sector, 20.3 billion in the last year dollar It broke a record with exports. An annual export target of 23 billion dollars was announced for this year. While some sector representatives stated that the 23 billion dollar target for this year is still possible, others stated that the figures of last year will be reached at most or there will be an increase of 5 percent.

Şeref Fayat, Chairman of the Turkish Union of Chambers and Commodity Exchanges, Ready-made Clothing and Apparel Sector Assembly, said that the decline in exports will be felt sharply in the last quarter of the year and in the first half of 2023. Fayat said that the falling rate of increase in ready-made clothing exports in recent months is also a foreshadowing of this. According to TUIK data, the rate of increase in the sector’s exports, which was 18.5 percent in April this year, decreased to 15.8 percent in May, 14.5 percent in June, 11.6 percent in July and 10.9 percent in August.

Employment losses started

Fayat evaluated the developments as follows: “We expect a sharp decline in export figures in the last quarter of the year. Not only this year, but also for the next year, major big buyers have already started to say that they will order 10-15 percent less.” Fayat continued as follows: “The said decline will be experienced not only in Turkey, but all over the world. However, the rate of decline will be above the world average in Turkey. Since the beginning of this year, the exchange rate has increased below inflation. On the other hand, we are experiencing a loss due to parity. There were serious losses in employment. We’re starting to hear about 300-400 serious layoffs, and this may increase further. We are putting pressure on the foreign currency in order to keep the inflation rate with the decisions we take in Turkey, but this also has negative consequences. Unfortunately, the economic decisions taken prevent Turkey from being competitive. While we were doing the basic work done by the Far East during the epidemic, we are now unable to do them. They went to the Far East. Our brands are going away not only in them but also in us. We missed the jobs that we were competitive in the lower price group, and we started to make goods for the middle and upper price group. We are back to the beginning, namely 2018-2019. Things are very high in medium and high even high quality. But their share in total exports is low. If there is no improvement in the exchange rate, our contraction will be above the world average.” According to Fayat, the competitive rate is currently around 21-22 TL.

Domestic brands are also heading abroad

Ramazan Kaya, President of the Turkish Clothing Manufacturers’ Association (TGSD), stated that there was a 10-20 percent contraction not only in foreign but also in domestic brands. Noting that the reason for this is the rising costs and the high prices, Ramazan Kaya said, “For this reason, many brands have increased their attempts to increase overseas supply. They had returned to Turkey for a while, especially for winter products such as coats and coats, but now they went out again because the prices were high here. This is actually one of the reasons for the increase in coat prices.” In this context, not only the Far East but also countries such as Egypt, Tunisia, Algeria and Morocco come to the fore. In particular, the advantage of a free trade agreement between the USA and Egypt led to an increase in supply from these regions. There is no taxation between Egypt and the EU. “There may be more US jobs than Egypt,” he said. It is possible to observe this situation in the stores of the brands. Now, 6-7 out of 10 products in Zara’s stores originate from North African countries. TGSD President Kaya said, “Inditex Morocco uses Tunisia. They are very close to Spain. These brands buy the raw material and send it to these countries, sew it and have it packaged. It uses the advantage of geography with countries close to the market. Because it’s 2 hours by ferry. It produces and withdraws. This was in the past. H&M is close to zero in purchasing from Turkey. These types of brands buy the price. It reduces the portions in Turkey because of the price. Instead of the portions they reduce, they substitute nearby geography such as Morocco and Tunisia. But they will buy the textile raw material part from Turkey”.

Far East implements aggressive price policy


Gürkan Tekin, Chairman of the Board of the Mediterranean Ready-made Clothing and Apparel Exporters’ Association (AHKİB), pointed out that high-mounted orders in the European Union (EU) countries, which are the main market of the sector, have shifted to China and Far East countries, which offer prices below the costs. Negative course in the global economy and recession concerns deepened, while in Turkey energy Noting that yarn and fabric prices have increased with the increase in labor and labor costs, Tekin said, “The orders of European fashion giants are decreasing day by day. We are concerned that our Turkish ready-made clothing and apparel industry has entered a period in which there will be losses in exports, production and employment.” Tekin said, “Our industry’s chance to compete against the increase in input costs and the aggressive price strategy of the Far East countries is getting weaker day by day. We expect positive discrimination in the ready-to-wear and apparel industry in government support for reducing energy, labor and raw material costs. Giving support, as in the pandemic period, in terms of protecting employment and facilitating access to finance is vital for the survival of our industry.