Apparel Industry: Challenges for Key Players

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The FINANCIAL — The once-flourishing apparel industry in Georgia, dating back to the Soviet Union, experienced difficult times after the country left the Union in the early 90s.


aparel.jpgThe FINANCIAL — The once-flourishing apparel industry in Georgia, dating back to the Soviet Union, experienced difficult times after the country left the Union in the early 90s.


The production of famous Georgian silk and wool ended after that. Later on small scale seamstresses emerged working with outdated techniques some of whom today work in the country’s roughly 200 ateliers.

On the other hand there are currently ten large-size Georgian factories which mostly work on uniform orders from governmental entities and the private sector. An additional five companies represented in Georgia are Turkish investment projects mostly located in Batumi (a city on the Black Sea coast near Turkey’s borders).

Georgian fashion designers typically have small boutiques in Tbilisi, selling high end products but in small quantities. The non-existence of required inventory/technologies and inputs like traditional Georgian silk and wool is a perennial issue for them. Out of the ten famous fashion designers interviewed by The FINANCIAL, all of them are importing the materials they need to make their final product with, from Turkey, Europe or post Soviet Union countries, which makes the final price of their work very high – unable to compete with imported clothing – and leaves virtually no chance to export for the same reason.

Investment opportunities in the sector — The Georgian Government has created attractive conditions for investors willing to open their factories in Georgia. The Government has chosen a special area in Guria (West of Georgia next to Batumi) where they will present a building and land to investors willing to set up a factory there. In cooperation with the Economic Prosperity Initiative there are trainings going on for Georgian labour to meet the standards and requirements of the apparel industry. 70,000 USD was allocated by EPI to invite foreign experts to the apparel industry and train Georgian labour.

About 295,000 people are unemployed in Georgia. In the apparel industry most workers are over 34 years old which is also the same for almost 50% of the unemployed, according to Keti Botchorishvili, Georgian Investment Agency of Georgia.

“Nowadays in Georgia we have five large Turkish factories where over 3,500 people are employed. In addition there are ten large Georgian factories which basically work on orders like that of uniform making. And there are also 200 small enterprises where five to ten people are employed. Overall there are 6,500 people employed in this sector. Georgian-produced clothing goods mostly go to Turkey and to former Soviet Union countries,” said Bochorishvili.

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Georgian companies already take orders from such famous brands as Puma, Adidas and Marks & Spencer.

“There was a movement a while ago where most apparel producer companies were moving to Ethiopia due to the fact that wage rates there were 25-30 USD a month. But Turkish companies still prefer to come to Georgia because we have a good business environment,” Bochorishvili told The FINANCIAL.

Zviad Kvlividze, Manufacturing and services components manager at EPI, said that the number of exporters in the sector is increasing. “The majority of export is done through Turkish companies and they are not paying as much for Georgian partners as Europeans would pay for them. But for Georgian companies, which were earlier only focused on making uniforms, they are now moving to the retail sector of clothing. And working with Turkish companies gives them huge experience,” Kvlividze told The FINANCIAL.

Challenges for Georgian fashion designers — According to famous Georgian fashion designers the challenges that they face are mostly connected to limited production and thus complicated relationships with factory owners; lack of quality materials which can be produced locally like silk and wool; lack of experience working with foreign partners and buyers.

As George Shaghashvili, a famous Georgian fashion designer working in Denmark, told The FINANCIAL, “The most acute problem in Georgia is the lack of fabrics like silk and other materials”.

“Georgia used to be a very high quality silk producer and had some other materials which in the past competed against Chinese and even Japanese materials (in the Soviet era), but this industry has since, unfortunately, been neglected,” stated Shaghashvili.

“Another problem is lack of fashion agents – those who unite several designers and during times of showrooms in Europe or other countries, show the works of those designers they represent.”

Some Georgian fashion designers believe the problem is the relationship with Georgian apparel factories. They claim that factories are not willing to accept small order amounts and are also not efficient when working with intricate designs.

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As Tamuna Ingorokva, Georgian fashion designer, told The FINANCIAL, her company is finding working with Georgian factories very difficult.

“I once tried to give an order to one Georgian company; they did make the order although in the end I had to finish the collection in my atelier because the quality of those items made in the factory was so poor.”

“And now I am thinking about giving some orders to an Italian company which will be ten times cheaper and the quality of which will be that much higher. I am importing all the materials I need from abroad because I make all my products from high quality silk.”

Tamar Chkheidze, Head of Tbilisi Fashion Week who also attended the event organized by EPI, said that, “Despite the fact that designers exhibit their works at Tbilisi Fashion Week – the latter only remains as a demonstration of their work whilst in essence they are not able to mass design and produce their work to serve the wider public.”

In response to designers’ concerns, Elguja Mamasakhlisi Elselema’s Director, one of the biggest apparel factory owners, responded that Georgian designers have the wrong perception of how the large factories work. “Our factory can’t make just fifty dresses for example because this will require the work of the whole factory’s staff for an amount that in the end is simply not profitable.”

Andrew Paterson, Commercial Director of Baltika Group, Estonian company that is the producer of famous brands like Monton, told us that such cases of non-compliance of fashion designers and factory owners was experienced by their company when designers wanted to order only small amounts of work from their factory.

“We charged 100% mark up for this because it took huge amounts of time and labour to divert the factory from a typical order. When our own brands want to make special pieces of only 80-150 units of some new, special design, we charge them a penalty of 10-20%. Designers have to understand that it is costly for factories to make such tiny orders, so therefore the designers need to know in advance if their customers are ready to buy the end-product at the higher price,” Paterson told The FINANCIAL.



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