The FINANCIAL — Puma is going to bring its factories from Turkey to Adjara, the Black Sea region of Georgia.
The FINANCIAL — Puma is going to bring its factories from Turkey to Adjara, the Black Sea region of Georgia. The management of Adjara Textile Ltd running the Puma plant in Bobokvati says in 3-4 months Turkish partners are going to move to Bobokvati. The low cost labour in Georgia is regarded one of the main reasons for such a decision.
Currently the manufactured production in Bobokvati, with a Made in Georgia label, is sent all over the world. The plant is 100% owned by Turkish investor Jemal Bilgingulluoglu with 3 million USD investment in the textile industry in Adjara.
“Our aim is to manufacture the textile that comes as semi-fabricates from Turkey and then finally gets exported to Asian, European, African, US, and other global markets,” said Lasha Khalvashi, Manager of Adjara Textile Ltd, to The FINANCIAL.
“Currently Puma in Adjara employs 620 people, out of which 99% are Georgian, mostly women, and the rest are Turkish. Salaries range between 200-250 GEL, in addition transportation, insurance, medical treatment and lunch are free of charge. We also work on a bonus system meaning whoever works more, gets more,” said Khalvashi.
“We ourselves are not eligible for distributing Puma products to stores, as Batumi Textile is only making the final products to be sold on the global market. The Puma products made in Adjara go through the headquarters in Turkey, on to Germany’s Puma stocks, and then get allocated to relevant stores all across the world. The prices are also set by Puma international,” Khalvashi told The FINANCIAL.
“98% of the labour wasn’t skilled when they started working at Adjara Textile but we provided them with 1 month of free training without any pay. The practice of Puma as well as other large-scale international companies is to find low cost labour, therefore countries like Malaysia and China are the largest manufacturers of Puma. Georgians do lack a high productivity rate (as most of them haven’t worked for the last 20 years) compared to other countries. Even now we don’t work at full capacity, only 30-40%, what needs to be done, but once we retrain them we hope them to become more productive,” said Khalvashi.
“For sewing the semi-fabricates we are paid 30-50 cents per unit. On a daily basis we sew 5,000-8,000 units. Normally, at full capacity 12,000-15,000 works should be completed. This Puma group has 2 similar factories in Turkey,” Khalvashi said.
“On average we get 150,000-200,000 orders from different clients. Our last, outstanding client in January 2010 was Newcastle United which signed up sports kit brand Puma as its official shirt maker for the next 2010/11 season. Puma has agreed a two year deal to supply all of the club’s team kit and training equipment as well replica shirts. The sponsorship will be worth between 1.5-10 million GBP, depending on how successful the club is. All the necessary equipment will be exported with the Made in Georgia label,” said Khalvashi.
“The salary budget amounts 130-140,000 USD and we still can’t earn huge profits due to labour non-productivity but will be working our best in September and reaching higher margins as Puma in Turkey is planning to move Turkish plants to Georgia.
The first official Puma store was opened in Tbilisi in March 2007, notwithstanding Batumi Textile factory, which is another division and doesn’t sell Made in Georgia labelled Puma sportswear in Tbilisi stores at all.
The German sportswear maker Puma is a well-known brand with an East Asia head office in Romania from where products get imported to Tbilisi.
“Russia, Ukraine, Moldova, Azerbaijan, Armenia, Uzbekistan, Khazhakstan as well as Georgia are one division of Puma. Therefore Puma provides us with the ready-made products then we go twice a year to Germany and select what we want and bring it to the Georgian market,” said General Director of Puma stores Mamuka Makhatadze.
“An average price in Puma Tbilisi stores is between 25-300 GEL though we had 800 GEL brands like Rudolph Dasler and Mc.Quinn. Most t-shirts cost 35-45 GEL,” said Makhatadze.
“The idea of founding a Puma store chain in Georgia came about in 2006. We have Gagra football club which played in the Top League, thus we wanted appropriate sportswear for our team. We went to Ukraine and asked the Nike Ukraine office for our sportswear. Then suddenly we thought that Puma didn’t have an official representative in Georgia therefore we decided to contact the relevant dealers,” Makhatadze told The FINANCIAL.
“Beso Chikhradze, Giorgi Makharadze and I were the three people who founded Puma in Georgia. The start-up costs were quite high including the licensing, shop repairs, etc. Overall it cost more than 200,000 USD. We have stores on Pekini Avenue and on 6 July we opened another high-profile store on Rustaveli Avenue which cost more than 50,000 USD, although all of the costs have yet to be counted. Demand at the Pekini branch was quite high, every minute we had new customers, that’s why we decided to open a new store,” said Makhatadze.
“We aren’t planning to open a new store this year but next year we might. It all depends on market demand,” said Makhatadze.