TURKISH TEXTILE, APPAREL, LEATHER and CARPET INDUSTRIES

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1 TURKISH TEXTILE, APPAREL, LEATHER and CARPET INDUSTRIES

2 HISTORICAL BACKGROUND TEXTILE AND APPAREL Turkey had a closed economy until 1980s; production and export were at poor levels. With the shift towards export-led economic policies in 1980s, both production and export have increased considerably: For example ; At the beginning of 1980s the total value of Turkish textiles and apparel export was about USD 700 million. In 2006, an amount of USD 19.7 billion was reached. Composition of export has changed as well. The distribution of exports between apparel and textile industries was 13% and 87% respectively in The share of apparel has increased gradually since then. In 2006, it reached to 69% of the total. Apparently, the share of textiles dropped to 31%. Within twenty five years up to 2006, the industry has both grown rapidly and shifted from low value added commodities to high value added manufacturing items and fashion goods.

3 HISTORICAL BACKGROUND LEATHER Similarly, Turkish leather industry s export was about USD 50 million in By 2006 it exceeded USD 1 billion. 20 folds in 25 years. With the inclusion of shuttle trade and touristic sales, the export amount reaches far beyond this figure. The same quality improvement has occurred in the Turkish leather industry as well. CARPET Export: In 1980:USD 89 million. In 2006: USD 743 million. Excludes touristic sales. A shift from hand made towards machine carpets.

4 TURKISH TEXTILE & CLOTHING EXPORTS GENERAL EXPORTS(Bil. US$) ,7 13,6 6, TEXT-APPAREL EXPORTS(Bil. US$) 10 0, YEARS GENERAL EXPORT APPAREL EXPORT TEXTILE EXPORT TEX+APP EXPORT

5 TURKISH LEATHER & LEATHER GOODS EXPORTS Total (2006): ml $ (Incl. some of luggage trade) Shoes 240,2 ml $ Million USD The Ready Wear of Double Face Sheepskins 388,9 ml $ Leather Garments 428,4 ml $ Finished Leather 105,2 ml $

6 800 TURKISH CARPET EXPORT UNIT: Million $

7 SIZE OF THE TURKISH TEXTILE AND APPAREL INDUSTRY The industry has a great contribution to the Turkish economy. This can be seen in main macro economic indicators. 8% of GDP, 20 % of industrial production, 24 % of manufacturing labour force 23 % of total Turkish export earnings. (2006) USD 19.7 billion export and Exporting Volume in 2006 Clothing : tons Clothing : 1.9 billion pcs. Knitted Fabric Woven Fabric : tons : tons Carpet : 130 million m 2

8 SIZE OF THE TURKISH LEATHER AND CARPET INDUSTR DUSTRIES The other important industry in Country s economy is Leather and Leather Products Industry which accounts for; 2.5% of Manufacturing Industries Output, 1.5 % of Manufacturing Industries Labor Force, 1.6 % of Total Turkish Exports Earnings. Turkish Carpet Industry is one of the traditional industries and its export was about 743 million $ in 2006 sharing with 0,9 percent in total export. However, taking into account of turistical carpet sales, its share in total export has risen to 2,4 percent.

9 Import Side SIZE OF THE INDUSTRIES IES USD 7.4 billion textile and apparel import in (% 5.4 of Turkey s total import) Main import items are: textile commodities such as fibres, yarns, fabrics, etc. Import of textile and clothing machinery, spare parts and chemical agents. Annual average import figure of machinary exceeds USD 1.3 billion ( % 1 of Turkey s total import-2006) Leather industry is another importer also. (USD 1,6 billion-2006) Imporsts both finihed goods, and raw materials. In raw hides and skins, the import amounted around USD 350 million, in With these high ratios and macro economic figures,, the industry has been denominated as the locomotive of the Turkish Economy for years.

10 Source : United Nations SHARE OF TURKEY IN WORLD TEXTILE & APPAREL TRADE (2005) APPAREL TRADE ( 277 BILLION $ ) 5% Billion $ TEXTILE TRADE 5.48 Billion $ ( 190 BILLION $ ) 3% Billion $ Billion $ 95% TURKEY REST OF THE WORLD 97% TURKEY REST OF THE WORLD

11 WHAT IS THE RANK IN THE WORLD APPAREL TRADE 80 The 4th Biggest Apparel Supplier (2005) ,4 EXPORTS (BILLION US$) 10 0 CHINA HONG KONG ITALY TURKEY GERMANY INDIA FRANCE MEXICO BELGIUM PAKISTAN U.S.A U.K. INDONESIA ROMANIA SPAIN Source : United Nations

12 WHAT IS THE RANK IN THE WORLD TEXTILE TRADE The 11th Textile Supplier In The World (2005) ,48 5 EXPORTS (BILLION US$) 0 China U.S.A Italy Germany Hong Kong S. Korea Japan India Belgium France Turkey U.K. Pakistan Netherlands Spain Source : United Nations

13 Source : United Nations SHARE OF TURKEY IN WORLD LEATHER & CARPET TRADE (2005) LEATHER TRADE (129,2 BILLION $) CARPET TRADE (11,3 BILLION) TURKEY 0,6% TURKEY 5,6% REST OF THE WORLD 99,4% REST OF THE WORLD 94,4%

14 WHAT IS THE RANK IN THE WORLD LEATHER TRADE Turkey is the 26th supplier (2005) EXPORT: MILLION $ TURKEY POLAND MEXICO AUSTRALIA ARGENTINA CANADA PAKISTAN AUSTRIA DENMARK S. KOREA THAILAND INDONESIA PORTUGAL ROMANIA U.K. NETHERLANDS INDIA SPAIN BRAZIL BELGIUM U.S.A GERMANY FRANCE HONG KONG ITALY CHINA Source : United Nations

15 Source : United Nations WHAT IS THE RANK IN THE WORLD CARPET TRADE 2500 The 6th Carpet Exporter In The World (2005) 2000 EXPORT: MILLION $ IRAN GERMANY UK CHINA U.S.A. TURKEY NETHERLANDS INDIA BELGIUM FRANCE PAKISTAN

16 Source : Undersecretariat for Foreign Trade TURKEY S S CLOTHING EXPORT BY MAIN CHAPTERS ( 13.6 Billion $-2006 ) Top Five Items Bed Linen Sacks for packaging Curtains Other furnishing articles Blankets Home textile and other goods 14% Top Five Items T-shirts Pullover,vests Socks and panty house Ladies outerwear Ladies nightwear Top Five Items Ladies outerwear Men outerwear Men shirts Ladies blouses Ladies nightwear Woven garments and accessories 35% Knitted garments and accessories 51%

17 Source : Undersecretariat for Foreign Trade TURKEY S S TEXTILE EXPORT BY MAIN CHAPTERS (6,1 Billion $-2006 ) Top Five Items Cotton Fabrics (14%) Knitted Fabrics (12%) Filament MMF Fabrics(11%) Stapel MMF Fabrics (5%) Filament MMF Yarns (5%) 60 KNITTED FABRICS 12,3% 59 COATED LAMINATED FABRICS 4,6% 50 SILK ( 51 WOOL ( FIBER,YARN,WOVEN FIBER,YARN,W.FABRIC) FABRIC) 3,0% 0,1% 52 COTTON ( FIBER,YARN,W.FABRIC) 21,8% 58 SPECIAL WOVEN FABRICS 9,3% 53 VEGETABLE FIBERS ( FIBER,YARN,W.FABRIC) 0,4% 57 CARPETS AND FLOOR COVERINGS 12,1% 56 WADDING FELT 2,8% 55 MAN MADE STAPLE ( FIBER,YARN,W.FABRIC) 16,8% 54 MAN MADE FILAMENT ( FIBER,YARN,W.FABRIC) 16,9%

18 TURKEY S S LEATHER EXPORT BY MAIN PRODUCTS ( 1,163 Billion $-2006 ) FOOTWEAR 21% RAW HIDES&SKINS 1% FINISHED LEATHER 8% SADDLERY 13% DOUBLE FACED SHEEP SKINS 4% LEATHER & FUR GARMENT 53%

19 TURKEY S S CARPET EXPORT BY MAIN PRODUCTS (743 Million $-2006) HAND WOVEN CARPET 14% MACHINE CARPETS 70% RUGS & KELIMS 16%

20 TURKEY S S MAIN TEXTILE MARKETS (6,1 Billion $-2006) ITALY 9% RUSSIAN FED. 8% OTHER COUNTRIES 47% GERMANY 6% ROMANIA 6% USA 4% BULGARIA 4% Source : Undersecretariat for Foreign Trade FRANCE 2% GREECE 3% SPAIN 3% POLONYA 4% UNITED KINGDOM 4%

21 TURKEY S S MAIN CLOTHING MARKETS (13,6 Billion $-2006) OTHER COUNTRIES 24% GERMANY 26% DENMARK 3% ITALY 5% SPAIN 5% UNITED KINGDOM 17% HOLLAND 6% Source : Undersecretariat for Foreign Trade FRANCE 7% USA 7%

22 TURKEY S S MAIN LEATHER MARKETS (1,163 BILLION-2006) GERMANY 14% OTHERS 39% RUSSIA 14% FRANCE 7% ROMANIA 3% BULGARİA 3% NETHERLANDS 3% ITALY 5% UK 5% USA 7%

23 TURKEY S S MAIN CARPET MARKETS (743 Million-2006) S.ARABIA 13% OTHERS 42% USA 10% KAZAKHISTAN 6% ROMANIA 5% RUSSIA 5% GREECE 3% POLAND 3% GERMANY 4% IRAQ UKRAINE 5% 4%

24 COMPETITIVE ADVANTAGES OF THE INDUSTRIES IES Rich in Raw Materials Turkey is the 7th biggest cotton producing country in the world. Annual production is estimated as 800 thousand tons for the season. Generally 30 % of Turkish cotton is high quality with long staples. Capacity of man made fibres is also noteworthy. Qualified and Educated Human Sources Turkey has a well-educated young population. Both governmental and non-governmental organisations (NGOs) attach great importance to professional education and make every effort to keep the level of education as high as possible. Exporter Associations (especially ITKIB) and Export Promotion Centre of Turkey also organise seminars, courses and similar educational activities for the industry. All these are important for labour intensive industries.

25 COMPETITIVE ADVANTAGES OF THE INDUSTRIES Geographical Proximity to the Main Markets Turkey has a strategic geographical location between the continents of Asia, Europe and Africa, Developed transport infrastructure, Road,sea,air and rail transports are available. Shipping times to the West European destinations average between 6-8 days by road and days by linear shipping. First orders can be delivered within 6 weeks; repeated orders within 3 weeks (by road).

26 COMPETITIVE ADVANTAGES OF THE INDUSTRY Advanced Sub-Industry for Clothing Sector Accessories such as zippers, narrow woven, buttons, hangings, labels, quilted materials, stiffening materials, etc. are produced by an advanced sub-industry. Product Diversification Since the industry consists of small and medium size companies mostly, product diversification is quite easy to manage, Products, changing from the haute-couture clothing to the mobile phone covers or from occupational clothing to technical textiles can be manufactured. Advanced Textile Finishing Industry For manufacturing high value added goods, a well-developed textile finishing industry is essential. Turkey has a noteworthy textile finishing capasity in Europe, Modern equipments and technologies used at these finishing companies with the high level of know-how.

27 Creativity COMPETITIVE ADVANTAGES OF THE INDUSTRY Young designers both for fabrics and clothing are supported by the nongovernmental organisations, especially by ITKIB. Due to these efforts Turkey has a creative young generation. Compliance with the EU s Technical Regulation Turkey has adopted the related technical legislation of the EU. Sensitivity about Workers Social Conditions There is an ever growing sensitivity among consumers and consumer organisations in the developed markets about social and health conditions of the workers who are employed in the production processes. Both Turkish government and business circles are sensitive on the matter as well. This sensitivity has been reflected into the Social Security Regulations.

28 COMPETITIVE ADVANTAGES OF THE INDUSTRY Sensitivity About Quality, Environment and Health Most of the companies have ISO 9001 or ISO 9002 certificate. Usage of aril amines (Azo Dyes) that may cause cancer has been prohibited. Quality Control and Test Capabilities Because of the sensitivity of health, environment and ecology, quality control assesments, tests and measurements are highly required by the industry. Turkey has an advanced textile testing laboratory infrastructure. Besides university laboratories and private laboratories, there are also foreign laboratories invested in Turkey. Textile laboratories in Turkey are very modern and well equipped. Qualified and skilled technicians and researchers are employed in these laboratories. Some of these laboratories are officially accredited by the internationally known foreign systems.

29 COMPETITIVE ADVANTAGES OF THE INDUSTRY Customs Union with the EU and Free Trade Agreements with Lots of Countries Turkey has Customs Union with the EU. Within this framework, industrial goods can move freely within the EU and Turkey, without paying any customs tariff and encountering any quantitative restriction. Turkey has Free Trade Agreements with the following countries: ISRAEL EFTA MACEDONIA BOSNIA & HERZEGOVINA CROATIA TUNISIA PALESTINE MOROCCO SYRIA EGYPT

30 COMPETITIVE ADVANTAGES OF THE INDUSTRY Free Zones and Organised Industrial Zones These zones offer : Advanced infrastructure, Technical knowledge base, Internationally accepted investment and export incentives, No import and export duty in Free Zones unless the goods are exported to Turkey.

31 WHAT CAN TURKISH TEXTILE, CLOTHING, LEATHER AND CARPET INDUSTRIES OFFER TO THE WORLD Numerious variety, designs, colours, etc. Good management in maintaining the reliability of product quality and supply, Fine worksmanship, High flexibility in making samples and small runs, Flexibility of order replacement, product development, quality control and logistic arrangement, Good packing and efficient delivery, Working with minimum stock, Cooperation on distribution, Cooperation on production in suitable regions, Great profit, less risk

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