TrainingBIRN Summer School BIRN Network About us
BIRN Newsletters
You can subscribe free of charge to Balkan Insight, BIRN's weekly
online publication analysing and investigating important developments in
the region.
Subscribe
02 11 2006
Undercut by low-priced Chinese labour costs, Albania's clothiers are struggling to maintain growth in the global market.
By Ornela Liperi in Tirana (Balkan Insight, 2 Nov 06)
Donika Mici, owner of the Albanian shoe factory Donianna, is hitting the big time.
The Tirana businesswoman's deal to supply men's shoes to Federated Department Stores, FDS - the giant US company that owns and operates Macy's and Bloomingdale's - has resulted in one of the few contracts placing the "Made in Albania" label on prominent store shelves in the world's richest economy. The label is inserted into every shoe.
The arrangement is no surprise to Mici, who blithely explains that "western companies like doing business with Albanian companies". Nor is it a revelation to other Albanian clothiers, a group of canny producers on the fringe of the European market that has grown accustomed to success. Textiles and shoe sales account for 60 per cent of the country's exports, and related jobs account for one fifth of all manufacturing jobs.
Nonetheless, the Donianna deal comes as refreshing news at a difficult moment for Albanian clothiers. After years of supplying the robust Italian market and other European textile giants, they increasingly find themselves undercut by low-priced Chinese competition.
While some have lost market share, Mici says she has succeeded in turning the tables on Chinese competition, not with lower prices but with lower volume and a new degree of specialisation. "We are able to produce 1,000-5,000 pair of shoes in a single model, whereas in China every order starts from 30,000 pairs," she said.
But not all clothiers are able to respond creatively to Chinese pressure, and those who fail to do so risk sudden marginalisation in a rapidly globalising marketplace.
Before 2005, Albania was rapidly consolidating an enviable position in the European market for textiles and shoes. Italy, a major producer, lay directly across the Adriatic, and major Italian manufacturers were more than happy to fly to Tirana and strike out-sourcing deals, taking advantage of drastically lower labour costs in an Albanian market whose proximity meant little time would be wasted on deliveries. Greek, German and British manufacturers did the same.
Such deals are still being struck today, with the vast majority of work in the CMT (Cut, Make and Trim) niche, in which raw materials down to the last thread are brought in for tailoring and finished assembly in Albania. After receiving CMT treatment, finished items bearing western brand names leave Albania, bound for western markets.
But now business is leaving at a quick pace, too. The first signs of a wobble came last year, following the expiration of the European Union's import quota on textiles originating outside the union. Catching companies and policymakers off-guard all across Europe, Chinese exports to the EU jumped by 45 per cent. At the same time, Albanian exports of clothing - previously fast-growing - slumped by 2 per cent.
Although Albanian exports showed signs of stabilising at the beginning of this year, last year's statistics bear the hallmarks of a coming rout. Before Europe opened its textile market to China, Albanian exports to the EU had grown 10-15 per cent every year for a decade, as western investors entered with capital and expertise. Their attention is now drawn to Asia.
Giusto Gentile, the Italian director of Albaco Shoes, one of the largest clothing manufacturers in Albania, draws a bleak conclusion, "It is impossible to compete with China."
A key factor is Chinese trade with Italy, and here the trouble is acute. Italy typically receives up to 75 per cent of Albanian textile exports. But from 2000 to 2005, Chinese textile sales to Italian companies rose by 85 per cent, and the speed of Chinese penetration of the Italian market is accelerating, with a further 10 per cent increase registered in the first four months of this year.
"In this situation, not only Italian manufacturers are losing but also Albanian ones," said Azbi Azbiu, director of Euro-Conceria, an Albanian-Italian shoemaker.
The labour cost differential is a fundamental part of the problem. The average Albanian textile factory worker's wages remain far below the EU average, at 140 US dollars per month, but an equivalent Chinese worker earns around half as much.
Yet some experts believe Albanian companies can fight back. A review of the sector published by the United Nations Development Programme, noting China's growing influence, argued that Albanian companies will see their role in the global market change but that they can stay afloat by adapting appropriately.
While Italian and Greek clothiers are likely to switch main production to China, they may also be persuaded to "maintain Albania as a back-up source of supply to offset long lead times from China".
Meanwhile, export diversification may soften the blow of lost Italian market share. Although the US market absorbs a vast volume of Chinese clothing exports, Albanian producers increasingly view American retailers - many of which find themselves equally stymied by Chinese producers' influence - as potential alternative partners.
Here lies the importance of Donika Mici's deal with FDS. She and her fellow Albanian clothiers must now strive to replicate it, many times over.
Ornela Liperi is editor in chief of weekly business and economy magazine Monitor. Balkan Insight is BIRN's online publication.
At the beginning of 2010 BIRN network published Digging Deeper - A Guide for Investigative Journalists in the Balkans, written in cooperation with Sheila Coronel, Director of the Stabile Center for Investigative Journalism and professor of professional practice at Columbia University, New York.
Komentari:
Nema komentara.