Turkey is gaining advantage over Far East Countries in clothing production
It seems that things are rapidly changing in the global clothing industry for several reasons, nowadays. For instance, the strong demand from the Western developed markets for the clothing industry in the past is now observed to be coming from other parts of the world and mainly from regions in the Far East and the Southern Hemisphere.
To provide a fact to support this argument for instance in Asia, where consumers buy more clothes than ever, clothing sales are estimated to increase by 6 percent each year. When calculated this accounts for about 40 percent of global sales foreseen in 2025. Consequently, this rising domestic demand creates competition for Asian clothing production capacity and changes the export balance. In fact plenty of Chinese manufacturers are observed to change their business strategies and start producing for the local market simply because the demand is substantially high.
This in return brings the result that production in the Far East does not provide a big advantage as it used to in the past. It goes without saying with the ever fast developments in economies of countries in the region labor wages are on the rise as well which is another factor to pull production costs up again. To provide an example labor costs in China were about one-tenth the costs in the US. Today however it is observed to be a third, only. The same situation applies to countries such as Turkey with immense production capability.
On the other hand, geographical proximity can provide significant savings in transportation and make the cost of production considerably more economical.
Looking at the issue from this point of view, experts note that it could be more economical to shift production from China to Turkey, for instance. Indeed, an additional savings margin of approx. 3 percent is targeted in jeans production, in such scenario.
Moreover it is suggested that the automation of jeans production in Turkey which is much closer to the European markets will provide an additional cost saving of minimum 1.30 and maximum 2.00 in US dollars. This means the cost advantage due to proximity to the European markets could be further improved via automation which could end up with an additional margin of 3 to 4 cent as compared to production in the Far East.
It goes without saying that on top of improved profit margin, speed to reach the destination market is another very important factor that enables countries such as Turkey to have the edge over competitors from the Far East.
