High quality products, labour capacity and attractive prices - these are the main competitive advantages that characterise the Bulgarian market as an attractive destination for investments in the textile industry. Below you will find an overview of the opportunities that the Bulgarian market could offer Danish companies, operating in the field of textile and apparel sector.
Textile production in Bulgaria has been growing over the recent years despite the removal of the world trade barriers and the following expansion of the Asian textile industry. The production of clothing in Bulgaria has more than doubled the last five years mainly due to the fact that Bulgaria is delivering high quality products at competitive prices. In the same period the overall production of clothing in the EU-25 countries declined by nearly 30 percent. The continuous growth in the Bulgarian production illustrates the competitiveness of the Bulgarian apparel and textile industry.
The textile and clothing industry plays an important role in the Bulgarian economy. In 2005, the production of textile and apparel amounted to 7.6 % of the production of the Bulgarian industrial enterprises, while the people employed in this sector constituted 31 % of the staff employed in the manufacturing industry. Over the period 1999 - 2005, the annual average increase of the production in the Bulgarian textile and apparel manufacturing was 20.4 %.
DEMAND ON INTERNAL MARKETS
During the first half of 2006, the retail trade in apparel, textile, footwear and leather goods has increased by 10.2 % compared to the same period of 2005.
The sector has been extremely export-oriented and sustains a positive trade balance, amounting to 308 mil BGN for 2006.
In the first half of 2006, the Bulgarian total export value of textile and apparel amounted to 1,720 mil BGN, which is a 6.8 % increase compared to the same period of 2005.
The most significant increases has been made in accordance with the following types of textile:
- Knitted or crocheted fabrics (+ 68.4 %)
- Impregnated, coated, covered and laminated textile fabrics (+ 50.7 %)
- Wool and woven fabric (+39.4 %)
During 2006, 86 % of the Bulgarian export of textile and apparel is delivered to the EU member-states. There is a significant increase in the export value of textile and apparel to the EU - by 10 %, compared to the value, registered for 2005.
In the first half of 2006, the total import value of textile and apparel into Bulgaria amounted to 1, 412 mil BGN.
Traditionally the biggest part of import consists of textile material, fabrics and accessories, which are mainly imported for final processing work with materials supplied by the client.
During the past 15 years the textile sector in the country has been fully privatised and presently the predominant part of the apparel producing companies in the country are small and medium-sized enterprises with not more than 250 employees. The majority of the companies are either implementing CMT orders (materials supplied by the customer) or manufacturing own production in the low price levels.
SWOT-ANALYSIS: STATUS IN THE BULGARIAN TEXTILE INDUSTRY
- EU membership since 01.01.2007
- Competitive labour costs
- Favourable geographic position in terms of market access to the EU market compared to Asian competitors
- Over 95 percent of the firms within the industry are Small and Medium Sized Enterprises (SMEs), which have high flexibility to react to clients' demands for quick delivery and respond to new standards for quality and organization of production
- Well functioning sector associations, supporting the textile business
- Well educated and experienced work force
- Liberal international trade regime regarding production of textile goods, which have contributed to the improvement of the market access and the competitiveness of the sector
- The majority of the companies are mostly dependent on very few major customers.
- Fashion products of high quality and established domestic brands on foreign markets are not well presented
- A relatively small share of the companies in the sector is marketing an own trade mark.
- Insufficient quality of the higher and middle management in terms of control, marketing, distribution, total quality management.
- Need for investments, improving safety and health conditions for labour.
- The predominantly EU export oriented textile companies, as well as the data for moderate growth of the annual turnover and the number of the employees implies the existence of resources which could be utilized with a view to the future strategic development of the producers from the sector.
- Intensified transfer of capital, know-how, technologies and design to Bulgaria in regard to the EU membership of the country
- Increased market demand of apparel in small series
- Higher quality and design expectations by the domestic consumers
- Possibility of considerable number of firm liquidations due to the cut of CMT orders
- Dumping imports from China and Asian countries
- Import of fake brands on the EU market on low price levels mainly form Asian producers.
The following main trends of the apparel and textile industry in Bulgaria could be outlined:
- Traditionally the apparel and textile production in Bulgaria is renowned for high quality and competitive prices.
- Bulgaria has an advantage over Asian countries owing to its proximity to EU countries, which are considered major markets. This allows local companies to provide shorter product delivery terms.
- The predominant part of the companies is export orientated. This has been a growing tendency during the past years.
- The main stock groups within the textile production, that are subject to export from Bulgaria are knitted or crocheted fabrics, impregnated textile fabrics, wool and woven fabric.
Presently, Bulgaria is Europe's most resilient market for the production of apparel. According to a recent analysis of the Bulgarian Association of Apparel and Textile producers and Exporters (BAATPE) ,for the first six months of 2005, when compared to the same period one year earlier, only China and India posted higher rates of growth in the value of apparel exports (measured in Euros), ranking Bulgaria 3rd in the world and first in Europe. During this same period, production of clothing from the EU-25 was down 9.3% from the same period just one year earlier. These trends demonstrate that Bulgaria is the least affected market in Europe by the abolishment of import quotas from Asian markets, which took effect at the beginning of 2005.
The major advantage of the Bulgarian apparel and textile producers is the ability to make fast deliveries to the European market. Compared to the industry in China and India, the Bulgarian companies are able to respond in a shorter timeframe to un-forecasted fluctuations in the demand.
Bulgaria is Europe's quick response solution. Bulgarian firms are rapidly developing the internal capabilities to manage all aspects of their supply chains to European partners, including sourcing, design and transport/logistics. These capabilities, combined with Bulgaria's strategically favourable location and products, delivered at attractive prices, make the Bulgarian companies competitively sustainable.
Embassy of Denmark, Sofia