With rising labour costs in the Far East, more and more Fashion brands are sourcing from countries closer to home such as Turkey. Drapers speaks to one of the country’s leading manufacturers.
You’ve seen your year-on-year volumes rise 20%. Why is business doing so well? The big retailers are looking for more of a partnership-style relationship with their suppliers. They have big international growth plans and are less inclined to jump from supplier to supplier, so they’re looking to give more volume to fewer suppliers who can help support that growth. There are so many requirements for them to consider now around the environment, social compliance and the production process, that having a trusted partner that you have an established relationship with is really important.
Customers come to us for a number of reasons. Firstly, we produce our own collections, in which they can find most of the trends, and they can buy into certain styles and secure them exclusively for their own ranges. We produce around 100-130 styles every month, often based on customer requests; Secondly, We also have the capacity, which is important for retailers such as H&M, because it requires large volumes of styles; Thirdly, we have a good set up in terms of social compliance; and fourthly, we have lots of in-house facilities, such as our laboratory for testing, that retailers can take advantage of.
Rising labour costs in China is making manufacturing there slightly less competitive. Have you seen business rise as a result? We have had some business as a result of increased labour costs there, but the majority of those businesses are looking for cheaper alternatives to Turkey to maintain their margins, such as Bangladesh, India or Sri Lanka. We’re always going to be more expensive than those countries.
More and more retailers are now working more closely with suppliers to identify areas where they can take cost out of the supply chain. Are you working more closely with your customers? Yes. C&A and H&M are very keen on this approach to supplier management, whereas Zara has just started working in this way recently. C&A and H&M allow us to get on with the production side of the business. They are visiting production lines less, and giving us more control of tests, and allowing us to take care of shipping. Though, they are making random checks for social compliance. What we’re working on more closely is design. Our in-house design team works alongside theirs on trends and product development.
Why manufacture in Turkey? What are the benefits?Firstly, we are very close to Europe, so that allows for speed to market and for our customers to repeat in season, which they can’t do from China. Secondly, like China, retailers can find everything in Turkey, from zips, to labels and fabrics. Whereas they can’t do that in Eastern European countries like Bulgaria. Turkish manufacturing is also more well-established, and we can adapt to market changes quickly.
Do you think we’ll see further migration away from China? Yes, but I don’t know how fast it will be. Chinese manufacturing grew so quickly between 2005 and 2011, but now they’re becoming more expensive. However, retailers can’t move their production that easily because they can’t source all of the components in one country like they can in China. So it will remain a hub for manufacturing for that reason, and due to the capacity that it offers.
How are you planning to grow the business? We’re looking to work with few retailers in greater volume. Rather than trying to service the requests of everyone, we have a focused strategy on certain customers, because they are growing. Today, if you’re a top ranking supplier for a global brand or retailer they expect you to be able to manufacture for them anywhere in the world, but we’re not ready to start producing outside of Turkey.
Customers: C&A, H&M, Next and Zara.
Produces: Women’s woven garments including dresses, blouses, shirts, skirts, trousers, blazers and shorts.
Turnover: €35m (estimate for 2012), €32m in 2011, €31m in 2010. Order volumes are currently up 20% year-on-year.
Tel: +90 216 4206300