Final Report Eng

8/6/2019 Final Report Eng

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DEVELOPMENT OF TEXTILE AND APPAREL INDUSTRY IN MOLDOVA

August 14th, 2007Heikki Mattila


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CONTENTS

1. Background

2. Upgrading in the textile and apparel value chain

2.1 Bulgaria2.2 The Baltic countries2.3 Portugal2.4 Romania2.5 Serbia

2.6 Turkey

3. Taxation and control of material remnants and waste in inward processing trade in othercountries

4. Recommendations

4.1 Upgrading in the textile and apparel value chain4.2 Taxation and control of material remnants and waste

References

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1. Background

The objective of this report is two-fold: First to present examples of how other countries havedeveloped their textile and apparel sectors and how Government can help the T/C sector totransit from low-value added processing such as CM to higher value-added operations such asFull-Package, Private Label and Own Label, secondly to recommend how to control and regulatematerial consumption in inward processing trade and how to deal with cutting remnants.

The sourcing concepts used in apparel sourcing are often defined as follows:

CMThe manufacturer sells cutting and manufacturing services only and all materials imported forprocessing as well as ready made goods to be exported are owned by the customer.

CMT

The same as CM except the manufacturer buys some of the accessories like sewing thread,buttons, etc.

Full-Package (Full Price, FOB)The manufacturer buys all materials according to the customers specifications and invoices thefull value of the product at delivery.

Private LabelThe manufacturer designs collections independently or jointly with the customer. The full-valueproducts are delivered under customers trademark.

Own LabelThe manufacturer designs own collections and sells them under his own brand.

Box 1. Sourcing concepts

The customers may be classified into three main categories: manufacturers, wholesalers andretailers. Manufacturers prefer often CM and CMT, while wholesalers and retailers favor Full-Package, Private Label and Supplier Brands. According to Palpacuer the French retailers seemto favor Full-Package to traditional buying and CMT, and the dominant objectives in Frenchfashion retailers sourcing policy are as follows:

Develop direct sourcing without intermediaries.

Increase continuous sourcing (instead of seasonal buying) and replenishmentpossibilities.

Centralize and rationalize sourcing. Work with selected suppliers on long term basis.

Supply chain integration.

The French retailers main criteria for selecting suppliers in sequence of importance are:

Price

Quality

Delivery time

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Ability to communicate

Product specialization

Product design

Ability to engage in stable relations

Ability to acquire retailer-specific skills

Financial stability and production volume

Upgrading to higher value adding concepts require special skills, more advanced technology andfinancing as presented in Figure 1.

CM CMT FULL-PACKAGE PRIVATE LABEL OWN LABEL

Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing

Accessories Material sourcing Material sourcing Material sourcing

Skills sourcing Material testing Material testing Material testing

needed Pattern design Pattern design Garment design Garment design

Marketing

Production Production Production Production Production

machinery machinery machinery machinery machinery

Technology Internet Internet Internet Internet Internet

needed Testing lab Testing lab Testing lab

Pattern design

CADPattern design

CADPattern design

CAD

Garment design

CADGarment design

CAD

Terms of Cash at delivery Cash at deliveryCash at delivery

or 30 days credit 30 days credit

payment 30 days credit

Financing Labor costs Labor costs Labor costs Labor costs Labor costs

needed Duty 5-10 % Duty 5-10 % Duty 5-10 % Duty 5-10 %

VAT 20 % VAT 20 % VAT 20 % VAT 20 %

Receivables Receivables Receivables

30 days 30 days 30 days

Table 1. Skills, technology and financial needs with different sourcing concepts (Source:Trade diagnostic study of Moldova - modified)

According to the World Banks trade diagnostic study of Moldova, 93 % of Moldovas apparelexports were done on CMT basis in 2004. Virtually no textile materials, i.e. fabrics or accessoriesfor apparel products are produced in Moldova. Furthermore the bureaucratic trade regulationsdid not encourage the apparel companies to upgrade towards more value added concepts.

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In CM the producer receives materials from the customer and pays only customs handling charge(in apparel 0.04 %) but no duty or VAT, as long as the customer owns the materials and theproducts during processing. Duty drawback means that duty (5-10 %) and/or VAT (20%) arepayable when the producer imports the materials, but they are refunded when products made ofthese materials are exported. Duty drawback would apply to CMT, Full-Package, Private Labeland Own label concepts. Many countries especially in emerging economies use such a system inorder to make their export industries competitive in the world market. This is beneficial to localgarment manufacturers but not to local accessories and fabric producers. According tocomprehensive studies by Elena Ianchovichina of the World Bank the conclusion seems to bethat duty draw backs have a positive impact on export competitiveness and employment in exportoriented industries, but could lead to exports with low domestic value added since it does notstimulate investments into domestic material producing capacity.

The total fabric waste in apparel production consists of cutting loss, roll ends and removeddefects. Cutting loss is fabric between product components (sleeve, collar, back piece, etc.). Rollends are pieces of fabric that are too short to make a garment. Fabric defects are removed eitherin spreading or later by re-cutting the defected part. All this is usually considered garbage with nocommercial value. Moldovan Customs, however, sees this differently and does not exempt themfrom duty and VAT as they are considered material staying behind in Moldova. This procedureoriginates probably from Soviet era as it is used in Russia, Belarus and Ukraine at least by certain

Customs offices. But in countries like Romania, Poland, Serbia and the Baltic countries it has notbeen exercised.

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2. Upgrading in the textile and apparel value chain

In order to enhance the value added of any industry the producers should move up in the apparel

value chain from very low priced CM and CMT to Full-Package, Private label and Own label.This, however, does not seem to be easy and usually takes a considerable length of time asdemonstrated in the World Banks Trade diagnostic study of Moldova (Figure 2).

70s 80s 90s 00s

CM/CMT

FOB

Private

Label

Own

Label

Hong

Kong

Hong

Kong

Hong

Kong

Hong

Kong

Portugal

Portugal

Portugal

Portugal

China

ChinaChina

Baltic

area

Baltic

area

Other

CIS

Other

CIS

Italy Italy Italy Italy

UK UKUK UK

Figure 2. The apparel industries in Portugal and Hong Kong have gradually transformedfrom CM/CMT production to FOB/Private Label producers. The Baltic area isbecoming a FOB area while the rest of the CIS countries are CM/CMT producers

Experiences and plans for upgrading from selected countries are presented on the followingpages.

2.1 Bulgaria

The textile and clothing industry employs 155 000 people in Bulgaria with 7.5 % share ofindustrial production and 23.4 % of total exports. The main export market in 2005 was Germany(28 %) followed by Greece (16%) and Italy (14%).

According to Textile Intelligence the Bulgarian production of textiles and clothing grew by 152 %and 109 % respectively between 2000 and 2006. Despite of difficulties, such as a large greyeconomy, illicit working practices, high investment needs, low labor productivity and reliance onimported textile materials, the article concludes that the outlook for Bulgarian textile and clothingindustry is good, because of:

The sector consists mainly of flexible and fast-to-the-market SMEs.

Favorable geographical location close to other EU countries

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Low wages

Removal of trade barriers due to EU membership

Bulgarias apparel industry is very export oriented. According to Bulgarian Association of Appareland Textile Producers and Exporters most garment exports are done on CM and CMT basis.Although many local producers have registered trade marks less than 10 % of total output is sold

domestically.

The Bulgarian Apparel Sector Strategy (http://exdima.sippo.ch/SIPPO_bg_textileEN.html)produced under the Ministry of Economys coordination in 2004 estimates that the share ofBulgarian producers participation in product development was only16 % while the rest of the totaloutput was pure CM or CMT. The following trends were identified by the companies:

Most producers are export oriented often without any domestic sales.

A big part of companies depend solely on 1 to 2 foreign customers.

Trade intermediaries (customers buying offices in Bulgaria) cut the producers off frommarket information and make it difficult to find and approach new customers.

The companies are interested in joint marketing projects, but very few have been carriedout so far.

The very high proportion of CM production and designs by customers decrease theadded value and make low price the only means of competition.

Many companies have registered trade marks, but do not use them.

Only 1 % of the T/C sector companies are ISO9001 certified.

Although a quality certificate is often a pre-condition for exports, the smaller companiescannot afford them.

High dependence on imported materials prevents the Bulgarian textile sector fromdeveloping successfully.

The strategic objectives for the Bulgarian T/C sector are as follows:

The sector will be dynamically developed in regards to design capability, managementand marketing skills, work force skills, inter-firm networks.

Sale of end-products will be promoted by increasing the number of local companiesmanufacturing products under international brands, creating and increasing sale of ownbrands and increasing sale of private label services.

Selling to the global market by diversification of markets and client structure, promotingMade in Bulgaria products and entering niche markets with higher added value.

The action plan for achieving the strategic targets includes the following:

Increase the number and improve the quality of company web pages.

Joint participation in international trade fairs.

Increase cooperation between firms, i.e. marketing chains, etc.

Join international distribution networks.

Cooperate in material purchases in order to optimize volume and price.

Introduce quality, environmental, social and other international standards. Encourage companies to implement design and ITC systems.

Establish domestic brands and introduce them at export markets.

Increase participation in international B2B fairs (materials, etc.)

Establish real marketing departments in companies

Improve the efficiency and legitimacy of industry associations and increase their dialoguewith the Government.

Adapt the objectives of higher, medium and vocational education to company needs.

Establish R&D centers specializing in technology, design and production,

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Establish a Design and Fashion Support Centre for providing fashion trend services tomember companies.

Establish a Productivity Support Center and a Marketing Support Centre.

Stream-line customs clearing procedures.

Improve taxation in order to promote re-investment of profits.

Establish an export promotion fund for financial support of trade fair participation, etc.

2.2 The Baltic countries

After gaining independence the Baltic countries quickly turned into important garment suppliers.The Nordic countries, especially Finland and Sweden, as well as Germany set up sub-contractingproduction in the area. There were several well equipped garment factories, some of which weretotally reorganized with modern machinery during the last years of Soviet Union. During theprivatization period many of these companies were bought by foreign apparel firms and theindustry became a part of Nordic and German T/C clusters .

All production in the 90s was CM as the companies were not experienced in sourcing materialsand most of them did not have sufficient funds for financing material purchases. The Baltic

countries are small in area and population (Estonia 1.6 million, Latvia 2.3 million and Lithuania3.4 million). The small size of these countries may be one of the reasons that several companieshave been able to upgrade further from the basic CM or CMT. The other reason is rapidly risingcosts and today many companies in the Baltic area are delocalizing their garment manufacturingto Belarus, Ukraine, Russia and further.

Estonia

At the beginning of 90s Estonias garment industry was very similar to what Moldovas apparelindustry is today. Nearly everything was produced on CM or CMT basis for export with hardly noown brands. The few textile producers concentrated on home textiles or knitwear materials. Mostapparel fabrics had to be imported. Several textile and apparel firms were bought fully or partly byforeign companies during privatization. These FDIs were mostly acquisitions rather than newinvestments. As result many factories were turned into foreign companies production subsidiariesselling CM services and there was no interest to upgrade towards more value-added concepts.Estonias own textile and apparel firms started gradually to develop their own brands andcollections selling them first in the domestic market and then in other Baltic states and Russia. Asthe GDP level in Estonia grew foreign retail chains started to enter the market from mid 90s. Atthat time there was no competition from local retailers and the market was soon dominated byforeign brands.

The main export markets for apparel products according to Estonian Clothing and TextileAssociation (ETCA) in 2005 were Finland (31%), Sweden (20%), Russia (9%), Germany (6%),UK (5%), Latvia (5%), Norway (5%) and Lithuania (4%). Exports to Russia and other Balticcountries are likely to consist of Estonian brands while the rest of the exports are CM or CMT.The reasons why after gaining independence the Estonian T/C industry became such animportant supplier to Scandinavia and Germany are as follows:

Most garment and textile firms were well equipped with modern machinery and they hadwell trained personnel.

Most factories were small and flexible and could respond quickly to customers requests.

The general cost level was very competitive in the 90s.

Estonia is close to these markets, and communications and logistics were easy andefficient.

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According to Purju the special conditions that have shaped the development of the T/C sector inEstonia are as follows:

Trade union representation is very weak and their bargaining power is limited. Only 14%of the total labor force belongs to labor unions.

There are huge wage level differences from one industrial sector to another.

Estonian Clothing and Textile Association (ECTA) was established in 1993 for promotingthe interests of Estonian T/C industry, but its influence on governmental policy is not asstrong as in West European countries. The T/C cluster, like other industrial clusters inEstonia, is not well organized and lacks bargaining power.

Only a few Estonian brands have been successful in Estonia and abroad.

Well educated young people are currently moving to other EU countries and the skilledworkers are leaving the T/C sector to work in higher paying sectors like electronics andservices.

Taxation policy is favorable both for corporations and individuals. Profits are not taxed ifinvested back into the company. Personal income tax is not progressive.

During the past 3 to 4 years the T/C sector in Estonia has gone through big changes. The

minimum wage level is still applied in the apparel industry while the electronics industry is payingmuch higher wages. According to Estonian Clothing and Textile Association the wages paid inthe apparel industry are 65 % of the average industrial wage level. People have started to moveto better paying jobs and it is nearly impossible to recruit new people. Direct wage costs atminimum level and other operating costs (gas, electricity, etc.) are increasing 20% to 30%annually. The impact on the T/C sector has been the following:

The Estonian branded manufacturers (Baltika, Klementi, PTA, etc.) are converting fromproducers to wholesalers and branded retailers. The factories are closed in Estonia andproducts are sourced from lower cost countries in East Europe and Asia.

Foreign companies with sub-contracting operations or own factories in Estonia aredelocalizing their production to lower cost countries. The total production value of theapparel sector has been declining since 2002.

The delocalization process in most regions in Estonia does not seem to causeemployment problems as people are leaving the T/C sector anyway and there are jobsavailable in better paying sectors, such as electronics and services.

Latvia

The textile sector is the oldest branch of Latvian industry. Many companies date back to the 19th

century. The industry was modernized and developed during the Soviet times and in 1990 whenLatvia became independent there were a number of apparel companies and textile millsproducing cotton, flax and silk fabrics. Exports to the West European markets started gradually inthe 90s. Today a big part of exports are apparel products, but many textile companies havesurvived and developed internationally known textile brands (Lauma, Ogre, Rita, Aurora-Baltika,Viola-Stils).

During the privatization process the large state-owned firms were restructured and many newflexibly operating apparel companies were established, often with foreign capital. The T/C sectorcomprised 664 companies employing 25 000 people in 2005, which is 14 % of total industrialworkforce. According to Latvias Central Statistics Bureau the main export markets for T/Cproducts in 2005 were Germany (14%), Sweden (13%), Estonia (10%), Denmark (10%) andRussia (9%).

According to the Latvian Investment and Development Agency the critical success factors for thetextile and clothing industry have been as follows:

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Short lead times and reliable deliveries due to proximity to the main markets andadvanced production management. Small orders are accepted and delivery time variesbetween 2 to 6 weeks.

Ability to produce high quality products both for subcontracting and own brands.

Good design skills for own brands. The Latvian Academy of Arts has high quality

education for designers. Well trained workforce due to well organized vocational education. The workforce is also

flexible in terms of working time.

Well educated and experienced engineers from Riga Technical University.

Capable and dedicated senior management with good English and German languageskills and which often are co-owners in the company.

Modern production facilities and many companies have carried out considerableinvestment programs during the past years.

A combination of low labor costs and high labor productivity.

Several companies have quality certificates, such as Oeko-tex, ISO9001 and ISO14000.

There are strong companies both in the textile and garment sector, for example in ladiesunderwear, which makes Latvia a one-stop-shop for the customers.

The main problem that Latvias textile and clothing sector faces today is increasing costs. Asresult many firms have started to delocalize their production to Belarus, Ukraine and Russia.

Lithuania

The historic background of the Lithuanian textile and clothing industry is very similar as in Latvia.The sector employs 47 000 people and 2/3 of the companies are apparel producers and 1/3textile manufacturers. The key trading partners today are UK, Germany, Sweden, Denmark andItaly. Most of exports are on CM and CMT basis, but several firms have also developed their ownbrands and sell them domestically and to export to neighboring countries. As a part of the globaltextile and apparel value chain Lithuanian producers are facing increasing competition from lowercost regions, especially from Asia. Many CM and CMT customers are currently shifting their

order away from Lithuania.

To survive the Lithuanian T/C sector feels that it is important to develop flexible productionsystems for small fashion orders and to emphasize own brand development. Several companieshave been successful in introducing their brands in the domestic and nearby markets, forexample Audejas, Audimas, Utenos Trikotazas, Roze and Omnitekas, but the domestic market isdominated by foreign brands and retail chains. The National Development Strategy for the Textileand Clothing Sector, 2005-2010 lists the following objectives for maintaining the competitiveadvantage of the sector:

Lithuanias T/C sector must emphasize its ability to produce and supply flexibly welldesigned high quality products, such as fabrics, trimmings, auxiliary materials andapparel products.

By using new multi-functional materials, new generation textile products with high addedvalue can be developed for medical purposes, automobile, aviation and space industriesas well as for safety and protective garments.

Further funding must be sought from EC for structural development as well as forresearch and development projects.

SWOT analysis by Glinskiene et al defines the current situation in the Lithuanian textile andclothing industry as follows:

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Strengths:

Large workforce in the sector.

More than 80 % of products are exported.

Export volumes larger than imports.

Labor productivity is competitive compared to European suppliers.

Workforce is experienced and highly qualified.

Advanced technologies in use.

Weaknesses:

Exports consist mainly of CM and CMT.

Profitability is low.

Export volume is decreasing.

Investments are decreasing.

Direct foreign investments are decreasing since 2000.

The lowest labor productivity among all Lithuanias industrial sectors.

Labor cost forms a large part of the cost structure due to CMT.

Opportunities:

Lithuania is still regarded as a favorable trading partner by EU customers.

Certain competitive advantage can be achieved by developing flexibility.

Threats:

Competition from Chinese suppliers.

Low material and direct foreign investment does not allow for upgrading of technology.

Increasing labor costs.

2.3 Portugal

Portugal became an important supplier of garments to the rest of Europe already in the 80s.Although there was a large textile industry in Portugal, most exports were CM and only a fewcompanies started to offer CMT. After Portugal became a member in EU support money becameavailable. The Ministry of Industry organized special funds co-financed by EU at the end of 80sand early 90s for the industry to get grants and loans for investments and productivitydevelopments. The focus of these development funds and programs was to improve productivityand to upgrade the industry to more value-adding businesses. In the 90s Portugals Governmentset up a special office for supporting the SME sector of Portugal, called IAPMEI(http://www.portugaloffer.com/iapmei/). IAPMEIs mission is to Design and carry out policies

that support and enable companies to expand. IAPMEI focuses in particular on upgrading andinnovation for small and medium-sized enterprises operating in the secondary and tertiary

sectors, including T/C sector.

A special investment initiative RETEX was set up in 1994 in order to modernize the PortugueseT/C industry (http://ec.europa.eu/regional_policy/reg_prog/po/prog_222.htm). The total budget ofthe program was 542 million, and the money was available to the T/C sector only. EU financed75 % while the Portuguese Government put up the rest. Altogether 1756 projects were carriedout during 1994-1999. The maximum grant for investments was 50 % and for consulting services70 %. RETEX was followed by other similar programs, like PEDIP and PEDIP II. Each program

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focused on specific topics, such as investments, capacity development, improvement ofmanagement know how, exports, etc. RETEX was organized as follows:

RETEX was a special program for textile and clothing industry (1992-1999). Companiesinterested in project funding had to present a project proposal to the Ministry. The applicationhad to be supported by a diagnostic study, strategy plan, project plan and project proposal.

Grant money was available for the following costs:

Costs Grant max % Grant max

Consulting fees for preparation of diagnosticstudy, strategy plan, project plan and project 70 % 50 000 proposal, as well as final reports.

Consulting fees for productivity built up 60 % 125 000

IT, CAD and CAM systems and equipment 50 % 75 000

Transport systems in production and warehouse,quality control systems and equipment together with 40 % 150 000 installation.

Refurbishing of factory buildings and environment 60 % 200 000

Dissemination, i.e. organizing an open door workshopto show other companies what was done and 100% 25 000

what was achieved.

Project preparation and supervision was carried out by consulting consortiums, which consist oflocal and international consultants bringing international consulting know how into the country andenhancing the skills of local consultants.

By 2001 the textile and clothing industry in Portugal employed more than 200 000 people, 25 %of the total industrial workforce. Of the total 13 000 T/C companies more than 70 % employ less

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Diagnostic StudyStrategy Preparation

Project PlanProject Proposal

InvestmentsProject Implementation

Consulting services

Final report with estimatedresultsFinancial records with invoices


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than 10 people. Such small companies may export themselves, but several trading companieswere established, which on behalf of these SMEs collect orders from customers and distributethem to small producers. Unfortunately the Portuguese apparel companies were slow indeveloping own brands and international fashion chains took over the Portuguese market in the90s. Today relatively few firms have own brands and companies that sell Full-Package servicesor Private label are moving their production to lower cost countries like Romania, Ukraine andMorocco.

2.4 Romania

Before EU membership Romania was for years the third largest extra EU supplier of apparelproducts to EU after China and Turkey. Currently the 360 000 people representing 14 % of thetotal workforce are employed by the Romanian apparel industry, which stands for 25 % ofRomanias total exports. In 2005 over 90 % of T/C sectors output was exported to EU.Most of the apparel exports are done on CM and CMT basis and the range of customers varyfrom top level European brands to low cost retailers. The labor cost is relatively high compared tonear-by countries. In 2006 the average monthly direct wage level in the textile industry was 217and in the garment industry 190. The labor productivity is not very high. Romanias garmentexports to EU have been decreasing since 2005.

The success of Romanias textile and clothing sector was largely built during the socialist era andright after Romania became a market economy. The large state owned enterprises werereorganized and privatized and several new privately owned SMEs were established. There areseveral high quality and high volume producers of heavy apparel (mens suits, ladies blazers,overcoats, etc.) in Romania, and they are still able to fully sell their capacity. Currently Romaniais facing the following problems:

Most of exports are CM and CMT with only some Full-package sales.

High labor costs together with low labor productivity makes Romania less interesting toCM and CMT customers.

There is a shortage of labor in the T/C sector as people go after better paying jobs. Thesalaries in the textile and clothing sector are 30 % lower than the average paid in

Romanian industry. Implementation of EU customs tariffs on January 1st 2007 is likely to lead Romanian CMT

and Full-package providers to source materials from Asia, which will weaken the positionof domestic textile industry.

Since 2004 all major T/C sector indicators (production volume, exports, employment andforeign and domestic investments) have been heading down hill.

According to some estimates CMT production, which accounted for 68% of total garmentoutput and 80 % of total exports in 2005 will largely move out from Romania by 2010.Half of the 8 000 textile and apparel companies could disappear reducing the total outputby 10% to 25%.

Despite of increasing cost pressure the Romanian apparel industry is confident that it will be ableto compete in the future, because:

Proximity to EU.

Specialization in high quality heavy apparel, where, like in mens suits, very littlecompetition comes from Asia.

Still low standard minute cost and skilled labor.

Gradual transition from CMT to Full-Package production.

Despite of growing invasion of foreign brands and retail chains popular domestic retailchains also exist.

Romania has a large domestic market.

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2.5 Serbia

During the transition period since 2000 Serbian macro economy has stabilized and the realannual GDP growth has varied between 2 % and 5.3 %. The textile and garment productionrepresented 7 % of total manufacturing output and 3 % of GDP employing 75 000 people in 2003.Before disintegration of the former Yugoslavia textile industry was one of the main exportindustries and over 70% of exports went to European customers. During the embargo most textileand apparel companies were forced to focus on the domestic market. Several large scale stateowned textile mills had to scale down their volume and some ended up in bankruptcy. But at thesame time a number of new SMEs especially in the apparel sector was set up. By focusing on thedomestic market with very little foreign competition they built strong brands and own retail chains.Today the value of apparel exports is 200 million and 70 % is exported to EU usually on CMTbasis.

The labor costs in Serbias T/C sector are among the lowest in Europe, way below 100 /month inthe T/C sector. The cost price of one production minute is very competitive. The labor force isskilled and experienced. There are special schools for training sewing operators and technicians,

and 100 textile engineers graduate annually.

The Serbian apparel industry depends heavily on imported fabrics as most of domestic fabricproduction has collapsed. The free trade agreements between Serbia and EU, Russia andCentral European countries have reduced import duties to 0%.

According to Serbian Investment and Export Promotion Agency the keys to success for the localT/C sector are as follows:

One of the most price competitive textile and apparel industries in Europe.

Quick and flexible deliveries and low order minimums.

Closeness to main European markets, especially Italy.

Good educational system produces highly skilled workers and management.

Serbian industry is a supplier to high quality brands in Europe and USA and throughthese contact understands top quality requirements.

Strong domestic brands and retail chains can compete in the local market and near-bycountries.

2.6 Turkey

According to the Association of Turkish Clothing Industry the Turkish apparel industry is:

The driving engine of Turkish economy in terms of investment, production andemployment.

Apparel is the leading export product.

Turkey is the 5th largest global and 2nd largest EU supplier.

The industry is internationally competitive and has growth potential.

There are about 40 000 textile and clothing producing companies in Turkey, mostly family ownedSMEs. But also 25 % of the 500 largest enterprises in Turkey are T/C firms. About 10 000 ofthese companies are exporters. All kinds of textiles and garments are produced in Turkey, whichmakes Turkey a one-stop-shop for the customers. Because of this Turkish T/C companies areprimarily Full-Package providers, although CM and CMT is still largely available. Several Turkishfirms have also developed their own brands and sell them domestically and also for export.Another strong point is that many of the larger firms have made investments in backward and

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forward linkages thus controlling a longer piece of the supply chain. This has attracted manylarge US customers like Liz Claiborne, Tommy Hilfiger and GAP. The firms that have madedownstream investments, i.e. they have became retailers, have developed their own product andretail brands.

Development of export trading companies (ETCs) were promoted already in the 1980s.According to Neidik et al, ETCs were formed when small firms came together to get betterfinancing and marketing support, and today there are 31 ETCs accounting for about 30 % ofTurkish textile and apparel exports. Some of the earlier ETCs were set up by large T/C producersand gradually they started to export goods made by other companies as well. The tradingcompanies are active exporters of Turkish made goods with excellent Internet trading sites andsales offices in EU and the USA.

Neidik et al define the following points to be behind the Turkish T/C success:

The sector consists mainly of family run SMEs, which are flexible and able to rapidlyrespond to demand changes. This has been a critical factor in Tukeys as Turkeys T/Csector relies on EU rather than US. EU buys smaller runs and more fashionable products.

There are both integrated firms (fabric and garment manufacturing) and severalindependent material producers and apparel producers. This makes it easy for Turkey tooffer Full-package services as well as Private Label.

Turkish brands and retail chains have meant that Turkish companies have been able tomaintain a meaningful share of the domestic retail market. Now these firms areexpanding to export markets with their brands and retail chains.

Textile and apparel sector has managed to attract foreign direct investments, although ingeneral the number of FDIs is low in Turkey. Well known international companies withinvestments in Turkey include firms like Levi Strauss, VF, Hugo Boss, Polgat and Adidas.

The free trade agreement and Customs Union with EU opened the EU market for Turkey.Turkey participates very actively in several EU organizations even though they are not anEU member. The Association of Turkish Clothing Manufacturers is a member ofEURATEX enabling them to participate in lobbying EU in textile policy making.

Turkish T/C firms have actively set up partnerships with international companies outsideTurkey in order to capitalize on low cost production and to be directly at the market.Some of these firms are production companies and some trading companies. Examplesof these are Turkish investments into the near-by countries like Romania, Moldova,Uzbekistan, Jordan and Turkmenistan. According to some estimates there are around3 000 Turkish firms from various industries operating in Bulgaria alone.

The Turkish Clothing Industry Horizon 2010 Road Map by the Association of Turkish ClothingManufacturers lists, among others, the following strategy objectives for the industry:

Lower the share of sub-contracting service sales in exports.

Replace the low cost simple products by upper middle class products in sub-contractingsales.

Increase the share of upper middle class Turkish branded fashion products in exports to50 % by 2010.

Switch from passive to active marketing and change the approach from production totrading.

Switch to flexible production methods.

Improve integration level in production.

Increase partnerships with international companies in terms of production and marketing.

Promote e-commerce infrastructure.

Improve training and education in technical, design and marketing areas.

Increase Government support in R&D, investments, quality and market development.

Ensure favorable finance conditions for investments and operational needs.

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Promote mergers in textile and clothing industries.

Promote Turkish retail chains.

Form national clothing industry advisory board.

Set up clothing industry development fund.

Establish a clothing research institute.

Develop e-design ability and form a design agency.

Reduce dependency on wholesalers and go directly to EU end customers. Target sales to international retail customers as they buy Full-Package services and

Turkish brands while international branded manufacturers favor CMT.

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3. Taxation and control of material remnants and waste in inward

processing trade in other countries

Customs offices in many countries are concerned that all material sent out for processing may notactually be used for the order. Due to fabric defects, order quantity and different kinds ofproduction equipment it is not possible to exactly define the consumption in advance.Furthermore, customers usually send out extra fabric in order to ensure that the producer is ableto complete the order. Cutting waste is normally between 10 % and 25 % of total material sent outfor processing. Left over material may be useful for the producer or the customer, but cuttingremnants are garbage and have no value. Based on interviews of customers and produces thematerial consumption control procedures in different countries are described on the followingparagraphs.

Belarus

The customer presents an estimate on material quantity and value to be consumed for each orderto domestic Customs office as well as to the producer. The producer presents this estimate tothe local Customs office in Belarus when clearing customs for incoming material. When exportingthe ready made products the quantity of products is checked against the order. Any left overfabric is either returned or used for making new samples for the same customer. The producerpays no import duty or VAT providing that all material is used or still usable leftovers are returned.Officially there are three ways to deal with cutting remnants:

1. They are returned to the customer (no duty, no VAT)2. They are destroyed under supervision of the Customs (no duty, no VAT)3. The producer clears customs for them and pays duty and VAT

Local Customs Offices seem to apply the regulations differently, as defined by A. Goer of BarnAS:

For example one our contactors in Belarus sends back all the waste (physically in the truck)according to the document. Another, from the same country, sends only 1 small box per month,but in documents he writes all what is needed. A third one sends nothing back, only indocuments. This all depends on the policy of local customs office and the relation between thefactory and the customs.

The current Customs Code of the Republic of Belarus valid since 1996 is being harmonized withthe Russian Customs Code. The current Code does not specify how processing waste should betreated.

http://www.law.by/work/EnglPortal.nsf/ThemaSort/BEF24B31A88CB05BC22570A7003DB4F6?OpenDocument

Bulgaria

As an EU member these formalities do no more concern production in Bulgaria. Before themembership, when exporting the ready-made goods, the producer reported actual consumptionof all materials in detail. Some left over material was acceptable and could stay in Bulgaria, but

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not in large quantity. Such material imports as well as cutting remnants were exempt from dutyand VAT.

Romania

Before EU membership it was possible to produce CM products for EU customers without payingimport duty on fabric. A permission had to be applied from the local Customs Office for eachimport and EUR1 certificate was required in order to be tax and duty free. When exporting theready made goods the producers had to present to the Custom office, along with the exportinvoice, a consumption note in order to justify the consumption of imported fabric. Usually around2 % of waste and left over fabrics were allowed. Larger quantities were returned to the customerin order to avoid duty and tax consequences. The companies usually declared their total waste tobe 2 % and did not pay duty or VAT.

Russia

No duty is paid for materials imported to Russia for production as long as the ready made goodsare exported. Russian customs request a document, which states the total consumption ofvarious materials per garment. When the ready made products are exported they control that theequal number of garments is shipped. In case the number of garments is lower than initially

defined, for example due to high number of defects in fabric, there are normally no dutysanctions. The customs procedures vary greatly from one location to another in Russia. Someregional Customs offices allow small quantities of left over fabric to stay in Russia and levies noduty on it or on cutting remnants. Another Customs office may request that such materials areburned at the presence of a Customs official to avoid paying duty and VAT.

The new Customs Code of Russia from 2003 (http://www.customs.ru/tk_en/) stipulates in Atricle183 only in general terms how waste is treated under inward processing scheme and does notspecify how it should be done for clothing production. Article 183 stipulates that The wasteswhich have formed as a result of the goods inward processing procedure shall be liable forcustoms duties and taxes equivalent to those applicable to the goods imported to the customsterritory of the Russian Federation in that state, except:

(a) The said wastes have been exported from the customs territory of the RussianFederation, or

(b) Processed into the state in which their further commercial utilisation on the customsterritory of the Russian Federation is no longer possible and they cannot be restored totheir original state by any economically feasible method

The Article stipulates further that

Wherever it is impossible to determine the wastes customs value using the method based onthe value of a transaction with imported goods or identical goods, the wastes customs value shallbe determined as equivalent to one of the following values:

- the price of sale of the appraised wastes at the instance of their initial sale in thecustoms territory of the Russian Federation to a buyer who is not interdependent uponany participant of the goods processing transaction;

- the price of sale of the goods identical to or homogenous with appraised wastesprovided said goods were manufactured as a result of analogous processing operationsunder the terms and conditions of the inward processing procedure at the instance oftheir initial sale in the customs territory of the Russian Federation to a buyer who is notinterdependent upon any participant of the goods processing transaction;

- the price of a transaction with the goods identical to or homogenous with appraisedwastes which were sold as export goods to the Russian Federation and imported to the

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Russian Federation in the period concurrent with the time of declaration of theappraised wastes;

- the price of the goods identical to or homogenous with appraised wastes transactedat the domestic market of the Russian Federation between independent buyers andsellers less the taxes levied on said goods at their sale in the Russian Federation.

The text is general and leaves room for interpretation regarding cutting waste, and local CustomsOffices seem to interpret it differently.

Serbia

No duty or tax is levied on material imported for CM production. An import document for CMproduction is issued for each order by the local Customs office stating the quantity and value offabric, the number of garments to be made and consumption per piece. Goods must be exportedin 90 days. An extension of 60 days can be applied in case unexpected problems occur. If a partof the fabric remains in Serbia the producer must pay import duty and VAT, which currently are 2% and 18 %. Import duty for fabrics from EU will be 0% from the beginning of 2008.

Ukraine

Imported textile goods are subject to customs duty and VAT (20%). Customs clearance is furthersubject to a processing fee, which is 0.2 % of the goods customs value. Materials imported forprocessing are exempt from these taxes, providing that:

Re-export takes place within 90 days.

The material and the finished goods belong to the foreign customer.

The tariff code must change as a result of processing.

The cost of raw material must be at least 20 % of the value of the finished goods.

The imported raw material must be the main component at each stage of production.

The time period that materials stay in Ukraine may be extended from the 90 day limit forproduction reasons. Importers of textile goods must issue an obligation for import duties and VAT

to the tax authorities in order to have the taxes cancelled. Any material that stays in Ukraine afterre-export will be taxed. Customs regulations treat the cutting remnants in a similar manner as inBelarus, but also in Ukraine local customs offices enforce the regulations differently

Importation must be supported by the following documentation:

Import customs declaration.

Cross-border contract.

Obligation for import duties with consumption calculations.

Customer order and invoice.

Waybill.

Compliance certificate.

Certificate of origin.

Any other documents as may be requested by Customs.

The new Customs Code of Ukraine, which came into force in 2003, is currently available only inRussian:

http://www.mdoffice.com.ua/pls/MDOffice/MDODocFolder.FindHelp?p_file=10&p_page=1000

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4. Recommendations

The draft of report Program on Development of the Light Industry of the Republic of Moldova untilYear 2015 and the Action Plan were discussed in detail with the CEED Team as well as with therepresentatives of local apparel industry and the Ministry of Industry and Infrastructure. TheProgram and the Action Plan were found to be well prepared. Several adjustments were,however, decided during the visit especially regarding how to support upgrading and how tostimulate the industry in improving productivity.

4.1 Upgrading in the textile and apparel value chain

Recommendations discussed in detail with the CEED Team during the visit can be summarizedas follows:

Education

Improving of higher education should be done with international help. EU offers support for thisarea through special initiatives like Tempus and Erasmus:(http://ec.europa.eu/education/programmes/tempus/index_en.html)(http://www.europarl.europa.eu/facts/4_16_1_en.htm).Tempus II came to an end at the end of 2006, but Tempus III is currently under preparation.Under this scheme Moldovan University signs an agreement with one of the EuropeanUniversities, which will then provide recommendation and assistance for improving the quality ofeducation. Erasmus funds exchange of students and professors. The initiative to participate inthese schemes must come from Moldova.

So called Dual system for vocational training, as in Germany, is currently discussed in Moldova.The education would consist of training at vocational school as well as practical training in an

industrial company. Such a system is highly recommended, and assistance for establishing itshould also be sought from international sources.

Internship is compulsory to students in most Technical Universities in Europe. The objective isthat the student understands how the industry operates as well as to bring the University andindustry closer to each other. During the internship the students are paid by the companies fortheir work and they also receive credits for their studies at the University.

Special training courses organized by the companies should also be supported by public funding.The company must set up a training class with all necessary machinery and hire an instructor.The cost of training as well as wages of workers, at least partly, should be paid by theGovernment.

The quality of designer education should be improved in order to make it possible for the industryto employ qualified designers when they upgrade to Full-Package, Private Label and Own Label.This can be done in cooperation with an EU Design University, for example through Tempus andErasmus schemes.

The State University of Technology should approach AUTEX and apply for membership. AUTEX(www.autex.org) is the Association of Textile Universities of Europe and they organize scientificconferences, and many other kinds of events. Also they promote joint research projects fundedby EU. Non EU member Universities are welcome to participate in such projects. The projectswould contribute to improving the quality of research and education in Moldova.

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Association of Apparel Industry

Moldovas Association of Light Industry was established in 2006, but it does not yet have anypermanent staff and its strategy and responsibility areas are still being discussed. Most membersare from apparel and footwear industries, and in order to be more effective the association shouldconsider concentrating on these industries only and change the name to Association of ApparelIndustry. An efficiently organized industry association can lobby the Government in policy issues,improve the image of the industry and offer its members different kinds of services like theFinnish Federation of Textile and Clothing industry (http://www.finatex.fi/finatex.html). Finatex isadministrated by a Board of Directors. The Executive Director and office staff, all permanentlyemployed, are responsible for operations :

Finatex

Figure 3. Areas of responsibility of Finatex

The Moldovan Association should seek international assistance in organizing the Association, forexample in form of a study tour to Portugal. By visiting ANIVEC, the Association of ApparelIndustry of Portugal they would be able to see how an Industry Association operates, how theProject Funding Schemes were carried out in the 90s and 00s and what kind of services aFashion Center offers its members. During the same trip the participants should also visitindividual companies and CITEVE, a Competence Center of Portugal, which offers technical

assistance and services to the textile and clothing industries.

A high quality web site should be created by the association. The image of apparel industry,which in the minds of Moldovan workforce and students is not very high, can be improved by anexciting web site. Furthermore, the web site can be used for commercial purposes by presentingits members, their production services and products, like in Portugal:

http://www.anivec.com/Page01.aspx?&L=en

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http://www.portugaloffer.com/garments.html

An industry association is an independent and private organization financed by its members. TheMoldovan Government should encourage and support such associations by recognizing that theyplay an important role in improving and upgrading industrial operations in Moldova.

Fashion center to distribute fashion trends

A Fashion Center should be established in Moldova, either independently or as part of theAssociation of Apparel Industry. The Fashion Center does not offer design services, but providesthe apparel industry with fashion trends collected from various sources. The representatives ofthe Fashion Center visit all main fabric and fashion fairs in Europe and are in contact withFashion Trend companies like Promostyl (http://www.promostyl.com/). By combining all thisinformation the Fashion Center then presents the Moldovan apparel producers color and fashiontrends regarding next seasons, organizes trend shows, etc.

Upgrading of Moldovan apparel industry

Establishing of Moldovan brands and retail chains should be supported as in order to set up abranded business the goods must be sold in the domestic market first. The fashion retail market

in Moldova is still not very developed and there are only a few stores selling domestic brands.Once international retail chains like Mango, Hugo Boss and Steilmann have taken over theMoldovan market it will be too late to develop Moldovan brands.

But the first step for many Moldovan apparel producers is to upgrade from the basic CM to CMTand Full-Package. CM customers often consist of branded manufacturers, which are looking forthe lowest price. Branded marketers and branded retailers prefer CMT and Full-Package, butthey avoid Moldova as such services are not available. In order to motivate and stimulate theMoldovan apparel industry to upgrade, one to two buyers from such companies in EU should beinvited to a workshop in Chisinau to highlight the services they are looking for. Technicalassistance for finding Full-Package customers is recommended. The assistance could be a list ofcompanies with contact information and visits to the companies jointly with Moldovan producers.

International standards, such as ISO 9000, ISO 14000, OecoTex, may be important forcompanies that producer more advanced garments, such as protective wear and militarygarments. They demonstrate that the company is well organized and willing to comply withinternational requirements. Other standards, for example regarding harmful substances in fabrics,or special properties are equally important to follow. Many Moldovan producers may not be awareof such standards. The Association of Apparel Industry of Moldova or the Competence Centerdescribed below should take an active role in making the standards known.

The Moldovan Government should recognize that the customs procedures are complicated andnot consistent in different parts of Moldova, as highlighted already by the World Banks TradeDiagnostic Study published in 2004. The current procedures increase direct and indirect costsmaking Moldovan producers less attractive. Furthermore, they do not encourage the industry toupgrade to CMT, Full-Package or Private Label, as the manufacturers would face further

complications in clearing customs and would need additional financing due to slow repayment ofduty and VAT. Drawback of both duty and VAT in Full-Package exports is applied by manycompeting countries, but in Moldovan drawback applies to VAT only. Streamlining of customsprocedures with international assistance is highly recommended.

Anti-dumping duties are an instrument widely used by EU for protecting domestic industry frominternational dumping and unfair competition. Anti-dumping action is initiated by EU industryagainst an individual company or country, and the duties are set for particular products. Moldovacould exercise similar procedures regarding the very low cost garment imports from the Far East,which disrupt the domestic market and make it difficult for Moldovan producers to compete.

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As no accessories, such as buttons, rivets, labels, fusibles, sewing thread, etc. for apparelproducts are produced in Moldova, they have to be imported. This is another barrier for theindustry to upgrade to CMT as they may not have direct contacts to international accessoriessuppliers, and importing has to be financed. A feasibility study for establishing such industry inMoldova should be carried out with donor or Government funding and presented to potentialinternational or domestic investors.

Project funding

Project funding schemes have been used in several countries for improving and upgradingindustries, as described earlier in this report in regards to Portugal. Most countries have also aspecial Government agency for funding technology and R&D projects like TEKES in Finland(http://www.tekes.fi/eng/). A project funding scheme is highly recommended for improvingMoldovan apparel industry. The scheme should focus on capacity building, exports, technologyimprovement, design and product development skills and upgrading to CMT, Full-Package,Private Label and Own Label. For each project a detailed strategy and project plan supported bya diagnostic study of the company would be required. Project funding would be more effective instimulating improvements and upgrading compared to direct export support or exemption fromVAT on machinery imports, as the companies would have to commit themselves to these projects

for development and upgrading.

The scheme could be co-funded by international donors and administrated by MoldovanGovernment. The first step would be to develop a concept and a business plan for the scheme.

Center of competence

Competence centers operate in many countries. They are set up for a specific industry or for theindustry in general. These centers offer technical services for improving technology andmanagement skills in the industry. CITEVE (www.citeve.pt) is a competence center set up inPortugal with the following mission:

CITEVEs mission is the development of technical and technological capacities of the Portuguese

textile and clothing industries through innovation, encouragement and dissemination, promotionof quality improvement and also as an instrument for the definition of industrial policies for thesector.

The first step in this case as well would be to develop a concept.

4.2 Taxation and control of material remnants and waste

Import duty and value added tax are used in Moldova in the same manner as in most competingcountries. Import of material for processing (CM) is exempt of duty and VAT. Regarding morevalue adding concepts like CMT, Full-Package and Private Label, drawback of VAT but not importduty is available once the ready made goods are exported, while many competing countries allow

drawback of import duty as well. It should also be noted, that drawback of VAT in accessoriesimport may put the domestic accessories industry into an unfavorable position as VAT is includein their prices when they sell to exporting garment industry.

Taxation of cutting remnants in CM and CMT are treated in Moldova in a same way as in Belarus,Russia and Ukraine. They are regarded as material staying in the country and thus liable to VATand import duty, unless destroyed under the supervision of the Customs or returned to thecustomer. For companies with no domestic sales this is a problem, as VAT does not apply toexport prices and the VAT on purchases prices can not be deducted. Cutting remnants can be up

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to 15% - 25 % of the total material allocated for the order, so the cost impact is considerable.Furthermore, taxation is not consistent in the various customs offices and companies are treateddifferently. Elastic materials, such as circular knits with elastic yarns produce a further problem.The total meters supplied declines before production due to relaxation and shrinking.

This, however, is not the case in Serbia or Asian countries, where cutting remnants are regardedas garbage with no commercial value and therefore exempt of VAT or import duty. From thebeginning of next the import duty on fabrics will be eliminated in Serbia. In order to be competitiveMoldova must find a way to renew taxation on processing materials. Two alternative solutionsshould be considered:

(A) All imports of textile materials are exempt from import duty and VAT as long as they areused for manufacturing of garments for domestic market or for export. Cutting remnantswould not be an issue any longer, and this would encourage and stimulate the industry todevelop own brands and retail chains for domestic sales.

(B) Cutting remnants are regarded as garbage with no commercial value. Technicalinstructions are prepared for the Customs regarding the remnants as follows:

1. A council of experts consisting of representatives of the Moldovan apparel industry,

Moldovan customs and an international expert should be appointed to draft technicalinstructions for the Customs offices in regards to how to tax waste and cutting remnants.

2. The principle should be that the processing waste, consisting of remnants betweenproduct components, edge and end loss, removed defected parts and roll ends should beconsidered as garbage with no commercial value and therefore exempt from import dutyand VAT, unless the company sells them or uses them commercially.

3. Standards for cutting waste with certain tolerance should be set for different types ofproducts, for example trousers: 15 %, shirts:18 %, ladies fashion 25 %, etc. Thetolerance could be +/- 4 %. Once the cutting loss stays within these standards the wasteis free of duty and VAT. Further allowance for shrinking of elastic materials must also bedefined, depending on the amount of elastic yarns.

4. Each company should be obliged to keep records of their cutting loss by recording theweight of cutting loss from each cut. When clearing customs the meters and weight g/m2

are reported and by using these figures the total weight of fabric received can becalculated.

5. Customs officials are allowed to check the records when necessary.

References:

Association of textile and clothing industry of Latvia, 2004, Latvian subcontracting directory.(http://subcontracting.link.lv/index.php?external=7&)

Association of Turkish Clothing Manufacturers, 2006. Turkish clothing industry horizon 2010

road map global targets and policies.

Baharat Books, 2003. Profile of the textile and clothing industry in Portugal

Brandchannel.com, 2007. Estonia and Belarus: Branding the old block.(http://www.brandchannel.com/features_effect.asp?pf_id=146)

Bulgarian Association of Apparel and Textile Producers and Exporters, 2007. Bulgarian T&Cindustry in 2006 (http://www.bgtextiles.org/?cid=25&p=&id=502)

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Kiefer, H. 2004. Market entry of Swedish Fashion retailer in Estonia taking into considerationEuropean competition law.

Latvian investment and development agency: 2007. Textile and clothing industry in Latvia.

Ministry of economy of Bulgaria, 2004, Sector development strategy Apparel production inBulgaria.

Ministry of Foreign Affairs of the Republic of Belarus, 2007. Non-tariff regulation of foreign tradein the Republic of Belarus (http://www.mfa.gov.by/eng/index.php?d=economic/trade&id=3)

Mocanu, C. 2006, Upgrading the textiles, clothing and footwear sector in Romania.

Neidik, B. Gereffi, G. 2004. Trade liberalization and export performance: Explaining Turkeysemergence and new role as a Full-Package supplier in the global textile and apparel value chain.

Palpacuer, F. 2004. The global sourcing patterns of French clothing retailers : Determinants andimplications for suppliers industrial upgrading.

Presnall, B. Gajic, D. Bisera, S. 2004. Textile industry in Serbia a selected study and

company overview.

PriceWaterhouseCoopers, 2007. Importing and exporting Ukraine.(http://www.pwc.com/extweb/insights.nsf/docid/1A1E0E662FA199B080256F32002601AA)

Purju, A. 2006. Public governance institutions and their impact on delocalization of laborintensive industries: The case of Estonia

Smith, A. Pickles, J. Begg. B. Roukova, P. Bucek, M. 2004. Upgrading the East Europeanapparel industry: Outsourcing and the embedded geographies of production.

Smith, A. Pickles, J. Begg. B. Roukova, P. Bucek, M. 2005. Outward processing, EUenlargement and regional relocation in the European textiles and clothing industry.

Serbian Investment and Export Promotion Agency, 2007. Textile Industry.(http://www.siepa.sr.gov.yu/site/en/home/1/key_industries/textile/)

Textile Intelligence, June 2007, Bulgaria: Europes fastest growing textile and clothing producergears up for further expansion.

The World Bank, 2004. The Republic of Moldova trade diagnostic study. Report No. 30998-MD

Interviews:

Alexander Goer, Barn AS, Latvia (production in Russia, Belarus and Ukraine)

Ance Tanasiciuc, Marketing Manager of Dinasty Co., Romania

Antonela Curteza, Professor at Technical University of Iasi, Romania

Gordana Kovacevic, Purchase Manager, Jagger Mfg Co. Serbia

Liisa Anttila, Purchase Director of Flare-Trading Oy, Finland (production in Russia and Belarus)

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Raimo Kinnunen, Production Director of Turo Tailor Oy, Finland (production in Russia andRomania)

Tatjana Radovanov, Serbian Investment and Export Promotion Agency

Tomi Luhtanen, Managing Director of I.N.A. Trading Ltd, Bulgaria

Documents

Final Report Eng